Initiation of Antidumping Duty Investigations: Steel Wire Rod From Canada, Germany, Trinidad and Tobago, and Venezuela

DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-826, A-428-822, A-274-802, and A-307-813]

Initiation of Antidumping Duty Investigations: Steel Wire Rod

From Canada, Germany, Trinidad and Tobago, and Venezuela

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: March 24, 1997.

FOR FURTHER INFORMATION CONTACT: James Doyle (Canada and Trinidad and

Tobago), at (202) 482-0172; Edward Easton (Germany), at (202) 482-1777;

or David Goldberger (Venezuela), at (202) 482-4136, Import

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

Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC

20230.

Initiation of Investigations

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (``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).

The Petition

On February 26, 1997, the Department of Commerce (``the

Department'') received a petition filed in proper form by Connecticut

Steel Corp., Co-Steel Raritan, GS Industries, Inc., Keystone Steel &

Wire Co., North Star Steel Texas, Inc., and Northwestern Steel & Wire

Co. (``petitioners''). The Department received supplemental information

to the petition on March 11, 1997.

In accordance with section 732(b) of the Act, petitioners allege

that imports of steel wire rod (``SWR'') from Canada, Germany, Trinidad

& Tobago, and Venezuela are being, or are likely to be, sold in the

United States at less than fair value within the meaning of section 731

of the Act, and that such imports are materially injuring an industry

in the United States.

The Department finds that petitioners have standing to file the

petition because they are interested parties as defined in section

771(9)(C) of the Act.

Scope of Investigations

The products covered by these investigations 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 these

investigations:

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 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

[[Page 13855]]

for convenience and customs purposes, our written description of the

scope of these investigations is dispositive.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Act requires that a petition be filed on

behalf of the domestic industry. Section 732(c)(4)(A) of the Act

provides that a petition meets this requirement if the domestic

producers or workers who support the petition account for: (1) at least

25 percent of the total production of the domestic like product; and

(2) more than 50 percent of the production of the domestic like product

produced by that portion of the industry expressing support for, or

opposition to, the petition.

Section 771(4)(A) of the Act defines the ``industry'' as the

producers of a domestic like product. Thus, to determine whether the

petition has the requisite industry support, the statute directs the

Department to look to producers and workers who account for production

of the domestic like product. The International Trade Commission

(``ITC''), which is responsible for determining whether ``the domestic

industry'' has been injured, must also determine what constitutes a

domestic like product in order to define the industry. However, while

both the Department and the ITC must apply the same statutory

definition of domestic like product, they do so for different purposes

and pursuant to separate and distinct authority. In addition, the

Department's determination is subject to limitations of time and

information. Although this may result in different definitions of the

like product, such differences do not render the decision of either

agency contrary to the law.1

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

\1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp.

639, 642-44 (CIT 1988); High Information Content Flat Panel Displays

and Display Glass Therefor from Japan: Final Determination;

Rescission of Investigation and Partial Dismissal of Petition, 56

Fed. Reg. 32376, 32380-81 (July 16, 1991).

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

Section 771(10) of the Act defines domestic like product as ``a

product that is like, or in the absence of like, most similar in

characteristics and uses with, the article subject to an investigation

under this title.'' Thus, the reference point from which the like

product analysis begins is ``the article subject to an investigation,''

i.e., the class or kind of merchandise to be investigated, which

normally will be the scope as defined in the petition.

The petition refers to the single domestic like product defined in

the ``Scope of Investigation'' section, above. The Department has no

basis on the record to find the petition's definition of the domestic

like product clearly inaccurate. In this regard, we have found no basis

on which to reject petitioners' representations that there are clear

dividing lines, in terms of characteristics or uses, between the

product under investigation on the one hand and, on the other hand,

other carbon and alloy coiled steel products. The Department has,

therefore, adopted the like product definition set forth in the

petition. In this case, petitioners established industry support

representing approximately 75 percent of the production of the domestic

like product.

On March 13, 1997, Stelco Inc. (``Stelco''), a producer of wire rod

in Canada, alleged that the petition covering imports from Canada did

not contain information concerning support from domestic coiled bar

producers. Stelco argued that domestic bar producers' support was

necessary because petitioners' March 4, 1997, submission specifically

included ``other coiled products known in the industry as `bar.'''

Accordingly, Stelco argued that the Department should poll the industry

in order to evaluate the question of industry support.

The Department has determined that the petition contained adequate

evidence of sufficient industry support and that polling is therefore

unnecessary. Petitioners established industry support representing

approximately 75 percent of the production of the domestic like

product, which percentage includes the coiled bar. Stelco did not

allege and has not demonstrated that coiled bar is a separate domestic

like product requiring a separate determination as to industry support.

Further, we note that both the American Iron and Steel Institute and

HTSUS statistics treat coiled bars and coiled rods as one category.

Because it is reasonable to find a single domestic like product for

purposes of evaluating industry support in these circumstances,

petitioners are well within the statutory requirements for industry

support--both among all producers and among producers expressing an

opinion--for the single like product covered by the petition. Finally,

the Department notes that the inclusion or exclusion in industry

support calculations of ``tire cord'' wire rod--which is excluded from

the scope of these proceedings--does not materially affect petitioners'

approximate support level of 75 percent (see Initiation Checklist,

dated March 18, 1997, and found in the official file in Room B-099).

Accordingly, the Department determines that the petition is filed on

behalf of the domestic industry within the meaning of section 732(b)(1)

of the Act.

Export Price and Normal Value

The following are descriptions of the allegations of sales at less

than fair value upon which our decisions to initiate these

investigations are based. Should the need arise to use any of this

information in our preliminary or final determinations for purposes of

facts available under section 776 of the Act, we will re-examine the

information and revise the margin calculations, if appropriate.

Canada

Petitioners identified three Canadian exporters and producers of

SWR: Ivaco, Inc. (``Ivaco''), Sidbec-Dosco, Inc. (``Sidbec-Dosco''),

and Stelco, Inc. (``Stelco''). Petitioners based export price on price

quotations (FOB-customer's location) to U.S. purchasers for carbon wire

rod products manufactured by Sidbec-Dosco and Ivaco in Canada. The

quoted prices were for three grades of rod during the months of March

and April and the fourth quarter of 1996; they also were export prices

(i.e., prices to unrelated U.S. customers for purchase prior to

export).

Petitioners made deductions for inland freight from the Canadian

steel plants to the place of delivery to the U.S. purchaser, brokerage

fees and customs duties paid upon entry of the merchandise into the

United States. Petitioners obtained freight and brokerage fee

quotations from a freight company offering trucking service in both

Canada and the United States. Petitioners calculated customs duty

charges based on the customs value for each U.S. product.

With respect to normal value, petitioners obtained home market FOB

price quotations for carbon wire rod manufactured by Sidbec-Dosco and

Ivaco in Canada. The prices were quoted in Canadian dollars on a

delivered basis, for delivery in the fourth quarter of 1996.

Petitioners made deductions for inland freight from the Canadian

steel plants to the home market customer, and for the credit costs.

Petitioners obtained freight and brokerage fee quotations from a

freight company offering trucking services in Canada and the United

States. Petitioners based the home market credit expense calculation on

thirty day credit terms, which were supported by the affidavit of the

regional manager of a U.S. manufacturer of wire rod, and the 1996

fourth quarter average of the monthly stated prime rate

[[Page 13856]]

reported in the Canadian Economic Observer. Petitioners noted that

prices do not include any Goods and Service Tax, and that they did not

make an adjustment for differences in physical characteristics of this

merchandise, although the grades used for one of the price comparisons

were different.

In addition, the petitioners provided information demonstrating

reasonable grounds to believe or suspect that sales of SWR in the home

market were made at prices below the fully allocated COP, within the

meaning of section 773(b) of the Act, and requested that the Department

conduct a country-wide sales below cost investigation. Therefore,

pursuant to sections 773(a)(4) and 773(e) of the Act, petitioners based

normal value for sales in Canada on constructed value (``CV'').

Pursuant to section 773(e) of the Act, CV consists of the cost of

manufacture (``COM''), selling, general, and administrative (``SG&A'')

expenses, and profit. Petitioners calculated COM based on their own

production experience, adjusted for known differences between costs

incurred to produce SWR in the United States and costs incurred for

producing the subject merchandise in Canada. To calculate SG&A and

financing expenses, the petitioners relied on the most recent company-

specific and/or country-specific data for the steel industry available

to the public. To calculate CV profit, the petitioners used the most

recent profitability data for Canadian steel manufacturers available to

the public.

The average dumping margins in the petition based on price-to-price

comparisons range from 14.59 percent to 17.89 percent. After certain

adjustments we made to the CV data listed in the petition, average

dumping margins based on price-to-CV comparisons range from 27.91

percent to 40.55 percent.

Germany

Petitioners identified four exporters and producers of SWR:

Brandenburg Elektrostahlwerk GmbH (``Brandenburg''), Ispat Hamburger

Stahlwerke GmbH, Saarstahl AG (``Saarstahl''), and Thyssen Stahl AG.

Petitioners obtained price quotes for two grades of SWR products

manufactured by Brandenburg and by Saarstahl and offered for sale to

unaffiliated purchasers in the United States. From these quoted prices,

petitioners deducted foreign inland freight from the mill to the port,

foreign port and loading fees, ocean freight and insurance, U.S. port

and unloading fees, U.S. customs duties, and U.S. inland freight.

With respect to normal value, petitioners obtained two price quotes

for Brandenburg and Saarstahl for SWR products offered for sale to

customers in Germany which are either identical or similar to those

sold to the United States. Petitioners adjusted these prices for

estimated inland transportation and credit expenses. Petitioners did

not make an adjustment for differences in physical characteristics of

the merchandise used for a price comparison in the two markets, even

though the grades used in the comparison were different.

In addition, the petitioners alleged that sales in the home market

were made at prices below the fully allocated COP, and requested that

the Department conduct a country-wide sales below COP investigation.

Therefore, petitioners constructed a normal value for sales in Germany.

To calculate CV, petitioners based COM on their own production

experience, adjusted for known differences between costs incurred to

produce SWR in the United States and costs incurred for producing the

merchandise in Germany. To calculate SG&A and financing expenses,

petitioners relied on the most recent company-specific and/or country

specific data for the steel industry available to the public. To

calculate CV profit, petitioners used the most recent profitability

data for German steel manufacturers available to the public.

The dumping margins based on price-to-price comparisons range from

19.95 percent to 36.68 percent. After certain adjustments we made to

the CV data listed in the petition, average dumping margins based on

price-to-CV comparisons range from 80.30 percent to 153.10 percent.

Trinidad and Tobago

Petitioners identified Caribbean Ispat, Ltd. (``CIL'') as the sole

exporter and producer of SWR from Trinidad and Tobago. Petitioners

based export price on FOB-customer's location prices to U.S. purchasers

for carbon wire rod products manufactured by CIL in Trinidad and

Tobago. The quoted prices were for two grades of rod during the month

of June and the first quarter of 1996; they also were export prices

(i.e., prices to unrelated customers for purchase prior to export).

Petitioners made deductions for Trinidad and Tobago cargo handling

fees, ocean freight, U.S. port and handling fees, and inland freight

charges from the U.S. port to the U.S. purchaser location. Petitioners

used the published port rates by the Point Lisas Industrial Port

Development Corp., Ltd. Petitioners based their estimate of ocean

freight and insurance costs by deducting the 1996 unit customs value of

wire rod imports from Trinidad and Tobago, entered through the

Louisiana port, by the CIF value of the same product. Petitioners did

not adjust for duties because the merchandise enters duty free under

the Caribbean Basin Initiative.

For normal value, petitioners stated that the Trinidad and Tobago

prices were quoted on an FOB plant basis, so there was no need to

adjust for inland freight; quoted prices were net of value added tax,

so there was no need for a tax adjustment; payment terms specify cash

on delivery, so there were no home market credit expenses.

In addition, the petitioners alleged that sales in the home market

were made at prices below the fully allocated COP and requested that

the Department conduct a sales below cost investigation. Therefore,

petitioners constructed a normal value for sales in Trinidad and

Tobago. To calculate CV, petitioners based COM for CIL based on

publicly available data and their own production experience, adjusted

for known differences between costs incurred to produce SWR in the

United States and costs incurred for production of the subject

merchandise in Trinidad and Tobago. To calculate SG&A and financing

expenses, petitioners relied on the most recent company-specific data

available to the public. To calculate profit for CV, the petitioners

relied on an average profit figure for a U.S. surrogate manufacturer.

We recalculated profit, using data supplied by the U.S. Embassy in

Trinidad and Tobago.

The dumping margins based on price-to-price comparisons range from

40.07 percent to 40.88 percent. After certain adjustments we made to

the CV data listed in the petition, average dumping margins based on

price-to-CV comparisons range from 77.88 percent to 78.94 percent.

Venezuela

Petitioners identified two Venezuelan exporters and producers of

SWR: CVG Siderurgica Del Orinoco C.A. (``SIDOR'') and Sidetur-

Siderugica del Turbio SA. Petitioners obtained FOB-delivered price

quotations to U.S. purchasers for SWR products manufactured by SIDOR in

Venezuela. Petitioners deducted ocean freight, customs duties, port

charges, and inland freight from the port of entry to the customer

site.

With regard to normal value, petitioners relied upon market

research to obtain FOB-plant price quotes from SIDOR. Petitioners made

a circumstance-of-sale adjustment to

[[Page 13857]]

account for differences in credit expenses associated with the U.S. and

home market sales.

In addition, the petitioners alleged that sales in the home market

were made at prices below the fully allocated COP and requested that

the Department conduct a sales below cost investigation. Therefore, the

petitioners constructed a normal value for sales in Venezuela. To

calculate CV, petitioners based COM for SIDOR based on publicly

available data and their own production experience, adjusted for known

differences between costs incurred to produce SWR in the United States

and costs incurred for producing the subject merchandise in Venezuela.

To calculate SG&A and financing expenses, the petitioners relied on the

most recent company-specific data available to the public. To calculate

profit for CV, the petitioners relied on the most recent profitability

data for a Venezuelan steel manufacturer available to the public.

The dumping margins in the petition based on price-to-price

comparisons range from 15.46 percent to 34.06 percent. The dumping

margins in the petition based on price-to-CV comparisons range from

40.99 percent to 66.75 percent.

Initiation of Cost Investigations

Pursuant to section 773(b) of the Act, petitioners alleged that

sales in the home markets of Canada, Germany, Trinidad and Tobago, and

Venezuela were made at prices below the fully allocated COP and,

accordingly, requested that the Department conduct a country-wide sales

below COP investigation in each of these petitioned-for antidumping

investigations. The Statement of Administrative Action (``SAA''),

submitted to the Congress in connection with the interpretation and

application of the Uruguay Round Agreements, states that an allegation

of sales below COP need not be specific to individual exporters or

producers. SAA, H.R. Doc. No. 316, 103d Cong., 2d Sess., at 833 (1994).

The SAA, at 833, states that ``Commerce will consider allegations of

below-cost sales in the aggregate for a foreign country, just as

Commerce currently considers allegations of sales at less than fair

value on a country-wide basis for purposes of initiating an antidumping

investigation.''

Further, the SAA provides that ``new section 773(b)(2)(A) retains

the current requirement that Commerce have `reasonable grounds to

believe or suspect' that below cost sales have occurred before

initiating such an investigation. `Reasonable grounds' * * * exist when

an interested party provides specific factual information on costs and

prices, observed or constructed, indicating that sales in the foreign

market in question are at below-cost prices.'' Id. Based upon the

comparison of the adjusted prices from the petition of the foreign like

products in their respective home markets to their costs of production,

we find the existence of ``reasonable grounds to believe or suspect''

that sales of these foreign like products were made below their

respective COPs within the meaning of section 773(b)(2)(A)(i) of the

Act. Accordingly, the Department is initiating the requested country-

wide cost investigations.

Fair Value Comparisons

Based on the data provided by petitioners, there is reason to

believe that imports of SWR from Canada, Germany, Trinidad and Tobago,

and Venezuela are being, or are likely to be, sold at less than fair

value.

Initiation of Antidumping Investigations

We have examined the petition on SWR and have found that it meets

the requirements of section 732 of the Act, including the requirements

concerning allegations of the material injury or threat of material

injury to the domestic producers of a domestic like product by reason

of the subject imports, allegedly sold at less than fair value.

Therefore, we are initiating antidumping duty investigations to

determine whether imports of SWR from Canada, Germany, Trinidad and

Tobago, and Venezuela are being, or are likely to be, sold in the

United States at less than fair value. Unless extended, we will make

our preliminary determinations by August 5, 1997.

Distribution of Copies of the Petitions

In accordance with section 732(b)(3)(A) of the Act, a copy of the

public version of each petition has been provided to the

representatives of the governments of Canada, Germany, Trinidad and

Tobago, and Venezuela. We will attempt to provide a copy of the public

version of each petition to each exporter named in the petition (as

appropriate).

International Trade Commission Notification

We have notified the ITC of our initiations, as required by section

732(d) of the Act.

Preliminary Determinations by the ITC

The ITC will determine by April 14, 1997, whether there is a

reasonable indication that imports of SWR from Canada, Germany,

Trinidad and Tobago, and Venezuela are causing material injury, or

threatening to cause material injury, to a U.S. industry. Negative ITC

determinations will result in the particular investigations being

terminated; otherwise, the investigations will proceed according to

statutory and regulatory time limits.

Dated: March 18, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-7357 Filed 3-21-97; 8:45 am]

BILLING CODE 3510-DS-P