Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Steel Wire Rod From Trinidad and Tobago

DEPARTMENT OF COMMERCE

International Trade Administration

[A-274-802]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Steel Wire Rod From

Trinidad and Tobago

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: October 1, 1997.

FOR FURTHER INFORMATION CONTACT: Abdelali Elouaradia or Alexander

Braier, Import Administration, International Trade Administration, U.S.

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

Washington, D.C. 20230; telephone: (202) 482-2243 or (202) 482-3818,

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

references to the provisions codified at 19 CFR Part 353 (April 1997).

Although the Department's new regulations, codified at 19 CFR 351 (62

FR 27296, May 19, 1997), do not govern these proceedings, citations to

those regulations are provided, where appropriate, to explain current

departmental practice.

Preliminary Determination

We preliminarily determine that steel wire rod (``SWR'') from

Trinidad & Tobago is being, or is 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 are shown in the ``Suspension of

Liquidation'' section of this notice.

Case History

Since the initiation of this investigation on March 18, 1997 (See

Initiation of Antidumping Duty Investigations: Steel Wire Rod from

Canada, Germany, Trinidad and Tobago, and Venezuela, 62 FR 13854 (March

24, 1997) (``Initiation''), the following events have occurred:

On April 14, 1997, the United States International Trade Commission

(``ITC'') notified the Department of Commerce (``the Department'') of

its affirmative preliminary injury determination in this case.

On April 21, 1997, the Department issued the antidumping duty

questionnaire to counsel for the following producer/exporter of steel

wire rod to the United States: Caribbean Ispat, ltd. (CIL). 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 the constructed value

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

During April and May 1997, the Department received interested party

comments regarding modifications to the product characteristic

reporting requirements. On May 22, 1997, the Department issued revised

product characteristic reporting instructions.

CIL submitted its questionnaire responses in May and June 1997. The

Department issued supplemental requests for information in June, July,

August and September 1997 and received the supplemental responses to

these requests in June, July, August and September 1997. Petitioners in

this investigation (Connecticut Steel Group, Co-Steel Raritan, GS

Industries, Inc., Keystone Steel & Wire Co., North Star Steel Texas,

Inc., and Northwestern Steel & Wire Co.) filed comments on CIL's

questionnaire responses in June, July, August, and September 1997.

On July 3, 1997, petitioners made a timely request for a

postponement of the preliminary determination in this investigation and

the companion investigations of steel wire rod from Canada, Germany,

and Venezuela to September 24, 1997. On July 14, 1997, the Department

postponed the preliminary determinations in these investigations until

September 24, 1997, in accordance with section 733(c)(1) of the Act

(See Notice of Postponement of Preliminary Antidumping Duty

Determinations: Canada, Germany, Trinidad and Tobago, and Venezuela, 62

FR 38257 (July 17, 1997).

Postponement of Final Determination

On September 22, 1997, CIL, the only respondent participating in

this investigation, 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 in the Federal Register. In accordance with

section 735 (a)(2)(A) of the Act and 19 CFR 353.2(b), inasmuch as our

preliminary determination is affirmative, CIL accounts for a

significant proportion of exports of the subject merchandise, and we

have not identified any compelling reasons for denying this request, we

are granting CIL's request and postponing the final determination.

Suspension of liquidation will be extended accordingly. See Final

Determination of Sales at Less Than Fair Value: Certain Pasta From

Italy, 61 FR 30326 (June 14, 1996).

Scope of Investigation

The products covered by this investigation are certain hot-rolled

carbon steel and alloy steel products, in coils, of approximately round

cross section, between 5.00 mm (0.20 inch) and 19.0 mm (0.75 inch),

inclusive, in solid cross-sectional diameter. Specifically excluded are

steel products possessing the above noted physical characteristics and

meeting the Harmonized Tariff Schedule of the United States (HTSUS)

definitions for (a) stainless steel; (b) tool steel; (c) high nickel

steel; (d) ball bearing steel; (e) free machining steel that contains

by weight 0.03 percent or more of lead, 0.05 percent or more of

bismuth, 0.08 percent or more of sulfur, more than 0.4 percent of

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

percent of tellurium; or (f) concrete reinforcing bars and rods.

The following products are also excluded from the scope of this

investigation:

Coiled products 5.50 mm or less in true diameter with an average

partial decarburization per coil of no more than 70 microns in depth,

no inclusions greater than 20 microns, containing by weight the

following: carbon greater than or equal to 0.68 percent; aluminum less

than or equal to 0.005 percent; phosphorous plus sulfur less than or

equal to 0.040 percent; maximum combined copper, nickel and chromium

content of 0.13 percent; and nitrogen less than or equal to 0.006

percent. This product is commonly referred to as ``Tire Cord Wire

Rod.''

Coiled products 7.9 to 18 mm in diameter, with a partial

decarburization of 75 microns or less in depth and seams no more than

75 microns in depth; containing 0.48 to 0.73 percent carbon by weight.

This product is commonly referred to as ``Valve Spring Quality Wire

Rod.''

The products under investigation are currently classifiable under

subheadings

[[Page 51582]]

7213.91.3000, 7213.91.4500, 7213.91.6000, 7213.99.0030, 7213.99.0090,

7227.20.0000, and 7227.90.6050 of the HTSUS. Although the HTSUS

subheadings are provided for convenience and customs purposes, our

written description of the scope of this investigation is dispositive.

North American Wire Products Corporation (NAW), an importer of the

subject merchandise from Germany, has requested that the Department

exclude steel wire rod used to manufacture pipe wrapping wire from the

scope of the antidumping and countervailing duty investigations.

Petitioners have not agreed to this scope exclusion. For purposes of

the preliminary determination, we have not excluded steel wire rod for

manufacturing pipe wrapping wire from the scope.

Period of Investigation

The period of investigation (``POI'') is January 1, 1996 through

December 31, 1996.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all

products produced by the respondent, covered by the description in the

Scope of Investigation section, above, and sold in the home market

during the POI, to be foreign like products for purposes of determining

appropriate product comparisons to U.S. sales. Where there were no

sales of identical merchandise in the home market to compare to U.S.

sales, we compared U.S. sales to the next most similar foreign like

product on the basis of the characteristics listed in the antidumping

duty questionnaire and the May 22, 1997, reporting instructions.

Consistent with our practice, we compared prime merchandise sold in

the United States to prime merchandise sold in the home market, and

secondary merchandise to secondary merchandise. See, e.g., Ceratin

Cold-rolled Carbon Steel Flat Products from the Netherlands; Final

Results of Antidumping Duty Administrative Review, 61 FR 48465

(September 13, 1996).

Fair Value Comparisons

To determine whether sales of steel wire rod sold by CIL to the

United States were made at less than fair value, we compared the Export

Price (``EP'') to the normal value (``NV''), as described in the ``EP''

and ``Normal Value'' sections of this notice below. In accordance with

section 777A(d)(1)(A)(i), we calculated weighted-average EPs for

comparisons to weighted-average NVs.

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the comparison market at

the same level of trade (LOT) as the EP. The NV LOT is that of the

starting-price sales in the comparison market or, when NV is based on

constructed value (CV), that of the sales from which we derive selling,

general and administrative (SG&A) expenses and profit. For EP, the U.S.

LOT is also the level of the starting-price sale, which is usually the

sale from the exporter to the importer. For CEP, it is the level of the

constructed sale from the exporter to the importer.

To determine whether NV sales are at a different LOT than the EP

sales, we examine stages in the marketing process and selling functions

along the chain of distribution between the producer and the

unaffiliated customer. If the comparison-market sales are at a

different LOT, and the difference affects price comparability, as

manifested in a pattern of consistent price differences between the

sales on which NV is based and comparison-market sales at the LOT of

the export transaction, we make an LOT adjustment under section

773(a)(7)(A) of the Act. See Certain Welded Carbon Steel Standard Pipes

and Tubes From India: Preliminary Results of New Shipper Antidumping

Duty Administrative Review, 62 FR 23760, 23761 (May 1, 1997).

Respondent claimed one LOT in the NV market and one LOT in the U.S.

market. CIL did not claim an LOT adjustment. To examine whether such an

adjustment was necessary, we examined CIL's distribution system,

including selling functions, classes of customers, and selling

expenses. We noted that CIL's selling expenses for the POI were the

same for all customers. We found that the selling functions, which

included sales administration, billing, maintaining inventory, and in

some cases arranging freight services, are sufficiently similar in the

U.S. and the home market to consider them as one level of trade. Based

on the findings noted above, we conclude that for these preliminary

results, CIL's U.S. and home market sales were made at the same LOT.

Export Price

We based price in the United States on EP, in accordance with

subsections 772 (a) and (c) of the Act because the subject merchandise

was sold directly to the first unaffiliated purchaser in the United

States prior to importation and CEP was not otherwise warranted based

on the facts on the record.

We calculated EP based on packed prices to the first unaffiliated

customer in the United States. We made adjustments, where appropriate,

for international ocean freight, marine insurance, U.S. brokerage and

handling, U.S. Customs duties and user fee, U.S. inland freight from

port to unaffiliated customer, U.S. inland insurance and survey fee in

both the United States and Trinidad in accordance with section

772(c)(2) of the Act.

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.,

if 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 the 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. Since

CIL's aggregate volume of home market sales of the foreign like product

was greater than five percent of its aggregate volume of U.S. sales for

the subject merchandise, we determined that the home market was viable.

Therefore, we have based NV on home market sales.

Cost of Production Analysis

Pursuant to an allegation made by petitioners, we initiated a cost

of production investigation in our notice of initiation. See Notice of

Initiation, 62 FR 13854 (March 24, 1997). Before making any fair value

comparisons, we conducted the COP analysis described below.

A. Calculation of COP

We calculated the COP based on the sum of respondent's cost of

materials and fabrication for the foreign like product, plus amounts

for home market general expenses and packing costs in accordance with

section 773(b)(3) of the Act. We have recalculated CIL's general and

administrative amounts to include only net foreign exchange losses

related to accounts payable . See Memorandum to Chris Marsh From Taija

Slaughter, September 12, 1997.

B. Test of Home Market Prices

We used the respondent's submitted POI weighted-average COPs, as

adjusted (see above). We compared the weighted-average COP figures to

home market sales of the foreign like product as required under section

773(b) of the Act. In determining whether to disregard home-market

sales made at prices below the COP, we examined whether (1)

[[Page 51583]]

within an extended period of time, such sales were made in substantial

quantities, and (2) whether such sales were made at prices which

permitted the recovery of all costs within a reasonable period of time.

On a product-specific basis, we compared the COP to the home market

prices, less any applicable movement charges, rebates, discounts, and

direct and indirect selling expenses.

C. Results of COP Test

Pursuant to section 773(b)(2)(C), where less than 20 percent of the

respondent's sales of a given product were at prices less than the COP,

we did not disregard any below-cost sales of that product because we

determined that the below-cost sales were not made in ``substantial

quantities.'' Where 20 percent or more of the respondent's sales of a

given product during the POI were at prices less than the COP, we

determined such sales to have been made in ``substantial quantities''

within an extended period of time in accordance with section

773(b)(2)(B) of the Act. In such cases, we also determined that such

sales were not made at prices which would permit recovery of all costs

within a reasonable period of time, in accordance with section

773(b)(2)(D) of the Act and, therefore, we disregarded the below-cost

sales. Where all sales of a specific product were at prices below the

COP, we disregarded all sales of that product, and calculated NV based

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

D. Calculation of CV

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

based on the sum of respondent's cost of materials, fabrication, SG&A,

interest expenses and profit. As noted above, we recalculated CIL's

general and administrative amounts. In accordance with section

773(e)(2)(A) of the Act, we based SG&A 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.

Price-to-Price Comparisons

For those product comparisons for which there were sales at prices

above the COP, we based NV on prices to home market customers. We made

adjustments, where appropriate, for physical differences in the

merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.

We calculated NV based on prices to unaffiliated home market

customers. We made deductions for discounts, rebates, and inland

freight. In addition, we made circumstance-of-sale adjustments or

deductions for credit and warranty, where appropriate. In accordance

with section 773(a)(6), we deducted home market packing costs and added

U.S. packing costs.

Currency Conversions

In accordance with section 773(A) of the Act, 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.

Verification

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

information relied upon 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 entries of steel wire rod

from Trinidad and Tobago, that are entered, or withdrawn from

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

notice in the Federal Register. Normally, we would instruct the Customs

Service to require a cash deposit or the posting of a bond equal to the

weighted-average amount by which the normal value exceeds the export

price, as indicated in the chart below. However, the product under

investigation is also subject to a concurrent countervailing duty

investigation. Article VI.5 of the General Agreement on Tariffs and

Trade (GATT) provides that ``[n]o product * * * shall be subject to

both antidumping and countervailing duties to compensate for the same

situation of dumping or export subsidization.'' This provision is

implemented by section 772(c)(1)(C) of the Act. Since antidumping

duties cannot be assessed on the portion of the margin attributed to

export subsidies, there is no reason to require a cash deposit or bond

for that amount.

The Department has determined in Preliminary Affirmative

Countervailing Duty Determination: Steel Wire Rod from Trinidad and

Tobago, 62 FR 41927 (August 4, 1997), that the product under

investigation benefitted from an export subsidy. To obtain the most

accurate estimate of the antidumping duty, and to fulfill our

international obligations arising under the GATT, we are subtracting,

for deposit purposes, the cash deposit rate attributable to the export

subsidies found in the countervailing duty investigation. For Caribbean

Ispat, Ltd., the attributable rate is 3.45 percent. We are also

subtracting from the ``All Others'' rate the cash deposit rate

attributable to the export subsidy included in the countervailing duty

investigation for the All Others rate, 3.45 percent. Pursuant to

Article of 17.4 of the WTO Agreement on Subsidies and Countervailing

Measures, in the absence of an affirmative final determination the

Department will terminate the suspension of liquidation in the

companion countervailing duty investigation of steel wire rod from

Trinidad and Tobago, effective December 2, 1997, which is 120 days

after the date of publication of that preliminary determination.

Accordingly, on December 2, 1997, if the ITC has not yet made an

affirmative injury determination in the countervailing duty

investigation, the antidumping deposit rate will revert to the full

amount calculated in this preliminary determination. These suspension

of liquidation instructions will remain in effect until further notice.

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

Weighted-

Exporter/manufacturer average margin Bonding

percentage percentage

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

Caribbean Ispat Limited.................... 13.00 9.55

All Others................................. 13.00 9.55

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

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 six copies must

be submitted to the Assistant Secretary for Import Administration no

later than December 22, 1997, and rebuttal briefs, no later than

January 5, 1998. 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 January 9, 1998, at the U.S. Department of Commerce,

14th Street and Constitution Avenue, N.W., Washington, D.C. 20230.

Parties should

[[Page 51584]]

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: September 24, 1997.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 97-26042 Filed 9-30-97; 8:45 am]

BILLING CODE 3510-DS-P