Final Determination of Sales at Less Than Fair Value: Certain Carbon and Alloy Steel Wire Rod From Japan

DEPARTMENT OF COMMERCE

[A-588-830]

Final Determination of Sales at Less Than Fair Value: Certain

Carbon and Alloy Steel Wire Rod From Japan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: February 9, 1994.

FOR FURTHER INFORMATION CONTACT:Ellen Grebasch or Erik Warga, Office of

Antidumping Investigations, Import Administration, U.S. Department of

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

20230; telephone (202) 482-3773 or 482-0922, respectively.

FINAL DETERMINATION: We determine that imports of certain carbon and

alloy steel wire rod (``steel wire rod'') from Japan are being, or are

likely to be, sold in the United States at less than fair value, as

provided in section 735 of the Tariff Act of 1930, as amended (the

Act). The estimated margins are shown in the ``Suspension of

Liquidation'' section of this notice.

Case History

Since our November 19, 1993, preliminary determination (58 FR

62638, November 29, 1993), the following events have occurred.

On December 8, 1993, interested party Michelin Tire Corporation

requested a public hearing.

Petitioners (Connecticut Steel Corporation, Co-Steel Raritan, and

Keystone Steel & Wire Co.), and interested parties (``the Barnes

Group''--comprised of Barnes Group Inc., Associated Spring, and NHK-

Associated Spring Suspension Components Inc.--and Amercord Inc.) filed

case briefs on January 5, and rebuttal briefs on January 10, 1994.

Another interested party, Goodyear Tire & Rubber Company, also filed a

rebuttal brief on January 10.

A public hearing took place on January 12, 1994. At our request,

interested parties in the companion investigation of wire rod from

Canada also submitted case and rebuttal briefs and attended the hearing

to discuss the scope of the three ongoing investigations of certain

carbon and alloy steel wire rod.

On January 18, 1994, Keystone Steel & Wire Co. withdrew as a

petitioner. On January 24, 1994, respondents, Nippon Steel Corporation

and Kobe Steel Inc., and Sumitomo Metal Industries (another Japanese

wire rod exporter) requested termination of the investigation.

Scope of Investigation

The products covered by this investigation are hot-rolled carbon

steel and alloy steel wire rod, in coils, of approximately round cross

section, between 0.20 and 0.75 inches in solid cross-sectional

diameter. The following products are excluded from the scope of this

investigation:

Steel wire rod 5.5 mm or less in diameter, with tensile

strength greater than or equal to 1040 MPa, and the following

chemical content, by weight: carbon greater than or equal to 0.79%,

aluminum less than or equal to 0.005%, phosphorous plus sulfur less

than or equal to 0.040%, and nitrogen less than or equal to 0.006%;

Free-machining steel containing 0.03% or more of lead,

0.05% or more of bismuth, 0.08% or more of sulfur, more than 0.4% of

phosphorus, more than 0.05% of selenium, and/or more than 0.01% of

tellurium;

Stainless steel rods, tool steel rods, free-cutting

steel rods, resulfurized steel rods, ball bearing steel rods, high-

nickel steel rods, and concrete reinforcing bars and rods; and

Wire rod 7.9 to 18 mm in diameter, containing 0.43 to

0.73% carbon by weight, and having partial decarburization and seams

no more than 0.75 mm in depth.

The products under investigation are currently classifiable under

subheadings 7213.31.3000, 7213.31.6000, 7213.39.0030, 7213.39.0090,

7213.41.3000, 7213.41.600, 7213.49.0030, 7213.49.0090, 7213.50.0020,

7213.50.0040, 7213.50.0080, 7227.20.0000, 7227.90.6000, and

7227.90.6050 of the Harmonized Tariff Schedule of the United States

(HTSUS). Although the HTSUS subheadings are provided for convenience

and customs purposes, our written description of the scope of this

investigation is dispositive.

Period of Investigation

The period of investigation is October 1, 1992, through March 31,

1993.

Such or Similar Comparisons

We have determined that the merchandise covered by this

investigation constitutes a single category of ``such or similar''

merchandise.

Best Information Available

Because both mandatory respondents failed to respond to our

questionnaire, we based our determination on best information available

(BIA) pursuant to section 776(c) of the Act.

In determining what rate to use as BIA, the Department of Commerce

(``the Department'') follows a two-tiered methodology, whereby the

Department normally assigns lower margins to those respondents who

cooperated in an investigation and margins based on more adverse

assumptions for those respondents who did not cooperate in an

investigation. According to the Department's two-tiered BIA methodology

outlined in the Final Determination of Sales at Less Than Fair Value:

Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-Rolled

Carbon Steel Flat Products, and Certain Cut-to-Length Carbon Steel

Plate From Belgium, (58 FR 37083, July 9, 1993), when a company refuses

to provide the information requested in the form required, or otherwise

significantly impedes the Department's investigation, it is appropriate

for the Department to assign to that company the higher of (1) the

margin alleged in the petition, or (2) the highest calculated rate of

any respondent in the investigation. Because there were no cooperative

respondents in this investigation, we are assigning to all exporters,

as BIA, a margin of 47.71 percent, the highest margin calculated based

on information in the petition on merchandise that is within the scope

of this investigation (as amended).

Fair Value Comparisons

To determine whether respondents made sales of steel wire rod from

Japan in the United States at less than fair value, we compared the

United States price (USP) to the foreign market value (FMV), as

specified in the ``United States Price'' and ``Foreign Market Value''

sections of this notice.

United States Price

We calculated USP using the methodology described in the

preliminary determination.

Foreign Market Value

We calculated FMV using the methodology described in the

preliminary determination.

Currency Conversion

We made currency conversions based on the official exchange rates

in effect on the dates of the U.S. sales as certified by the Federal

Reserve Bank.

Interested Party Comments

Comment 1. Michelin contends that the Department must exclude from

the scope of the investigation tire cord quality 1070 steel wire rod

(``TCQ 1070''), which Michelin imports, because Michelin has been

unable to obtain that product in commercial quantities from any U.S.

manufacturer. Additionally, Michelin suggests that the Flat Panel

Displays case\1\ (``FPDs'') established that the Department is required

to determine, within a class or kind of merchandise, whether ``there

are any distinct products for which U.S. manufacturers do not

manufacture a like product.'' Michelin contends that TCQ 1070 is a

distinct product, and that the portion of the petition pertaining to

TCQ 1070 should be dismissed for lack of standing on the part of

petitioners. If TCQ 1070 is not found to be a distinct product Michelin

suggests that TCQ 1070 is essentially the same as tire cord quality

1080 steel wire rod (``TCQ 1080''), which is already excluded from the

scope of the investigation pursuant to petitioners' October 19, 1993,

petition amendment. Accordingly, Michelin argues, TCQ 1070 and TCQ 1080

should be evaluated jointly. Based on this premise, Michelin contends

that the Department should determine that the two subsets of all steel

wire rod--tire cord quality and non-tire cord quality--constitute two

distinct classes or kinds of merchandise based on the Diversified

Products criteria,\2\ and class-or-kind-specific dumping margins should

be calculated.

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\1\Final Determination and Partial Rescission: Flat Panel

Displays from Japan (56 FR 32376, July 16, 1991)

\2\The Diversified Products Corp. v. United States (572 F. Supp.

883 (CIT 1983)) case upheld a class-or-kind decision which

considered the following criteria: (1) The product's general

physical characteristics; (2) its ultimate use; (3) the expectations

of the ultimate purchaser; (4) the channels of trade; and (5) cost.

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Stelco Inc., commenting on scope in the context of the companion

investigation of wire rod from Canada,\3\ argues that the antidumping

law does not permit the Department to accept without explanation or

analysis petitioners' October 18, 1993, amendment to the petition

(excluding TCQ 1080) over the objection of an interested party. To

grant a contested exclusion request, Stelco suggests, requires an

explicit finding that the product in question be ``* * * co-extensive

with a rational class or kind of wire rod product subcategory.'' A

reasonable analysis, according to Stelco, can lead only to the joint

consideration and disposition of petitioners' amendment (excluding TCQ

1080) and Michelin's request (to exclude TCQ 1070).

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\3\Stelco, a Canadian wire rod producer, is not an interested

party in this proceeding. However, the scope issues in the three

concurrent wire rod investigations are essentially the same and thus

best disposed of together. Therefore, we have placed Stelco's scope

comments on the record in this proceeding.

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Petitioners object to the request to exclude TCQ 1070 because the

precedent of other antidumping investigations of wire rod, as well as

the Diversified Products criteria and the criteria used to determine

like products, demonstrate no ``bright line'' upon which to base a

decision to treat TCQ 1070 as a distinct product or to find that wire

rod products comprise multiple classes or kinds. Petitioners also

contend that the request is untimely.

Petitioners claim that there is substitutability between the

products that Michelin would exclude on the one hand and products that

would remain within the scope on the other hand (e.g., tire bead

quality wire rod). Petitioners further claim that the description of

the product that Michelin proposes to exclude encompasses products that

petitioners produce. Finally, petitioners suggest that, even if the

Department determines tire cord quality wire rod to be a distinct

product or a separate class or kind, petitioners' standing must be

accepted unless challenged by a domestic producer.

With respect to Stelco's argument that the Department's acceptance

of petitioners' amendment was unlawful, petitioners contend that

Department precedent requires only that scope amendments ``be timely

and consistent with the intent of the petitioner.''

DOC Position. We agree with petitioners. Accordingly, we have not

excluded TCQ 1070 from the scope of this investigation but will

continue to exclude TCQ 1080.

The Act and our regulations do not provide for consideration of

domestic availability in determining whether a product should or should

not fall within the scope of an investigation. See, e.g., Appendix to

Final Determination of Sales at Less Than Fair Value: Certain Cold-

Rolled Carbon Steel Flat Products from Argentina (58 FR 37062, July 9,

1993) (``Flat-Rolled Steel''). Additionally, our acceptance of

petitioners' amendment excluding TCQ 1080 from the scope of the

petition was lawful and appropriate. Under our regulations, section

353.12(b)(4) requires a petitioner to describe the scope in filing a

petition and section 353.12(e) provides that a petitioner may amend the

petition.

We agree that we must evaluate scope amendments. Generally, when a

petitioner asks to amend the scope of a petition, our chief concern is

the administrative feasibility of granting the request (see, e.g.,

Flat-Rolled Steel cases, where petitioners' late plate scope amendment

was rejected)--including such factors as whether time permits

soliciting any required new information and practicality for customs

purposes. In addition, we will evaluate on its merits any opposition to

an exclusion request. However, the act on the part of a petitioner of

making such a request is generally sufficient justification for

granting such an exclusion, because it is a statement by petitioner

that it does not need relief from a product's competition. Further,

this view of a petitioner's important role in determining the scope is

supported by Department practice in past cases (e.g., Flat-Rolled Steel

cases).

In this case, Stelco opposes the exclusion of TCQ 1080 on the

grounds that this product should not be considered separately from TCQ

1070. While we agree that TCQ 1070 and TCQ 1080 are similar in many

respects, these similarities do not require that the two products'

fates be inextricably intertwined. The two products have different

minimum carbon contents, and the matching criteria in the three

companion wire rod cases (upon which all interested parties were

afforded an opportunity to comment) rank grade/carbon content highest

among relevant characteristics of wire rod. Thus, the two are

meaningfully distinct products, only one of which (TCQ 1070)

petitioners have chosen to include in the scope of their petition.

Notwithstanding Stelco's unsupported allegations concerning

petitioners' exclusion request, neither the statute nor the regulations

requires the Department to determine that products whose exclusion is

contested represent a distinct class or kind of merchandise or a

distinct like product, nor did the FPDs case establish a requirement

for a like product analysis. In FPDs, a like product analysis was

conducted in order to evaluate the petitioner's standing with respect

to one class or kind of merchandise.

With respect to whether TCQ 1070 can be excluded over petitioners'

opposition, such exclusions are possible only if the product is

determined to be part of a separate class or kind of merchandise which

petitioners do not produce. TCQ and non-TCQ wire rod do not constitute

separate classes or kinds of merchandise--even applying the Diversified

Products criteria (which, we note, are guidelines, not mandatory

criteria for defining class or kind).\4\ In short, there is no bright

line among the product groups at issue in this case. Further, there is

no precedent for separate classes or kind in other investigations of

wire rod, and no party broached this issue when asked to comment on

matching criteria. In any case, since petitioners claim that they

produce TCQ 1070, a separate class or kind finding would not result in

a finding that petitioners lack standing.

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\4\Wire rod has in past cases been broadly defined in terms of

the same general physical characteristics and range of ultimate

uses. Customers expect to draw or stamp the product into various

other downstream products. While different technical specifications

and uses exist, it would be prohibitively difficult to identify each

unique combination as defining a separate class or kind of

merchandise. No differences in channels of trade, such as sale to

end users versus sales to resellers, distinguish groups of wire rod.

Although tire cord quality wire rod has a relatively high cost, it

is not the only type of wire rod included in the scope that has a

high cost.

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In conclusion, petitioners have requested a scope amendment that

can be administered. Petitioners oppose the exclusion of TCQ 1070, and

TCQ 1070 is neither a distinct product for which petitioners lack

standing nor part of a separate tire cord quality class or kind of

merchandise. While similar to TCQ 1080, TCQ 1070 differs in terms of a

characteristic recognized as significant: carbon content. Challenges to

like product or class-or-kind determinations are subject to very high

standards and are difficult for the Department to sustain. Petitioners'

scope definition is afforded great weight because petitioners can best

determine from what products they require relief. Moreover, in

administering the law the Department may not take into account

potential shortages in domestic supply.

Comment 2. Petitioners and the Barnes Group request the exclusion

of valve spring quality wire rod from the scope of this investigation,

in accordance with petitioners' November 1993 petition amendment.

DOC Position. We agree that valve spring quality wire rod should,

in accordance with petitioners' amendment, be excluded from the scope.

This amendment has not been contested, and nothing on the record in

this proceeding gives rise to concern over feasibility.

Comment 3. Respondents contend that the Department should terminate

this investigation because of the January 18, 1994, withdrawal by three

of the five original petitioners. Respondents reason that these three

companies' withdrawal as petitioners constitutes a withdrawal of

support, which, in turn, should be considered opposition to the

petition. Alternatively, respondents request that the domestic industry

be polled to determine whether a majority supports the petition.

DOC Position. We disagree. The Department's policy has been to

accept the representation of petitioners that the petition has been

filed on behalf of the domestic industry. In this case, the withdrawal

of certain producers as petitioners was not accompanied by a statement

that they oppose the petition. Because there has been no showing of

opposition by domestic producers, we conclude that the petition was

filed on behalf of the U.S. industry. See Suramerica de Aleaciones

Laminadas v. United States, 966 F.2d 660 (Fed. Cir. 1992). In addition,

neither the statute nor our regulations require a petitioner to

establish affirmatively that it had or continues to have the support of

a majority of domestic producers. See Trent Tube v. Avesta Sandvik

Tube, 975 F.2d 807, 812-813 (Fed. Cir. 1992). Finally, the Department

only considers polling the domestic industry when members of that

industry have submitted for the record statements of opposition to the

petition. See Final Determination of Sales at Less Than Fair Value:

Polyethylene Terephthalate Film, Sheet, and Strip from Japan (56 FR

16300, April 22, 1991).

Suspension of Liquidation

In accordance with section 733(d)(1) of the Act, we are directing

the Customs Service to continue to suspend liquidation of all entries

of the subject merchandise from Japan that are entered, or withdrawn

from warehouse, for consumption on or after the date of publication of

this notice in the Federal Register. The Customs Service shall require

a cash deposit or posting of a bond equal to the estimated dumping

margins, as shown below. The suspension of liquidation will remain in

effect until further notice. The weighted-average margins are as

follows:

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Margin

Manufacturer/producer/exporter percentage

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All companies............................................... 47.71

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ITC Notification

In accordance with section 735(d) of the Act, we have notified the

ITC of our determination. The ITC will now determine whether these

imports are materially injuring, or threaten material injury to, the

U.S. industry within 45 days. If the ITC determines that material

injury, or threat of material injury, does not exist with respect to

the subject merchandise, the proceeding will be terminated and all

securities posted will be refunded or cancelled. If the ITC determines

that such injury does exist, the Department will issue an antidumping

duty order directing Customs officials to assess antidumping duties on

all imports of the subject merchandise from Japan entered, or withdrawn

from warehouse, for consumption on or after the effective date of the

suspension of liquidation.

Notice to Interested Parties

This notice also serves as the only reminder to parties subject to

administrative protective order (APO) of their responsibility, pursuant

to 19 CFR 353.34(d), concerning the return or destruction of

proprietary information disclosed under APO. Failure to comply is a

violation of the APO.

This determination is published pursuant to section 735(d) of the

Act (19 U.S.C. 1673(d)) and 19 CFR 353.20(a)(4).

Dated: February 2, 1994.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-2996 Filed 2-8-94; 8:45 am]

BILLING CODE 3510-DS-M