[Federal Register Volume 64, Number 173 (Wednesday, September 8, 1999)]
[Notices]
[Pages 48760-48767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23327]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-421-701]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review and Intent To Revoke Order: Brass Sheet and Strip From the 
Netherlands

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

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SUMMARY: The Department of Commerce is conducting an administrative 
review of the antidumping duty order on brass sheet and strip from the 
Netherlands. This review covers imports of brass sheet and strip from 
one producer/exporter during the period of review (POR), August 1, 1997 
through July 31, 1998.
    We preliminarily determine that sales of the subject merchandise 
have not been made below normal value. If these preliminary results are 
adopted in the final results, we will instruct the Customs Service not 
to assess antidumping duties on the subject merchandise exported by 
this company. If these preliminary results are adopted in our final 
results of this administrative review, we will revoke the antidumping 
duty order, based on three consecutive review periods of sales at not 
less than normal value by Outokumpu Copper Strip B.V., the sole 
producer and exporter of subject merchandise from the Netherlands (see 
19 CFR 351.222(b)(i)). See Intent to Revoke section of this notice.

EFFECTIVE DATE: September 8, 1999.

FOR FURTHER INFORMATION CONTACT: John Brinkmann or Jarrod Goldfeder, 
Office of AD/CVD Enforcement, Group II, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-4126r (202) 482-2305, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    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 refer to the regulations codified at 19 CFR 
Part 351 (1999).

Background

    On August 12, 1988, the Department published in the Federal 
Register the antidumping duty order on brass sheet and strip from the 
Netherlands (53 FR 30455). On August 11, 1998, we published in the 
Federal Register the notice of ``Opportunity to Request an 
Administrative Review'' of this order, for the period August 1, 1997 
through July 31, 1998 (63 FR 42821). On August 31, 1998, in accordance 
with 19 CFR 351.213(b), Outokumpu Copper Strip B.V. (OBV), the sole 
producer/exporter requested an administrative review of its exports of 
the subject merchandise to the United States for the POR August 1, 1997 
through July 31, 1998. In addition, OBV requested that the Department 
revoke the antidumping duty order against brass sheet and strip from 
the Netherlands, pursuant to 19 CFR 351.222(b), based on the absence of 
dumping and the fact that OBV is not likely to sell the subject 
merchandise at less than normal value in the future. On September 23, 
1998, in accordance with 19 CFR 351.221, the Department initiated this 
administrative review (see Initiation of Antidumping and Countervailing 
Duty Administrative Reviews and Requests for Revocation in Part, 63 FR 
51893 (September 29, 1998)).
    On October 2, 1998, the Department issued an antidumping 
questionnaire 1 to OBV. After several extensions, OBV 
submitted its response to sections A, B, and C in October and November 
1998. The Section D questionnaire response was received in December 
1998. The Department issued and received responses to Sections A, B, 
and C supplemental questionnaires in January 1999. On February 5, 1999, 
the Department extended the time limit for completion of the 
preliminary results of this administrative review by 120 days, or until 
August 31, 1999. See Brass

[[Page 48761]]

Sheet and Strip from the Netherlands: Notice of Extension of Time 
Limits for the Sixth Antidumping Duty Administrative Review, 64 FR 
5766. In April 1999, the Department issued a Section D supplemental 
questionnaire. The response to the supplemental cost questionnaire was 
received by the Department in May 1999.
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    \1\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under review that it sells, and the sales of the 
merchandise in all of its markets. Sections B and C of the 
questionnaire request comparison market sales listings and U.S. 
sales listings, respectively. Section D requests additional 
information about the cost of production of the foreign like product 
and constructed value of the merchandise under review.
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Scope of Review

    Imports covered by this review are brass sheet and strip, other 
than leaded and tin brass sheet and strip, from the Netherlands. The 
chemical composition of the products under review is currently defined 
in the Copper Development Association (CDA) 200 Series or the Unified 
Numbering System (UNS) C2000 series. This review does not cover 
products the chemical compositions of which are defined by other CDA or 
UNS series. The physical dimensions of the products covered by this 
review are brass sheet and strip of solid rectangular cross section 
over 0.006 inch (0.15 millimeter) through 0.188 inch (4.8 millimeters) 
in gauge, regardless of width. Included in the scope are coiled, wound-
on-reels (traverse wound), and cut-to-length products. The merchandise 
under investigation is currently classifiable under item 7409.21.00 and 
7409.29.20 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheading is provided for convenience and 
customs purposes, the written description of the merchandise under 
investigation is dispositive.

Verification

    As provided in section 782(i) of the Act, the Department verified 
sales and cost information provided by OBV. The cost verification was 
conducted from May 31 to June 6, 1999 and the sales verification was 
conducted from July 12 to July 16, 1999. The Department used standard 
verification procedures, including on-site inspection of the 
manufacturer's facilities and examination of relevant sales and 
financial records. Verification results are outlined in the 
verification reports placed in the case file.

Product Comparisons

    In accordance with section 771(16) of the Act, the Department first 
attempted to match contemporaneous sales of products sold in the U.S. 
and home markets that were identical with respect to the following 
characteristics: (1) type (alloy); (2) gauge (thickness); (3) width; 
(4) temper; (5) coating; and (6) packed form. Where there were no sales 
of identical merchandise in the home market to compare with U.S. sales, 
we compared U.S. sales with the most similar product based on the 
characteristics listed above, in descending order of priority.
    For purposes of the preliminary results, we have used differences 
in merchandise adjustments based on the difference in the variable cost 
of manufacturing between each U.S. model and its most similar home 
market model.

Date of Sale

    During the POR, OBV reported making sales in the home market 
pursuant to frame agreements, which are non-binding arrangements with 
customers containing estimates of the types and quantities of 
merchandise the customer expects to order over a certain period of 
time. See Response to Section A of the Department's Questionnaire, 
dated October 23, 1998, at A-16. In addition, although the frame 
agreements contain a fabrication price, which is the price charged by 
companies such as OBV to transform raw materials into finished brass 
sheet and strip, such agreements do not contain the price OBV charges 
for the necessary raw materials (i.e., the ``metal price''). As such, 
the quantity to be purchased and the total price to be paid by the 
customer are not established in the frame agreements.
    In the immediately preceding review, the Department used the 
invoice date as the date of sale rather than the frame agreement date 
because we found in that review that the invoice date was the first 
date on which all material terms of sale (i.e., quantity, metal price, 
and fabrication price) were established. See Brass Sheet and Strip from 
the Netherlands: Notice of Preliminary Results of Antidumping Duty 
Administrative Review, 63 FR 25821, 25822 (May 11, 1998); see also 
Brass Sheet and Strip from the Netherlands: Final Results of 
Antidumping Duty Administrative Review, 63 FR 49544 (September 16, 
1998) (Final Results 96/97). The record in this review, including our 
findings at the sales verification of OBV's submitted data, supports 
the same conclusion. Therefore, in accordance with 19 CFR 351.401(i) 
and Department practice, we have preliminarily determined that the 
invoice date is the appropriate date of sale for OBV.

Comparisons to Normal Value

    To determine whether OBV's sales of brass sheet and strip were made 
to the United States at less than normal value, the Department compared 
the export price (EP) to the normal value (NV), as described in the 
``Export Price'' and ``Normal Value'' sections of this notice. In 
accordance with section 771A(d)(2) of the Act, the Department 
calculated monthly weighted-average prices for NV and compared these to 
individual U.S. transactions.

Export Price

    For the price to the United States, we used EP in accordance with 
section 772(a) of the Act, because the subject merchandise was sold to 
an unaffiliated U.S. purchaser prior to the date of importation and CEP 
methodology was not otherwise warranted.
    We calculated EP based on the packed, delivered prices to 
unaffiliated purchasers in the United States. In accordance with 
section 772(c)(2) of the Act, where appropriate, we deducted from the 
starting price international freight expense, marine insurance, U.S. 
brokerage and handling expenses, and U.S. Customs duties.
    We made corrections to the U.S. packing costs and recalculated U.S. 
credit expenses based on our verification findings. See Sales 
Verification Report, dated August 31, 1999 (Sales Verification Report). 
In addition, per the Department's instructions, OBV reported a 
transaction to the United States which the company characterized as a 
sample sale to a non-U.S. customer. Based on the evidence on the record 
of this review, including our findings at verification, we 
preliminarily determine that this transaction constitutes a sample sale 
to a non-U.S. customer and, therefore, have removed this sale from our 
calculations. See Sales Verification Report.

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, 
we compared OBV's volume of home market sales of the foreign like 
product to the volume of its U.S. sales of the subject merchandise. 
Pursuant to sections 773(a)(1)(B) and (C) of the Act, since OBV's 
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 was viable 
pursuant to section 773(a) of the Act. Therefore, in accordance with 
section 773(a)(1)(B)(i) of the Act, we based NV on the price at which 
the foreign like products were first sold in the home market, in the 
usual commercial quantities and in the ordinary course of trade.
    Where appropriate, the Department deducted early-payment discounts 
and

[[Page 48762]]

rebates. We also deducted inland freight expense (plant-to-customer), 
inland insurance, and packing expense from the home market price in 
accordance with section 773(a)(6)(B) of the Act. We used the revised 
packing expenses provided to us at verification. We made adjustments, 
where appropriate, for differences in credit expenses between the U.S. 
and home market sales in accordance with section 773(a)(6)(C)(iii) of 
the Act.
    We increased normal value by U.S. packing expenses in accordance 
with section 773(a)(6)(A) of the Act. To the extent there were 
comparisons of U.S. merchandise to home market merchandise that was not 
identical but similar, the Department made adjustments to NV for 
differences in physical characteristics of the merchandise pursuant to 
section 773(a)(6)(C)(ii) of the Act.

Cost of Production Analysis

    Because we disregarded sales that failed the cost test in the most 
recently completed review, we had reasonable grounds to believe or 
suspect that sales of the foreign like product under consideration for 
determining NV in this review may have been made at prices below the 
cost of production (COP), as provided in section 773(b)(2)(A)(ii) of 
the Act. See Final Results 96/97. Therefore, pursuant to section 
773(b)(1) of the Act, we initiated a COP investigation of sales by OBV.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the respondent's cost of materials and fabrication 
employed in producing the foreign like product, plus the costs for 
selling, general, and administrative expenses (SG&A), including 
interest expense, and packing costs.
    We relied on the home market sales and COP information that OBV 
provided in its questionnaire responses, except as follows:
1. Use of Quarterly Cost Data
    OBV calculated and reported quarterly per-unit manufacturing costs 
because of the significant and consistent decline in metal prices 
(i.e., copper and zinc) throughout the POR. On August 11, 1999, 
however, OBV requested that the Department calculate weighted-average 
costs on a monthly basis for use in the sales-below-cost test. 
According to OBV, in this case the Department should deviate from its 
preferred method of calculating a single weighted-average POR cost in 
order to prevent distortions in the margin calculations that would 
result from the metal price fluctuations, since these metal inputs 
account for approximately 70 percent of the cost of manufacturing brass 
sheet and strip.
    Our normal practice for a respondent in a country that is not 
experiencing high inflation is to calculate a single weighted-average 
cost for the entire period of review except in unusual cases where this 
preferred method would not yield an appropriate comparison in the 
margin calculation. See, e.g., Final Determination of Sales at Less 
Than Fair Value: Stainless Steel Sheet and Strip in Coils from the 
Republic of Korea; 64 FR 30664, 30676 (June 8, 1999) (concluding that 
weighted-average costs for two periods were permissible where major 
declines in currency valuations distorted the margin calculations); 
Final Determination of Sales at Less than Fair Value: Static Random 
Access Memory Semiconductors from Taiwan, 63 FR 8909, 8925 (February 
23, 1998) (calculating quarterly weighted-average costs due to a 
significant and consistent price and cost decline in the market); Final 
Determination of Sales at Less than Fair Value: Dynamic Random Access 
Memory Semiconductors of One Megabit and Above from the Republic of 
Korea; 58 FR 15467, 15476 (March 23, 1993) (determining that the 
Department may use quarterly weighted-average costs where there exists 
a consistent downward trend in both U.S. and home market prices during 
the period); Final Determination of Sales at Less than Fair Value: 
Erasable Programable Read Only Memories from Japan; 51 FR 39680, 39682 
(October 30, 1986) (finding that significant changes in the COP during 
a short period of time due to technological advancements and changes in 
production process justified the use of quarterly weighted-average 
costs).
    We have reviewed the information on the record of this case and 
note that both OBV's sales prices for the subject merchandise and the 
cost of metal used in the manufacture of this merchandise 
correspondingly and consistently declined on a quarterly basis 
throughout the POR. Since the metal costs represent a significant 
percentage of the total cost of producing brass sheet and strip and the 
cost of the metal dropped consistently throughout the POR, computing a 
single POR weighted average cost would distort the results of the cost 
test. In order to avoid this distortion, we have preliminarily relied 
upon the submitted quarterly weighted-average costs rather than 
calculating single weighted-average POR costs. We did not recalculate 
OBV's submitted COP and constructed value (CV) data on a monthly 
weighted-average basis because the monthly changes in selling prices 
and input metal costs do not appear significant enough to require such 
a short averaging period. As such, we compared weighted-average 
quarterly COP figures for OBV, adjusted where appropriate (see below), 
to home market sales of the foreign like product in the same quarter, 
as required under section 773(b) of the Act, in order to determine 
whether these sales had been made at prices below the COP.
2. Startup Adjustment
    OBV claimed a startup adjustment to costs pursuant to section 
773(f)(1)(C)(ii) of the Act, covering a nine-month startup period from 
January 1998 through September 1998 for its new continuous strip 
casting line, which replaced OBV's ring casting mill. We preliminarily 
determine that OBV's new continuous strip casting mill constitutes a 
new facility and that the new production facility required substantial 
additional investment, within the meaning of section 
773(f)(1)(C)(ii)(I) of the Act. The new vertical continuous strip 
casting mill represents an investment in a new technology for the 
production of brass sheet and strip. Consequently, the continuous strip 
casting mill, which entirely replaced the former ring casting mill, 
required the construction of an addition to OBV's plant containing 
mostly new equipment that was custom made for OBV for installation in 
this new mill, thereby also requiring considerable investment. 
Secondly, we preliminarily determine that OBV's production levels at 
the new facility have been limited due to technical factors associated 
with the initial phase of commercial production, as required under 
section 773(f)(1)(C)(ii)(II) of the Act. OBV specifically identified 
these limiting technical factors in a proprietary memorandum to the 
Department in support of its startup cost adjustment dated February 2, 
1999. We examined these factors at the verification of OBV's submitted 
cost data (see Cost Verification Report, dated August 2, 1999) and have 
preliminarily determined that OBV has satisfied the criteria for 
receiving a startup adjustment.
    Regarding the startup period, we have accepted for the preliminary 
results the submitted startup period that ends on September 30, 1998. 
We based this preliminary finding, in large part, on a review of the 
quantity of material input (i.e., production starts) at the new 
facility during the POR. Specifically, the production starts represent 
the best

[[Page 48763]]

measure of the facility's ability to produce at commercial production 
levels. Based upon our analysis of OBV's production starts, we 
preliminarily find that OBV attained commercial production levels in 
October 1998. Accordingly, we have accepted OBV's submitted startup 
cost adjustment.
3. General and Financial Expenses
    We used the revised general and administrative (G&A) and financial 
expense rates that OBV provided on the first day of the cost 
verification, which the company revised to correct for clerical errors 
made in originally calculating these items. In addition, we included in 
G&A expenses the loss OBV recognized in the ordinary course of business 
from holding metals in inventory.

B. Test of Home Market Prices

    After calculating COP, we tested to see whether home market sales 
of subject brass sheet and strip were made at prices below 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 COP to the reported home market 
prices less any applicable movement charges, discounts and rebates, 
where appropriate.

C. Results of COP Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of OBV's home market sales for a model were at prices less than 
the COP, we did not disregard below-cost sales of that model because 
the Department determined that the below cost sales were not made 
within an extended period of time in ``substantial quantities.'' Where 
20 percent or more of OBV's home market sales of a given product were 
at prices less than the COP, we determined that such sales were made 
within an extended period of time in substantial quantities in 
accordance with section 773(b)(2)(C) of the Act. To determine whether 
such sales were at prices which would not permit the full recovery of 
all costs within a reasonable period of time, in accordance with 
section 773(b)(2)(D) of the Act, we compared home market prices to the 
weighted-average COP for the POR. When we found that below-cost sales 
had been made in ``substantial quantities'' and were not at prices 
which would permit recovery of all costs within a reasonable period of 
time, we disregarded the below-cost sales in accordance with section 
773(b)(1) of the Act.
    Since there were sufficient sales that passed the cost test, it was 
unnecessary to calculate CV in this case.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, the Department determines NV based on sales in the 
comparison market at the same level of trade (LOT) as the EP or, if 
applicable, CEP 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 expenses 
(SG&A) and profit. For EP, the U.S. LOT is also the level of the 
starting-price sale, which is usually from the exporter to the 
importer.
    To determine whether comparison market sales are at different LOT's 
than EP, the Department examines stages in the marketing process and 
selling functions along the chain of distribution between the producer 
and the unaffiliated (or arm's length) customers. 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, the Department makes 
a LOT adjustment under section 773(a)(7)(A) of the Act.
    OBV claims that the Department can match U.S. sales to identical 
sales at the same LOT in the home market and that a LOT adjustment is 
therefore not necessary. OBV manufactures to order and ships directly 
to original equipment manufacturers (OEMs) in the United States and 
home market, and also ships directly to a home market trading company. 
In order to determine whether U.S. sales were made at the same LOT as 
sales in the home market, we examined OBV's questionnaire responses 
with regard to its distribution system, including selling functions, 
class of customer and selling expenses. We examined the chain of 
distribution and the selling activities associated with sales reported 
by OBV to its two home market customer categories (i.e., OEMs and 
trading company). We found that the two home market customer categories 
did not differ significantly from each other with respect to selling 
activities, although there were slight differences between them for 
sales process/marketing support and freight and delivery. Based on our 
overall analysis, we found that the two home market categories 
constituted one LOT.
    OBV reported EP sales to its unaffiliated customers in one customer 
category, OEM's, and therefore only had one level of trade for U.S. 
sales. We examined the channel of distribution and the selling 
activities associated with sales reported by OBV to the single LOT in 
the Netherlands and in the United States and found that the LOT in 
these two markets were similar. Therefore, all price comparisons are at 
the same LOT and a LOT adjustment pursuant to section 773(a)(7)(A) of 
the Act is unwarranted.

Currency Conversion

    For purposes of these preliminary results, we made currency 
conversions in accordance with section 773A(a) of the Act, based on the 
official exchange rates published by the Federal Reserve. Section 
773A(a) of the Act directs the Department to use a daily exchange rate 
in order to convert foreign currencies into U.S. dollars, unless the 
daily rate involves a ``fluctuation.'' In accordance with the 
Department's practice, we have determined as a general matter that a 
fluctuation exists when the daily exchange rate differs from a 
benchmark by 2.25 percent. The benchmark is defined as the rolling 
average of rates for the past 40 business days. When we determine that 
a fluctuation exists, we substitute the benchmark for the daily rate.

Intent To Revoke

    On August 31, 1998, OBV submitted a letter stating that OBV was the 
sole producer of brass sheet and strip from the Netherlands, and 
requested that pursuant to 19 CFR 351.222(b), the Department revoke the 
antidumping duty order currently in place against certain brass sheet 
and strip from the Netherlands. OBV submitted, along with its 
revocation request, a certification stating that: (1) the company sold 
subject merchandise at not less than NV during the POR, and that in the 
future it would not sell such merchandise at less than NV (see 19 CFR 
351.222(e)(1)(i)); and (2) the company has sold the subject merchandise 
to the United States in commercial quantities during each of the past 
three years. See 19 CFR 351.222(e)(1)(ii).2
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    \2\ On September 1, 1999, OBV amended its request for revocation 
to include a certification that, if the Department finds that OBV is 
not the sole producer and exporter from the Netherlands, the company 
agrees to immediate reinstatement in the order if, subsequent to 
revocation, the Department concludes that the company sold the 
subject merchandise at less than normal value (see 19 CFR 
351.222(b)(iii)). Since the Department has concluded that OBV is the 
sole producer and exporter from the Netherlands, the revocation 
decision is whether to revoke the order on brass sheet and strip 
from the Netherlands in whole.
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    The Department ``may revoke, in whole or in part'' an antidumping 
duty

[[Page 48764]]

order upon completion of a review under section 751 of the Act. While 
Congress has not specified the procedures that the Department must 
follow in revoking an order, the Department has developed a procedure 
for revocation that is described in 19 CFR 351.222. This regulation 
requires, inter alia, that each exporter and producer covered by the 
order submit the following: (1) a certification that the company has 
sold the subject merchandise at not less than NV in the current review 
period and that the company will not sell at less than NV in the 
future; and (2) a certification that the company sold the subject 
merchandise in each of the three years forming the basis of the request 
in commercial quantities (see 19 CFR 351.222(e)(1).) Upon receipt of 
such a request, the Department may revoke an order, if it concludes 
that each exporter and producer covered at the time of revocation: (1) 
sold subject merchandise at not less than NV for a period of at least 
three consecutive years; and (2) is not likely in the future to sell 
the subject merchandise at less than NV; see 19 CFR 351.222(b)(1)).
    On February 2, 1999, the Department established a time frame for 
parties to submit factual information relating to the Department's 
consideration of OBV's request for the revocation of the antidumping 
duty order on brass sheet and strip from the Netherlands. See Brass 
Sheet and Strip From The Netherlands; Notice of Extension of Time 
Limits for Sixth Antidumping Duty Administrative Review, 64 FR 5766 
(Feb. 5, 1999). OBV and the petitioners submitted comments on April 1, 
1999 and rebuttal comments on May 6, 1999.
    Petitioners' Comments: The petitioners argue that the Department 
should not revoke the order from the Netherlands because the factual 
information presented by OBV does not support its position that (1) it 
has sold subject merchandise in the United States in commercial 
quantities during the last three annual review periods; and (2) it has 
demonstrated that it is not likely to resume dumping in the future if 
the antidumping order is revoked. The petitioners state that recent 
determinations issued by the Department indicate that the ``commercial 
quantities'' requirement applies with respect to both the volume of 
sales as well as the number of sales made by a party requesting 
revocation. See Pure Magnesium From Canada; Final Results of 
Antidumping Duty Administrative Review and Determination Not to Revoke 
Order in Part, 64 FR 12977, 12978 (Mar. 16, 1999) (Magnesium from 
Canada). See also Certain Corrosion-Resistant Carbon Steel Flat 
Products and Certain Cut-to-Length Carbon Steel Plate From Canada; 
Final Results of Antidumping Duty Administrative Reviews and 
Determination To Revoke in Part, 64 FR 2173, 2175 (Jan. 13, 1999) 
(Certain Plate from Canada). The petitioners argue that the number and 
quantity of sales of subject merchandise (radiator strip brass) 
reported by OBV in the last three administrative reviews is a small 
fraction of the volume and number of U.S. sales made prior to the 
original investigation. They suggest that the only reasonable inference 
that can be drawn from such a substantial decrease in sales is that OBV 
withdrew from the U.S. market for the products that it was selling 
during the original investigation (both radiator strip and electrical 
connector strip) because it could not sell these products without 
dumping. According to the petitioners, the fact that OBV has chosen to 
source a large part of its radiator strip sales in the United States 
from production by its American affiliate, Outokumpu American Brass 
(American Brass), despite the fact that such merchandise currently 
would be subject to a 0% ad valorem cash deposit rate, according to the 
petitioner is further proof of OBV's inability to sell subject 
merchandise in the United States without dumping. The petitioners argue 
that in a similar situation, the Department denied revocation to a 
German company who had shifted sourcing to its United States subsidiary 
(see Brass Sheet and Strip From Germany; Final Results of Antidumping 
Duty Administrative Review and Determination Not to Revoke in Part, 61 
FR 49727, 49730 (Sept. 23, 1996) (Brass from Germany).
    Finally, in order for the Department to make an objective 
determination of the likelihood of future dumping if the order were 
revoked, the petitioners requested that the Department undertake an 
analysis of OBV's past practices as well as future competitive 
conditions that would affect OBV's prices and costs in the United 
States and the home market. Specifically, for both OBV and American 
Brass, they requested that the Department obtain, for each product 
category of subject merchandise, historical shipment data in both the 
United States and the home market, production capacities, and 
fabrication prices. The petitioners claim that this necessary 
information was noticeably absent from OBV's otherwise voluminous 
submission supporting revocation and that it is otherwise not available 
to the petitioners.
    Respondent Comments: OBV claims that it is a well-established past 
practice of the Department to make revocation determinations on a case-
by-case basis, taking into consideration the industry in question, 
relevant market conditions, and the record evidence. See Dynamic Random 
Access Memory Semiconductors of One Megabyte or Above From the Republic 
of Korea: Final Results of Antidumping Duty Administrative Review and 
Determination Not To Revoke Order In Part, 62 FR 39809, 39812 (July 24, 
1997) (DRAMS from Korea). In addition to three years of no dumping, 
when evidence is placed on the record relating to the likelihood of 
future dumping, the Department is required to consider the evidence. 
See Steel Wire Rope From the Republic of Korea: Final Results of 
Antidumping Duty Administrative Review and Revocation in Part of 
Antidumping Duty Order, 63 FR 17986, 17988 (April 13, 1998) (Wire Rope 
from Korea). In Wire Rope from Korea, the Department considered 
information placed on the record which included conditions and trends 
in the domestic and home market industries, currency movements, and the 
ability of the respondent to compete in the U.S. market without 
dumping. OBV argues that the information it has placed on the record, 
as supported by an economic report that it commissioned from LECG, Inc. 
(LECG Report), demonstrates that its sales have in fact been made in 
commercial quantities,3 and that it is not likely to sell at 
below normal value in the future if the order were revoked.
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    \3\ OBV further argued that the ``commercial quantities'' factor 
cited in 19 C.F.R. 351.222 (d)(1) applies only to antidumping 
reviews in which the ``middle'' year does not involve a review. In 
that regard, it contends that the Department's reliance upon 
``commercial quantities'' in Magnesium From Canada notwithstanding, 
it is OBV's position that the quantity of imports is only one of 
many factors the Department may consider in making a ``likelihood'' 
determination.
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    OBV notes that in Certain Plate from Canada the Department stated 
that ``the Department must be able to determine that the company has 
continued to participate meaningfully in the U.S. market during each of 
the three years at issue.'' OBV claims that in fact the company shipped 
at historical levels over the period covered by the first three 
administrative reviews, i.e., February 8, 1988 through July 31, 1991, 
discontinued shipments from 1992 until 1995, but resumed shipments when 
it to began servicing certain niche markets in the United States. Upon 
review and consideration of the ``unusual occurrences which might 
affect the potential for production and exportation'' in deciding 
commercial quantities (see Notice of Proposed

[[Page 48765]]

Rulemaking and Request for Public Comment, 61 FR 7308, 7320 (February 
27, 1996) (Proposed Regulations)), OBV contends that the Department 
will find that the shipments made during this and the previous two 
administrative reviews were made in commercial quantities.
    In evaluating the question of ``commercial quantities'' and 
``likelihood,'' OBV argues that it is essential to understand that 
OBV's decision to discontinue shipments of subject merchandise to the 
United States in 1991 was not because OBV was unable to sell in the 
United States at above normal value prices. Rather, it was due to the 
acquisition of American Brass, a major United States producer of brass 
sheet and strip products (and supporter of the revocation of this 
order), by OBV's parent company, Outokumpu Oyj (Outokumpu). OBV claims 
that this event caused a significant and permanent structural change in 
the U.S. industry, vis-a-vis OBV, which makes it unlikely that OBV 
would resume dumping in the United States.
    OBV states that following the acquisition of American Brass, 
production of subject merchandise was shifted from the Netherlands to 
American Brass for a variety of management reasons unrelated to 
pricing. Due to its obvious proximity to OBV's customers in the United 
States, and the need to address the uncertainty brought about by the 
on-going antidumping order, American Brass was required by Outokumpu to 
produce in-scope brass radiator strip, while OBV continued to supply 
thinner gauge radiator strip not covered by the scope of the order. OBV 
resumed shipments of in-scope radiator strip in 1995 to service a niche 
market for certain United States customers who prefer brass strip with 
more exacting tolerances, which for a variety of reasons cannot be 
produced efficiently by American Brass. OBV claims that as a result of 
a significant investment made in innovating radiator strip production 
at its facilities, which has strengthened OBV's position as the world 
cost leader in the production of radiator strip, Outokumpu intends to 
shift production of in-scope radiator strip for its United States 
customers back to the Netherlands This shift in production would also 
allow American Brass, in which Outokumpu has also made significant new 
investment in equipment, to focus on non-radiator strip production, 
where it has its best efficiency, and away from radiator strip which is 
not suited to its production process.
    OBV claims that the LECG economic report clearly shows that it is 
unlikely that OBV will resume pricing in-scope radiator strip, or any 
other subject brass, in the United States market at less than normal 
value even as it increases its shipments of radiator strip from the 
Netherlands, for the following reasons: (1) The recent investment in 
the vertical strip caster at OBV has made OBV the world cost leader in 
radiator strip; (2) there is no direct competition to drive-down prices 
from any integrated United States mill for in-scope radiator strip; (3) 
the parent company to both OBV and American Brass would never allow OBV 
to compete with American Brass in non-radiator strip where American 
Brass has a comparative advantage. Thus, OBV will not export any 
product to the United States except radiator strip; (4) OBV is already 
operating at full capacity servicing its worldwide customer base. 
Further, OBV could not significantly increase its production of non-
radiator strip brass, or shift production to other types of subject 
merchandise, without significant additional investment; (5) many United 
States customers of radiator strip are multinational producers who 
would not tolerate price discrimination among their worldwide 
affiliated entities; (6) the Dutch guilder has been weaker against the 
U.S. dollar and is more likely to continue to fall rather than to 
appreciate; (7) any increase in radiator strip exports beyond servicing 
the current OBV/American Brass customer base would be moderated by the 
limited market for radiator brass, given the ongoing advance of 
aluminum as the preferred substitute for brass. OBV's conclusion based 
on the LECG report is that selling at prices below normal value in the 
future would be irrational and self-injurious.
    Department Position: In determining whether to revoke an 
antidumping order, we must conclude, pursuant to 19 CFR 351.222(b)(1), 
that: (1) all producers and exporters have sold the subject merchandise 
at not less than normal value to the United States in commercial 
quantities for three consecutive reviews; and (2) it is not likely that 
those persons will in the future sell the subject merchandise at less 
than NV.
    In the present case, the Department preliminarily finds that OBV is 
the only exporter or producer of subject merchandise shipped to the 
United States. This determination was based on an examination of 1997 
and 1998 United States import statistics for the HTSUS item numbers 
(7409.21 and 7409.29) which cover the subject merchandise as well as 
information obtained during verification. See ``memorandum of 
``Shipments of Brass Sheet & Strip from the Netherlands,'' dated August 
31, 1999, from John Brinkmann to the file (OBV Shipment Memorandum); 
see also Verification Report, dated August 31, 1999. The Department 
also preliminarily finds that OBV had zero or de minimis dumping 
margins for three consecutive reviews. Further, in determining whether 
three years of no dumping establish a sufficient basis to make a 
revocation determination, the Department must be able to determine that 
the company continued to participate meaningfully in the U.S. market 
during each of the three years at issue. See Certain Plate from Canada, 
64 FR at 2175; see also Magnesium from Canada, 64 FR at 12979. This 
practice has been codified in section 351.222(d)(1) of the Department's 
regulations, which states that, ``before revoking an order or 
terminating a suspended investigation, the Secretary must be satisfied 
that, during each of the three (or five) years, there were exports to 
the United States in commercial quantities of the subject merchandise 
to which a revocation or termination will apply.'' 19 CFR 351.222(d)(1) 
(emphasis added); see also 19 CFR 351.222(e)(1)(ii). For purposes of 
revocation, the Department must be able to determine that past margins 
are reflective of a company's normal commercial activity. Sales during 
the POR which, in the aggregate, are an abnormally small quantity do 
not provide a reasonable basis for determining that the discipline of 
the order is no longer necessary to offset dumping.
    With respect to the threshold matter of whether OBV made sales of 
subject merchandise to the United States in commercial quantities, we 
find that OBV's aggregate sales to the United States were made in 
commercial quantities during all segments of this proceeding. Although 
both the quantity and number of OBV's shipments to the United States of 
subject merchandise have decreased since the imposition of the 
antidumping duty order, we find that the Outokumpu acquisition of 
American Brass and the subsequent transfer of in-scope radiator strip 
production to the United States is reflective of the type of ``unusual 
occurrence'' contemplated by the Department, in promulgating its 
regulations, as an acceptable explanation of why exports of subject 
merchandise have declined. See Proposed Regulations, 61 FR 7307, 7320 
(Feb. 27, 1996). Prior to this acquisition, in 1989 and 1990, OBV 
continued to ship in similar quantities to the pre-order period and the 
subsequent

[[Page 48766]]

cessation of shipments until 1995 was an immediate result of the 1991 
acquisition. Based upon these circumstances, it is reasonable to 
conclude that the company's commercial practices were permanently 
changed in 1991, and that 1991, rather than the pre-order period, 
should be the benchmark for measuring whether the company's sales 
during the three years without dumping were made in commercial 
quantities. Examination of shipments of subject merchandise from OBV 
from 1991 to the present shows that shipments began again in 1995 and 
increased in quantity and number of sales each year through 1998 (see 
OBV Shipment Memorandum). Thus, we can reasonably conclude that the 
``zero'' margins calculated for OBV in each of the last three 
administrative reviews are reflective of the company's normal 
commercial experience.
    With respect to 19 CFR 351.222(b)(1)(ii), the likelihood issue, 
``when additional evidence is on the record concerning the likelihood 
of future dumping, the Department is, of course obligated to consider 
the evidence by the parties which relates to the likelihood of future 
dumping.'' In doing so, the Department may consider such ``factors as 
conditions and trends in the domestic and home market industries, 
currency movements, and the ability of the foreign entity to compete in 
the U.S. marketplace without [sales at less than normal value].'' Wire 
Rope from Korea, 63 FR at 17988 (citing Brass from Germany, 61 FR at 
49730); see also Proposed Regulation Concerning the Revocation of 
Antidumping Duty Orders, 64 FR 29818, 29820 (June 3, 1999) (explaining 
that when additional evidence as to whether the continued application 
of an antidumping duty order is necessary to offset dumping is placed 
on the record, ``the Department may consider trends in prices and 
costs, investment, currency movements, production capacity, as well as 
all other market and economic factors relevant to a particular 
case.''); and Brass Sheet and Strip from Canada: Preliminary Results of 
Antidumping Duty Administrative Review and Notice of Intent to Revoke 
Order in Part, 63 FR 6519, 6523 (Feb. 9, 1998). Thus, based upon three 
consecutive reviews of zero or de minimis margins, the Department 
presumes that dumping is not likely to resume unless the Department has 
been presented with evidence to demonstrate that dumping is likely to 
resume if the order were revoked.
    In this proceeding, the petitioners have not presented evidence 
that would demonstrate that dumping is likely to resume if the order 
were revoked. However, since the respondent placed information on the 
record that addresses the types of factors considered by the 
Department, we have considered this information in our determination of 
whether dumping is likely to occur if the order on brass sheet and 
strip from the Netherlands is revoked.
    Based upon the evidence presented in this proceeding, we have 
considered various factors in considering whether OBV is likely to sell 
merchandise in the future at less than NV. We have reviewed the LECG 
economic report and briefs presented by OBV and find no evidence that 
indicates the likelihood of future dumping. Although OBV has indicated 
that it intends to shift production of subject radiator strip from 
American Brass back to the Netherlands, we find that there is no 
evidence that this will lead to the reoccurrence of dumping in the 
future. Further, the record shows that with the recent investment in 
the new vertical strip caster, OBV has a considerable cost advantage 
over American Brass in the production of radiator strip. Also, we 
confirmed at verification that OBV is already producing to near 
capacity and has limited capabilities to shift production from radiator 
strip to other subject products, such as electrical connector strip, 
where American Brass has a considerable cost advantage. Based on this 
and other evidence presented by OBV as to the current structure of the 
American market for brass radiator strip, and the relative weakness of 
the Dutch guilder to the U.S. dollar, we find that it is not likely 
that OBV will sell at less than normal value in the future.
    Because both requirements under the regulation have been satisfied, 
and the record establishes that OBV is the only known producer and 
exporter of the subject merchandise from the Netherlands, we intend to 
revoke the antidumping duty order on brass sheet and strip from the 
Netherlands. If these preliminary findings are affirmed in our final 
results, we will revoke the order with respect to brass sheet and strip 
from the Netherlands. In accordance with 19 CFR 351.222(f)(3), we will 
terminate the suspension of liquidation for any such merchandise 
entered, or withdrawn from warehouse, for consumption on or after the 
first day after the period under review, and will instruct Customs to 
refund any cash deposit.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following percentage weighted-average margin exists for the period 
August 1, 1997 through July 31, 1998:

------------------------------------------------------------------------
                                                                Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
OBV.........................................................       Zero.
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of the date of publication of this notice. See 
19 CFR 351.310(c). Any hearing, if requested, will be held 44 days 
after the date of publication, or the first workday thereafter. 
Interested parties may submit case briefs within 30 days of the date of 
publication of this notice. Parties who submit case briefs in this 
proceeding should provide a summary of the arguments not to exceed five 
pages and a table of statutes, regulations, and cases cited. Rebuttal 
briefs, limited to issues raised in the case briefs, may be filed not 
later than 7 days after the date of filing of case briefs. The 
Department will publish a notice of the final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such written comments, within 120 days from the 
publication of these preliminary results.

Assessment Rate

    Pursuant to 19 CFR 351.212(b), the Department calculated an 
assessment rate for the importer of the subject merchandise. Upon 
completion of this review, the Department will issue appraisement 
instructions to the U.S. Customs Service. If these preliminary results 
are adopted in our final results, we will instruct the U.S. Customs 
Service to liquidate all entries subject to this review without regard 
to antidumping duties.
    If these preliminary results are not adopted in the final results, 
we will instruct the U.S. Customs Service to assess antidumping duties 
on all appropriate entries covered by this review if any importer-
specific assessment rates calculated in the final results of this 
review are above de minimis (i.e., at or above 0.5 percent). For 
assessment purposes, we intend to calculate importer-specific 
assessment rates for the subject merchandise by aggregating the dumping 
margins for all U.S. sales to each importer and dividing the amount by 
the total entered value of the sales to that importer.

Cash Deposit Requirements

    If the final results remain unchanged from these preliminary 
results, no future

[[Page 48767]]

cash deposits will be required for the subject merchandise.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402 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 determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: August 31, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-23327 Filed 9-7-99; 8:45 am]
BILLING CODE 3510-DS-P