[Federal Register Volume 76, Number 244 (Tuesday, December 20, 2011)]
[Notices]
[Pages 78882-78885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32536]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-830]


Carbon and Certain Alloy Steel Wire Rod From Mexico: Affirmative 
Preliminary Determination of Circumvention of the Antidumping Duty 
Order

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

SUMMARY: We preliminarily determine that carbon and certain alloy steel 
wire rod (wire rod) with an actual diameter between 4.75 mm and 5.00 mm 
produced in Mexico and exported to the United States by Deacero S.A. de 
C.V. (Deacero) is circumventing the antidumping duty order on wire rod 
from Mexico (Wire Rod Order) within the meaning of section 781(c) of 
the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.225(i).\1\
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    \1\ See Notice of Antidumping Duty Orders: Carbon and Certain 
Alloy Steel Wire Rod from Brazil, Indonesia, Mexico, Moldova, 
Trinidad and Tobago, and Ukraine, 67 FR 65945 (October 29, 2002) 
(Wire Rod Order).

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DATES: Effective Date: December 20, 2011.

FOR FURTHER INFORMATION CONTACT: Eric B. Greynolds, Program Manager, or 
Jolanta Lawska, Trade Analyst, Office 3, Antidumping and Countervailing 
Duty Operations, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue NW., Washington, DC 
20230; telephone: (202) 482-6071 or (202) 482-8362, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On June 8, 2011, the Department of Commerce (the Department) 
initiated a circumvention inquiry into whether Deacero S.A. de C.V. 
(Deacero) and Ternium Mexico S.A. de C.V. (Ternium) shipped wire rod 
with an actual between 4.75 and 5.00 mm \2\ in a manner that 
constitutes merchandise altered in form or appearance in such minor 
respects that it should be

[[Page 78883]]

included within the scope.\3\ In its June 15, 2011, submission Ternium 
stated that it does not produce or sell wire rod with an actual 
diameter between 4.75 and 5.00 mm. Ternium included a product brochure 
which lists the diameter ranges and diameter tolerances of its wire 
products. The brochure does not include wire rod with actual diameters 
less than 5.5 mm.
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    \2\ The Department is using slightly different wording in this 
Federal Register notice from the wording in the initiation notice to 
clarify that Deacero's shipments of 4.75 mm wire rod are covered by 
this circumvention inquiry.
    \3\ See Carbon and Certain Alloy Steel Wire Rod From Mexico: 
Initiation of Anti-Circumvention Inquiry of Antidumping Duty Order, 
76 FR 33218 (June 8, 2011) (Initiation).
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    On July 22, 2011, Deacero submitted its response to the 
Department's June 1, 2011, questionnaire. See Deacero's July 22, 2011, 
Questionnaire Response (First QNR Response). On July 27, 2011, Illinois 
Tool Works Inc. (ITW) submitted comments in support of Deacero's claim 
that the products at issue do not constitute merchandise altered in 
form or appearance in such minor respects that it should be included 
within the scope.
    On August 16, 2011, ArcelorMittal USA LLC, Gerdau Ameristeel U.S. 
Inc, Rocky Mountain Steel, and Members of the Wire Rod Producers 
Coalition (collectively, the Coalition) submitted comments on the First 
QNR Response. On August 25, 2011, Nucor Corporation and Cascade Steel 
Rolling Mills, Inc. (collectively, Petitioners) submitted comments on 
the First QNR Response. On August 26, 2011, Deacero responded to the 
Coalition's August 16, 2011, submission. On September 2, 2011, ITW 
submitted comments in response to the submissions of the Coalition and 
Petitioners. On September 6, 2011, Deacero responded to Petitioners' 
August 25, 2011, comments. On September 9, 2011, the Coalition 
responded to Deacero's August 26, 2011, submission. On October 5, 2011, 
Deacero submitted its response to the Department's September 7, 2011, 
questionnaire. See Deacero's October 5, 2011, Questionnaire Response 
(Second QNR Response). On October 17, 2011, Petitioners submitted 
comments regarding the Second QNR Response. On October 18, 2011, the 
Coalition submitted comments regarding the Second QNR Response.
    On November 18, 2011, Deacero submitted comments for the Department 
to consider in preparing the preliminary determination. On December 2, 
2011, the Coalition responded to Deacero's November 18, 2011, 
submission. On December 5, 2011, Petitioners submitted comments for the 
Department's preliminary determination in the minor alteration 
circumvention inquiry. The Department will consider these submissions 
for the final determination of this circumvention inquiry.

Scope of the Order

    The merchandise subject to this order is certain hot-rolled 
products of carbon steel and alloy steel, in coils, of approximately 
round cross section, 5.00 mm or more, but less than 19.00 mm, in solid 
cross-sectional diameter.
    Specifically excluded are steel products possessing the above-noted 
physical characteristics and meeting the Harmonized Tariff Schedule of 
the United States (HTSUS) definitions for (a) stainless steel; (b) tool 
steel; (c) high nickel steel; (d) ball bearing steel; and (e) concrete 
reinforcing bars and rods. Also excluded are (f) free machining steel 
products (i.e., products that contain by weight one or more of the 
following elements: 0.03 percent or more of lead, 0.05 percent or more 
of bismuth, 0.08 percent or more of sulfur, more than 0.04 percent of 
phosphorus, more than 0.05 percent of selenium, or more than 0.01 
percent of tellurium).
    Also excluded from the scope are 1080 grade tire cord quality wire 
rod and 1080 grade tire bead quality wire rod. This grade 1080 tire 
cord quality rod is defined as: (i) Grade 1080 tire cord quality wire 
rod measuring 5.0 mm or more but not more than 6.0 mm in cross-
sectional diameter; (ii) with an average partial decarburization of no 
more than 70 microns in depth (maximum individual 200 microns); (iii) 
having no inclusions greater than 20 microns; (iv) having a carbon 
segregation per heat average of 3.0 or better using European Method NFA 
04-114; (v) having a surface quality with no surface defects of a 
length greater than 0.15 mm; (vi) capable of being drawn to a diameter 
of 0.30 mm or less with 3 or fewer breaks per ton, and (vii) containing 
by weight the following elements in the proportions shown: (1) 0.78 
percent or more of carbon, (2) less than 0.01 percent of aluminum, (3) 
0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 
0.006 percent or less of nitrogen, and (5) not more than 0.15 percent, 
in the aggregate, of copper, nickel and chromium.
    This grade 1080 tire bead quality rod is defined as: (i) Grade 1080 
tire bead quality wire rod measuring 5.5 mm or more but not more than 
7.0 mm in cross-sectional diameter; (ii) with an average partial 
decarburization of no more than 70 microns in depth (maximum individual 
200 microns); (iii) having no inclusions greater than 20 microns; (iv) 
having a carbon segregation per heat average of 3.0 or better using 
European Method NFA 04-114; (v) having a surface quality with no 
surface defects of a length greater than 0.2 mm; (vi) capable of being 
drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per 
ton; and (vii) containing by weight the following elements in the 
proportions shown: (1) 0.78 percent or more of carbon, (2) less than 
0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the 
aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of 
nitrogen, and (5) either not more than 0.15 percent, in the aggregate, 
of copper, nickel and chromium (if chromium is not specified), or not 
more than 0.10 percent in the aggregate of copper and nickel and a 
chromium content of 0.24 to 0.30 percent (if chromium is specified).
    The designation of the products as ``tire cord quality'' or ``tire 
bead quality'' indicates the acceptability of the product for use in 
the production of tire cord, tire bead, or wire for use in other rubber 
reinforcement applications such as hose wire. These quality 
designations are presumed to indicate that these products are being 
used in tire cord, tire bead, and other rubber reinforcement 
applications, and such merchandise intended for the tire cord, tire 
bead, or other rubber reinforcement applications is not included in the 
scope. However, should petitioners or other interested parties provide 
a reasonable basis to believe or suspect that there exists a pattern of 
importation of such products for other than those applications end-use 
certification for the importation of such products may be required. 
Under such circumstances, only the importers of record would normally 
be required to certify the end use of the imported merchandise.
    All products meeting the physical description of subject 
merchandise that are not specifically excluded are included in this 
scope.
    The products within the scope of this order are currently 
classifiable under subheadings 7213.91.3010, 7213.91.3090, 
7213.91.4510, 7213.91.4590, 7213.91.6010, 7213.91.6090, 7213.99.0031, 
7213.99.0038, 7213.99.0090, 7227.20.0010, 7227.20.0020, 7227.20.0090, 
7227.20.0095, 7227.90.6051, 7227.90.6053, 7227.90.6058, and 
7227.90.6059 of the HTSUS. Although the HTSUS subheadings are provided 
for convenience and customs purposes, the written description of the 
scope of this proceeding is dispositive.

Scope of the Circumvention Inquiry

    The merchandise subject to this circumvention inquiry consists of 
wire rod with actual an diameter between 4.75 mm and 5.00 mm. This

[[Page 78884]]

merchandise produced by Deacero, entered the United States under 
Harmonized Tariff Schedule (HTS) classification 7213.91.3093.

Statutory and Regulatory Framework

    Section 781(c) of the Act, dealing with minor alterations of 
merchandise, states that: (1) In general: The class or kind of 
merchandise subject to (A) an investigation under this title, (B) an 
antidumping duty order issued under section 736, (C) a finding issued 
under the Antidumping Act, 1921, or (D) a countervailing duty order 
issued under section 706 or section 303, shall include articles altered 
in form or appearance in minor respects (including raw agricultural 
products that have undergone minor processing), whether or not included 
in the same tariff classification. (2) Exception. Paragraph (1) shall 
not apply with respect to altered merchandise if the administering 
authority determines that it would be unnecessary to consider the 
altered merchandise within the scope of the investigation, order, or 
finding.
    As stated under 19 CFR 351.225(a), issues may arise as to whether a 
particular product is included within the scope of an antidumping or 
countervailing duty order or a suspended investigation. Such issues can 
arise because the descriptions of subject merchandise contained in the 
Department's determinations must be written in general terms. At other 
times, a domestic interested party may allege that a change to an 
imported product or the place where the imported product is assembled 
constitutes circumvention under section 781 of the Act. When such 
issues arise, the Department conducts circumvention inquiries that 
clarify the scope of an order or suspended investigation with respect 
to particular products. Pursuant to 19 CFR 351.225(i) and section 
781(c) of the Act, the Secretary may include within the scope of an 
antidumping or countervailing duty order articles altered in form or 
appearance in minor respects.
    While the statute is silent regarding what factors to consider in 
determining whether alterations are properly considered ``minor,'' the 
legislative history of this provision indicates there are certain 
factors which should be considered before reaching a circumvention 
determination. Previous circumvention cases \4\ have relied on the 
factors listed in the Senate Finance Committee report on the Omnibus 
Trade and Competitiveness Act of 1988 (which amended the Act to include 
the circumvention provisions contained in section 781of the Act), which 
states:
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    \4\ See, e.g., Final Determination of Circumvention of the 
Antidumping Order: Cut-to-Length Carbon Steel Plate From Canada, 66 
FR 7617, 7618 (January 24, 2001)) (Canadian Plate), and accompanying 
Issued and Decision Memorandum (Canadian Plate Decision Memorandum) 
at Comment 4, in which the Department discusses its application of 
the factors discussed in the Senate Finance Committee report; Final 
Results of Anti-Circumvention Review of Antidumping Order: 
Corrosion-Resistant Carbon Steel Flat Products From Japan, 68 FR 
33676, 33677 (June 5, 2003) (Japanese CORE); and Affirmative Final 
Determination of Circumvention of the Antidumping Duty Order on 
Certain Cut-to-Length Carbon Steel Plate From the People's Republic 
of China, 74 FR 40565, 40566 (August 12, 2009)) (Tianjin Plate), and 
accompanying Issues and Decision Memorandum (Tianjin Plate Decision 
Memorandum).

    {i{time} n applying this provision, the Commerce Department 
should apply practical measurements regarding minor alterations, so 
that circumvention can be dealt with effectively, even where such 
alterations to an article technically transform it into a 
differently designated article. The Commerce Department should 
consider such criteria as the overall physical characteristics of 
the merchandise, the expectations of the ultimate users, the use of 
the merchandise, the channels of marketing and the cost of any 
modification relative to the total value of the imported 
products.\5\
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    \5\ Omnibus Trade Act of 1987, Report of the Senate Finance 
Committee, S. Rep. No. 71, 100th Cong., 1st Sess. 100 (1987).

    In the case of an allegation of a ``minor alteration'' under 
section 781(c) of the Act, it is the Department's practice to look at 
the five factors listed in the Senate Finance Committee report to 
determine if circumvention exists in a particular case.\6\
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    \6\ See, e.g., Canadian Plate, and Canadian Plate Decision 
Memorandum at Comment 4.
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Preliminary Determination

    We preliminarily determine that wire rod with an actual diameter 
between 4.75 mm and 5.0 mm and subject wire rod are indistinguishable 
in any meaningful sense in terms of overall physical characteristics of 
the merchandise. By Deacero's own admission, the 0.25 mm difference in 
diameter constitutes the sole physical difference between the wire rod 
products at issue (e.g., 4.75 mm wire rod) and subject wire rod. Our 
preliminary analysis indicates that other physical characteristics, 
such as tensile strength, ductility, and chemical content (which 
determines product grade), do not vary by diameter. In addition, we 
preliminarily determine that the 0.25 mm difference between the wire 
rod products at issue and subject wire rod do not alter the 
expectations of the ultimate users, the use of the merchandise, and the 
channels of marketing in any meaningful way. We further preliminarily 
determine that the costs incurred to produce wire rod with a 0.25 mm 
smaller diameter are not significant. Accordingly, pursuant to section 
781(c) of the Act and 19 CFR 351.225(i) we preliminarily determine that 
shipments of wire rod with an actual diameter between 4.75mm and 5.00 
mm by Deacero constitutes merchandise altered in form or appearance in 
such minor respects that it should be included within the scope of the 
order on wire rod from Mexico.
    This affirmative finding applies solely to Deacero because 
information supplied by Ternium indicates that it did not produce or 
sell merchandise subject to this circumvention inquiry.
    For further discussion of the Department's preliminary findings, 
see the Memorandum to Paul Piquado, Assistant Secretary for Import 
Administration, ``Preliminary Results of Minor Alteration Circumvention 
Inquiry on Carbon and Certain Alloy Steel Wire Rod with an Actual 
Diameter between 4.75 and 5.00 Millimeters,'' a proprietary document of 
which the public version is available via IA ACCESS in room 7046 of the 
main Commerce Building.

Suspension of Liquidation

    In accordance with section 351.225(l)(2) of the Department's 
regulations, we will direct U.S. Customs and Border Protection (CBP) to 
suspend liquidation of wire rod with an actual diameter between 4.75 mm 
and 5.00 mm produced and/or exported by Deacero that are entered, or 
withdrawn from warehouse, for consumption on or after June 8, 2011, the 
publication date of the Initiation in the Federal Register. Pursuant to 
19 CFR 351.225(l)(2), we will also instruct CBP to require a cash 
deposit of estimated duties equal to the all others rate of 20.11 
percent ad valorem for each unliquidated entry of wire rod with an 
actual diameter between 4.75 mm and 5.00 mm produced and/or exported by 
Deacero entered, or withdrawn from warehouse, for consumption on or 
after June 8, 2011.\7\
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    \7\ Deacero has never been individually examined by the 
Department during the history of the Order. For this reason 
Deacero's shipments of subject merchandise are subject to the all 
others rate.
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Public Comment

    Interested parties are invited to comment on the preliminary 
results and may submit case briefs and/or written comments within 20 
days of the publication of this notice. See 19 CFR 351.225(f)(3). 
Interested parties may file rebuttal briefs limited to issues raised in 
the case briefs no later than 10 days after the date on which the case 
briefs

[[Page 78885]]

are due. Id. Interested parties may request a hearing within 20 days of 
the publication of this notice. Interested parties will be notified by 
the Department of the location and time of any hearing, if one is 
requested.
    This affirmative preliminary circumvention determination is in 
accordance with section 781(c) of the Act and 19 CFR 351.225.

    Dated: December 13, 2011.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2011-32536 Filed 12-19-11; 8:45 am]
BILLING CODE 3510-DS-P