[Federal Register Volume 65, Number 91 (Wednesday, May 10, 2000)]
[Notices]
[Pages 30058-30061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11599]


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DEPARTMENT OF COMMERCE

INTERNATIONAL TRADE ADMINISTRATION

(A-421-701)


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

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

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

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on 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, 1998 through July 31, 1999.
    We preliminarily determine that sales of the subject merchandise 
have not been made below normal value (NV). If these preliminary 
results are adopted in the final results, we will instruct the U.S. 
Customs Service not to assess antidumping duties on the subject 
merchandise exported by this company.

EFFECTIVE DATE: May 10, 2000.

FOR FURTHER INFORMATION CONTACT: John Brinkmann or Jarrod Goldfeder, 
AD/CVD Enforcement, Office 6, Group II, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230; telephone: 
(202) 482-4126 or (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. In addition, unless otherwise indicated, 
all citations to 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, 1999, we published in the 
Federal Register the notice of ``Opportunity to Request an 
Administrative Review'' of this order, for the period August 1, 1998 
through July 31, 1999 (64 FR 43649). On August 31, 1999, in accordance 
with 19 CFR 351.213(b), Outokumpu Copper Strip B.V. (OBV), the sole 
producer/exporter, and the petitioners \1\ requested an administrative 
review of OBV's exports of the subject merchandise to the United States 
during this POR. OBV also 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 NV in the future. OBV subsequently withdrew 
its revocation request on April 4, 2000. On September 24, 1999, in 
accordance with 19 CFR 351.221(b), the Department initiated this 
administrative review (see Initiation of Antidumping and Countervailing 
Duty Administrative Reviews and Requests for Revocation in Part, 64 FR 
53318 (October 1, 1999)).
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    \1\ The petitioners in this proceeding are Heyco Metals, Inc., 
Olin Corporation, PMX Industries, Inc., Revere Copper Products, 
Inc., International Association of Machinists and Aerospace Workers, 
United Auto Workers (Local 2367), and the United Steelworkers of 
America (AFL-CIO/CLC).
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    On October 4, 1999, the Department issued an antidumping 
questionnaire \2\ to OBV. OBV submitted its response to sections A, B, 
and C in November 1999. The Section D questionnaire response was 
received in December 1999. The Department issued Section A, B, and C 
supplemental questionnaires in February 2000 and received responses in 
March 2000. The Department issued and received a response to the 
Section D supplemental questionnaire in April 2000.
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    \2\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the subject merchandise under review, and the sales of the foreign 
like product 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 review 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 
review is dispositive.

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 calculated the 
adjustment for differences in merchandise based on the difference in 
the variable cost of manufacturing between each U.S. model and the most 
similar home market model selected for comparison.

Comparisons to Normal Value

    To determine whether OBV's sales of brass sheet and strip were made 
to the United States at less than NV, the Department compared the 
export price (EP) to the NV, as described in the ``Export Price'' and 
``Normal Value'' sections of this notice. In accordance with section 
777A(d)(2) of the Act, the Department calculated monthly

[[Page 30059]]

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.

Normal Value

A. Selection of Comparison Market

    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. 
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.

B. 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 Notice of Final Results of Antidumping Duty Administrative 
Review and Determination Not to Revoke the Antidumping Duty Order: 
Brass Sheet and Strip from the Netherlands, 65 FR 742, 743 (January 6, 
2000) (Brass 97/98 Final Results). Therefore, pursuant to section 
773(b)(1) of the Act, we initiated a COP investigation of sales by OBV.

1. 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. Furthermore, we have 
calculated weighted-average monthly metal costs based on ``metal fix 
prices.'' \3\ For fabrication costs, we have used weighted-average 
annual costs. In addition, we computed SG&A on an annual basis as a 
ratio of the total SG&A expenses divided by the cost of sales.
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    \3\ In the immediately preceding review, we found that in the 
ordinary course of business, OBV accounts for metal as a pass-
through item. Specifically, OBV requires its customers to purchase 
the metal inputs prior to fabrication. As a service to its 
customers, OBV purchases the metals on the customer's behalf. OBV 
then bills the customer for the cost of metals, the terms of which 
are set forth on the finished brass sales invoice. The parties 
determine the price of the metals at a metal fix date, which occurs 
prior to the invoice dates for sales of finished brass. Since OBV 
purchases the metal and then passes on the cost of the metal to the 
customer, the company records and recognizes the cost of this 
purchased metal in its accounting system. See Brass 97/98 Final 
Results, 65 FR at 747.
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    Use of Monthly Metal Cost Data. OBV calculated and reported monthly 
per-unit manufacturing costs for metal because of the significant 
fluctuation in metal input prices (i.e., copper and zinc) throughout 
the POR. \4\ In the immediately preceding review, the Department 
calculated weighted-average monthly metal costs based on metal fix 
prices, and used weighted-average annual fabrication costs to calculate 
COP and constructed value (CV). See Brass 97/98 Final Results, 65 FR at 
743. We explained in that review that OBV's reported metal costs make 
up a significant portion of the total cost of manufacturing brass sheet 
and strip, and that the market values of these inputs fluctuated 
sharply from the beginning to the end of the POR.
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    \4\ Originally, OBV reported costs on a quarterly basis. See 
OBV's Section D questionnaire response, dated December 1, 1999. 
Based on our request in a supplemental cost questionnaire, OBV 
provided cost data files that had costs reported on both a quarterly 
and a monthly basis.
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    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 POR except in unusual cases where this preferred 
method would not yield an appropriate comparison. See, e.g., Final 
Determination of Sales at Less than Fair Value: Brass Sheet and Strip 
From Netherlands, 53 FR 23431, 23432 (June 22, 1988) (Brass LTFV Final 
Determination) (dividing the period of investigation into three periods 
because of the significant metal price fluctuations during that 
period); Final Results of Antidumping Administrative Review: Brass 
Sheet and Strip from Italy, 52 FR 9235, 9236 (March 17, 1992) (Brass 
Sheet and Strip from Italy) (using monthly costs to resolve the 
distortive effects the fluctuating metal prices had on 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) (the Department will utilize shorter cost 
periods if markets experience significant and consistent price 
declines); 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 weighted-average costs of 
shorter periods 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 weighted-average costs of less than a year); and Final 
Results of Antidumping Duty Administrative Review of Brass Sheet and 
Strip from Canada and Revocation, in Part, of the Antidumping Duty 
Order, 56 FR 57317, 57318 (November 8, 1991) (using monthly metal costs 
to calculate differences in merchandise adjustments).
    We have reviewed the information on the record of this review and 
find that both OBV's sales prices for the subject merchandise and the 
cost of metal used in the manufacture of this merchandise displayed an 
overall pattern of significant and consistent decline during the first 
half of the POR and a pattern of overall significant and sharp incline 
during the second half of the POR. As in the immediately preceding 
review, we believe that computing a single annual weighted-average cost 
under these circumstances would distort the results of the cost test 
since (1) the metal costs represent a significant percentage of the 
total cost of producing brass sheet and strip; (2) the cost of the 
metal fluctuated significantly

[[Page 30060]]

throughout the POR; and (3) those metal costs are treated as pass-
through items when brass is sold to customers. In order to avoid this 
distortion, we have preliminarily relied upon the submitted monthly 
weighted-average metal costs rather than calculating single weighted-
average annual costs.
    We find that using monthly weighted-average metal costs, rather 
than quarterly or annual weighted-average costs, is the most 
appropriate method in this proceeding for several reasons. First, the 
record indicates that the price of metal fluctuated sharply on a 
monthly basis. See the proprietary memorandum from Geoffrey Craig to 
John Brinkmann, ``Analysis of Metal Costs,'' dated May 2, 2000, on file 
in the Central Records Unit (CRU), Room B-099 of the Main Commerce 
Building. In this regard, by using the weighted-average monthly metal 
fix cost based on the company's metal fix date, we are able to make a 
contemporaneous comparison of metal values which results in a more 
accurate calculation of the margin of dumping in this case than using 
either quarterly or annual weighted-average costs. We also note that 
this method conforms with the manner in which OBV accounts for its 
metal transactions in its normal accounting records, which are kept in 
accordance with home market generally accepted accounting principles 
(GAAP). Specifically, the company records metal costs in its accounting 
system on the date on which the price of metal is fixed. This is 
consistent with section 773(f)(1)(A) of the Act, which provides that 
the Department normally calculates costs based on the exporter's or 
producer's records, as long as such records are kept in accordance with 
the GAAP of the exporting (or producing) country and reasonably reflect 
the costs associated with the production and sale of the merchandise.
    Therefore, we compared monthly weighted-average COP figures for 
OBV, adjusted where appropriate, to home market sales of the foreign 
like product in the same month in which the metal price was fixed in 
order to determine whether these sales had been made at prices below 
the COP.
    Startup Adjustment.--OBV claimed a startup adjustment to costs 
pursuant to section 773(f)(1)(C) 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. 
In the preceding review, we determined that the start-up period ended 
on May 31, 1998, based upon evidence that OBV reached commercial 
production levels as of that date. See Brass 97/98 Final Results, 65 FR 
at 744-45. During the course of this review we have not received any 
new evidence, nor has OBV made any new arguments, that would persuade 
us to change our prior determination on this issue. Accordingly, in the 
current review, we preliminarily determine that OBV is not entitled to 
a start-up adjustment because we continue to find that the start-up 
period ended on May 31, 1998, a date which is prior to the start of the 
current review period. See the proprietary Memorandum from Stan Bowen 
to the File, ``Analysis of Start-up Period,'' dated May 2, 2000, on 
file in the CRU. Consistent with the previous review, we have continued 
to amortize the capitalized startup costs and included a portion of the 
amortized costs in the calculation of COP. See Brass 97/98 Final 
Results, 65 FR at 743.
2. 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.
3. 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.
    While we disregarded some below-cost sales, sufficient sales 
remained that passed the cost test in the current review. Therefore, it 
was unnecessary to calculate CV in this case.

C. Level of Trade (LOT)

    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 LOT as the EP transaction 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 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 LOTs 
than EP or CEP sales, 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.
    In this review, all of OBV's U.S. sales have been categorized as EP 
sales. OBV claims that the Department can match U.S. sales to identical 
sales at the same LOT in the home market and therefore a LOT adjustment 
is 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 (1) whether the two home market customer categories 
constituted one LOT or distinct LOTs, and (2) 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. To 
determine whether there was more than one LOT in the home market, 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

[[Page 30061]]

differences between them for sales process/marketing support and 
freight and delivery. Based on our analysis, we found that the two home 
market categories constituted one LOT.
    OBV reported EP sales to its unaffiliated U.S. customers in one 
customer category, OEMs, which we determined to constitute one LOT. To 
determine whether U.S. sales were made at the same LOT as sales in the 
home market, we compared the channel of distribution and the selling 
activities associated with sales reported by OBV to the single LOT in 
the Netherlands and that in the United States, and found that the LOT 
in these two markets were the same. 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.

D. Calculation of Normal Value Based on Home-Market Prices

    Where appropriate, we deducted early-payment discounts, rebates, 
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 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 NV 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 were 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.

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.

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, 1998 through July 31, 1999:

------------------------------------------------------------------------
           Manufacturer/exporter                  Margin  (percent)
------------------------------------------------------------------------
OBV........................................  zero.
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    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 or at a hearing, if 
requested, within 120 days from the publication of these preliminary 
results.

Assessment Rate

    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 minimins (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

    As a result of a Sunset Review of brass sheet and strip from the 
Netherlands, the Department has revoked the antidumping duty order for 
this case, effective January 1, 2000. See Revocation of Antidumping 
Duty Orders: Brass Sheet and Strip From the Republic of Korea, the 
Netherlands, and Sweden, 65 FR 25305 (May 1, 2000). Therefore, we have 
instructed the Customs Service to terminate suspension of liquidation 
for all entries of subject merchandise made on or after January 1, 
2000. We will issue additional instructions directing the Customs 
Service to liquidate all entries of brass sheet and strip made on or 
after January 1, 2000, without regard to antidumping duties.
    Entries of subject merchandise made prior to January 1, 2000, will 
continue to be subject to suspension of liquidation and antidumping 
duty deposit requirements. The Department will complete any pending 
reviews of this order and will conduct administrative reviews of 
subject merchandise entered prior to the effective date of revocation 
in response to appropriately filed requests for review.

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: May 2, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-11599 Filed 5-9-00; 8:45 am]
BILLING CODE 3510-DS-P