[Federal Register Volume 64, Number 215 (Monday, November 8, 1999)]
[Notices]
[Pages 60788-60791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29205]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-833]


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

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

ACTION: Notice of preliminary results of antidumping administrative 
review.

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SUMMARY: The Department of Commerce is conducting an administrative 
review of the antidumping duty order on stainless steel bar from Japan 
in response to a request from a respondent, Aichi Steel Corporation. 
This review covers the period February 1, 1998, through January 31, 
1999.
    We preliminarily determine that sales have been made below normal 
value. Interested parties are invited to comment on these preliminary 
results. Parties who submit argument are requested to submit with the 
argument (1) a statement of the issue and (2) a brief summary of the 
argument.

EFFECTIVE DATE: November 8, 1999.

FOR FURTHER INFORMATION CONTACT: Minoo Hatten or Robin Gray, Office of 
AD/CVD Enforcement, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-1690 
or (202) 482-4023, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

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

Background

    On February 26, 1999, the Department received a request from Aichi 
Steel Corporation (Aichi) to conduct an administrative review of the 
antidumping duty order on stainless steel bar (SSB) from Japan. On 
March 29, 1999, the Department published a notice of initiation of an 
administrative review of Aichi, covering the period February 1, 1998, 
through January 31, 1999, in the Federal Register (64 FR 14860).
    On March 25, 1999, Aichi requested that it be permitted to limit 
the scope of products reported to include home-market sales of only 
hot-rolled merchandise, as was permitted in the 97/98 review. On March 
30, 1999, we granted Aichi's request, given that Aichi confirmed that 
the same facts apply in this review that applied in the 97/98 review. 
As was the case in that review, Aichi claims that there are a limited 
number of home-market sales of stainless steel bar during the period of 
review (POR) to which U.S. sales would match when calculating dumping 
margins. See Preliminary Results Analysis Memorandum from case analyst 
to file, dated October 19, 1999 (98/99 review), in room B-099 of the 
main Department building; see also Preliminary Results Analysis 
Memorandum from case analyst to file, dated February 22, 1999 (97/98 
review), in room B-099 for additional details.
    On April 28, 1999, Al Tech Specialty Steel Corp., Dunkirk, N.Y., 
Carpenter Technology Corp., Reading, PA, Republic Engineered Steels, 
Inc., Massillon, OH, Slater Steels Corp., Fort Wayne, IN, Talley Metals 
Technology, Inc., Hartsville, SC, and the United Steel Workers of 
America, AFL-CIO/CLC, collectively the petitioners in the less-than-
fair value (LTFV) investigation (hereafter petitioners), requested that 
the Department determine whether antidumping duties have been absorbed 
in the event that the subject merchandise was sold during the POR in 
the United States through an importer affiliated with the respondent. 
As all of Aichi's sales to the United States during the POR were 
through an unaffiliated importer, duty absorption was not an issue.
    On May 17, 1999, the petitioners requested that the Department 
initiate a sales-below-cost investigation of Aichi's home-market sales. 
On June 28, 1999, based on section 773(b)(2)(A)(ii) of the Act, since 
we disregarded certain home-market sales below the cost of production 
(COP) in the 97/98 review, we initiated a cost investigation for this 
review. See Stainless Steel Bar From Japan: Final Results of 
Antidumping Administrative Review, 64 FR 36333 (July 6, 1999).

Scope of Review

    The merchandise covered by this review is stainless steel bar 
(SSB). For purposes of this review, the term ``stainless steel bar'' 
means articles of stainless steel in straight lengths that have been 
either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise 
cold-finished, or ground, having a uniform solid cross section along 
their whole length in the shape of circles, segments of circles, ovals, 
rectangles (including squares), triangles, hexagons, octagons or other 
convex polygons. SSB includes cold-finished SSBs that are turned or 
ground in straight lengths, whether produced from hot-rolled bar or 
from straightened and cut rod or wire, and reinforcing bars that have 
indentations, ribs, grooves, or other deformations produced during the 
rolling process.
    Except as specified above, the term does not include stainless 
steel semi-finished products, cut-length flat-rolled products (i.e., 
cut-length rolled products which if less than 4.75 mm in thickness have 
a width measuring at least 10 times the thickness or if 4.75 mm or more 
in thickness having a width which exceeds 150 mm and measures at least 
twice the thickness), wire (i.e., cold-formed products in coils, of any 
uniform solid cross section along their whole length, which do not 
conform to the definition of flat-rolled products), and angles, shapes, 
and sections.
    The SSB subject to this order is currently classifiable under 
subheadings 7222.11.0005, 7222.19.0005, 7222.11.0050, 7222.19.0050, 
7222.20.0005, 7222.20.0045, 7222.20.0075, and 7222.30.0000 of the 
Harmonized Tariff Schedule of the United States (HTSUS). Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
our written description of the scope of this order is dispositive.

United States Price

    In calculating the price to the United States, we used export price 
(EP) as defined in section 772(a) of the Act because the subject 
merchandise was sold to an unaffiliated U.S. purchaser in the United 
States prior to the date of importation into the United States and the 
use of constructed export price was not indicated by the facts of 
record.
    We calculated EP for U.S. sales based on F.O.B. Japan port prices 
to the United States. We made adjustments, where appropriate, for 
domestic inland freight, warehousing expenses, and brokerage and 
handling in accordance with section 772(c)(2)(A) of the Act. We used 
the shipment date as the date of

[[Page 60789]]

sale for the U.S. market because this was the point at which the 
material terms of sale were determined. See Preliminary Results 
Analysis Memorandum from case analyst to file, dated October 19, 1999, 
in room B-099.
    Aichi claimed that an upward adjustment to EP was appropriate to 
account for a ``duty drawback'' program. As stated in Certain Welded 
Carbon Standard Steel Pipes and Tubes from India (62 FR 47632, 47635 
(September 10, 1997)), ``we determine whether an adjustment to U.S. 
price for a respondent's claimed duty drawback is appropriate when the 
respondent can demonstrate that it meets both parts of our two-part 
test. There must be: (1) a sufficient link between the import duty and 
the rebate, and (2) a sufficient amount of raw materials imported and 
used in the production of the final exported product.'' As discussed 
below, because the respondent met these criteria, we have made an 
adjustment to EP.
    Aichi participates in Japan's duty-drawback program through its 
operation of a ``hozei area,'' which is similar to a bonded warehouse. 
Aichi posts a bond on all materials that enter the warehouse. If Aichi 
utilizes the imported materials for the production of merchandise that 
is exported, Japanese Customs Authority then releases the bond. If the 
imported materials are not used in the production of exported 
merchandise, Aichi pays import duties on the materials.
    We granted an upward adjustment to EP because Aichi was able to 
show both (1) a link between the import duty and the rebate, and (2) a 
sufficient amount of raw materials imported and used in the production 
of the final exported product.
    No other adjustments to EP were claimed.

Normal Value

    On March 25, 1999, Aichi requested that the Department limit the 
product scope of Aichi's reporting requirements as in Preliminary 
Results of Antidumping Duty Administrative Review: Stainless Steel Bar 
from Japan, 64 FR 10445 (March 4, 1999).
    On March 30, 1999, the Department granted Aichi's request to report 
only home-market sales of hot-rolled merchandise given that Aichi's 
letter confirmed that the same facts apply in this review that applied 
in the last review.
    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a basis for calculating normal value 
(NV), we compare the respondent's volume of home-market sales of the 
foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a) of the Act. Because the 
aggregate volume of home-market sales of the foreign like product was 
greater than five percent of the aggregate volume of U.S. sales of the 
subject merchandise, we determined that the home market provides a 
viable basis for calculating NV. Therefore, in accordance with section 
773(a)(1)(B)(i) of the Act, we based NV on the price at which the 
foreign like product was first sold to unaffiliated customers for 
consumption in the exporting country, in the usual commercial 
quantities and in the ordinary course of trade. We matched EP sales to 
sales at the same level of trade in the home market and made no level-
of-trade adjustment. (See Level of Trade below.)
    After disregarding appropriate below-cost sales (see Cost-of-
Production Analysis below), pursuant to section 773(b)(1) of the Act, 
we compared the EP sales of individual transactions to the monthly 
weighted-average price of sales of the most similar foreign like 
product. Where possible, we based NV on delivered prices to 
unaffiliated purchasers in the home market. Where applicable, we made 
adjustments to home-market price for billing adjustments, inland 
freight, warehousing expenses, discounts and rebates. Subject 
merchandise sold in the United States was compared to home-market 
products by applying the following criteria on a hierarchical basis: 
general type of finish, grade, remelting, type of final finishing 
operation, shape, and size.
    Home-market prices were based on delivered prices to affiliated or 
unaffiliated purchasers. When applicable, we made adjustments for 
differences in packing and for movement expenses in accordance with 
sections 773(a)(6)(A) and (B) of the Act. We also made adjustments for 
differences in cost attributable to differences in physical 
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) 
of the Act and for differences in circumstances of sale (COS) in 
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410. To make COS adjustments, we reduced home-market price by an 
amount for home-market credit and we increased it by an amount for U.S. 
credit expenses.

Level of Trade

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

[[Page 60790]]

services, research and development technical programs, advertising, 
procurement and sourcing, sales calls/assistance and post-sale 
warehousing. The distinction between consignment and non-consignment 
sales is that, in consignment sales situations, Aichi permits the 
customer to take possession of the product without requiring that the 
customer pay for the product until the customer sells to its downstream 
customer. This distinction, however, does not relate to the nature of 
the selling activities provided. See Preliminary Results Analysis 
Memorandum from case analyst to file, dated October 19, 1999, in room 
B-099. This determination is consistent with the Department's 
determination on this issue in the previous administrative review (see 
Preliminary Results of Antidumping Duty Administrative Review: 
Stainless Steel Bar from Japan, 64 FR 10445 (March 4, 1999)).
    Aichi reported sales to three types of customers in the home 
market: trading companies, end-users, and distributors. Selling 
functions performed with respect to sales to trading companies included 
strategic and economic planning, market research, computer, legal and 
business-systems development, engineering services and post-sale 
warehousing. In addition to these functions, other functions performed 
for sales to end-users included R&D technical programs, advertising, 
and sales calls/assistance. Distributors also were offered personnel 
training and manpower assistance in addition to the services offered to 
trading companies and end-users. Based on these differences, we found 
that the three types of home-market customers constituted three 
different levels of trade.
    We found that Aichi made EP sales of various models of merchandise 
through unaffiliated trading companies, a channel of distribution 
similar to the home-market channel involving sales to trading 
companies. As with sales through the trading-company channel of 
distribution in the home market, Aichi performed only a few selling 
functions when selling merchandise to trading companies that exported 
the merchandise to the United States. Thus, we found that the level of 
trade for this U.S. channel of distribution was the same as the level 
of trade for the home-market trading company channel of distribution. 
See Id.

Cost-of-Production Analysis

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

Constructed Value

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

Preliminary Results of Review

    As a result of our comparison of EP and NV, we preliminarily 
determine a weighted-average dumping margin of 1.72 percent for Aichi 
for the period February 1, 1998, through January 31, 1999.
    Any interested party may request a hearing within 30 days of 
publication of this notice. Any hearing, if requested, will be held 37 
days after the date of publication of this notice, or the first workday 
thereafter. Issues raised in hearings will be limited to those raised 
in the respective case and rebuttal briefs. Interested parties may 
submit case briefs within 30 days of the date of publication of this 
notice. Rebuttal briefs, which must be limited to issues raised in the 
case briefs, may be filed not later than 35 days after the date of 
publication.
    Parties who submit argument are requested to submit with the 
argument (1) a statement of the issue, and (2) a brief summary of the 
argument. The Department will publish a notice of final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such comments or at a hearing.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with 19 CFR 351.212(b)(1), we have calculated an exporter/customer-
specific assessment value for subject merchandise. Upon completion of 
this review, the Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of SSB from Japan entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided for by 
section 751(a)(2)(c) of the Act: (1) The cash deposit rate for Aichi 
will be the rate established in the final results of this review; (2) 
for previously reviewed or investigated companies not listed above, the 
cash-deposit rate will continue to be the company-specific rate

[[Page 60791]]

published for the most recent period; (3) if the exporter is not a firm 
covered in this review, or the original 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; and (4) 
for all other producers and/or exporters of this merchandise, the cash 
deposit rate shall be 61.47 percent, the all-others rate established in 
the LTFV investigation (59 FR 66930 (December 28, 1994)).
    The deposit rate, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    We are issuing and publishing this determination in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: November 1, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-29205 Filed 11-5-99; 8:45 am]
BILLING CODE 3510-DS-P