[Federal Register Volume 69, Number 99 (Friday, May 21, 2004)]
[Notices]
[Pages 29262-29266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-11576]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-791-819]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Certain Aluminum Plate From South Africa

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

ACTION: Notice of preliminary determination of sales at less than fair 
value.

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[[Page 29263]]

SUMMARY: The Department of Commerce (``the Department'') preliminarily 
determines that certain aluminum plate from South Africa is being, or 
is likely to be, sold in the United States at less than fair value, as 
provided in section 733(b) of the Tariff Act of 1930, as amended (``the 
Act'').
    Interested parties are invited to comment on this preliminary 
determination. We will make our final determination not later than 75 
days after the preliminary determination.

DATES: Effective Date: May 21, 2004.

FOR FURTHER INFORMATION CONTACT: Rebecca Trainor or Kate Johnson, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-4007 or (202) 482-4929, 
respectively.

SUPPLEMENTARY INFORMATION:

Background

    Since the initiation of this investigation (Initiation of 
Antidumping Duty Investigation: Certain Aluminum Plate from South 
Africa, 68 FR 64081 (November 12, 2003)) (``Initiation Notice''), the 
following events have occurred.
    On December 1, 2003, the United States International Trade 
Commission (ITC) preliminarily determined that there is a reasonable 
indication that imports of certain aluminum plate from South Africa are 
materially injuring the United States industry (see ITC Investigation 
No. 731-TA-1056 (Publication No. 3654)).
    On December 5, 2003, we selected the largest producer/exporter of 
certain aluminum plate from South Africa as the mandatory respondent in 
this proceeding. For further discussion, see the December 5, 2003, 
Memorandum to Louis Apple, Director Office 2, from The Team Re: 
Selection of Respondent. Also on December 5, 2003, we issued the 
antidumping questionnaire to Hulett Aluminium (Pty) Limited 
(``Hulett'').
    During the period January through May 2004, the Department received 
responses to sections A through D of the Department's original and 
supplemental questionnaires from Hulett.\1\
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    \1\ The Section D supplemental response was filed on May 11, 
2004, but not received in time to be used for purposes of the 
preliminary determination. Accordingly, for purposes of the 
preliminary determination, we used the original Section D 
questionnaire response dated April 30, 2004.
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    On February 13, 2004, the petitioner made an allegation that Hulett 
sold certain aluminum plate in a third country market at prices below 
the cost of production (COP). On March 4, 2004, the Department 
initiated a cost investigation of Hulett's third country sales (see the 
March 4, 2004, Memorandum to the File Re: Petitioner's Allegation of 
Sales Below the Cost of Production for Hulett Aluminium (Pty) Limited).
    On March 9, 2004, the Department extended the time limit for the 
preliminary results in this review until May 13, 2004. See Notice of 
Postponement of Preliminary Determination of Sales at Less Than Fair 
Value: Certain Aluminum Plate from South Africa, 69 FR 10980.

Scope of Investigation

    The merchandise covered by this investigation is 6000 series 
aluminum alloy, flat surface, rolled plate, whether in coils or cut-to-
length forms, that is rectangular in cross section with or without 
rounded corners and with a thickness of not less than .250 inches (6.3 
millimeters). 6000 Series Aluminum Rolled Plate is defined by the 
Aluminum Association, Inc.
    Excluded from the scope of this investigation are extruded aluminum 
products and tread plate.
    The merchandise subject to this investigation is currently 
classifiable under subheading 7606.12.3030 of the Harmonized Tariff 
Schedule of the United States (HTS). Although the HTS subheading is 
provided for convenience and customs purposes, our written description 
of the scope of this investigation is dispositive.

Period of Investigation

    The period of investigation (``POI'') is October 1, 2002, through 
September 30, 2003.

Fair Value Comparisons

    To determine whether sales of certain aluminum plate from South 
Africa to the United States were made at less than fair value 
(``LTFV''), we compared the export price (``EP'') to the normal value 
(``NV''), as described in the ``Export Price'' and ``Normal Value'' 
sections of this notice, below. In accordance with section 
777A(d)(1)(A)(I) of the Act, we compared POI weighted-average EPs to 
weighted-average NVs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the respondent in the third country 
market during the POI that fit the description in the ``Scope of 
Investigation'' section of this notice to be foreign like products for 
purposes of determining appropriate product comparisons to U.S. sales. 
We compared U.S. sales to sales made in the third country market, where 
appropriate.\2\ Where there were no sales of identical merchandise in 
the third country market made in the ordinary course of trade to 
compare to U.S. sales, we compared U.S. sales to sales of the most 
similar foreign like product made in the ordinary course of trade. In 
making the product comparisons, we matched foreign like products based 
on the physical characteristics reported by the respondents in the 
following order of importance: alloy, temper, gauge, width, and length.
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    \2\ See the discussion of home market viability in the ``Normal 
Value'' section of this notice.
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Date of Sale

    Section 351.401(i) of the Department's regulations states that the 
Department will normally use the date of invoice, as recorded in the 
exporter's or producer's records kept in the ordinary course of 
business, as the date of sale. However, the Department may use a date 
other than the date of invoice if the alternative better reflects the 
date on which the material terms of sale (e.g., price and quantity) are 
established. On February 6, March 5, and March 22, 2004, the petitioner 
submitted letters to the Department arguing that the dates of either 
the framework agreement or the release order more accurately reflect 
the date on which the material terms of sale were established for the 
majority of the reported U.S. and third country sales transactions than 
does the invoice date. At the Department's request, Hulett submitted 
additional information on April 2, 2004. We found that this 
documentation, subject to verification, demonstrated that the quantity 
of aluminum plate ultimately sold changes significantly between the 
time the framework agreements and release orders are established and 
the time the commercial invoices are issued. Therefore, we have used 
the reported U.S. and third country invoice dates as the dates of sale 
for purposes of the preliminary determination.

Export Price

    We used EP methodology, in accordance with section 772(a) of the 
Act, because the subject merchandise was sold directly by the producer/
exporter in South Africa to the first unaffiliated purchaser in the 
United States prior to importation and constructed export price 
(``CEP'') methodology was not otherwise indicated.
    We based EP on the packed price to unaffiliated purchasers in the 
United States. In accordance with section 772(c)(2)(A) of the Act, we 
made

[[Page 29264]]

deductions for movement expenses, including, where appropriate, foreign 
inland freight, warehousing, foreign brokerage and handling, 
international freight, and marine insurance. We added billing 
adjustments to EP, where appropriate.

Normal Value

A. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
the aggregate volume of home market sales of the foreign like product 
is equal to or greater than five percent of the aggregate volume of 
U.S. sales), we compared Hulett'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. 
Because Hulett's aggregate volume of home market sales of the foreign 
like product was less than five percent of its aggregate volume of U.S. 
sales for the subject merchandise, we determined that the home market 
was not viable for Hulett. However, we determined that the third 
country market of Taiwan was viable, in accordance with section 
773(a)(1)(B)(ii) of the Act. Therefore, pursuant to section 
773(a)(1)(C) of the Act, we have used third country sales as a basis 
for NV for Hulett.

B. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (``LOT'') as the EP or CEP. Sales are made at 
different LOTs if they are made at different marketing stages (or their 
equivalent). See 19 CFR 351.412(c)(2). Substantial differences in 
selling activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. Id., 
see also Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 
FR 61731, 61732 (November 19, 1997) (``Plate from South Africa''). In 
order to determine whether the comparison sales were at different 
stages in the marketing process than the U.S. sales, we reviewed the 
distribution system in each market (i.e., the ``chain of 
distribution''), including selling functions, class of customer 
(``customer category''), and the level of selling expenses for each 
type of sale.
    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for EP and comparison market sales (i.e., NV based on 
either home market or third country prices \3\), we consider the 
starting prices before any adjustments. For CEP sales, we consider only 
the selling activities reflected in the price after the deduction of 
expenses and profit under section 772(d) of the Act. See Micron 
Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 (Fed. Cir. 
2001).
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    \3\ Where NV is based on constructed value (``CV''), we 
determine the NV LOT based on the LOT of the sales from which we 
derive selling expenses and profit for CV, where possible.
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    When the Department is unable to match U.S. sales to sales of the 
foreign like product in the comparison market at the same LOT as the EP 
or CEP, the Department may compare the U.S. sale to sales at a 
different LOT in the comparison market. In comparing EP or CEP sales to 
sales at a different LOT in the comparison market, where available data 
make it practicable, we examine whether a LOT adjustment is warranted 
under section 773(a)(7)(A) of the Act. Finally, for CEP sales only, if 
a NV LOT is more remote from the factory than the CEP LOT and there is 
no basis for determining whether the difference in LOTs between NV and 
CEP affects price comparability (i.e., no LOT adjustment was 
practicable), the Department shall grant a CEP offset, as provided in 
section 773(a)(7)(B) of the Act. See Plate from South Africa, 62 FR at 
61731.
    We obtained information from the respondents regarding the 
marketing stages involved in making the reported foreign market and 
U.S. sales, including a description of the selling activities performed 
for each channel of distribution.
    In both the U.S. and Taiwan markets, Hulett sold the subject 
merchandise through one channel of distribution. In the U.S. market, 
Hulett sold to a long-standing customer which distributes Hulett's 
products in the United States. In Taiwan, Hulett similarly sold to a 
distributor, but employed a selling agent to assist with negotiation, 
translation and formalization of contracts, for which Hulett paid it a 
commission. Hulett also incurred certain marketing and technical 
support expenses associated with being a new entrant into the Taiwan 
market during the POI. Because of these differences in selling 
activities and associated selling expenses, we determined that U.S. and 
third country sales were made at two different LOTs. However, as there 
is only one LOT in the third country market, we have no basis on which 
to determine that a LOT adjustment is warranted pursuant to section 
773(a)(7)(A) of the Act.

C. Calculation of Normal Value

    We calculated NV based on CIF or C&F prices to unaffiliated 
customers. We made deductions, where appropriate, from the starting 
price for movement expenses, including inland freight, warehousing, 
brokerage and handling, international freight, and marine insurance, 
under section 773(a)(6)(B)(ii) of the Act. In addition, we made 
adjustments under section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410 for differences in circumstances of sale for imputed credit, 
warranty, and advertising expenses. We also made an adjustment to NV to 
account for commissions paid in the third country but not in the U.S. 
market, in accordance with 19 CFR 351.410(e). As the offset for third 
country commissions, we applied the lesser of third country commissions 
or U.S. indirect selling expenses. We disallowed an adjustment claimed 
for certain technical services expenses because they appear to be 
indirect rather than direct selling expenses based on Hulett's 
description in its response. See the May 13, 2004, Memorandum to the 
File: Calculations for the Preliminary Determination of Certain 
Aluminum Plate from South Africa.
    Furthermore, we made an adjustment for differences in costs 
attributable to differences in the physical characteristics of the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 
19 CFR 351.411. We also deducted third country packing costs and added 
U.S. packing costs in accordance with section 773(a)(6)(A) and (B) of 
the Act.

D. Cost of Production

1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of Hulett's cost of materials and fabrication for the 
foreign like product, plus amounts for general and administrative 
expenses (``G&A''), and interest expenses, where appropriate. We relied 
on the COP information provided by Hulett in its questionnaire 
responses.
2. Test of Third Country Prices
    On a product-specific basis, we compared the weighted-average COPs 
to third country sales of the foreign like product during the POI, as 
required under section 773(b) of the Act, in order to determine whether 
sales had been made at prices below the COP. The prices were exclusive 
of any applicable movement charges, commissions, direct and indirect 
selling expenses. In determining whether to disregard third

[[Page 29265]]

country sales made at prices below the COP, we examined, in accordance 
with sections 773(b)(1)(A) and (B) of the Act, whether such sales were 
made (1) within an extended period of time in substantial quantities, 
and (2) at prices which did not permit the recovery of costs within a 
reasonable period of time.
3. Results of the COP Test
    Pursuant to section 773(b)(1) of the Act, where less than 20 
percent of a respondent's sales of a given product are made at prices 
below the COP, we do not disregard any below-cost sales of that product 
because we determine that in such instances the below-cost sales were 
not made in ``substantial quantities.'' Where 20 percent or more of a 
respondent's sales of a given product are at prices less than the COP, 
we disregard those sales of that product, because we determine that in 
such instances the below-cost sales represent ``substantial 
quantities'' within an extended period of time in accordance with 
section 773(b)(1)(A) of the Act. In such cases, we also determine 
whether such sales are made at prices which would not permit recovery 
of all costs within a reasonable period of time, in accordance with 
section 773(b)(1)(B) of the Act.
    The results of our cost test for Hulett indicated that less than 20 
percent of third country sales of any given product were at prices 
below COP. We therefore retained all sales in our analysis and used 
them as the basis for determining NV.

Currency Conversion

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

Decline of the U.S. Dollar Against the South African Rand

    On April 9, 2004, the petitioner filed a letter with the Department 
requesting that we alter our normal calculation methodology to account 
for the significant decline of the U.S. dollar against the South 
African rand (SAR) over the course of the POI. The petitioner claimed 
that the combination of the following facts in this case may result in 
a distorted margin calculation when the Department's standard 
methodology is used: (1) Hulett's U.S. and third country prices were 
both denominated in dollars; (2) Hulett's costs were recorded in SAR; 
and (3) Hulett's third country prices remained relatively stable over 
the POI, rather than having been adjusted to take into account the 
decline in the value of the dollar. As a result of Hulett's failure to 
adjust its third country sales prices to take this decline into 
account, the petitioner contended that a disproportionate amount of 
Hulett's sales would be below cost toward the end of the POI. 
Consequently, the petitioner proposed three alternate methods for 
addressing this problem: (1) Disregard Taiwan as a comparison market 
based on a finding that sales to it are unrepresentative or based on 
``a particular market situation,'' and use CV as the basis for NV, (2) 
divide the POI into monthly segments for purposes of price and cost 
comparisons, or (3) adjust the prices using an index of the exchange 
rates applicable over the POI.
    On April 22, 2004, Hulett submitted comments arguing that the 
petitioner's claims are without merit. Specifically, Hulett maintained 
that: (1) There is no basis for the Department to ignore its statutory 
mandate to use sales to a viable third country market as NV in this 
case; (2) the petitioner provides no evidence that prices to Taiwan or 
the United States differ significantly over the POI to justify 
employing a monthly comparison methodology; and (3) the proposed 
indexing methodology is inconsistent with the statute. Citing 
Torrington Co. v. United States, 832 F. Supp. 379, 392 (CIT 1993), 
Hulett concluded that the key issue in an antidumping proceeding is 
ascertaining differences between home market or third country prices 
and U.S. prices, rather than differences between the returns realized 
by the exporter on sales made in the two markets.
    Our preliminary calculations show that no Taiwan sales need to be 
disregarded as a result of the cost test, and that no currency 
conversions for Taiwan sales prices for comparison to U.S. sales prices 
are necessary because they are already denominated in U.S. dollars. 
Therefore, we preliminarily find no basis for departing from our 
standard calculation methodology, as claimed by the petitioner.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
U.S. Customs and Border Protection (CBP) to suspend liquidation of all 
imports of subject merchandise that are entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice in the Federal Register. We will instruct CBP to require a cash 
deposit or the posting of a bond equal to the weighted-average amount 
by which the NV exceeds the EP, as indicated in the chart below. These 
suspension of liquidation instructions will remain in effect until 
further notice. The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/manufacturer                        margin
                                                              percentage
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Hulett Aluminium (Pty.) Limited............................         4.33
All Others.................................................         4.33
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Disclosure

    We will disclose the calculations used in our analysis to parties 
in this proceeding in accordance with 19 CFR 351.224(b).

Public Comment

    Case briefs for this investigation must be submitted to the 
Department no later than seven days after the date of issuance of the 
sales and cost verification reports in this proceeding. Rebuttal briefs 
must be filed five days from the deadline date for case briefs. A list 
of authorities used, a table of contents, and an executive summary of 
issues should accompany any briefs submitted to the Department. 
Executive summaries should be limited to five pages total, including 
footnotes. Section 774 of the Act provides that the Department will 
hold a public hearing to afford interested parties an opportunity to 
comment on arguments raised in case or rebuttal briefs, provided that 
such a hearing is requested by an interested party. If a request for a 
hearing is made in this investigation, the hearing will tentatively be 
held two days after the rebuttal brief deadline date at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230. Parties should confirm by telephone the time, 
date, and place of the hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written

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request to the Assistant Secretary for Import Administration, U.S. 
Department of Commerce, Room 1870, within 30 days of the publication of 
this notice. Requests should contain: (1) The party's name, address, 
and telephone number; (2) the number of participants; and (3) a list of 
the issues to be discussed. Oral presentations will be limited to 
issues raised in the briefs.
    We will make our final determination no later than 75 days after 
the preliminary determination.
    This determination is published pursuant to sections 733(f) and 
777(i) of the Act.

    Dated: May 13, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-11576 Filed 5-20-04; 8:45 am]
BILLING CODE 3510-DS-P