[Federal Register Volume 64, Number 223 (Friday, November 19, 1999)]
[Notices]
[Pages 63285-63288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30282]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-853]
Initiation of Antidumping Duty Investigation: Circular Seamless
Stainless Steel Hollow Products From Japan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: November 19, 1999.
FOR FURTHER INFORMATION CONTACT: Charles Riggle or Constance Handley at
(202) 482-0650 and (202) 482-0631, respectively; Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW, Washington, D.C. 20230.
Initiation of Investigation
The 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's regulations are
references to the provisions codified at 19 CFR Part 351 (1998).
The Petition
On October 26, 1999, the Department of Commerce (``the
Department'') received a petition on circular seamless stainless steel
hollow products from Japan filed in proper form by Altx, Inc., American
Extruded Products, PMAC Ltd, DMV Stainless USA, Inc., Salem Tube Inc.,
Sandvik Steel Co. International Extruded Products LLC and the United
Steel Workers of America, AFL-CIO/CLC. On November 9, 1999,
Pennsylvania Extruded Company (Pexco) joined as a co-petitioner in the
case. The Department received supplements to the petition on November
9, 10, and 12, 1999.
In accordance with section 732(b) of the Act, the petitioners
allege that imports of circular seamless stainless steel hollow
products from Japan are being, or are likely to be, sold in the United
States at less than fair value within the meaning of section 731 of the
Act, and that such imports are materially injuring an industry in the
United States.
The Department finds that the petitioners filed this petition on
behalf of the domestic industry because they are interested parties as
defined in sections 771(9)(C) and (D) of the Act and they have
demonstrated sufficient industry support with respect to the
antidumping investigation they are requesting the Department to
initiate (see Determination of Industry Support for the Petition
below).
Scope of Investigation
The scope of this investigation covers seamless stainless hollow
products, including pipes, tubes, redraw hollows, and hollow bars, of
circular cross section, containing 10.5 percent or more by weight
chromium, regardless of production process, outside diameter, wall
thickness, length, industry specification (domestic, foreign or
proprietary), grade or intended use. Common specifications for the
subject seamless stainless steel hollow products include, but are not
limited to, ASTM-A-213, ASTM-A-268, ASTM-A-269, ASTM-A-270, ASTM-A-271,
ASTM-A-312, ASTM-A-376, ASTM-A-498, ASTM-A-511, ASTM-A-632, ASTM-A-731
ASTM-A-771, ASTM-A-789, ASTM-A-790, ASTM-A-826 and their proprietary or
foreign equivalents.
The merchandise covered by this petition is found in the Harmonized
[[Page 63286]]
Tariff Schedule of the United States (HTSUS) subheadings 7304.10.50.20,
7304.10.50.50, 7304.10.50.80, 7304.41.30.05, 7304.41.30.15,
7304.41.30.45, 7304.41.60.05, 7304.41.60.15, 7304.41.60.45,
7304.49.00.05, 7304.49.00.15, 7304.49.00.45, 7304.49.00.60. Although
HTSUS subheadings are provided for convenience and customs purposes,
the written description of the merchandise is dispositive. Excluded
from the scope of the investigation are finished oil country tubular
goods certified to American Petroleum Institute (``API'') standard 5CT
or 5D. Also excluded are hollow drill bars and rods, classifiable under
7228.80 of the HTSUS.
During our review of the petition, we discussed the scope with the
petitioners to ensure that the scope in the petition accurately
reflects the product for which the domestic industry is seeking relief.
Moreover, as discussed in the preamble to the Department's regulations
(62 FR 27323), we are setting aside a period for parties to raise
issues regarding product coverage. The Department encourages all
parties to submit such comments by December 13, 1999. Comments should
be addressed to Import Administration's Central Records Unit at Room
1870, U.S. Department of Commerce, 14th Street and Constitution Avenue,
NW, Washington, D.C. 20230. The period of scope consultations is
intended to provide the Department with ample opportunity to consider
all comments and consult with parties prior to the issuance of the
preliminary determination.
Determination of Industry Support for the Petition
Section 732(b)(1) of the Act requires that a petition be filed on
behalf of the domestic industry. Section 732(c)(4)(A) of the Act
provides that a petition meets this requirement if the domestic
producers or workers who support the petition account for: (1) At least
25 percent of the total production of the domestic like product; and
(2) more than 50 percent of the production of the domestic like product
produced by that portion of the industry expressing support for, or
opposition to, the petition.
Section 771(4)(A) of the Act defines the ``industry'' as the
producers of a domestic like product. Thus, to determine whether the
petition has the requisite industry support, the statute directs the
Department to look to producers and workers who produce the domestic
like product. The International Trade Commission (``ITC''), which is
responsible for determining whether ``the domestic industry'' has been
injured, must also determine what constitutes a domestic like product
in order to define the industry. While both the Department and the ITC
must apply the same statutory definition regarding the domestic like
product (section 771(10) of the Act), they do so for different purposes
and pursuant to separate and distinct authority. In addition, the
Department's determination is subject to limitations of time and
information. Although this may result in different definitions of the
like product, such differences do not render the decision of either
agency contrary to the law.1
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\1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp.
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays
and Display Glass from Japan: Final Determination; Rescission of
Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-
81 (July 16, 1991).
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Section 771(10) of the Act defines the domestic like product as ``a
product that is like, or in the absence of like, most similar in
characteristics and uses with, the article subject to an investigation
under this title.'' Thus, the reference point from which the domestic
like product analysis begins is ``the article subject to an
investigation,'' i.e., the class or kind of merchandise to be
investigated, which normally will be the scope as defined in the
petition.
After the filing of the petition, we received comments from U.S.
redrawers and from Sumitomo Metal Industries, Ltd. (Sumitomo), a
Japanese producer of the subject merchandise, requesting that for the
purposes of determining industry support, the Department define hot-
finished pipe and cold-drawn pipe as separate like products. These
parties contend that hot-finished and cold-drawn pipe are made by
different companies with different equipment and sold for different
uses.
In addition, Sumitomo argues that while the ordinary uses for pipe
and tubing can be met by the hot-rolling process, there are uses such
as heat exchange, hydraulics, instrumentation, and subsea control and
service, which demand greater accuracy, higher physical properties,
better surfaces, thinner walls and smaller diameters that require cold-
drawing methods. Therefore, both the U.S. redrawers and Sumitomo
requested that the Department poll producers of hot-finished and cold-
drawn pipe and tube separately to determine if the petitioners have
adequate industry support for both types of products.
On November 12, 1999, the petitioners submitted rebuttal comments,
stating that with the addition of Pexco, the largest U.S. domestic
producer of the subject merchandise, as a petitioner, the petition has
clearly been filed on behalf of the U.S. domestic industry whether
circular seamless stainless steel hollow products are treated as a
single like product, or as two distinct like products.
For purposes of this initiation, we are adopting the domestic like
product definition set forth in the petition. Seamless stainless steel
hollow products are made along a continuum of sizes and grades, with a
degree of substitution of one type of product for another along the
continuum. While we recognize that certain differences exist between
the products in the proposed like product groupings, we find that the
similarities are more significant. For example, all products in the
proposed like product groupings share characteristics, such as chemical
composition, that make them suitable for uses in pressurized,
corrosive, high-temperature environments. Moreover, Sumitomo
acknowledged in its November 10, 1999, submission (at 11) that no
particular general application is always the exclusive domain of either
hot-finished or cold-finished products.
With regard to the assertion that hot-finished and cold-drawn
hollow products are manufactured by different companies and with
different equipment, given the time constraints placed on the
Department, our industry support analysis focuses on the factors
specified in section 771(10) of the Act, i.e., physical characteristics
and uses of the domestic like product. Moreover, as stated above, based
on the evidence available, we find that the similarities outweigh the
differences between these products.
Further, several steel cases support our conclusion that hot-
finished and cold-drawn products are treated appropriately as a single
like product by the Department. See e.g. Initiation of Antidumping Duty
Investigations: Certain Large Diameter Carbon and Alloy Seamless
Standard, Line and Pressure Pipe from Japan and Mexico; and Certain
Small Diameter Carbon and Alloy Seamless Standard, Line and Pressure
Pipe From the Czech Republic, Japan, the Republic of South Africa and
Romania, 64 FR 40825 (July 28, 1999); Final Determination of Sales at
Less Than Fair Value; Stainless Steel Hollow Products from Sweden, 52
FR 37810 (October 9, 1987); Small Diameter Circular Seamless Carbon and
Alloy Steel Standard, Line and Pressure Pipe From Germany: Final
Results of Antidumping Duty Administrative Review, 63 FR 13217 (March
18, 1998) and Stainless Steel Bar From Japan: Final Results of
Antidumping
[[Page 63287]]
Administrative Review, 64 FR 36333 (July 6, 1999). The facts of this
case do not justify departure from our large body of established
precedent.
Because the petitioners did not account for more than 50 percent of
the domestic production at the time the petition was filed, we polled
the industry as directed in 732(c)(4)(D) of the Act. While certain
domestic producers 2 expressed opposition to the petition,
the entry of Pexco on November 9, 1999, as a petitioner now means that
the petitioners account for more than 50 per cent of total production
of the domestic like product. As such, they have established the
requisite level of industry support. See Attachment to the Initiation
Checklist, Re: Industry Support, November 15, 1999.
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\2\ These producers are principally redrawers who import,
directly or indirectly, at least some of their inputs from Japan.
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Sumitomo argued further that the Department should have gathered
U.S. production data for the period July 1, 1998, through June 30,
1999, rather than calendar year 1998 data, for purposes of its industry
support analysis because this period would reflect the most recent
state of the industry. With regard to Sumitomo's argument as to the use
of 1998 production data, we note that, pursuant to 19 CFR
351.203(e)(1), the Department has discretion in defining the 12-month
period for which production will be measured. In this case, we believe
that the calender year 1998, which was used in the petition for the
purposes of demonstrating industry support, is representative and
consistent with Department practice. See e.g., Initiation Checklist for
the Petitions Covering Certain Cold-Rolled Carbon Steel Flat Products
from Argentina, Brazil, South Africa, Slovakia, Indonesia, Japan,
Thailand, Taiwan, Venezuela, the People's Republic of China, Turkey,
and Russia, dated June 14, 1999, and Initiation Checklist for the
Petition Covering Solid Agricultural Grade Ammonium Nitrate from The
Russian Federation, dated June 21, 1999.
Finally, Sumitomo stated that 1998 production by Al Tech, whose
seamless pipe production facility was later purchased by the petitioner
Altx, should not be considered for purposes of determining industry
support. The petitioners claimed that the inclusion of Al Tech's 1998
production is appropriate because the equipment employed in 1998 to
produce the like product is now operated by Altx. We note that this is
a moot point because, with the entry of Pexco as a petitioner, the
inclusion of Al Tech's production is not necessary for the petitioners
to demonstrate adequate industry support.
Export Price and Normal Value
The petitioners, in determining normal value (``NV'') for Japan,
relied upon price data contained in a confidential market research
report filed with the Department. At our request, the petitioners
arranged for the Department to contact the authors of the report to
verify the accuracy of the data, the methodology used to collect the
data, and the credentials of those gathering the market research. The
Department's discussion with the authors of the market research reports
is summarized in Memorandum to the File: Re: Foreign Market Research
Reports, dated November 2, 1999.
The petitioners based EP on affidavits of U.S. price offerings for
seamless stainless steel hollow products manufactured by Sumitomo,
Nippon, and Sanyo during January through April 1999. The petitioners
selected seamless stainless hollow products with specifications
commonly exported to the United States. In the absence of more
definitive information, the petitioners refer to the date of the offer
as the date of sale. The affidavits with the sales price offers reflect
the prices offered to an unaffiliated customer.
The petitioners calculated a net U.S. price by subtracting
estimated costs for shipment from the factory in Japan to the port of
export, and Japanese trading company commissions, from the sales price.
For a more detailed discussion of the deductions and adjustments
relating to home market price, U.S. price, factors of production and
sources of data, see Initiation Checklist, dated November 15, 1999.
Should the need arise to use as facts available under section 776 of
the Act any of this information in our preliminary or final
determinations, we may re-examine the information and revise the margin
calculations, if appropriate.
As further explained below in the ``Initiation of Cost
Investigation'' section, the petitioners provided information
demonstrating reasonable grounds to believe or suspect that sales of
seamless stainless steel hollow products sold in the home market were
made at prices below the fully absorbed cost of production (``COP''),
within the meaning of section 773(b) of the Act. Pursuant to section
773(b)(3) of the Act, COP consists of the cost of manufacturing
(``COM''), selling, general, and administrative expenses (``SG&A'') and
packing. To calculate COP, the petitioners based COM on their own
production experience, adjusted for known differences between costs
incurred to produce seamless stainless steel hollow products in the
United States and in Japan using market research and publicly available
data.
To calculate SG&A and financial expenses, petitioners relied upon
the fiscal year 1998 audited financial statements of a Japanese steel
producer. Based upon the comparison of the adjusted prices of the
foreign like product in the home market to the calculated COP of the
product, we find reasonable grounds to believe or suspect that sales of
the foreign like product were made below the COP within the meaning of
section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is
initiating a country-wide cost investigation.
When we find that sales in the home market are made at prices below
cost, we compare EP to constructed value 3 (``CV''). The
margin calculations based on price to CV comparisons, indicate dumping
margins ranging from 30.86-156.81 percent. The estimated dumping
margins, based on price-to-price comparisons, range from 11.72-49.17
percent.
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\3\ Pursuant to section 773(e) of the Act, the constructed value
is the sum of (1) the cost of materials and fabrication of the
subject merchandise, (2) selling, general, and administrative
expenses and profit in the foreign market, and (3) the cost of
packing for exportation to the United States.
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Based on the data provided by the petitioners, there is reason to
believe that imports of circular stainless steel hollow products from
Japan are being, or are likely to be, sold at less than normal value.
Initiation of Cost Investigation
As noted above, pursuant to section 773(b) of the Act, the
petitioners provided specific factual information demonstrating
reasonable grounds to believe or suspect that sales in the Japanese
home market were made at prices below the fully absorbed COP and,
accordingly, requested that the Department conduct a country-wide
sales-below-COP investigation in connection with the requested
antidumping investigation for Japan. The Statement of Administrative
Action accompanying the URAA, H.R. Doc. 103-412 (``SAA''), states that
an allegation of sales below COP need not be specific to individual
exporters or producers. SAA at 833. The SAA at 833 states that
``Commerce will consider allegations of below-cost sales in the
aggregate for a foreign country, just as Commerce currently considers
allegations of sales at less than fair value on a country-wide basis
for purposes of
[[Page 63288]]
initiating an antidumping investigation.''
Further, the SAA provides that ``new section 773(b)(2)(A) retains
the current requirement that Commerce have `reasonable grounds to
believe or suspect' that below cost sales have occurred before
initiating such an investigation. `Reasonable grounds' * * * exist when
an interested party provides specific factual information on costs and
prices, observed or constructed, indicating that sales in the foreign
market in question are at below-cost prices.'' Id. Based upon the
comparison of the adjusted prices from the petition for the
representative foreign like products to their costs of production, we
find the existence of ``reasonable grounds to believe or suspect'' that
sales of these foreign like products in Japan were made below the COP
within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly,
the Department is initiating the requested country-wide cost
investigation.
Allegations and Evidence of Material Injury and Causation
The petition alleges that the U.S. industry producing the domestic
like products is being materially injured, and is threatened with
material injury, by reason of the individual and cumulated imports of
the subject merchandise sold at less than NV. The petitioners explained
that the industry's injured condition is evident in the declining
trends in (1) U.S. market share, (2) average unit sales values, (3)
share of domestic consumption, (4) operating income, (5) employment,
(6) output, (7) sales, (8) return on investment, (9) capacity
utilization, (10) ability to raise capital and (11) cash flow.
The allegations of injury and causation are supported by relevant
evidence including U.S. Customs import data, lost sales, and pricing
information. The Department assessed the allegations and supporting
evidence regarding material injury and causation and determined that
these allegations are supported by accurate and adequate evidence and
meet the statutory requirements for initiation (see Attachments to
Initiation Checklist, Re: Material Injury, November 15, 1999).
Initiation of Antidumping Investigation
Based upon our examination of the petition on circular seamless
stainless steel hollow products from Japan, we find that the petition
meets the requirements of section 732 of the Act. Therefore, we are
initiating an antidumping duty investigation to determine whether
imports of circular seamless stainless steel hollow products from Japan
are being, or are likely to be, sold in the United States at less than
fair value. Unless this deadline is extended, we will make our
preliminary determinations no later than 140 days after the date of
this initiation.
Distribution of Copies of the Petition
In accordance with section 732(b)(3)(A) of the Act, a copy of the
public version of the petition has been provided to the representatives
of Japan. We will attempt to provide a copy of the public versions of
each petition to each exporter named in the petition, as appropriate.
International Trade Commission Notification
We have notified the ITC of our initiations, as required by section
732(d) of the Act.
Preliminary Determinations by the ITC
The ITC will determine, by no later than December 10, 1999, whether
there is a reasonable indication that imports of circular seamless
stainless steel hollow products from Japan are causing material injury,
or threatening to cause material injury, to a U.S. industry. A negative
ITC determination will result in the investigation being terminated;
otherwise, this investigation will proceed according to statutory and
regulatory time limits.
This notice is published pursuant to section 777(i) of the Act.
Dated: November 15, 1999.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-30282 Filed 11-18-99; 8:45 am]
BILLING CODE 3510-DS-P