Steel Wire Rope from Mexico; Affirmative Preliminary Determination of Circumvention of Antidumping Duty Order

SUMMARY: On May 26, 1993, the Department of Commerce received an

allegation of circumvention of the antidumping duty order on steel wire

rope from Mexico. Pursuant to that allegation, the Department of

Commerce initiated a circumvention inquiry on September 17, 1993, which

was published in the Federal Register on September 27, 1993 (58 FR

50349).

The Department of Commerce has conducted that inquiry and

preliminarily determines that imports into the United States of steel

wire strand from Mexico, which are assembled in the United States into

steel wire rope for sale in the United States, are circumventing the

antidumping duty order on steel wire rope from Mexico within the

meaning of section 781(a) of the Tariff Act of 1930, as amended, and 19

CFR 353.29(e). Interested parties are invited to comment on this

preliminary determination.

EFFECTIVE DATE: June 3, 1994.

FOR FURTHER INFORMATION CONTACT: Sandra Yacura or Thomas Prosser at

(202) 482-5253, Office of Antidumping Compliance, Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

On May 26, 1993, the Department of Commerce (the Department)

received a petition filed by the Committee of Domestic Steel Wire Rope

and Specialty Cable Manufacturers (the Committee) requesting an

investigation to determine whether imports of steel wire strand (also

known as stranded wire or strand) are circumventing the antidumping

duty order on steel wire rope from Mexico (58 FR 16173, March 25, 1993)

within the meaning of section 781(a) of the Tariff Act of 1930, as

amended (the Tariff Act). Subsequent submissions from the Committee,

addressing deficiencies in the original request, were received on

August 13, August 18, and August 20, 1993. On April 11, 1994, the

Committee submitted copies of the Census Bureau data that it had

summarized in earlier submissions. On September 27, 1993, the

Department published in the Federal Register a Notice of Initiation of

Anticircumvention Inquiry; Steel Wire Rope from Mexico (58 FR 50349).

The inquiry covers the period from October 1, 1992 to September 30,

1993.

On November 19, 1993, the Department issued a questionnaire to

Grupo Camesa S.A. de C.V. (Grupo Camesa) and its United States

affiliate, Camesa Inc. (collectively, Camesa). Camesa responded to the

questionnaire on December 20, 1993. The Department determined that this

submission was deficient and issued a supplemental questionnaire on

January 31, 1994. The Department received a response to the

supplemental questionnaire on February 16, 1994. On March 15, 1994, the

Committee submitted comments with respect to Camesa's responses.

Scope of Antidumping Duty Order

The product covered by the order is steel wire rope, which is

defined in the Department's antidumping duty order on steel wire rope

from Mexico as: ``ropes, cables, and cordage of iron or carbon steel,

other than stranded wire, not fitted with fittings or made up into

articles, and not made up of plated wire.''

During the period of this inquiry (POI), such merchandise was

classifiable under subheadings 7312.10.9030, 7312.10.9060, and

7312.10.9090 of the Harmonized Tariff Schedule (HTS). HTS subheadings

are provided for convenience and for Customs purposes. The Department's

written description of the scope of the order remains dispositive.

Scope of the Anticircumvention Inquiry

Products subject to the circumvention inquiry are entries of

strand, which are defined as stranded wire having a lay or twist of not

more than 1 revolution for a length equal to the strand diameter

multiplied by 8.5. During the POI, such merchandise was classifiable

under subheading 7312.10.3020 of the HTS. The HTS subheading is

provided for convenience and for Customs purposes. The Department's

written description of the scope of the inquiry remains dispositive.

Nature of the Circumvention Inquiry

Section 781(a)(1) of the Tariff Act provides that if:

(A) A product sold in the United States is of the same class or

kind as merchandise that is the subject of an order, and

(B) Such product sold in the United States is completed or

assembled in the United States from parts or components produced in the

foreign country with respect to which such order applies, and

(C) The difference between the value of such product sold in the

United States and the value of the imported parts and components

referred to in (B) above is small, the Department, after taking into

account any advice provided by the U.S. International Trade Commission

(ITC), may include within the scope of such order the imported parts or

components referred to in paragraph (B) above that are used in the

completion or assembly of the merchandise in the United States at any

time such order is in effect. Section 781(a)(2) of the Tariff Act

further provides that, in determining whether to include parts or

components in an antidumping duty order, the Department shall take into

account such factors as (A) pattern of trade; (B) whether the

manufacturer or exporter of the parts or components is related to the

person who assembles or completes the merchandise sold in the United

States from the parts or components produced in the foreign country

with respect to which the order applies, and (C) whether imports into

the United States of the parts or components produced in such foreign

country have increased after the issuance of such order.

I. Statutory Criteria

(A) Class or Kind of Merchandise

In this inquiry, the merchandise completed at Camesa Inc.'s

Rosenberg, Texas, facility and sold in the United States is steel wire

rope. As the antidumping duty order encompasses ``ropes, cables, and

cordage of iron or carbon steel, other than stranded wire, not fitted

with fittings or made up into articles, and not made up of plated

wire,'' the steel wire rope sold in the United States is of the same

class or kind of merchandise as that subject to the antidumping duty

order on steel wire rope from Mexico.

(B) Parts/Components Produced in the Country to Which the Order Applies

The component of wire rope being imported is defined as stranded

wire having a lay or twist of not more than 1 revolution for a length

equal to the strand diameter multiplied by 8.5. This strand is produced

by Grupo Camesa in Mexico, imported into the United States for closure

into steel wire rope at the Camesa Inc. facility at Rosenberg, Texas,

and subsequently sold in the United States by Camesa Inc.

(C) Difference in Value

In this anticircumvention inquiry, we attempted to base our

analysis of the difference in value on both a quantitative analysis of

the value of the finishing process in the United States, and a

qualitative analysis of the nature of the processing performed in the

United States. This approach is consistent with our analysis in

previous anti-circumvention inquiries. See, e.g., Certain Carbon Steel

Butt-Weld Pipe Fittings from the People's Republic of China;

Affirmative Final Determination of Circumvention of Antidumping Duty

Order, 59 FR 15155 (March 31, 1994).

Generally, in an anticircumvention inquiry, a quantitative analysis

is based on a comparison of the value between the finished product sold

in the United States and the value of the component imported from the

country to which the order applies. See, e.g., Granular

Polytetrafluoroethylene Resin from Italy, Preliminary Affirmative

Determination of Circumvention of Antidumping Duty Order, 57 FR 43218

(September 18, 1992). However, in order to make an effective

comparison, the Department must ascertain that it is using the

appropriate value for the imported component. To that end, we provided

the respondent with three options for demonstrating that the price of

the wire strand imported by Camesa Inc. from Grupo Camesa represented a

valid market price for use in our difference-in-value calculation. The

options were as follows: (1) Sales prices for strand sold to unrelated

parties in the home market and largest third country market; (2)

purchase prices paid to unrelated suppliers in Mexico by Grupo Camesa

for strand; or (3) monthly weighted-average manufacturing costs for

strand sold to Camesa Inc. during the POI. In order for us to ascertain

the value of the completed merchandise sold in the United States, we

also requested that Camesa provide cost data relevant to the production

of steel wire rope in the United States.

Camesa, however, failed to provide any of the requested

information. Instead, Camesa provided a single price quotation from a

supplier in a third country. Camesa's failure to provide the requested

information prevented the Department from determining whether the

difference between the value of the steel wire rope sold in the United

States and the value of the strand produced in Mexico is small.

Accordingly, the Department is required to rely on the best information

available (BIA), pursuant to section 776(c) of the Tariff Act, to make

the determination.

In deciding what to use as BIA, the Department's regulations at 19

CFR 353.37(b) state that the Department may take into account whether a

party refuses to provide requested information. Thus, the Department

may determine, on a case-by-case basis, what constitutes BIA.

Because Camesa refused to provide the requested information, as

BIA, we preliminarily determine that the quantitative difference

between the value of the finished steel wire rope sold in the United

States and the value of the strand produced in Mexico is small. This

eliminates the need for the Department's qualitative analysis of the

nature of the processing Camesa Inc. performed in the United States.

However, we note that the result of a qualitative analysis supports the

BIA assumption that the difference between the value of the imported

strand and the value of the finished rope is small, as discussed below.

According to the description of the manufacturing process provided

by the ITC in its final affirmative determination of injury (as

discussed in the following paragraphs) concerning imports of steel wire

rope from Argentina and Mexico (see Steel Wire Rope from Argentina and

Mexico, Determinations of the Commission in Investigations Nos. 731-TA-

457 and 479 (Final) Under the Tariff Act of 1930, Together With the

Information Obtained in the Investigations, August 1991, pages A17-

A21), the manufacturing process for steel wire rope consists of three

major steps: (1) Drawing rod into wire, (2) stranding wire, and (3)

closing strands into rope. Camesa Inc. performs only the closing

process in the United States.

In the first step, steel wire rod is heat treated (called

patenting), coated, cleaned, and reduced to a smaller diameter through

a series of dies to wire. Depending on the amount of reduction during

drawing (called the draft), the wire may also undergo patenting and re-

drawing to a smaller diameter.

In the second step, strands are formed in a single operation from

individual wires laid about a core so that all wires in a strand can

move in unison to distribute load and bending stresses equally. This is

achieved with ``tubular'' or ``planetary'' stranding machines. Strand

used for making wire rope is generally lubricated as the wires move

into the stranding die. After emerging from the stranding die, the

strand is frequently ``postformed,'' a process that involves passing

the strand through a series of straightening rollers in order to remove

excessive twist. The strand may be die-formed or flattened, or coated

at this point.

The third step, the finishing operation, is called ``closing'' and

is accomplished on a tubular or planetary closer, operating in a manner

similar to tubular or planetary stranders. Spools or bobbins of strand

are placed in cradles in the closer to dispense simultaneously all

strands of a sufficient length needed to make a single rope without a

splice. The closing die presses the strands together, forming the rope.

Based on the above description of the manufacturing process for

steel wire rope, we preliminarily determine that the finishing

operation performed by Camesa Inc. in the United States represents a

minor portion of the manufacturing process of steel wire rope, and adds

minor value when compared to the production of the wire strand, as

alleged by the petitioner in its anticircumvention inquiry request.

The Department has determined, based on BIA, that the quantitative

difference between the value of the steel wire rope sold in the United

States and the value of the wire strand produced in Mexico is small.

Though not necessary for this conclusion, the Department further notes

that a qualitative analysis of the manufacturing process for steel wire

rope demonstrates that the finishing operation performed by Camesa Inc.

represents a minor portion of the manufacturing process of steel wire

rope. Therefore, we preliminarily determine that the difference between

the value of the strand produced in Mexico and the value of the wire

rope sold in the United States is small within the meaning of section

781(a) of the Tariff Act.

II. Factors

In accordance with section 781(a)(2) of the Tariff Act, the

Department considered the following factors in determining whether to

include strand within the order: (A) The pattern of trade, (B) whether

the manufacturer or exporter of the parts or components is related to

the person who assembles or completes the merchandise sold in the

United States from the parts or components produced in the foreign

country with respect to which the order applies, and (C) whether

imports into the United States of the parts or components produced in

such foreign country have increased after the issuance of such order.

(A) Pattern of Trade

Generally, the Department considers circumvention to be more likely

when the imports of the merchandise subject to the order have

decreased. To evaluate the pattern of trade in this case, we examined

the timing and quantities of exports of steel wire rope from Mexico to

the United States during the POI. We also examined the timing and

quantities of Camesa's imports into the United States of steel wire

rope produced by Grupo Camesa in Mexico.

U.S. Census Bureau (Census Bureau) statistics indicate that, during

the nine months prior to the POI, steel wire rope imports from Mexico

to the United States averaged 316.44 net tons per month. However,

during the first half of the POI, imports of steel wire rope from

Mexico dropped to an average of ten net tons per month. Census Bureau

statistics for the second half of the POI were not available.

Although Camesa imported steel wire rope from Mexico to the United

States prior to the POI, Camesa had no such imports of steel wire rope

during the POI. Thus, the pattern of trade of imports of merchandise

subject to the order indicates that circumvention may have occurred

during the POI.

(B) Relationship

Generally, the Department considers circumvention to be more likely

when the manufacturer/exporter of the parts or components is related to

the party completing or assembling merchandise in the United States

using such imported parts or components. See, e.g., Granular

Polytetrafluoroethylene Resin from Italy, Final Affirmative

Determination of Circumvention of Antidumping Duty Order, 58 FR 26100

(April 30, 1993).

Camesa Inc., which imports the strand at issue and finishes it into

steel wire rope in the United States, is a wholly-owned subsidiary of

Grupo Camesa, the Mexican manufacturer and exporter of the strand (see

Camesa submission of December 20, 1993, page one). Since all of Camesa

Inc.'s purchases of strand during the POI were from Grupo Camesa, these

purchases are from a related party within the meaning of section

773(e)(4) of the Tariff Act. Accordingly, the relationship between

Grupo Camesa and Camesa Inc. would make it more likely that

circumvention of the antidumping duty order may have occurred during

the POI.

(C) Increase in Imports of Components

Generally, the Department considers circumvention to be more likely

when imports of parts and components which are used in the production

of merchandise subject to the order have increased after issuance of

the antidumping duty order. The Department reviewed Camesa's imports of

strand after the issuance of the order, and compared these imports to

those prior to the order.

We note that Camesa's imports steadily increased after issuance of

the order through the end of the POI (see Camesa submission of December

20, 1993, Attachment Five). This pattern of imports of strand from

Mexico indicates that circumvention of the order on steel wire rope may

have occurred during the POI.

Affirmative Preliminary Determination of Circumvention

After consideration of all the factors discussed above, the

Department preliminarily determines that circumvention of the

antidumping duty order on steel wire rope from Mexico has occurred

within the meaning of section 781(a) of the Tariff Act.

We base this determination on the following: First, the merchandise

finished at Camesa Inc. and sold in the United States is of the same

class or kind of merchandise as that covered by the order and is

completed from merchandise produced in the order country. Second, on

the basis of BIA, the Department preliminarily determines that the

difference between the value of the steel wire rope sold in the United

States and the value of the strand used in the production of steel wire

rope is small within the meaning of section 781(a) of the Tariff Act.

Third, Camesa's imports into the United States of strand from Mexico

increased during the POI, while Camesa's imports into the United States

of wire rope from Mexico ceased after the Department issued the

affirmative preliminary determination of sales at less than fair value

of steel wire rope from Mexico. Finally, Camesa Inc. is a wholly-owned

subsidiary of Grupo Camesa. Thus, the pattern of trade, relationship

between Grupo Camesa and Camesa Inc., and level of imports into the

United States support a finding of circumvention of the antidumping

duty order.

Based on this affirmative preliminary determination of

circumvention, we have preliminarily determined that strand, as defined

above, falls within the scope of the antidumping duty order on steel

wire rope from Mexico, pursuant to section 781(a)(1) of the Tariff Act.

Suspension of Liquidation

In accordance with section 773(d) of Tariff Act, the Department is

directing the U.S. Customs Service to suspend liquidation of all

entries of stranded wire from Mexico having a lay or twist of not more

than 1 revolution for a length equal to the strand diameter multiplied

by 8.5, that are entered, or withdrawn from warehouse, for consumption

on or after the date of publication of this notice in the Federal

Register.

The merchandise subject to suspension of liquidation is wire strand

of the kind used in the production of steel wire rope, as defined in

the ``Scope of the Anticircumvention Inquiry'' section of this notice.

The U.S. Customs Service shall require a cash deposit or posting of

bond in the amount of 111.68 percent. This suspension of liquidation

will remain in effect until further notice.

Notification of the International Trade Commission

The Department, consistent with section 781(e) of the Tariff Act,

will notify the ITC of this preliminary determination to include the

merchandise subject to this inquiry within the antidumping duty order

on steel wire rope from Mexico. Pursuant to section 781(e) of the

Tariff Act, the ITC may request consultations concerning the

Department's proposed inclusion of the subject merchandise. If, after

consultations, the ITC believes that a significant injury issue is

presented by the proposed inclusion, the ITC may provide written advice

to the Department. In such a case, the ITC will have 60 days to provide

written advice to the Department.

Public Comment

Interested parties may request disclosure within 5 days of the date

of publication of this determination, and may request a hearing within

10 days of publication. Case briefs and/or written comments from

interested parties may be submitted no later than 30 days after the

date of publication of this notice. Rebuttal briefs and rebuttals to

comments, limited to issues raised in those briefs or comments, may be

filed no later than 37 days after publication of this notice. Any

hearing, if requested, will be held 44 days after publication of this

notice. The Department will publish the final determination with

respect to the circumvention inquiry, including the results of its

analysis of any written comments.

This preliminary affirmative circumvention determination is in

accordance with section 781(a) of the Tariff Act and 19 CFR 353.29(e).

Dated: May 19, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-12798 Filed 5-24-94; 8:45 am]

BILLING CODE 3510-DS-P