Brass Sheet and Strip From the Netherlands: Notice of Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-421-701]

Brass Sheet and Strip From the Netherlands: Notice of 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 (BSS) from the Netherlands (A-421-701). This review covers one

producer/manufacturer/exporter of the subject merchandise to the United

States during the period August 1, 1996 through July 31, 1997.

We preliminarily determine that sales of BSS from the Netherlands

have not been made below Normal Value (NV). If the preliminary results

are adopted in our final results of administrative review, we will

instruct the U.S. Customs Service not to assess antidumping duties on

entries of the subject merchandise made during period of review.

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 11, 1998.

FOR FURTHER INFORMATION CONTACT: Karla Whalen at 202/482-1386 or

[[Page 25822]]

Lisette Lach at 202/482-0190, AD/CVD Enforcement Group III, Import

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

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

20230.

SUPPLEMENTARY INFORMATION:

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 of Commerce's (the

Department's) regulations are to the regulations last codified at 19 FR

Part 351 (May 19, 1997).

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 4, 1997, the Department published in the Federal

Register a notice announcing the opportunity to request an

administrative review of the antidumping duty order on BSS from the

Netherlands for the period August 1, 1996, through July 31, 1997 (62 FR

41925). On August 29, 1997, in accordance with 19 CFR 353.213 (b), OBV

filed a letter requesting an administrative review of its sales in this

period of review. On September 25, 1997, we published in the Federal

Register a notice of initiation of this administrative review (62 FR

50292). On October 23, 1997, petitioners in this proceeding

1 entered a notice of appearance in this administrative

review.

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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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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 (CDA) 200 Series or the Unified

Numbering System (UNS) C20000 series. This review does not cover

products the chemical compositions of which are defined by other CDA or

UNS 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.

Product Comparisons

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

BSS, covered by the descriptions in the ``Scope of the Review'' section

of this notice, supra, and sold in the home market during the POR, to

be foreign like products for the purpose of determining appropriate

product comparisons to U.S. sales of BSS. 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 Appendix V of the

Department's October 24, 1997 antidumping questionnaire. In making the

product comparisons, we matched foreign like products based on the

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

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

form.

For purposes of the 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.

Date of Sale

On December 11, 1997, petitioners submitted a letter, objecting to

OBV's use of the invoice date as the date of sale for the period of

review. Citing a questionnaire response dated November 8, 1991, wherein

OBV stated that sales in the United States were based primarily on

long-term contracts generally negotiated on an annual basis and that

all material terms of sale were established in these long-term

contracts, petitioners urged the Department to use the frame agreement

date, rather than the invoice date, as the date of sale.

On December 22, 1997, OBV responded to petitioners' date of sale

comment. Citing 19 CFR 351.401(i), respondent asserted that

petitioners' objection to the use of the invoice date as the date of

sale ignores recent Department practice. OBV further argued that using

the frame agreement date as the date of sale would be incorrect because

frame agreements do not firmly establish the material terms of sale.

Rather, they contain an estimate by the customer of the type and

approximate quantity of the merchandise the customer expects to order

over the period of time covered by the frame agreements. OBV asserted

that although frame agreements do contain a fabrication price, they do

not contain a metal price; 2 therefore, OBV contended that

such agreements do not establish the total price to be paid by the

customer. Furthermore, respondent stated that frame agreements are non-

binding since the quantity will vary from the quantity stated in the

frame agreement. Finally, OBV stated that since the Department

determined the use of the invoice date as the date of sale in the

immediately preceding review, it should continue to find that the

invoice date constitutes the date of sale.

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\2\ A ``fabrication price'' is the price charged by companies

such as OBV to transform raw materials into finished BSS. A ``metal

price'' is the price OBV charges for the necessary raw materials.

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In the immediately preceding review, the Department used the

invoice date as the date of sale because we found that it was the first

date on which all terms of sale (i.e., quantity, metal price and

fabrication price) were established. The record in this review supports

the same conclusion. Therefore, in accordance with 19 CFR 351.401(i)

and Department practice, we have preliminarily determined that the

invoice date is the appropriate date of sale for OBV.

Differences in 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 or constructed export price

(CEP) transaction. 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 expenses (SG&A) expenses and profit. For EP, the U.S.

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

than EP or CEP, we examine stages in the marketing process and selling

functions along the chain of distribution between the producer and the

unaffiliated customer.

[[Page 25823]]

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 a

LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP

sales, if the NV level is more remote from the factory than the CEP

level and there is no basis for determining whether the difference in

the levels between NV and CEP affects price comparability, we adjust NV

under section 773(a)(7)(B) of the Act (the CEP offset provision). See

Notice of Final Determination of Sales at Less Than Fair Value: Certain

Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731

(November 19, 1997).

OBV did not request an adjustment for LOT for this POR. To ensure

that no such adjustment was necessary, we examined OBV's questionnaire

responses with regard to its distribution system, including selling

functions, class of customer and selling expenses. We noted that OBV

had the same type of channel of distribution and class of customer for

all sales in both markets. We also noted that its selling expenses for

the POR were the same for all customers. In addition, we examined

information concerning OBV's different payment terms (including

discounts) and any possible selling agents with which OBV works. Based

on the available information on the record, it appears OBV did not have

a formal or official policy for providing payment terms, including

discounts, to different customers, nor did OBV have selling agents.

Finally, employees of OBV or a sister company, OAB (Outokumpu Copper

Radiator Strip A.B.), appear to have handled all sales of the foreign

like product. Accordingly, we preliminarily find that all sales in the

home market and the U.S. market were made at the same level of trade.

Therefore, all price comparisons are at the same level of trade and an

adjustment pursuant to section 773(a)(7)(A) of the Act is unwarranted.

Fair Value Comparisons

To determine whether OBV's sales of BSS to the United States were

made at less than fair value, we compared EP to NV, as described in the

``Export Price'' and ``Normal Value'' sections of this notice. In

accordance with section 771A(d)(2) of the Act, we calculated monthly

weighted-average prices for NV and compared these to individual U.S.

transactions.

Export Price

We calculated the price of U.S. sales based on EP, in accordance

with section 772(a) of the Act, because the subject merchandise was

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

importation.

We calculated EP based on the packed, delivered prices to

unaffiliated purchasers in the United States. In accordance with

section 772(c)(2) of the Tariff Act, where appropriate, we deducted

from the starting price post-sale warehousing expense, international

freight expense, inland and marine insurance, U.S. brokerage and

handling expenses and U.S. Customs duties.

Normal Value

Based on a comparison of the aggregate quantity of home market and

U.S. sales, we determined that the quantity of the foreign like product

sold in the exporting country was sufficient to permit a proper

comparison with the sales of the subject merchandise to the United

States pursuant to section 773(a) of the Act. Therefore, in accordance

with section 773(a)(1)(B)(i)of the Tariff Act, we based NV on the price

at which the foreign like products were first sold for consumption in

the home market, in the usual commercial quantities and in the ordinary

course of trade.

Where appropriate, we deducted discounts, post-sale warehousing

expense, inland freight expense, marine and inland insurance and

packing expense. We made adjustments, where appropriate, for

differences in credit expenses.

We increased NV by U.S. packing expenses in accordance with section

773(a)(6)(A) of the Act. To the extent there were comparisons of U.S.

merchandise to home market merchandise which were not identical but

similar, we made adjustments to NV for differences in cost attributable

to differences in physical characteristics of the merchandise pursuant

to section 773(a)(6)(C)(ii) of the Act.

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, 62 FR 51449 (October 1, 1997).

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

initiated a COP investigation of sales by OBV.

A. Calculation of COP

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

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

and fabrication employed in producing the foreign like product, plus

the costs for selling, general, and administrative expenses (SG&A),

interest expense and packing costs. We relied on the home market sales

and COP information OBV provided in its questionnaire responses.

B. Test of Home Market Prices

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 discounts, where appropriate.

C. Results of COP Test

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

20 percent of OBV's 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 20 percent

or more of OBV's 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 COP for the POR. When we found that below-cost sales

had been made in ``substantial quantities'' and were not at prices

which would permit recovery of all costs within a reasonable period of

time, we disregarded the below-cost sales in accordance with section

773(b)(1) of the Act.

On January 8, 1998, the U.S. Court of Appeals for the Federal

Circuit issued a decision in Cemex v. United States, WL 3626 (Fed.

Cir.). In that case, based on the pre-URAA version of the Act, the

Court discussed the appropriateness of using CV as the basis for

foreign market value when the Department finds

[[Page 25824]]

foreign market sales to be outside ``the ordinary course of trade.''

This issue was not raised by any party in this proceeding. However, the

URAA amended the definition of sales outside the ``ordinary course of

trade'' to include sales below cost. See section 771(15) of the Act.

Consequently, the Department has reconsidered its practice in

accordance with this court decision and has determined that it would be

inappropriate to resort directly to CV, in lieu of foreign market

sales, as the basis for NV if the Department finds foreign market sales

of merchandise identical or most similar to that sold in the United

States to be outside the ``ordinary course of trade.'' Instead, the

Department will use sales of similar merchandise, if such sales exist.

The Department will use CV as the basis for NV only when there are no

above-cost sales that are otherwise suitable for comparison. Therefore,

in this proceeding, when making comparisons in accordance with section

771(16) of the Act, we considered all products sold in the home market

as described in the ``Scope of the Review'' section of this notice,

above, that were in the ordinary course of trade for purposes of

determining appropriate product comparisons to U.S. sales. Where there

were no sales of identical merchandise in the home market made in the

ordinary course of trade to compare to U.S. sales, we compared U.S.

sales to sales of the most similar foreign like product made in the

ordinary course of trade, based on the information provided by OBV in

response to our antidumping questionnaire. We have implemented the

Court's decision in this case to the extent that the data on the record

permitted. Since there were sufficient sales above cost, it was

unnecessary to calculate CV in this case.

Currency Conversion

For purposes of the preliminary results, 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 of New York.

Section 773A(a) of the Act 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.'' There were no

significant fluctuations during the POR.

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:

Brass Sheet and Strip From the Netherlands

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Weighted-

average

Producer/manufacturer/exporter margin

(percent)

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Outokumpu Copper Strip B.V. (OBV).......................... 0.00

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Parties to this proceeding may request disclosure within five days

of the date of publication of this notice and any interested party 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. Interested parties may submit case

briefs and/or written comments 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. The

Department will publish a notice of the final results of the

administrative review, including its analysis of issues raised in any

written comments or at a hearing, not later than 120 days after the

date of publication of this notice.

Cash Deposit

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 (no

deposit will be required for a zero or de minimis margin, i.e., margin

lower than 0.5 percent); (2) For merchandise exported by manufacturers

or exporters not covered in this review but covered in a previous

segment of the proceeding, the cash deposit rate will be the company-

specific rate published for the most recent segment; (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). These deposit requirements, when imposed, shall

remain in effect until publication of the final results of the next

administrative review.

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 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)).

Dated: May 4, 1988.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-12316 Filed 5-8-98; 8:45 am]

BILLING CODE 3510-DS-P