Brass Sheet and Strip From The Netherlands; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-421-701]

Brass Sheet and Strip From The Netherlands; 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 a request by respondent Outokumpu Copper Strip

B.V. (OBV) and its United States affiliate Outokumpu Copper (USA), Inc.

(OCUSA), the Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on brass sheet and

strip from the Netherlands (A-421-701). This review covers one

manufacturer/exporter of the subject merchandise to the United States

during the period August 1, 1995 through July 31, 1996. We

preliminarily determine that sales of brass sheet and strip (BSS) from

the Netherlands have not been made below the normal value (NV). If

these preliminary results are adopted in our final results of

administrative review, we will instruct the U.S. Customs Service to

assess antidumping duties with respect to the entries of OBV.

Interested parties are invited to comment on these preliminary results.

Parties who submit comments are requested to submit with the argument:

(1) A statement of the issues; and (2) a brief summary of the argument.

EFFECTIVE DATE: May 12, 1997.

FOR FURTHER INFORMATION CONTACT: Karla Whalen or Lisette Lach, Office

of Antidumping/Countervailing Duty Enforcement, Group III, Import

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

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

20230; telephone: (202) 482-0408 or (202) 482-6412, respectively.

SUPPLEMENTARY INFORMATION: Applicable Statute and Regulations: Unless

otherwise indicated, all citations to the Tariff Act of 1930, as

amended (the Tariff Act), are to the provisions effective January 1,

1995, the effective date of the amendments made to the Tariff Act by

the Uruguay Round Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to the Department's regulations are to the

current regulations, as amended by the interim regulations published in

the Federal Register on May 11, 1995 (60 FR 25130).

Background

On August 12, 1988, the Department published in the Federal

Register the antidumping duty order on BSS from the Netherlands (53 FR

30455). On August 12, 1996, the Department published the notice of

``Opportunity to Request Administrative Review'' for the period August

1, 1995 through July 31, 1996 on BSS from the Netherlands (61 FR

41768). In accordance with 19 CFR 353.22 (a)(1), OBV requested that we

conduct a review of its sales. On September 17, 1996, we published in

the Federal Register a notice of initiation of this antidumping

administrative review (61 FR 48882).

Verification

From February 24 through February 28, 1997, in accordance with

section 782(i) of the Act, we verified information provided by OBV

using standard verification procedures including on-site inspection of

the manufacturer's facilities, examination of relevant sales and

financial records, and selection of original source documentation

containing relevant information. Our verification results are outlined

in the verification report, the public version of which is available in

the Central Records Unit of the Department of Commerce, Room B-099.

Scope of the Review

Imports covered by this review are brass sheet and strip, other

than leaded and tin brass sheet and strip, from the Netherlands. The

chemical composition of the products under review is currently defined

in the Copper Development Association (C.D.A.) 200 Series or the

Unified Numbering System (U.N.S.) C20000 series. This review does not

cover products the chemical compositions of which are defined by other

C.D.A. or U.N.S. series. The physical dimensions of the products

covered by this review are brass sheet and strip of solid rectangular

cross section over 0.006 inch (0.15 millimeter) through 0.188 inch (4.8

millimeters) in gauge, regardless of width. Coiled, wound-on-reels

(traverse wound), and cut-to-length products are included. The

merchandise under investigation is currently classifiable under item

7409.21.00 and 7409.29.20 of the Harmonized Tariff Schedule of the

United States (HTSUS). Although the HTSUS subheading is provided for

convenience and customs purposes, the written description of the

merchandise under investigation is dispositive.

Level of Trade

To the extent practicable, we determine NV for sales at the same

level of trade as the U.S. sales (either export price (EP) or

constructed export price (CEP)). When there are no sales at the same

level of trade, we compare U.S. sales to home market (or, if

appropriate, third-country) sales at a different level-of-trade. The NV

level of trade is that of the starting-price sales in the home market.

When NV is based on CV, the level of trade is that of the sales from

which we derive selling, SG&A and profit.

For both EP and CEP, the relevant transaction for the level of

trade analysis is the sale (or constructed sale) from the exporter to

the importer. While the starting price for CEP is that of a

[[Page 25892]]

subsequent resale to an unaffiliated buyer, the construction of the CEP

results in a price that would have been charged if the importer had not

been affiliated. We calculate the CEP by removing from the first resale

to an independent U.S. customer the expenses under section 772(d) of

the Tariff Act and the profit associated with these expenses. These

expenses represent activities undertaken by the affiliated importer.

Because the expenses deducted under section 772(d) represent selling

activities in the United States, the deduction of these expenses

normally yields a different level of trade for the CEP than for the

later resale (which we use for the starting price). Movement charges,

duties and taxes deducted under section 772(c) do not represent

activities of the affiliated importer, and we do not remove them to

obtain the CEP level of trade.

To determine whether home market sales are at a different level of

trade than U.S. sales, we examine whether the home market sales are at

different stages in the marketing process than the U.S. sales. The

marketing process in both markets begins with goods being sold by the

producer and extends to the sale to the final user, regardless of

whether the final user is an individual consumer or an industrial user.

The chain of distribution between the producer and the final user may

have many or few links, and each respondent's sales occur somewhere

along this chain. In the United States, the respondent's sales are

generally to an importer, whether independent or affiliated. We review

and compare the distribution systems in the home market and U.S. export

markets, including selling functions, class of customer, and the extent

and level of selling expenses for each claimed level of trade. Customer

categories such as distributor, original equipment manufacturer (OEM),

or wholesaler are commonly used by respondents to describe levels of

trade, but, without substantiation, they are insufficient to establish

that a claimed level of trade is valid. An analysis of the chain of

distribution and of the selling functions substantiates or invalidates

the claimed levels of trade. If the claimed levels are different, the

selling functions performed in selling to each level should also be

different. Conversely, if levels of trade are nominally the same, the

selling functions performed should also be the same. Different levels

of trade necessarily involve differences in selling functions, but

differences in selling functions, even substantial ones, are not alone

sufficient to establish a difference in the levels of trade. A

different level of trade is characterized by purchasers at different

stages in the chain of distribution and sellers performing

qualitatively or quantitatively different functions in selling to them.

When we compare U.S. sales to home market sales at a different

level of trade, we make a level-of-trade adjustment if the difference

in levels of trade affects price comparability. We determine any effect

on price comparability by examining sales at different levels of trade

in a single market, the home market. Any price effect must be

manifested in a pattern of consistent price differences between home

market sales used for comparison and sales at the equivalent level of

trade of the export transaction. To quantify the price differences, we

calculate the difference in the average of the net prices of the same

models sold at different levels of trade. We use the average difference

in net prices to adjust NV when NV is based on a level of trade

different from that of the export sale. If there is a pattern of no

consistent price differences, the difference in levels of trade does

not have a price effect and, therefore, no adjustment is necessary.

The statute also provides for an adjustment to NV when NV is based

on a level of trade different from that of the CEP if the NV level is

more remote from the factory than the CEP and if we are unable to

determine whether the difference in levels of trade between CEP level

and NV level affects the comparability of their prices. This latter

situation can occur where there is no home market level of trade

equivalent to the U.S. sales level or where there is an equivalent home

market level but the data are insufficient to support a conclusion on

price effect. This adjustment, the CEP offset, is identified in section

773(7)(B) of the Tariff Act and is the lower of the following:

The indirect selling expenses on the home market sale, or

The indirect selling expenses deducted from the starting

price used to calculate CEP. The CEP offset is not automatic each time

we use CEP. The CEP offset is made only when the level of trade of the

home market sale is more advanced than the level of trade of the U.S.

(CEP) sale and there is not an appropriate basis for determining

whether there is an effect on price comparability.

In the present review, OBV did not request an LOT adjustment. To

ensure that no such adjustment was necessary, we examined information

regarding OVB's distribution system in both the United States and the

Netherlands, including selling functions, class of customer and selling

expenses. In the home market, OBV sold to two categories of customers,

end-users and trading companies. However, OBV's HM sales were all

manufactured to order and the merchandise was shipped directly from the

mill to both types of customer. OBV's packing process was also similar

for both markets, and the selling expenses for the POR were comparable

for all sales, regardless of the type of customer. Evidence on the

record also demonstrates that OBV did not have a formal policy for

providing payment terms, including discounts to different types of

customers. Based upon this evidence, we determine that the selling

activities involved with these sales were the same, and that OBV's HM

sales were all made at the same level of trade.

OBV's sales in the United States, all of which were EP sales, were

also at the same level of trade. All of OBV's United States customers

were end-users and the sales were all manufactured to order. The

packing process was basically the same as that of the HM sales, as was

OBV's customer-specific approach to payment terms. Therefore, we

conclude that no level of trade adjustment is warranted.

Export Price

For sales to the United States, we used export price (EP) as

defined in section 772(a) of the Act, because the subject merchandise

was sold to an unaffiliated U.S. purchaser prior to the date of

importation and the use of constructed export price was not indicated

by the facts on the record. We calculated EP as the packed, delivered

price to unaffiliated purchasers in the United States. In accordance

with section 772(c)(2) of the Tariff Act, we reduced this price by

post-sale warehousing, international freight, inland and marine

insurance, U.S. brokerage and handling, U.S. duty, Customs Service

fees, Department of Agriculture fees, and credit expenses, where

appropriate.

Normal Value

A. Viability

Based upon (i) the Department's comparison of the aggregate

quantity of home market and U.S. sales, (ii) the absence of any

information that a particular marketing situation in the Netherlands

does not permit a proper comparison, and (iii) the fact that OBV's

quantity of sales in the home market exceeded five percent of its sales

to the U.S. market, we determined that the quantity of foreign like

product OBV

[[Page 25893]]

sold in the Netherlands was sufficient to permit a proper comparison

with the sales of subject merchandise to the United States pursuant to

section 773(a) of the Tariff Act. Therefore, in accordance with section

773(a)(1)(B)(i) of the Tariff Act, we based NV on the prices at which

the foreign like products were first sold for consumption in the

Netherlands.

B. Cost-of-Production Analysis

Because we disregarded sales below the cost of production in the

most recently completed review, we had reasonable grounds to believe or

suspect that sales of the foreign like product under consideration for

determining NV in this review may have been at prices below the cost of

production (COP), as provided in section 773(b)(2)(A)(ii) of the Tariff

Act. See Brass Sheet and Strip From the Netherlands; Final Results of

Antidumping Duty Administrative Reviews (57 FR 9534, March 19, 1992).

Therefore, pursuant to section 773(b)(1) of the Tariff Act, we

initiated a COP investigation of sales by OBV.

In accordance with section 773(b)(3) of the Tariff Act, we

calculated COP based on the sum of materials and fabrication employed

in producing the foreign like product, plus selling, general, and

administrative expenses (SG&A) and the cost of all expenses incidental

to placing the foreign like product in condition packed ready for

shipment. We relied on the home market sales and COP information OBV

provided in its questionnaire responses.

After calculating COP, we tested whether home market sales of

subject BSS were made at prices below COP within an extended period of

time in substantial quantities and whether such prices permitted the

recovery of all costs within a reasonable period of time. We compared

model-specific COP to the reported home market prices less any

applicable movement charges and post-sale price adjustments (reported

as early payments and credit adjustments), where appropriate.

Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than

twenty percent of home market sales for a model were at prices less

than the COP, we did not disregard any below-cost sales of that model

because we determined that the below cost sales were not made within an

extended period of time in ``substantial quantities.'' Where twenty

percent or more of home market sales of a given product were at prices

less than the COP, we determined that such sales were made within an

extended period of time in substantial quantities in accordance with

section 773(b)(2) (C) of the Tariff Act. To determine whether such

sales were at prices which would not permit the full recovery of all

costs within a reasonable period of time, in accordance with section

773(b)(2)(D) of the Tariff Act, we compared home market prices to the

weighted-average COPs for the POR.

The results of our cost test for OBV indicated that for certain

home market models less than twenty percent of the sales of the model

were at prices below COP. We therefore retained all sales of these

models in our analysis and used them as the basis for determining NV,

where applicable. Our cost test also indicated that within an extended

period of time (one year, in accordance with section 773(b)(2)(B) of

the Tariff Act) for certain other home market models, more than twenty

percent of the sales were at prices below COP which would not permit

the full recovery of all costs within a reasonable period of time. In

accordance with section 773(b)(1) of the Tariff Act, we therefore

disregarded the below-cost sales of these models and used the remaining

above-cost sales as the basis for determining NV, where applicable.

In accordance with section 773(a)(4) of the Act, we used

constructed value (CV) as the basis for NV when there were no usable

sales of the foreign like product in the comparison market. We

calculated CV in accordance with section 773(e) of the Act. We included

the cost of materials and fabrication, SG&A expenses and profit. In

accordance with section 773(e)(2)(A) of the Act, we based SG&A expenses

and profit on the amounts incurred and realized by the respondent in

connection with the production and sale of the foreign like product in

the ordinary course of trade for consumption in the foreign country.

For selling expenses, we used the weighted average home market selling

expenses. Where appropriate, we made adjustments to CV, in accordance

with section 773(a)(8) of the Act and section 353.56(a) of the

Department's regulations, for circumstances of sale (COS) differences.

For comparisons to EP, we made COS adjustments by deducting home market

direct selling expenses and adding U.S. direct selling expenses.

C. Product Comparisons

We compared OBV's U.S. sales with contemporaneous sales of the

foreign like product in the home market. We compared BSS based on the

following hierarchy of physical characteristics: (1) Grade (alloy); (2)

gauge (thickness); (3) width; (4) temper; (5) coating; and (6) packed

form. For purposes of these preliminary results, we have used

differences in merchandise adjustments based on the difference in the

variable cost of manufacturing between each U.S. model and its most

similar home market model.

D. Date of Sale

The Department examined a number of distinct events in OBV's sales

process to determine the appropriate date of sale. These included the

frame agreement date, order entry date, and invoice date. OBV's sales

listing included data permitting use of any of these for the date of

sale. OBV argued that the appropriate date of sale methodology should

be the order entry date. Petitioners 1 argued that the

appropriate date of sale methodology should be the date of the frame

agreement, as that date was used in the immediately preceding review.

However, for purposes of these preliminary results, the Department has

used the invoice date as the date of sale in determining the

appropriate sales universe for comparison based upon the information

provided by respondent and our findings at verification. (See

Memorandum to the File Regarding Verification, dated April 16, 1997,

from Lisette Lach and Lisa Yarbrough; and Analysis Memorandum to the

File Regarding Preliminary Determination Analysis, dated May 6, 1997,

from Lisette Lach and Karla Whalen.)

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\1\ Hussey Copper, Ltd.; The Miller Company; Olin Corporation;

Revere Copper Products, Inc.; International Association of

Machinists and Aerospace Workers; International Union, Allied

Industrial Workers of America (AFL-CIO); Mechanics Educational

Society of America (Local 56); and United Steelworkers of America

(AFL-CIO/CLC).

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E. Home Market Prices

We based home market prices on the packed, ex-factory or delivered

prices to unaffiliated purchasers in the home market or on CV, where

applicable. For matching to home market prices, we made adjustments for

differences in packing and for movement expenses in accordance with

sections 773(a)(6)(A) and (B) of the Tariff Act. In addition, we made

adjustments for differences in cost attributable to differences in

physical characteristics of the merchandise pursuant to section

773(a)(6)(C)(ii) of the Tariff Act, and for COS differences in

accordance with section 773(a)(6)(C)(iii) of the Tariff Act and

Sec. 353.56(2) of the Department's regulations.

Duty Absorption

On October 3, 1996, petitioners requested that the Department

[[Page 25894]]

determine whether OBV had absorbed antidumping duties during the period

of review pursuant to section 751(a)(4) of the Tariff Act. Section

751(a)(4) requires the Department, if requested, to determine, during

an administrative review initiated two years or four years after

publication of the order, whether antidumping duties have been absorbed

by a foreign producer or exporter subject to the order, if the subject

merchandise is sold in the United States through an importer who is

affiliated with such foreign producer or exporter. Section 751(a)(4)

was added to the Tariff Act by the URAA. The Department's interim

regulations do not address this provision of the Tariff Act. For

transition orders as defined in section 751(c)(6)(C) of the Tariff Act,

i.e., orders in effect as of January 1, 1995, Sec. 351.213(j)(2) of the

Department's proposed antidumping regulations provides that the

Department will make a duty absorption determination, if requested, for

any administrative review initiated in 1996 or 1998. See Notice of

Proposed Rulemaking, 61 FR 7308, 7366 (February 27, 1996). The preamble

to the proposed antidumping regulations explains that reviews initiated

in 1996 will be considered initiated in the second year and reviews

initiated in 1998 will be considered initiated in the fourth year. Id.

at 7317. Although these proposed regulations are not yet binding upon

the Department, they do constitute a public statement of how the

Department expects to proceed in applying section 751(a)(4) of the

amended statute. This approach assures that interested parties will

have the opportunity to request a duty absorption determination on

entries for which the second and fourth years following an order have

already passed, prior to the time for sunset review of the order under

section 751(c).

Because the order on BSS from the Netherlands has been in effect

since 1988, this qualifies as a transition order. Therefore, based on

the policy stated above, the Department will first consider a request

for an absorption determination during a review initiated in 1996. This

being a review initiated in 1996, we are making a duty-absorption

determination as part of this segment of the proceeding. The statute

provides for a determination on duty absorption if the subject

merchandise is sold in the United States through an affiliated

importer. In this case, OCUSA, OBV's wholly owned subsidiary, is the

importer of record for OBV's U.S. sales. Therefore, the importer and

the exporter are ``affiliated'' within the meaning of sections

751(a)(4) and 771(33) of the Tariff Act. Furthermore, we have

preliminarily determined that there is a dumping margin for OBV on 9.17

percent (by quantity) of its U.S. sales during the period of review. In

addition, we cannot conclude from the record that the unaffiliated

purchaser in the United States will pay the ultimately assessed duty.

Under these circumstances, we preliminarily find that there is a

dumping margin on OBV's sales through its affiliate representing 1.13

percent of its total U.S. sales and that antidumping duties have been

absorbed by OBV.

Fair Value Comparison

To determine whether OBV made sales of subject BSS in the United

States at prices that were less than fair value, we compared the EP to

NV, as described in the ``Export Price'' and ``Normal Value'' analysis

sections of this notice. In accordance with section 777A(d)(2) of the

Tariff Act, we calculated monthly weighted-average prices for NV or CV

where appropriate, and compared these monthly averages to individual

U.S. sales transactions.

Currency Conversion

We made currency conversions in accordance with 19 CFR 353.60(a).

All currency conversions were made at the rates certified by the

Federal Reserve Bank.

Preliminary Results of Review

As a result of our comparison of EP to NV, we preliminarily

determine that the weighted-average dumping margin for OBV for this

administrative review period is as follows:

------------------------------------------------------------------------

Manufacturer/exporter Period Margin

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OBV........................................ 8/1/95-7/31/96 0.10

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Parties to these proceedings may request disclosure within five

days of the date of publication of this notice and may request a

hearing within ten days of publication. Any hearing, if requested, will

be held 44 days after the date of publication, or the first business

day thereafter. Case briefs and/or written comments from interested

parties may be submitted no later than 30 days after the date of

publication. Rebuttal briefs and rebuttals to written comments, limited

to issues raised in the case briefs and comments, may be submitted no

later than 37 days after the date of publication of this notice.

Parties who submit arguments in these proceedings are requested to

submit with the argument (1) a statement of the issues and (2) a brief

summary of the argument. The Department will issue final results of

these administrative reviews, including the results of our analysis of

the issues in any such written comments or at a hearing, within 180

days of issuance of these preliminary results.

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between export price and NV may vary from the percentage

stated above. The Department will issue appraisement instructions

directly to Customs.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of this administrative review for

all shipments of BSS from the Netherlands entered, or withdrawn from

warehouse, for consumption on or after the publication of the final

results of this administrative review, as provided in section 751(a)(1)

of the Tariff Act:

(1) The cash deposit rate for OBV will be the rate established in

the final results of this administrative review;

(2) For previously reviewed or investigated companies other than

OBV, 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 the less-than-fair-value 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) If neither the exporter nor the manufacturer is a firm covered

in this or any previous review conducted by the Department, the cash

deposit rate will be the ``all others'' rate of 16.99 percent

established in the less-than-fair-value investigation. See Antidumping

Duty Order of Sales at Less-Than-Fair-Value; Brass Sheet and Strip From

the Netherlands (53 FR 30455, August 12, 1988).

All U.S. sales by the respondent OBV will be subject to one deposit

rate according to the proceeding. The cash deposit rate has been

determined on the basis of the selling price to the first unrelated

customer in the United States. For appraisement purposes, where

information is available, we will use the entered value of the subject

merchandise to determine the appraisement rate.

This notice serves as preliminary reminder to importers of their

responsibility 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

[[Page 25895]]

reimbursement of the antidumping duties occurred and the subsequent

assessment of double antidumping duties. This administrative review and

this notice are in accordance with section 751(a)(1) of the Tariff Act

(19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

Dated: May 5, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-12386 Filed 5-9-97; 8:45 am]

BILLING CODE 3510-DS-P