Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Collated Roofing Nails From Taiwan

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-826]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Collated Roofing Nails

From Taiwan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: May 12, 1997.

FOR FURTHER INFORMATION CONTACT: Everett Kelly or Ellen Grebasch,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone: (202) 482-4194 or (202) 482-3773,

respectively.

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (the Act), are references to the provisions effective

January 1, 1995, the effective date of the amendments made to the 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).

Preliminary Determination

We preliminarily determine that collated roofing nails (``CRN'')

from Taiwan are being, or are likely to be, sold in the United States

at less than fair value (``LTFV''), as provided in section 733 of the

Act. The estimated margins of sales at LTFV are shown in the

``Suspension of Liquidation'' section of this notice.

Case History

Since the initiation of this investigation (Notice of Initiation of

Antidumping Duty Investigations: Collated Roofing Nails from the

People's Republic of China, the Republic of Korea, and Taiwan (61 FR

67306, December 20, 1996), the following events have occurred:

On January 17, 1997, the United States International Trade

Commission (``ITC'') issued an affirmative preliminary injury

determination in this case (see ITC Investigation Nos. 731-TA-757-759).

During November 1996 through January 1997, the Department obtained

information from various sources identifying producers/exporters of the

subject merchandise. (See Memorandum to the File, dated May 5, 1997,

for a detailed explanation of the Department's search for producers/

exporters of the subject merchandise.) During January and February,

based on this information, the Department issued antidumping

questionnaires to Unicatch Industrial Co. Ltd. (``Unicatch''), K. Ticho

Industries Co., Ltd. (``K. Ticho''), Hao Chun B&M Corporation (``Hao

Chun''), Lei Chu Enterprise Co., Ltd. (``Lei Chu''), Forrader Union

Company (``Forrader''), Double Dragon Ent. Co. Ltd. (``Dragon''), S&J

Wire Products Company, Ltd. (``S&J''), Certified Products Inc.

(``Certified''), Sun Jade Handicraft Ltd. (``Sun Jade''), Master United

Corporation (``United''), Trim International Incorporated (``Trim''),

and Romp Coil Nail Industries (``Romp''). The questionnaire is divided

into four sections: Section A requests general information concerning a

company's corporate structure and business practices, the merchandise

under investigation that it sells, and the sales of the merchandise in

all of its markets. Sections B and C request home market sales listings

and U.S. sales listings, respectively. Section D requests information

on the cost of production (``COP'') of the foreign like product and

constructed value (``CV'') of the subject merchandise.

The Department received responses to Section A of the questionnaire

during February and March, 1997. K. Ticho did not respond to the

Department's questionnaire. (See the ``Fair Value Comparisons'' section

below, for further discussion).

On March 13, 1997, pursuant to section 777A(c) of the Act, the

Department determined that, due to the large number of exporters/

producers of the subject merchandise, it would limit the number of

mandatory respondents in this investigation. The Department determined

that the resources available to it for this investigation and the two

companion investigations limited our ability to analyze any more than

the responses of the four largest exporters/producers of the subject

merchandise in this investigation. Based on Section A questionnaire

responses, the Department determined that the four largest companies,

and therefore the mandatory respondents in this proceeding, were:

Unicatch, Lei Chu, Romp, and S&J. (For detailed information regarding

this issue, see memorandum to Lou Apple from the CRN team, dated March

13, 1997.)

Unicatch, Lei Chu, Romp, and S&J submitted questionnaire responses

in February and March 1997. We issued supplemental requests for

information in March and April 1997, and received supplemental

responses to these requests in April 1997.

On April 14, 16, 23, and 25, 1997, the Paslode Division of Illinois

Tool Works Inc. (``Petitioner'') filed comments on the Unicatch, Lei

Chu, Romp, and S&J questionnaire responses.

Postponement of Final Determination and Extension of Provisional

Measures

On April 22, 1997, Respondents Unicatch and Lei Chu requested that,

pursuant to section 735(a)(2)(A) of the Act, in the event of an

affirmative preliminary determination in this investigation, the

Department postpone its final determination until not later than 135

days after the date of publication of the affirmative preliminary

determination in the Federal Register. In accordance with section

735(a)(2)(A) of the Act and 19 CFR 353.20(b), inasmuch as our

preliminary determination is affirmative, Unicatch and Lei Chu account

for a significant proportion of exports of the subject merchandise

under investigation, and we are not aware of the existence of any

compelling reasons for denying the request, we are granting the

respondents' request and postponing the final determination. Suspension

of liquidation will be extended

[[Page 25905]]

accordingly. See Preliminary Determination of Sales at Less Than Fair

Value: Large Newspaper Printing Presses and Components Thereof, Whether

Assembled or Unassembled, from Japan (61 FR 8029, March 1, 1996).

Scope of Investigation

The product covered by this investigation is CR nails made of

steel, having a length of \13/16\ to 1-\13/16\ inches (or 20.64 to

46.04 millimeters), a head diameter of 0.330 inch to 0.415 inch (or

8.38 to 10.54 millimeters), and a shank diameter of 0.100 inch to 0.125

inch (or 2.54 to 3.18 millimeters), whether or not galvanized, that are

collated with two wires.

CR nails within the scope of this investigation are classifiable

under the Harmonized Tariff Schedule of the United States (``HTSUS'')

subheading 7317.00.55.05. Although the HTSUS 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 this investigation (``POI'') comprises each

exporter's four most recent fiscal quarters prior to the filing of the

petition. In this case, the POI for all companies is October 1, 1995

through September 30, 1996.

Fair Value Comparisons

A. K. Ticho

As discussed above, K. Ticho did not respond to the Department's

questionnaire. Section 776(a)(2) of the Act provides that if an

interested party withholds information that has been requested by the

Department, fails to provide such information in a timely manner and in

the form requested, significantly impedes a proceeding, or provides

such information but the information cannot be verified, the Department

shall use the facts otherwise available in reaching the applicable

determination. Because K. Ticho failed to submit the information that

the Department specifically requested, we must base our determination

for K. Ticho on the facts available.

Section 776(b) of the Act provides that adverse inferences may be

used against a party that has failed to cooperate by not acting to the

best of its ability to comply with a request for information. K.

Ticho's decision not to participate in the Department's investigation

demonstrates that K. Ticho has failed to act to the best of its ability

in this investigation. Thus, the Department has determined that, in

selecting from among the facts otherwise available, an adverse

inference is warranted. As adverse facts available, we are assigning to

K.Ticho the higher of the petition margin or margin calculated for any

respondent in this investigation. Because the margins in the petition

(as recalculated by the Department at initiation) were higher than any

of the calculated margins, we used the highest margin stated in the

Notice of Initiation, 40.28%, as total adverse facts available for K.

Ticho.

Section 776(c) of the Act provides that where the Department

selects from among the facts otherwise available and relies on

``secondary information,'' such as the petition, the Department shall,

to the extent practicable, corroborate that information from

independent sources reasonably at the Department's disposal. The

Statement of Administrative Action accompanying the URAA, H.R. Doc. No.

316, 103d Cong., 2d Sess. (1994) (hereinafter, the ``SAA''), states

that ``corroborate'' means to determine that the information used has

probative value. See SAA at 870.

In the petition, the petitioner based its allegation of export

price on price quotes from two manufacturer/exporters of CRN in Taiwan.

These price quotations were adjusted for movement expenses using

customs data and IM-145 Import Statistics. See Notice of Initiation, 61

FR at 67307-08. As stated in Final Determination of Sales at Less Than

Fair Value: Certain Pasta From Turkey, 61 FR 30309 (June 14, 1996), we

consider price quotations as information from independent sources. The

export price calculations were based upon independent sources and

Import Statistics, both sources which we consider to require no further

corroboration by the Department. Therefore, we determined at

initiation, and continue to find, that the calculations set forth in

the petition have probative value.

The petitioner based Normal Value (``NV'') on CV. See Notice of

Initiation, 61 FR at 67308. To calculate CV, the petitioner used

manufacturing costs based on its own production experience, its 1995

audited financial statements, and publicly available industry data. Id.

The CV calculations in the petition are consistent with the CVs

reported by the respondents on the record of this investigation. As

such, we determine that the NV calculations have probative value. (See

memorandum, dated May 5, 1997.)

Based on our pre-initiation analysis and reexamination of the price

information supporting the petition, we determine that the highest

margin stated in the Notice of Initiation is corroborated within the

meaning of section 776(c) of the Act.

B. Unicatch, Lei Chu, S&J, and Romp

To determine whether sales of the subject merchandise by Unicatch,

Lei Chu, S&J, and Romp to the United States were made at less than fair

value, we compared the Export Price (``EP'') or Constructed Export

Price (``CEP'') to the NV, as described in the EP, CEP, and ``Normal

Value'' sections of this notice, below. In accordance with section

777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-average EPs

or CEPs to weighted-average NVs.

In making our comparisons, in accordance with section 771(16) of

the Act, we considered all products sold in the home market, fitting

the description specified in the ``Scope of Investigation'' section of

this notice, above, to be foreign like products for purposes of

determining appropriate product comparisons to U.S. sales. Unicatch,

Lei Chu, S&J, and Romp reported that they had no viable home market or

third country sales during the POI. We therefore made no price-to-price

comparisons. See the ``Normal Value'' section of this notice, below,

for further discussion.

Level of Trade and CEP Offset

As set forth in section 773(a)(1)(B)(i) of the Act and in the SAA

at 829-331, to the extent practicable, the Department will calculate NV

based on sales at the same level of trade as the U.S. sales. When the

Department is unable to find sales in the comparison market at the same

level of trade as the U.S. sale(s), the Department may compare sales in

the U.S. and foreign markets at different levels of trade. Section

773(a)(7)(A) provides that if we compare a U.S. sale with a home market

sale made at a different level of trade, when appropriate, we will

adjust NV to account for this difference. When NV is based on CV, the

level of trade is that of the sales from which we derive selling,

general and administrative (``SG&A'') expenses and profit.

For comparisons to CEP sales, section 773(a)(7)(B) establishes the

procedure for making a CEP offset when two conditions are met. First,

the NV is established at a level of trade which constitutes a more

advanced stage of distribution than the level of trade of the CEP, and

second, the data available do not establish an appropriate basis for

calculating a level of trade adjustment.

We have not applied a level of trade adjustment or CEP offset for

any respondent in this investigation because none of the respondents

claimed a level of trade adjustment and we are unable

[[Page 25906]]

to determine whether the NVs for each respondent are calculated at

different levels of trade than their U.S. sales. As explained below in

the ``Normal Value'' section of this notice, we calculated NV for each

respondent based entirely on CV. We derived SG&A and profit from data

contained in each respondents' financial statements. This data does not

permit an appropriate level of trade analysis because we are unable to

isolate the particular selling expenses associated with the selling

functions for each respondents' NV. Therefore, we find insufficient

evidence on the record to justify a level of trade adjustment or CEP

offset.

Export Price/Constructed Export Price

Unicatch

We used EP in accordance with section 772(a) of the Act where the

subject merchandise was sold to unaffiliated customers prior to

importation and the CEP methodology was not indicated by the facts of

record. We used CEP in accordance with section 772(b) of the Act where

the subject merchandise was sold to unaffiliated customers after

importation. We calculated EP/CEP, as appropriate, based on packed

prices, either FOB Taiwan, C&F USA, CIF USA, Free on Road (``FOR'')

Taiwan, or FOB U.S. affiliate's warehouse to the first unaffiliated

purchaser in the United States. For both EP and CEP sales we made

deductions from the starting price (gross unit price) for discounts,

inland freight from the plant/warehouse to port of exit, Taiwan

brokerage and handling, international freight, marine insurance, U.S.

inland freight from port to the warehouse, and U.S. customs duties,

where appropriate. We also adjusted the starting price and quantity for

returns. We added to both EP and CEP reported duty drawback amounts.

For Unicatch's CEP sales, we made additional deductions, in

accordance with section 772(d) (1) and (2) of the Act, for commissions,

credit expenses, indirect selling expenses, and inventory carrying

costs. Pursuant to section 772(d)(3) of the Act, the price was further

reduced by an amount for profit, to arrive at the CEP. In accordance

with section 773(f) of the Act, the CEP profit rate was calculated

using the expenses incurred by Unicatch and its affiliates on their

sales of the subject merchandise in the United States and the profit

associated with those sales. Because Unicatch had no home market sales,

we did not include any home market expenses in the CEP profit rate

calculation.

Lei Chu

We used EP in accordance with section 772(a) of the Act because the

subject merchandise was sold to unaffiliated customers before

importation and the CEP methodology was not indicated by the facts of

record. We calculated EP based on packed prices, either FOB, CNF USA,

or CIF USA to the first unaffiliated purchaser in the United States.

Where appropriate, we made deductions from the starting price (gross

unit price) for inland freight from the plant/warehouse to port of

exit, brokerage and handling in Taiwan, international freight, marine

insurance, and bank charges. We added to EP reported duty drawback

amounts.

S&J

We used EP in accordance with section 772(a) of the Act because the

subject merchandise was sold to unaffiliated customers before

importation and the CEP methodology was not indicated by the facts of

record. We calculated EP based on packed prices, either FOB, CNF, or

CIF to the first unaffiliated purchaser in the United States. Where

appropriate, we made deductions from the starting price (gross unit

price) for inland freight from the plant/warehouse to port of exit,

brokerage and handling in Taiwan, international freight, marine

insurance and direct selling expenses.

Romp

We used EP in accordance with section 772(a) of the Act because the

subject merchandise was sold to unaffiliated customers before

importation and the CEP methodology was not indicated by the facts of

record. We calculated EP based on packed prices, FOB to the first

unaffiliated purchaser in the United States. Where appropriate, we made

deductions from the starting price (gross unit price) for inland

freight from the plant/warehouse to port of exit, and brokerage and

handling in Taiwan. We added to EP reported duty drawback amounts.

Normal Value

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 greater than five percent of the aggregate volume of U.S. sales), we

compare each respondent'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. Unicatch, Lei Chu,

S&J, and Romp reported that they had no home market sales during the

POI. Therefore, we have determined that none of the respondents have a

viable home market. Because Unicatch, Lei Chu, S&J, and Romp also

reported that they had no third country sales during the POI, we based

normal value on CV in accordance with section 773(a)(4) of the Act.

Calculation of CV

In accordance with section 773(e)(1) of the Act, we calculated CV

based on the sum of a respondent's cost of materials, fabrication,

SG&A, profit and U.S. packing costs as reported in the U.S. sales

databases. In this case, none of the respondents had home market

selling expenses or home market profit upon which to base CV.

Section 773(e)(2)(B) of the Act sets forth three alternatives for

computing profit and SG&A without establishing a hierarchy or

preference among the alternative methods. We did not have the necessary

cost data for methods one (calculating SG&A and profit incurred by the

producer on the home market sales of merchandise of the same general

category as the exports in question), or two (averaging SG&A and profit

of other investigated producers of the foreign like product). The third

alternative (section 773(e)(2)(B)(iii) of the Act) provides that profit

and SG&A may be computed by any other reasonable method, capped by the

amount of profit normally realized on sales in the home market of the

same general category of products. The SAA states that, if the

Department does not have the data to determine amounts for profit under

alternatives one and two or a profit cap under alternative three, it

may apply alternative three (without determining the cap) on the basis

of ``the facts available.'' SAA at 841. Therefore, as the facts

available, we are using each respondent's overall profit and SG&A rate

associated with its total sales as recorded in its most recent

financial statement. Because the figures recorded in the financial

statements are company-specific and contemporaneous with the POI, we

preliminarily determine this data to be a reasonable surrogate for SG&A

and profit of the subject merchandise. However, we will consider the

issue of appropriate SG&A and profit information further for the final

determination and invite comment on this issue.

Price to CV Comparisons

Because we based SG&A for CV on the financial statements of each

individual company, where we compared CV to EP, we did not make any

circumstance of sale adjustments for direct expenses and

[[Page 25907]]

commissions as we were unable to split out from total SG&A these

expenses.

Currency Conversion

We made currency conversions into U.S. dollars based on the

official exchange rates in effect on the dates of the U.S. sales as

certified by the Federal Reserve Bank.

Section 773A(a) of the Act directs the Department to convert

foreign currencies based on the dollar exchange rate in effect on the

date of sale of the subject merchandise, except if it is established

that a currency transaction on forward markets is directly linked to an

export sale. When a company demonstrates that a sale on forward markets

is directly linked to a particular export sale in order to minimize its

exposure to exchange rate losses, the Department will use the rate of

exchange in the forward currency sale agreement.

Section 773A(a) also directs the Department to use a daily exchange

rate in order to convert foreign currencies into U.S. dollars unless

the daily rate involves a fluctuation. It is the Department's practice

to find that a fluctuation exists when the daily exchange rate differs

from the benchmark rate by 2.25 percent. The benchmark is defined as

the moving average of rates for the past 40 business days. When we

determine a fluctuation to have existed, we substitute the benchmark

rate for the daily rate, in accordance with established practice.

Further, section 773A(b) directs the Department to allow a 60-day

adjustment period when a currency has undergone a sustained movement. A

sustained movement has occurred when the weekly average of actual daily

rates exceeds the weekly average of benchmark rates by more than five

percent for eight consecutive weeks. (For an explanation of this

method, Policy Bulletin 96-1: Currency Conversions (61 FR 9434, March

8, 1996)). Such an adjustment period is required only when a foreign

currency is appreciating against the U.S. dollar. The use of an

adjustment period was not warranted in this case because the New Taiwan

dollar did not undergo a sustained movement.

Critical Circumstances

The petition contained a timely allegation that there is a

reasonable basis to believe or suspect that critical circumstances

exist with respect to imports of subject merchandise. Section 733(e)(1)

of the Act provides that the Department will determine that there is a

reasonable basis to believe or suspect that critical circumstances

exist if: (A)(i) there is a history of dumping and material injury by

reason of dumped imports in the United States or elsewhere of the

subject merchandise, or (ii) the person by whom, or for whose account,

the merchandise was imported knows or should have known that the

exporter was selling the subject merchandise at less than its fair

value and that there was likely to be material injury by reason of such

sales, and (B) there have been massive imports of the subject

merchandise over a relatively short period.

To determine that there is a history of dumping of the subject

merchandise, the Department normally considers evidence of an existing

antidumping duty order on CRN in the United States or elsewhere to be

sufficient. See e.g., Preliminary Determinations of Critical

Circumstances: Brake Drums and Rotors from the People's Republic of

China, 61 FR 55269 (Oct. 25, 1996); Notice of Final Determinations of

Sales at Less Than Fair Value: Brake Drums and Rotors from the People's

Republic of China, 62 FR 9160 (Feb. 28, 1997). Currently, no countries

have outstanding antidumping duty orders on CRN from Taiwan. The

petitioner alleged a history of dumping based upon antidumping orders

on steel wire nails from Korea and the People's Republic of China, both

of which covered CRN. See Certain Steel Wire Nails From Korea; Final

Results of Changed Circumstances Administrative Review and Revocation

of Antidumping Duty Order, 50 FR 40045 (Oct. 1, 1985); Final Results of

Changed Circumstances Administrative Review and Revocation of

Antidumping Duty Order; Certain Steel Wire Nails from The People's

Republic of China, 52 FR 33463 (Sept. 3, 1987). We preliminarily

determine that these antidumping orders are not a sufficient basis to

find a history of dumping because both orders were revoked several

years ago. However, we will consider this issue further for the final

determination and we invite interested parties to comment on the issue.

In determining whether an importer knew or should have known that

the exporter was selling subject merchandise at less than fair value

and thereby causing material injury, the Department normally considers

margins over 15% for EP sales and 25% for CEP sales to impute knowledge

of dumping and of resultant material injury. Brake Drums and Rotors, 62

FR at 9164-65. In this investigation, none of the exporters/

manufacturers has a margin over 15% for EP sales or 25% for CEP sales.

Based on these facts, we determine that the first criterion for

ascertaining whether or not critical circumstances exist is not

satisfied. Therefore, we have not analyzed the shipment data for any of

these companies to examine whether imports of CRN have been massive

over a relatively short period. Thus, because neither alternative of

the first criterion has been met, we preliminarily determine that there

is no reasonable basis to believe or suspect that critical

circumstances exist with respect to exports of CRN from Taiwan by

Unicatch, Lei Chu, Romp, and S&J.

Regarding all other exporters, because we do not find that critical

circumstances exist for any of the investigated companies, we also

determine that critical circumstances do not exist for companies

covered by the ``All Others'' rate.

We will make a final determination concerning critical

circumstances when we make our final determination in this

investigation, if the final determination is affirmative.

Verification

As provided in section 782(i) of the Act, we will verify all

information determined to be acceptable for use in making our final

determination.

Suspension of Liquidation

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

Customs Service to suspend liquidation of all imports of subject

merchandise--except those exported by Unicatch or Lei Chu--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 the Customs Service to require a cash deposit or the posting

of a bond equal to the weighted-average amount by which the NV exceeds

the export price, 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

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

Unicatch.................................................... 0

Lei Chu..................................................... 4.38

Romp........................................................ 6.09

S&J......................................................... 6.21

K. Ticho.................................................... 40.28

All Others.................................................. 5.39

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

Pursuant to section 735(c)(5)(A) of the Act, the Department has

excluded zero margins and the margin determined entirely under section

776 of the Act from the calculation of the ``All Others Rate.''

[[Page 25908]]

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.

Public Comment

Case briefs or other written comments in at least ten copies must

be submitted to the Assistant Secretary for Import Administration no

later than July 30, 1997, and rebuttal briefs, no later than August 6,

1997. A list of authorities used and an executive summary of issues

should accompany any briefs submitted to the Department. Such summary

should be limited to five pages total, including footnotes. In

accordance with section 774 of the Act, we will hold a public hearing,

if requested, to afford interested parties an opportunity to comment on

arguments raised in case or rebuttal briefs. Tentatively, the hearing

will be held on August 7th, at 9:00 a.m. in Room 1412 at the U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington, D.C. 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 request to the Assistant

Secretary for Import Administration, U.S. Department of Commerce, Room

1870, within ten 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. If this investigation proceeds normally, we will make our final

determination by 135 days after the publication of this notice in the

Federal Register.

This determination is published pursuant to section 733(d) of the

Act.

Dated: May 5, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-12395 Filed 5-9-97; 8:45 am]

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