Initiation of Antidumping Duty Investigations: Stainless Steel Round Wire from Canada, India, Japan, the Republic of Korea, Spain, and Taiwan

DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-829, A-533-814, A-588-844, A-580-830, A-469-808, A-583-829]

Initiation of Antidumping Duty Investigations: Stainless Steel

Round Wire from Canada, India, Japan, the Republic of Korea, Spain, and

Taiwan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: May 12, 1998.

FOR FURTHER INFORMATION CONTACT: Thomas Schauer (Canada) at (202) 482-

4852; Diane Krawczun (India) at (202) 482-0198; Edward Easton (Japan)

at (202) 482-1777; Gabriel Adler (the Republic of Korea) at (202) 482-

1442; Michael Panfeld (Spain) at (202) 482-0168; or Michelle Frederick

(Taiwan) at (202) 482-0186, Import Administration-Room 1870,

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 regulations published in the Federal Register on May 19, 1997

(62 FR 27296).

The Petition

On March 27, 1998, the Department of Commerce (``the Department'')

received a petition filed in proper form by the following companies:

ACS Industries, Inc., Al Tech Specialty Steel Corp., Branford Wire &

Manufacturing Company, Carpenter Technology Corp., Handy & Harman

Specialty Wire Group, Industrial Alloys, Inc., Loos & Company, Inc.,

Sandvik Steel Company, Sumiden Wire Products Corporation, and Techalloy

Company, Inc. (``the petitioners''). Sumiden Wire Products Corporation

is not a petitioner in the Japanese case, and Carpenter Technology

Corp. and Techalloy Company, Inc., are not petitioners in the Canadian

case. The Department received numerous supplemental submissions

throughout the month of April, 1998.

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

allege that imports of stainless steel round wire (``SSRW'') from

Canada, India, Japan, the Republic of Korea (Korea), Spain, and Taiwan

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, or threatening material injury to, an

industry in the United States.

The Department finds that the petitioners filed the petition on

behalf of the domestic industry because they are interested parties as

defined in section 771(9)(C) and (D) of the Act and they have

demonstrated sufficient industry support (see discussion below).

Scope of Investigations

For purposes of these investigations, the product covered is

stainless steel round wire. Stainless steel round wire is any cold-

formed (i.e., cold-drawn, cold-rolled) stainless steel product, of a

cylindrical contour, sold in coils or spools, and not over 0.703 inch

(18 mm) in maximum solid cross-sectional dimension. SSRW is made of

iron-based alloys containing, by weight, 1.2 percent or less of carbon

and 10.5 percent or more of chromium, with or without other elements.

Metallic coatings, such as nickel and copper coatings, may be applied.

The merchandise subject to these investigations is classifiable

under subheadings 7223.00.1015, 7223.00.1030, 7223.00.1045,

7223.00.1060, and 7223.00.1075 of the Harmonized Tariff Schedule of the

United States (``HTSUS''). Although the HTSUS subheadings are provided

for convenience and customs purposes, the written description of the

merchandise under investigation is dispositive.

During our review of the petition, we discussed with the

petitioners whether the proposed scope was an accurate reflection of

the product for which the domestic industry is seeking relief. The

petitioners indicated that the scope in the petition accurately

reflected the product for which they are seeking relief. Consistent

with the preamble to the new regulations (62 FR at 27323), we are

setting aside a period for parties to raise issues regarding product

coverage. The Department encourages all parties to submit such comments

by 20 days after the publication of this notice. Comments should be

addressed to Import Administration's Central Records Unit at Room 1870,

U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, N.W.,

Washington, D.C. 20230. This period of scope consultation is intended

to provide the Department with ample opportunity to consider all

comments and to consult with parties prior to the issuance of the

preliminary determinations.

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. While both the

Department and the ITC are required to apply the same statutory

provision regarding the domestic like product (section 771(10) of the

Act), 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 domestic like product, such

differences do not render the decision of either agency contrary to

law.1 Section 771(10) of the Act defines domestic like

product as ``a product which 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 domestic 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 domestic like product referred to in the petition is the

single domestic like product defined in the ``Scope of Investigation''

section, above. We

[[Page 26151]]

consulted with the ITC, the U.S. Customs Service, and petitioners and

have, as a result of these discussions, adopted the domestic like

product definition set forth in the petition.

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\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 FR

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

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On April 8, 1998, the ITC presented us with information indicating

that there may be as many as 25 additional producers of the domestic

like product that were not included in the petition. On April 9, 1998,

Central Wire Industries Ltd. and Greening Donald Co., Ltd., two

Canadian producers of subject merchandise, submitted a list of 47 non-

petitioning companies that they claimed represented U.S. producers of

the domestic like product. See Letter from Central Wire Industries Ltd.

and Greening Donald Co., Ltd. to the Secretary of Commerce dated April

9, 1998 (the Central Wire submission). Certain of these companies were

included in the list of non-petitioning producers in the petition, but

a majority were not. Because there was a question as to whether

petitioners' met the statutory requirements cited above, we exercised

our statutory discretion under section 732(c)(1)(B) to extend the

deadline for determining whether to initiate an investigation to a

maximum of 40 days from the date of filing in order to resolve this

issue. See Memorandum to Joseph A. Spetrini from Laurie Parkhill dated

April 16, 1998. We also invited parties to identify any other potential

producers of the domestic like product.

On April 21, 1998, the petitioners provided production information

concerning 42 of the then 64 nonpetitioning companies that had been

identified as potential producers by the ITC, the Central Wire

submission, or by the petitioners themselves at that time. See Letter

from the petitioners to the Secretary of Commerce, April 21, 1998. The

sources of this production information are affidavits from co-counsel

for the petitioners, stating that they have contacted each of the 42

producers and have received the production information directly from

the companies. The petitioners also included affidavits from co-counsel

for the petitioners, as well as one of the petitioning company

officials, indicating that certain nonpetitioning companies support the

petition.

On April 21, 1998, Central Wire submitted a list of all U.S.

producers (including the petitioners) that it believed produced the

domestic like product. See Letter from Central Wire Industries Ltd. and

Greening Donald Co., Ltd. to the Secretary of Commerce, April 21, 1998.

While most of these potential producers had already been identified,

there were several potential producers who had not been previously

identified, and thus were not included in the list of 64 companies

provided in the petitioners' April 21, 1998 letter.

We were able to contact all but one of the companies identified,

and based on the data now on the record, we determine that the

petitioners have established industry support in accordance with the

statutory requirements cited above. See Memorandum from Laurie Parkhill

and Gary Taverman to Richard W. Moreland dated May 6, 1998.

Accordingly, we determine 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 may re-examine the

information and revise the margin calculations, if appropriate.

With respect to sales to the U.S. market, the petitioners used an

export price (EP) analysis because the producers in each country make

their first sale of exports to unaffiliated importers. The petitioners

based export prices on affidavits based on call reports and price

quotes, as appropriate. The petitioners calculated EP by subtracting

domestic inland freight (except in the India and Taiwan cases), ocean

freight and marine insurance (except in the Canada case), import duties

(except in the India case), harbor maintenance fees, U.S. merchandise

processing fees, and U.S. inland freight (except in the Canada and

India cases). The data for these adjustments was based on market

research, U.S. Customs statistics, affidavits, and the 1997 import duty

rates. The petitioners did not deduct domestic inland freight in the

Indian case because they were not able to obtain such data. Although

the petitioners did not explain why they did not deduct domestic inland

freight in the Taiwan case, we note that this will not cause the

dumping margins to be overstated. All adjustments not mentioned above

that were not made by the petitioners in specific cases were due to the

terms of the sales. We restated some of the export prices in the India

case to conform with the affidavits the petitioners submitted. See

Memorandum to File dated April 16, 1998.

The petitioners based normal value (NV) on home market prices, as

obtained by market research. They adjusted the home market prices by

deducting foreign inland freight (except in the India case due to the

terms of sale) and imputed credit, and by adding the imputed credit

calculated on the U.S. sale (except in the India case). Though the

petitioners did not adjust for imputed credit in the India case, we

were able to calculate an imputed credit expense for that case and did

deduct it from NV. See Memorandum to File dated April 16, 1998. The

data for the adjustments the petitioners made to NV were based on

market research and International Financial Statistics (published by

the International Monetary Fund). The petitioners submitted affidavits

to support their claims regarding packing costs in the U.S. and

Japanese markets. However, there was no adjustment for packing in other

cases, either because information was not available for a country or

because the petitioners assumed that packing costs were the same for

sales to the home market and the U.S. market. There is no public

evidence available to adjust NV for the differences in packing costs

between the U.S. and home markets. Furthermore, our experience in steel

cases generally suggests that the packing costs of export sales are

nearly always greater than or equal to the packing costs of domestic

sales, because additional precautions are usually necessary to protect

exported merchandise (for example, from rust) during its longer time in

transit. Therefore, we conclude that not adjusting for differences in

packing costs is conservative.

Pursuant to sections 773(a)(4) and 773(e) of the Act, the

petitioners also based NV for sales in all countries, except Japan, on

constructed value (CV). CV consists of COM, selling, general and

administrative expenses (SG&A), packing and profit. The petitioners

based their calculations for COM, SG&A and packing on costs obtained by

market research, affidavits from the petitioning companies' officials,

and U.S. industry data compiled by the petitioners. We recalculated the

CVs used in the Canada, India, and Taiwan cases. The nature of the

recalculations and the reasons for the recalculations are explained in

Memoranda to File dated April 16, 1998.

Based on comparisons of EP to NV, the petitioners estimate margins

of 2.18 to 64.24 percent in the Taiwan case. We recalculated the

estimated margins to be 2.38 to 40.48 percent in the Canada case, 3.47

to 36.52 percent in the India case, 2.02 to 29.58 percent in the Japan

[[Page 26152]]

case, 3.46 to 66.44 percent in the Korea case, and 12.99 to 35.80

percent in the Spain case.

Initiation of Cost Investigations

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

sales in the home market of Canada, India, Korea, and Taiwan were made

at prices below the cost of production (COP) and, accordingly,

requested that the Department conduct a country-wide sales-below-COP

investigation in Canada, India, Korea, and Taiwan. The Statement of

Administrative Action (``SAA''), submitted to 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 states at 833 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.''

The statute at section 773(b) states that the Department must 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.

Based upon the comparison of the adjusted prices from the petition of

the foreign like product in Canada, India, Korea, and Taiwan to the COP

calculated in the petition (and adjusted in the Canada, India, and

Taiwan cases as described in Memoranda to File dated April 16, 1998),

we find ``reasonable grounds to believe or suspect'' that sales of

these foreign like products were made below their respective COP within

the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the

Department is initiating the requested country-wide cost investigation

for Canada, India, Korea, and Taiwan.

Fair Value Comparisons

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

believe that imports of SSRW from Canada, India, Japan, Korea, Spain,

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

value.

Allegations and Evidence of Material Injury and Causation

The petition alleges that the U.S. industry producing the domestic

like product is being materially injured, and is threatened with

material injury, by reason of the individual and cumulated imports of

the subject merchandise sold at less than NV. The allegations of injury

and causation are supported by relevant evidence including business

proprietary data from the petitioning firms and U.S. Customs import

data. The Department assessed the allegations and supporting evidence

regarding material injury and causation and determined that these

allegations are sufficiently supported by accurate and adequate

evidence and meet the statutory requirements for initiation.

Initiation of Antidumping Investigations

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

the requirements of section 732 of the Act. Therefore, we are

initiating antidumping duty investigations to determine whether imports

of SSRW from Canada, India, Japan, Korea, Spain, and Taiwan 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 for the

antidumping duty investigations by September 23, 1998.

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, India, Japan, Korea,

Spain, and Taiwan. 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 June 1, 1998, whether there is a

reasonable indication that imports of SSRW from Canada, India, Japan,

Korea, Spain, and Taiwan 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: May 6, 1998.

Richard W. Moreland,

Acting Assistant Secretary, Import Administration.

[FR Doc. 98-12593 Filed 5-11-98; 8:45 am]

BILLING CODE 3510-DS-P