[Federal Register Volume 65, Number 174 (Thursday, September 7, 2000)]
[Notices]
[Pages 54220-54224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22993]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-802]


Gray Portland Cement and Clinker From Mexico; Preliminary Results 
of Antidumping Duty Administrative Review

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

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

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SUMMARY: In response to requests from interested parties, the 
Department of Commerce is conducting an administrative review of the 
antidumping duty order on gray portland cement and clinker from Mexico. 
The review covers exports of subject merchandise to the United States 
during the period August 1, 1998, through July 31, 1999, and one firm, 
CEMEX, S.A. de C.V., and its affiliate, Cementos de Chihuahua, S.A. de 
C.V. We have preliminarily determined that, during the period of 
review, sales were made below normal value.
    We invite interested parties to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with the argument (1) a statement of the issues, and (2) a 
brief summary of the argument.

EFFECTIVE DATE: September 7, 2000.

FOR FURTHER INFORMATION CONTACT: David Dirstine or Robin Gray, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone (202) 482-4033, (202) 482-4023, 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 are to 19 CFR Part 351 (April 1999).

Background

    On August 11, 1999, the Department published in the Federal 
Register a Notice of Opportunity to Request Administrative Review 
concerning the antidumping duty order on gray portland cement and 
clinker from Mexico (64 FR 43649). In accordance with 19 CFR 351.213, 
the petitioner, the Southern Tier Cement Committee (STCC), requested a 
review of CEMEX, S.A. de C.V., (CEMEX), CEMEX's affiliate, Cementos de 
Chihuahua, S.A. de C.V. (CDC), and Apasco, S.A. de C.V. (Apasco). In 
addition, CEMEX and CDC requested reviews of their own entries. On 
October 1, 1999, we published a Notice of Initiation of Antidumping and 
Countervailing Duty Administrative Reviews (64 FR 53318) initiating 
this review. The period of review is August 1, 1998, through July 31, 
1999. Apasco reported, and we confirmed with the Customs Service, that 
Apasco did not have any sales or shipments to the United States during 
the period of review. We are now conducting a review of CEMEX and CDC 
pursuant to section 751 of the Act.
    We also received information sufficient to warrant initiation of a 
changed-circumstances administrative review of the antidumping duty 
order on gray portland cement and clinker from Mexico. Based on the 
information on the record, we preliminarily determined that GCC 
Cemento, S.A. de C.V. (GCCC), is the successor-in-interest to CDC for 
purposes of determining antidumping liability. See Gray Portland Cement 
and Clinker From Mexico: Preliminary Results of Changed-Circumstances 
Antidumping Duty Administrative Review, 65 FR 50180 (August 17, 2000). 
However, since this change occurred on December 1, 1999, which is after 
the close of the review period, we refer to this entity as CDC and not 
GCCC for purposes of this review.

Scope of Review

    The products covered by this review include gray portland cement 
and clinker. Gray portland cement is a hydraulic cement and the primary 
component of concrete. Clinker, an intermediate material product 
produced when manufacturing cement, has no use other than of being 
ground into finished cement. Gray portland cement is currently 
classifiable under Harmonized Tariff Schedule (HTS) item number 2523.29 
and cement clinker is currently classifiable under HTS item number 
2523.10. Gray portland cement has also

[[Page 54221]]

been entered under HTS item number 2523.90 as ``other hydraulic 
cements.'' The HTS subheadings are provided for convenience and customs 
purposes only. Our written description of the scope of the proceeding 
is dispositive.

Verification

    As provided in section 782(i) of the Act, we verified sales 
information provided by CEMEX and CDC using standard verification 
procedures, including an examination of relevant sales and financial 
records, and selection of original documentation containing relevant 
information. Our verification results are outlined in public versions 
of the verification reports.

Collapsing

    Section 771(33) of the Act defines when two or more parties will be 
considered affiliated for purposes of an antidumping analysis. 
Moreover, 19 CFR 351.401(f) describes when we will treat two or more 
affiliated producers as a single entity (i.e., ``collapse'' the firms) 
for purposes of calculating a dumping margin. In the four previous 
administrative reviews of this order, we analyzed whether we should 
collapse CEMEX and CDC in accordance with our regulations. See, e.g., 
Gray Portland Cement and Clinker from Mexico; Final Results of 
Antidumping Duty Administrative Review, 65 FR 13943 (March 15, 2000).
    The regulations state that we will treat two or more affiliated 
producers as a single entity where those producers have production 
facilities for similar or identical products that would not require 
substantial retooling of either facility in order to restructure 
manufacturing priorities and we conclude that there is a significant 
potential for the manipulation of price or production. In identifying a 
significant potential for the manipulation of price or production, the 
factors we may consider include the following: (i) the level of common 
ownership; (ii) the extent to which managerial employees or board 
members of one firm sit on the board of directors of an affiliated 
firm; (iii) whether operations are intertwined, such as through the 
sharing of sales information, involvement in production and pricing 
decisions, the sharing of facilities or employees, or significant 
transactions between the affiliated producers.
    A North American Free Trade Agreement Binational Panel upheld our 
decision in the 1994/95 administrative review to collapse CEMEX and 
CDC. See Opinion of the Panel, Article 1904 Binational Panel Review 
Pursuant To The North American Free Trade Agreement, Secretariat File 
No. USA-97-1904-01 (June 18, 1999). We found that, in each of the 
subsequent administrative reviews, the factual information underlying 
our original decision to collapse these two entities had not changed 
and, accordingly, we continued to treat these two entities as a single 
entity.
    Having reviewed the current record, we find, once again, that the 
factual information underlying our original decision to collapse these 
two entities has not changed during the 1998/99 review period. CEMEX's 
indirect ownership of CDC exceeds five percent, such that these two 
companies are affiliated pursuant to section 771(33)(E) of the Act. In 
addition to their affiliation, we find that CEMEX and CDC have similar 
production processes. Finally, interlocking boards of directors and 
significant transactions between the companies give rise to a 
significant potential for the manipulation of price or production. 
Accordingly, we preliminarily conclude that these affiliated producers 
should be treated as a single entity and that we should calculate a 
single, weighted-average margin for these companies. Therefore, 
throughout this notice, references to ``respondent'' should be read to 
mean the collapsed entity. See Memorandum from Analyst to Joseph A. 
Spetrini, 1996/1997 Administrative Review of Gray Portland Cement and 
Clinker from Mexico (August 31, 1998), and Memorandum from Analyst to 
File, Collapsing CEMEX, S.A. and Cementos de Chihuahua for the Current 
Administrative Review (July 28, 2000).

Export Price and Constructed Export Price

    We used export price (EP), in accordance with section 772(a) of the 
Act, where the subject merchandise was sold to the first unaffiliated 
purchaser in the United States prior to importation. We used 
constructed export price (CEP) in accordance with section 772(b) of the 
Act for those sales to the first unaffiliated purchaser that took place 
after importation into the United States. CEMEX made CEP sales during 
the period of review, while CDC made both CEP and EP sales during the 
period of review.
    We calculated EP based on delivered prices to unaffiliated 
customers in the United States. Where appropriate, we made adjustments 
from the starting price for early-payment discounts, foreign inland 
freight, U.S. inland freight, U.S. brokerage and handling, and U.S. 
duties. We also adjusted the starting price for billing adjustments to 
the invoice price.
    We calculated CEP based on delivered prices to unaffiliated 
customers. Where appropriate, we made adjustments to the starting price 
for discounts and billing adjustments to the invoice price. In 
accordance with section 772(d) of the Act, we deducted those selling 
expenses, including inventory carrying costs, that were related to 
economic activity in the United States. We also made deductions for 
foreign brokerage and handling, foreign inland freight, U.S. inland 
freight and insurance, U.S. brokerage and handling, and U.S. duties. 
Finally, we made an adjustment for CEP profit in accordance with 
section 772(d)(3) of the Act.
    With respect to subject merchandise to which value was added in the 
United States prior to sale to unaffiliated U.S. customers (i.e., 
cement that was imported and further-processed into finished concrete 
by U.S. affiliates of foreign exporters), we preliminarily determine 
that the special rule under section 772(e) of the Act for merchandise 
with value added after importation is applicable.
    Section 772(e) of the Act provides that, where the subject 
merchandise is imported by an affiliated person and the value added in 
the United States by the affiliated person is likely to exceed 
substantially the value of the subject merchandise, we shall determine 
the CEP for such merchandise using the price of identical or other 
subject merchandise if there is a sufficient quantity of sales to 
provide a reasonable basis for comparison and we determine that the use 
of such sales is appropriate. Section 351.402(c)(2) of the regulations 
provides that normally we will determine that the value added in the 
United States by the affiliated person is likely to exceed 
substantially the value of the subject merchandise if we estimate the 
value added to be at least 65 percent of the price charged to the first 
unaffiliated purchaser for the merchandise as sold in the United 
States. Normally we will estimate the value added based on the 
difference between the price charged to the first unaffiliated 
purchaser for the merchandise as sold in the United States and the 
price paid for the subject merchandise by the affiliated person. We 
will base this determination normally on averages of the prices and the 
value added to the subject merchandise. If there is not a sufficient 
quantity of such sales or if we determine that using the price of 
identical or other subject merchandise is not appropriate, we may use 
any other reasonable basis to determine the CEP.

[[Page 54222]]

    During the course of this administrative review, the respondent 
submitted, and we verified, information which allowed us to determine 
whether, in accordance with section 772(e) of the Act, the value added 
in the United States by its U.S. affiliates is likely to exceed 
substantially the value of the subject merchandise. To determine 
whether the value added is likely to exceed substantially the value of 
the subject merchandise, we estimated the value added based on the 
difference between the averages of the prices charged to the first 
unaffiliated purchaser for the merchandise as sold in the United States 
and the averages of the prices paid for subject merchandise by the 
affiliated person. Based on this analysis, we estimate that the value 
added was at least 65 percent of the price the respondent charged to 
the first unaffiliated purchaser for the merchandise as sold in the 
United States. Therefore, we preliminarily determine that the value 
added is likely to exceed substantially the value of the subject 
merchandise. Also, the record indicates that there is a sufficient 
quantity of subject merchandise to provide a reasonable and appropriate 
basis for comparison. Accordingly, for purposes of determining dumping 
margins for the further-manufactured sales, we have assigned the 
weighted-average margin of 41.28 percent, the rate calculated for sales 
of identical or other subject merchandise sold to unaffiliated 
purchasers.
    No other adjustments to EP or CEP were claimed or allowed.

Normal Value

A. Comparisons

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating 
normal value (NV), we compared 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)(1)(C) of the Act. 
Since the respondent'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 for the subject merchandise, we determined that 
the home market was viable. Therefore, we have based NV on home-market 
sales.
    During the period of review, the respondent sold the following 
types of cement in the United States--Type V, Type V LA, Type II, and 
Type II LA. The statute expresses a preference for matching U.S. sales 
to identical merchandise in the home market. The respondent sold Type 
I, Type II LA, Type V, and Type V LA in the home market. In situations 
where identical product types cannot be matched, the statute expresses 
a preference for basing NV on sales of similar merchandise (sections 
773(a)(1)(B) and 771(16) of the Act). Because we have preliminarily 
determined that sales of Type V and Type V LA by the respondent in the 
home market are outside the ordinary course of trade (see the 
``Ordinary Course of Trade'' section in the decision memorandum from 
Laurie Parkhill, Office Director, to Richard W. Moreland, Deputy 
Assistant Secretary, Import Administration) and that there were no 
sales to unaffiliated customers of Type II LA in the home market, we 
did not find identical matches in the home market to which we could 
match sales of the subject merchandise. Accordingly, we based NV on 
sales of similar merchandise.
    During the period of review, the respondent sold two other basic 
types of gray portland cement in Mexico--Type I and pozzolanic. The 
history of this order demonstrates that, of the various types of cement 
which may reasonably be compared to imports of cement from Mexico, Type 
I cement is most similar to the types of cement sold in the United 
States.
    On June 18, 1999, the North American Free Trade Agreement 
Binational Panel reviewing the final results of the 1994/95 
administrative review found that the respondent's Type I bagged cement 
should not have been compared with sales of Type I cement sold in bulk 
to the United States in the calculation of normal value and remanded 
the results of the 1994/95 review to the Department for a recalculation 
of the margin. This proceeding has not yet been completed. In this 
review, the record supports our continued practice of finding the 
respondent's sales of Type I bagged cement in the home market as sales 
that are comparable, within the meaning of section 771(16)(B) of the 
Act, to U.S. sales. Specifically, in accordance with section 771(16)(B) 
of the Act, we find that both bulk and bagged Type I cement are 
produced in the same country and by the same producer as the types sold 
in the United States, both bulk and bagged Type I cement are like the 
types sold in the United States in component materials and in the 
purposes for which used, and both bulk and bagged Type I cement are 
approximately equal in commercial value to the types sold in the United 
States. The questionnaire responses submitted by the respondent 
indicate that, with the exception of packaging, Type I cement sold in 
bulk and Type I cement sold in bags are physically identical and both 
are used in the production of concrete. Also, since there is no 
difference in the cost of production between cement sold in bulk or in 
bagged form (again with the exception of packaging), both are 
approximately equal in commercial value. See CEMEX response to Section 
A of the Department's Questionnaire, Volume 1, December 6, 1999, at A-
34-36, Section B, December 23, 1999, at B-47-48, and CDC response to 
Section A, at A-44-47, December 6, 1999, and Section B, December 21, 
1999, at B-30.

B. Ordinary Course of Trade

    Section 773(a)(1)(B) of the Act requires the Department to base NV 
on ``the price at which the foreign like product is first sold (or in 
the absence of sales, offered for sale) for consumption in the 
exporting country, in the usual commercial quantities and in the 
ordinary course of trade.'' Ordinary course of trade is defined as 
``the conditions and practices which, for a reasonable time prior to 
the exportation of the subject merchandise, have been normal in the 
trade under consideration with respect to merchandise of the same class 
or kind.'' See section 771(15) of the Act.
    In the instant review, we analyzed home-market sales of cement 
produced as Type V LA and Type V cement. Pursuant to section 
773(a)(1)(B) of the Act, we based our examination on the totality of 
circumstances surrounding the respondent's sales in Mexico that are 
produced as Type V LA cement and Type V using the following criteria: 
number of transactions, the quantity of tonnage sold, shipping 
distances, and profit. Based on our analysis of the above-mentioned 
information on the record, we found that the respondent's home-market 
sales of Type V LA cement and Type V cement made during the instant 
review period are outside the ordinary course of trade. For a detailed 
discussion, see the ``Ordinary Course of Trade'' section in the 
decision memorandum from Laurie Parkhill, Office Director, to Richard 
W. Moreland, Deputy Assistant Secretary, Import Administration (August 
30, 2000).

C. Arm's-Length Sales

    To test whether sales to affiliated customers were made at arm's 
length, where we could test the prices, we compared the prices of sales 
to affiliated and unaffiliated customers, net of all movement charges, 
direct selling expenses, discounts, and packing. Where the price to the 
affiliated party was on average 99.5 percent or more of the price to 
the unaffiliated parties, we

[[Page 54223]]

determined that the sales made to the affiliated party were at arm's 
length. With respect to the respondent's home-market sales of Type II 
cement to its affiliated customer, we were unable to test whether the 
prices for those sales in question were at arm's length because the 
respondent did not provide information on the prices for sales of the 
same cement type to unaffiliated customers. Consistent with 19 CFR 
351.403, we excluded these sales from our analysis.

D. Cost of Production

    The petitioner alleged on January 5, 2000, that the respondent sold 
gray portland cement and clinker in the home market at prices below the 
cost of production (COP). After examining the allegation, we determined 
that there were reasonable grounds to believe or suspect that the 
respondent had sold the subject merchandise in the home market at 
prices below the COP. Therefore, pursuant to section 773(b)(1) of the 
Act, we initiated a COP investigation in order to determine whether the 
respondent made home-market sales during the period of review at below-
cost prices. See Memorandum from Robin Gray to Laurie Parkhill, Gray 
Portland Cement and Clinker from Mexico: Request to Initiate Cost 
Investigation (March 29, 2000).

E. Adjustments to Normal Value

    Where appropriate, we adjusted home-market sales of Type I cement 
for discounts, rebates, packing, handling, interest revenue, and 
billing adjustments to the invoice price. In addition, we adjusted the 
starting price for inland freight, inland insurance, and pre-sale 
warehousing expenses. For comparisons to EP transactions, we made 
adjustments to the home-market starting price for differences in direct 
selling expenses in the two markets. For comparisons to CEP sales, we 
deducted home-market direct selling expenses from the home-market 
price. We also deducted home-market indirect selling expenses as a CEP-
offset adjustment (see Level of Trade/CEP Offset section below). In 
addition, in accordance with section 773(a)(6) of the Act, we deducted 
home-market packing costs and added U.S. packing costs.
    Section 773(a)(6)(C)(ii) of the Act directs us to make an 
adjustment to NV to account for differences in the physical 
characteristics of merchandise where similar products are compared. 
Section 351.411(b) of the regulations directs us to consider 
differences in variable costs associated with the physical differences 
in the merchandise.
    A discussion of our preliminary conclusions on differences in 
merchandise is contained in a memorandum in the official file for this 
case. See the ``Difference in Merchandise'' section of the Decision 
Memorandum from Laurie Parkhill, Office Director, to Richard W. 
Moreland, Deputy Assistant Secretary, Gray Portland Cement and Clinker 
from Mexico (August 30, 2000).

F. Level of Trade/CEP Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the home market at the 
same level of trade as the EP or CEP. The NV level of trade is that of 
the starting-price sales in the home market or, when NV is based on 
constructed value (CV), that of sales from which we derive selling, 
general and administrative (SG&A) expenses and profit. For EP, the U.S. 
level of trade is also the level of the starting-price sale, which is 
usually from the exporter to the importer. For CEP, it is the level of 
the constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different level of trade 
than EP or CEP, 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 difference affects 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. 
Finally, for CEP sales, if the NV level is more remote from the factory 
than the CEP level and there is no basis for determining whether the 
difference in the levels between NV and CEP affects price 
comparability, we adjust NV under section 773(a)(7)(B) of the Act (the 
CEP offset provision). See Notice of Final Determination of Sales at 
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from 
South Africa, 62 FR 61971 (November 19, 1997).
    Based on our analysis, we conclude that the respondent's home-
market sales to various classes of customers which purchase both bulk 
and bagged cement constitute one level of trade. We based our 
conclusion on our analysis of the respondent's reported selling 
functions and sales channels. We found that, with some minor 
exceptions, CEMEX and CDC performed the same selling functions to 
varying degrees in similar channels of distribution. We also concluded 
that the variations in selling functions were not substantial when all 
selling expenses were considered as a whole. See the memorandum on 
level of trade from analyst to Laurie Parkhill, Office Director (August 
21, 2000).
    With respect to U.S. sales, we conclude that the respondent's sales 
to various classes of customers which purchase both bulk and bagged 
cement constituted three separate levels of trade. We based our 
conclusion on our analysis of the respondent's reported selling 
functions and sales channels after making deductions for selling 
expenses under section 772(d) of the Act. CEMEX and CDC performed 
different sales functions for sales to their respective U.S. affiliates 
and CDC performed different sales functions for EP sales. Furthermore, 
the respondent's home-market sales occur at a different and more 
advanced stage of distribution than its sales to the United States. We 
have also determined that the data available do not permit us to 
calculate a level-of-trade adjustment and, therefore, we could not make 
a level-of-trade adjustment to normal value in our analysis of the 
respondent's EP sales. However, we have granted a CEP-offset adjustment 
in accordance with section 773(a)(7)(B) of the Act for the respondent's 
CEP sales. See the analysis memorandum on level of trade referenced 
above.

Currency Conversion

    Pursuant to section 773A(a) of the Act, we made currency 
conversions into U.S. dollars based on the exchange rates in effect on 
the dates of U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the dumping 
margin for the collapsed parties, CEMEX and CDC, for the period August 
1, 1998, through July 31, 1999, to be 41.28 percent.
    We will disclose calculations performed in connection with these 
preliminary results to parties within five days of the date of 
publication of this notice. Interested parties may request a hearing 
within 30 days of publication of this notice. We will notify interested 
parties of the date of any requested hearing and the briefing schedule.
    Upon completion of this review, we will determine, and the Customs 
Service shall assess, antidumping duties on all appropriate entries. 
The Department will issue appropriate appraisement instructions 
directly to the Customs Service upon completion of this review. The 
final results of this review shall be the basis for the assessment of

[[Page 54224]]

antidumping duties on entries of merchandise covered by this 
determination and for future deposits of estimated duties. We have 
calculated importer-specific assessment rates based on the entered 
value for subject merchandise sold during the period of review.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of review, as provided by section 751(a)(1) of the Act: 
(1) The cash deposit rate for the respondent will be the rate 
determined in the final results of review; (2) for previously reviewed 
or investigated companies not mentioned above, the cash-deposit rate 
will continue to be the company-specific rate published for the most 
recent period; (3) if the exporter is not a firm covered in this 
review, a prior review, or in the original less-than-fair-value (LTFV) 
investigation, but the manufacturer is, the cash-deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) the cash-deposit rate for all other 
manufacturers or exporters will be 61.35 percent, the all-others rate 
from the LTFV investigation. These deposit requirements, 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 dumping duties.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: August 30, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-22993 Filed 9-6-00; 8:45 am]
BILLING CODE 3510-DS-P