Notice of Amended Preliminary Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coils From Taiwan

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-830]

Notice of Amended Preliminary Determination of Sales at Less Than

Fair Value: Stainless Steel Plate in Coils From Taiwan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Amended preliminary determination of antidumping duty

investigation.

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SUMMARY: On November 4, 1998, the Department of Commerce (``the

Department'') published the preliminary determination of its

antidumping duty investigation of stainless steel plate in coils

(``SSPC'') from Taiwan. This investigation covers two respondents, Yieh

United Steel Corporation (``YUSCO'') and Ta Chen Stainless Steel Pipe,

Ltd. (``Ta Chen'').

YUSCO submitted a ministerial error allegation on November 6, 1998

with respect to the preliminary determination published on November 4,

1998. On November 10, 1998, petitioners (Armco, Inc.; J&L Specialty

Steel, Inc.; Lukens, Inc.; North American Stainless; the United

Steelworkers of America, AFL-CIO/CLC; the Butler Armco Independent

Union; and Zanesville Armco Independent Organization, Inc.) submitted

ministerial error allegations with respect to the middleman dumping

portion of the preliminary determination. Based on the correction of

certain ministerial errors made in the preliminary determination, we

are amending our preliminary determination. (See 19 CFR 351.224(e).)

EFFECTIVE DATE: December 3, 1998.

FOR FURTHER INFORMATION CONTACT: Joanna Gabryszewski, Rebecca Trainor,

or Maureen Flannery, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)

482-0780, (202) 482-0666 or (202) 482-3020, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

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. In addition, unless otherwise

indicated, all references to the Department's regulations are to the

regulations set forth at 19 CFR part 351.

Significant Ministerial Errors

We are amending the preliminary determination of sales at less than

fair value for SSPC from Taiwan to reflect the correction of

significant ministerial errors made in the margin calculations

regarding both YUSCO and Ta Chen in that determination, pursuant to 19

CFR 224(g)(1) and (2). A significant ministerial error is defined as a

correction which, singly or in combination with other errors, (1) would

result in a change of at least 5 absolute percentage points in, but not

less than 25 percent of, the weighted average dumping margin calculated

in the original (erroneous) preliminary determination; or (2) would

result in a difference between a weighted-average dumping margin of

zero or de minimis and a weighted-average dumping margin of greater

than de minimis or vice versa. We are publishing this amendment to the

preliminary determination pursuant to 19 CFR 351.224(e).

Scope of the Investigation

For purposes of these investigations, the product covered is

certain stainless steel plate in coils. Stainless steel is an alloy

steel containing, by weight, 1.2 percent or less of carbon and 10.5

percent or more of chromium, with or without other elements. The

subject plate products are flat-rolled products, 254 mm or over in

width and 4.75 mm or more in thickness, in coils, and annealed or

otherwise heat treated and pickled or otherwise descaled. The subject

plate may also be further processed (e.g., cold-rolled, polished, etc.)

provided that it maintains the specified dimensions of plate following

such processing. Excluded from the scope of this investigation are the

following: (1) plate not in coils, (2) plate that is not annealed or

otherwise heat treated and pickled or otherwise descaled, (3) sheet and

strip, and (4) flat bars.

The merchandise subject to this investigation is currently

classifiable in the Harmonized Tariff Schedule of the United States

(HTS) at subheadings: 7219.11.00.30, 7219.11.00.60, 7219.12.00.05,

7219.12.00.20, 7219.12.00.25, 7219.12.00.50, 7219.12.00.55,

7219.12.00.65, 7219.12.00.70, 7219.12.00.80, 7219.31.00.10,

7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60,

7219.90.00.80, 7220.11.00.00, 7220.20.10.10, 7220.20.10.15,

7220.20.10.60, 7220.20.10.80, 7220.20.60.05, 7220.20.60.10,

7220.20.60.15, 7220.20.60.60, 7220.20.60.80, 7220.90.00.10,

7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. Although the HTS

subheadings are provided for convenience and Customs purposes, the

written description of the

[[Page 66786]]

merchandise under investigation is dispositive.

Period of Investigation

The period of investigation (``POI'') is January 1, 1997 through

December 31, 1997.

Background

On November 4, 1998, the Department published in the Federal

Register its notice of preliminary determination of the antidumping

duty investigation of SSPC from Taiwan (Notice of Preliminary

Determination of Sales at Less Than Fair Value: Stainless Steel Plate

in Coils from Taiwan (63 FR 59524 (November 4, 1998)). We preliminarily

calculated a dumping margin of 67.68 percent based on YUSCO's sales. In

addition, after initiating a middleman dumping investigation, we

preliminarily determined that Ta Chen had not engaged in middleman

dumping. (See Memorandum to the File: Analysis for the Preliminary

Determination of SSPC from Taiwan: Middleman Dumping Investigation: Ta

Chen (October 27, 1998).)

YUSCO

On November 6, 1998, YUSCO submitted timely written allegations

that the Department made a ministerial error which resulted in a change

of at least 5 absolute percentage points in, but not less than 25

percent of, the weighted average margin calculated in the preliminary

determination. YUSCO alleged that the Department erred by failing to

convert U.S. movement expenses reported in New Taiwan Dollars (NTD)

into U.S. dollars.

We agree with YUSCO that we inadvertently failed to convert U.S.

movement expenses, reported by YUSCO in NTD, into U.S. dollars. Because

the ministerial error is significant, as defined in 19 CFR 351.224(g),

we are amending our preliminary determination. YUSCO's amended rate is

de minimis. We have set YUSCO's cash deposit rate at zero. (See

``Suspension of Liquidation'' section, below.)

Ta Chen

On August 11, 1998, petitioners alleged that Ta Chen Stainless

Steel Pipe, Ltd. and/or its affiliated U.S. importer, Ta Chen

International (collectively Ta Chen), were reselling subject

merchandise in the United States at prices less than Ta Chen's cost of

acquisition and related selling and movement expenses. In our

preliminary determination, we preliminarily found that Ta Chen had not

engaged in middleman dumping because the portion of below-acquisition-

cost sales was not substantial. (63 FR at 59526)(November 4, 1998).)

On November 10, 1998, petitioners alleged that the Department's

computer program, upon which it based its preliminary determination

that Ta Chen was not engaging in middleman dumping during the POI,

contained a number of clerical errors. On November 17, 1998, Ta Chen

filed a response to the petitioners' comments. In accordance with

section 351.224(c)(3) of the Department's regulations, we do not

consider replies to ministerial error comments submitted in connection

with a preliminary determination. Therefore, we have returned Ta Chen's

rebuttal comments and have not considered them for this amended

preliminary determination. (See 19 CFR 351.224(c).)

First, petitioners claim that the Department omitted the following

U.S. selling expenses from the analysis: bank fees incurred in Taiwan

and the United States; imputed credit expenses; and certain indirect

selling expenses. Petitioners argue that these expenses should be

deducted from Ta Chen's U.S. price in accordance with Fuel Ethanol from

Brazil; Final Determination of Sales at Less Than Fair Value, 51 FR

5572, 5573 (February 14, 1986) (Fuel Ethanol). Because these were

actual costs incurred, we intended to deduct these costs. Thus, we

agree that we committed a ministerial error in not deducting bank fees

and indirect selling expenses from U.S. price. We have deducted these

expenses for this amended preliminary determination. There was no

ministerial error in not deducting imputed credit, however, because

only actual selling expenses should be deducted in the middleman

dumping analysis. See Mitsui & Co., Ltd. v. the United States, Slip Op.

97-49 (April 22, 1997) (Mitsui Remand Determination). We stated that:

``[imputed credit expenses and inventory carrying costs]

represent opportunity costs, not actual expenses to the company. In

analyzing whether prices are above or below the cost of production,

it is the Department's practice to base its calculation on actual

costs rather than imputed expenses.'' (Mitsui Remand Determination

at 10.)

Second, petitioners argue that the Department inadvertently based

the middleman dumping analysis on only a portion of Ta Chen's resales

by deleting from the database any resale where the quantity was

reported on a theoretical basis, i.e., for sheet. Petitioners claim

that all reported resales are of subject merchandise regardless of

whether it was resold as a coil or as sheet, because the product

imported was stainless steel sheet in coil, i.e., subject merchandise.

Petitioners argue that, since Ta Chen provided the data for these

sales, converting them from theoretical to actual, it is not necessary

to eliminate any sales from the database.

We agree with petitioners in part. YUSCO reported its sales on an

actual gauge basis, while Ta Chen reported its sales on a nominal

(theoretical) gauge basis. Ta Chen included a variable in its database

that provided the actual gauge of the merchandise it purchased from its

supplier, YUSCO. Ta Chen reported some sales of merchandise for which

no corresponding YUSCO sale was reported, because the actual gauge was

less than 4.75 mm. In the preliminary determination, we intended to

remove only these sales. In doing so, we inadvertently identified these

sales by weight rather than by gauge--that is, we removed from the

database sales that Ta Chen made on a nominal weight basis. For this

amended preliminary determination, we identified these sales by gauge,

and have only removed those sales that have an actual gauge of less

than 4.75 mm.1

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\1\ We note that we requested that YUSCO report all sales of

merchandise that nominally fit the gauge included in the scope of

the investigation, i.e., with gauge greater than or equal to 4.75

mm. However, YUSCO had reported sales only on an actual basis as of

the time of the preliminary determination, i.e., it reported sales

of merchandise with an actual gauge of greater than or equal to 4.75

mm. We intended to include in our preliminary analysis only Ta

Chen's resales corresponding to merchandise reported by YUSCO. By

letter to YUSCO of November 6, 1998, we have reiterated our request

for data based on the nominal gauge.

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Third, petitioners claim that the Department made a ministerial

error by converting Ta Chen's acquisition price to U.S. dollars based

on the date of Ta Chen's sale to the first unaffiliated U.S. customer,

instead of the date of YUSCO's invoice to Ta Chen. We disagree that

this was a ministerial error. In accordance with our longstanding

practice, we intentionally based currency conversions on the date of

sale. See 19 CFR 351.415(a) (Currency Conversion).

Fourth, petitioners claim that the Department incorrectly

calculated the percentage of Ta Chen's U.S. sales that are below the

acquisition cost, because we miscalculated the total U.S. sales value

and the total value of sales below acquisition cost.

We agree with petitioners, and have corrected this ministerial

error. In our preliminary calculations, we intended to calculate total

below-acquisition-cost value and total U.S. sales value by multiplying

per unit prices by their corresponding quantities, and then summing

these values. Instead, for both calculations, we first summed per unit

[[Page 66787]]

values and their corresponding quantities, and then we multiplied the

total value by the total quantity. After making the appropriate

correction, we divided the total value of below-acquisition-cost sales

by the total value of all sales, as we did in the Preliminary

Determination, to arrive at the ratio of the below-acquisition-cost-

sales value to the value of all sales to the United States. See the

Analysis Memorandum for the Amended Preliminary Determination (Amended

Preliminary Memo) on file in room B-099 of the Commerce Department.

As a result of the correction of these ministerial errors, we have

determined that Ta Chen sold subject merchandise at a loss because Ta

Chen's prices were, after the deduction of all costs incurred in

selling the merchandise in the United States, lower than its costs of

acquisition from YUSCO, an unaffiliated producer during the POI. See

Amended Preliminary Memo.

In accordance with the methodology we used in Mitsui Remand

Determination, we determined whether a substantial portion of Ta Chen's

U.S. sales were below acquisition costs by comparing the total value of

stainless steel plate sold below acquisition cost to the total value of

all stainless steel plate sales made by Ta Chen during the POI. We

first identified sales below acquisition cost by comparing Ta Chen's

resale price for stainless steel plate sold during the POI to its

acquisition cost for this merchandise. We used YUSCO's invoice price to

Ta Chen as the acquisition cost. We based the U.S. resale prices on Ta

Chen's sales to unaffiliated customers in the United States. From that

starting price we deducted discounts, movement expenses (freight,

insurance, U.S. duties, and brokerage and handling fees), and the

actual selling expenses incurred by Ta Chen (commissions, warehousing

charges, bank charges, and indirect selling expenses), where

applicable. We then compared that price, after deductions, to the

acquisition cost.

Based on these amended findings, we preliminarily determine that Ta

Chen made a substantial portion of its sales below acquisition cost,

because 34.7 percent of Ta Chen's resales to the United States were at

prices below its acquisition cost. As a result of this finding, we have

examined whether Ta Chen's U.S. prices were substantially below its

acquisition costs from YUSCO to determine whether Ta Chen engaged in

middleman dumping during the POI.

As we stated in the Preliminary Determination, Congress has left to

the Department the discretion to devise a methodology which would

accurately capture middleman dumping. See S. Rep. No. 249, 96th Cong.,

1st Sess. at 94 (1979). We have considered the methodology used in Fuel

Ethanol, and have concluded that, given the facts before us for this

amended preliminary determination, the methodology described below is

the appropriate one for purposes of this amended preliminary

determination. To determine the magnitude of the losses incurred by Ta

Chen in selling YUSCO's subject merchandise to the United States during

the POI, we divided the amount of losses by the total sales value of

all sales. By ``amount of losses'' we mean the sum of the cost less the

adjusted sales price of each below-acquisition-cost sale, multiplied by

the respective quantity of each sale. By ``total sales value'' we mean

the sum of the sales price of each sale (whether or not below

acquisition cost) multiplied by its respective quantity. Based upon

this calculation, we have determined that Ta Chen's losses on U.S.

sales of subject merchandise during the POI are 3.00 percent, which we

deem to be substantial. Therefore, we preliminarily find that Ta Chen

engaged in middleman dumping during the POI.

Where a producer sells through an unaffiliated trading company and

has knowledge of the ultimate destination of its merchandise, we

normally focus only on the producer's sales to determine the margin of

dumping. However, as we stated in our Preliminary Determination, very

infrequently, a producer may sell to an unaffiliated trading company

which, in turn, sells the producer's merchandise at prices below the

trading company's acquisition costs, thereby engaging in middleman

dumping. Where we find middleman dumping in an investigation, as here,

we must calculate a cash deposit rate that reflects that middleman

dumping. Additionally, any dumping which occurs from the producer to

the trading company must be included in the margin calculation to

capture the full amount of the dumping. Therefore, we have assigned a

cash deposit rate of 3.08 percent to sales produced by YUSCO and sold

to the United States through Ta Chen. This reflects YUSCO's margin on

U.S. sales to Ta Chen as well as Ta Chen's losses on sales to the

United States.

Amended Preliminary Determination

As a result of our corrections of ministerial errors, we have

determined the following amended weighted-average dumping margins

apply.

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Margin

Manufacturer/exporter percentage

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YUSCO/Ta Chen.............................................. 3.08

All Others................................................. 3.08

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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 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 normal value exceeds the U.S. price, as indicated

in the chart above. These suspension-of-liquidation instructions will

remain in effect until further notice.

This amended preliminary determination and notice are in accordance

with section 703(d)(2) of the Act (19 CFR 351.224).

Dated: November 27, 1998.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-32212 Filed 12-2-98; 8:45 am]

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