Carbon Steel Wire Rope from Mexico; Preliminary Results of Antidumping Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-806]

Carbon Steel Wire Rope from Mexico; Preliminary Results of

Antidumping Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review; Carbon Steel Wire Rope from Mexico.

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SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on steel wire rope

from Mexico in response to a request by respondent, Aceros Camesa S.A.

de C.V. (Camesa). This review covers exports of subject merchandise to

the United States during the period March 1, 1996 through February 28,

1997.

We have preliminarily determined that sales have not been made

below normal value (NV). If these preliminary results are adopted in

our final results, we will instruct U.S. Customs to liquidate entries

without regard to antidumping duties. Interested parties are invited to

comment on these preliminary results. Parties who submit comments are

requested to submit with each comment (1) a statement of the issue and

(2) a brief summary of the comment.

EFFECTIVE DATE: April 7, 1998.

FOR FURTHER INFORMATION CONTACT: Leah Schwartz or Maureen Flannery, AD/

CVD Enforcement, Import Administration, International Trade

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

Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-

3782 or (202) 482-3020.

Applicable Statute and Regulations

Unless otherwise stated, 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

stated, all citations to the Department's regulations are references to

the regulations as codified at 19 CFR Part 353 (April 1996).

SUPPLEMENTARY INFORMATION:

Background

The Department published in the Federal Register the antidumping

duty order on steel wire rope from Mexico on March 25, 1993 (58 FR

16173). On March 7, 1997 we published in the Federal Register (62 FR

10521) a notice of opportunity to request an administrative review of

the antidumping duty order on steel wire rope from Mexico covering the

period March 1, 1996 through February 28, 1997.

In accordance with 19 CFR 353.22(a)(2), Camesa requested that we

[[Page 16968]]

conduct an administrative review of its sales. We published a notice of

initiation of this antidumping duty administrative review on May 21,

1997 (62 FR 27720).

On September 18, 1997, we solicited comments from Camesa and from

petitioner, the Committee of Domestic Steel Wire Rope and Specialty

Cable Manufacturers, regarding the product characteristics used to

match subject merchandise sold in the United States to foreign like

products sold in the home market. We received comments from petitioner

on September 25, 1997 and comments from Camesa on September 26, 1997.

(See the Model Match section below for further discussion.)

On September 29, 1997, petitioner requested that the Department

initiate an investigation of sales below the cost of production (COP)

for Camesa. Based on our analysis of petitioner's COP allegation, we

initiated an investigation of sales at less than COP, pursuant to

section 773(b) of the Act. (See Memorandum For Edward Yang from Leon

McNeill, Steel Wire Rope from Mexico: Whether to Initiate a Sales Below

Cost Investigation, October 6, 1997.) We received cost data from Camesa

on December 1, 1997 and December 29, 1997.

Under section 751(a)(3)(A) of the Act, the Department may extend

the deadline for completion of administrative reviews if it determines

that it is not practicable to complete the review within the

established time limit. The Department published a notice of extension

of the time limit for the preliminary results in this case, on October

22, 1997. See Steel Wire Rope from Mexico: Extension of Time Limits for

Preliminary Results of Antidumping Duty Administrative Review, 62 FR

54831 (October 22, 1997). On January 5, 1998, the Department published

a second notice of extension of the time limit for the preliminary

results. See Steel Wire Rope from Mexico: Extension of Time Limits for

Preliminary Results of Antidumping Duty Administrative Review, 63 FR

206 (January 5, 1998). The Department is conducting this administrative

review in accordance with section 751(a) of the Act.

Scope of the Review

The product covered by this review is steel wire rope. Steel wire

rope encompasses ropes, cables, and cordage of iron or carbon steel,

other than stranded wire, not fitted with fittings or made up into

articles, and not made up of brass plated wire. Imports of these

products are currently classifiable under the following Harmonized

Tariff Schedule (HTS) subheadings: 7312.10.9030, 7312.10.9060 and

7312.10.9090.

Excluded from this review is stainless steel wire rope, which is

classifiable under the HTS subheading 7312.10.6000, and all forms of

stranded wire, with the following exception.

Based on the final affirmative determination of circumvention of

antidumping duty order, 60 FR 10831 (February 28, 1995), the Department

has determined that steel wire strand, when manufactured in Mexico by

Camesa and imported into the United States for use in the production of

steel wire rope, falls within the scope of the antidumping duty order

on steel wire rope from Mexico. Such merchandise is currently

classifiable under subheading 7312.10.3020 of the HTS.

Although HTS subheadings are provided for convenience and Customs

purposes, the written description of the scope of this order remains

dispositive.

This review covers one manufacturer and exporter, Camesa, and the

period March 1, 1996 through February 28, 1997.

Verification

As provided in section 782(i) of the Act, we verified information

provided by Camesa using standard verification procedures, including

on-site inspection of the manufacturer's facilities, examination of

relevant sales and financial records, and selection of original

documentation containing relevant information. Our verification results

are outlined in the public version of the verification report.

Product Comparisons

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

products produced by Camesa covered by the description in the ``Scope

of Review'' section, above, and sold in the home market during the

period of review (POR) to be foreign like products for the purposes of

determining appropriate product comparisons with U.S. sales. In the

Product Concordance section (Appendix V) of the questionnaire, we

provided the following hierarchy of product characteristics to be used

for reporting identical and most similar comparisons of merchandise: 1)

type of steel wire (finishing type), 2) diameter of wire rope, 3) type

of core, 4) class of wire rope, 5) grade of steel, 6) number of wires

per strand, 7) design of strands, and 8) lay of rope. In response to

arguments raised by petitioner regarding the use of certain product

characteristics as model match criteria, we solicited comments from

both parties on September 18, 1997. Based on our analysis of the

comments we received, our findings at verification, and information

contained in Camesa's submissions, we have preliminarily determined not

to change the model match criteria set forth in our June 11, 1997

questionnaire. (See the Memorandum from Leah Schwartz to Edward Yang,

dated March 31, 1998: Model Matching Criteria in the First

Administrative Review of Steel Wire Rope from Mexico (Model Match

Memo).)

Camesa requested to limit its reporting of home market sales of

steel wire rope during the POR because it claimed that it sold only a

limited number of models of steel wire rope to the United States, and

that many of its home market models of steel wire rope would not match

the steel wire rope sold to the United States. We told Camesa that it

might report only the home market sales of identical or most similar

foreign like products sold during the POR, but that we might, at a

later date, require the reporting of additional home market sales at

short notice. In the sales section of its questionnaire response,

Camesa limited its reporting of home market sales to one general

category of steel wire rope which encompasses the specific models of

steel wire rope sold to the United States. In the COP section of the

questionnaire response, Camesa reported data for a smaller, more

specific group of steel wire rope products which it considered to be

identical or most similar to the subject merchandise sold to the United

States. In its sales response, Camesa provided a comprehensive list of

all steel wire rope products which Camesa manufactures for sale in the

home market. Upon examination of this information, and the results of

our verification of Camesa's home market sales and costs, we

preliminarily determine that the steel wire rope models which Camesa

did not report are neither identical nor most similar to steel wire

rope that Camesa sold to the United States during the POR. Moreover,

the Department verified that Camesa had home market sales of identical

or most similar models in the home market during the period of time

contemporaneous with the U.S. sales. We preliminarily determine that

the models for which Camesa submitted cost information are identical

and most similar to the models sold to the United States.

United States Price

We based United States price on export price (EP), as defined in

section 772(a) of the Act, because the merchandise was sold directly by

the exporter to unaffiliated U.S. purchasers

[[Page 16969]]

prior to the date of importation and constructed export price was not

indicated by other facts of record.

The Department calculated EP for Camesa based on packed, delivered

prices to customers in the United States. We made deductions, where

applicable, for foreign inland freight, U.S. Customs duties, and

brokerage and handling, in accordance with 19 CFR 353.41(d). We added

to U.S. price an amount for duty drawback received by Camesa. We found

at verification that Camesa over-reported the amount of duty drawback

to be added to the U.S. price. (See the Report on the Sales and Cost

Verification of Aceros Camesa S.A. de C.V. (Camesa) in the First

Administrative Review of Steel Wire Rope from Mexico, dated March 31,

1998 (Verification Report).) Since Camesa stated in its questionnaire

response that it calculated its reported duty drawback amount using the

average price for imported rod during the POR, and we found at

verification that Camesa in fact did not use an average price for wire

rod purchased during the POR, we determine in accordance with section

776(a) of the Act, that the use of facts available is appropriate, as

the basis of our adjustment to U.S. price for duty drawback. Section

776(b) of the Act further provides that an adverse inference may be

used with respect to a party that has failed to cooperate to the best

of its ability. See Statement of Administrative Action accompanying the

URAA, H.R. Rep. No. 316, 103rd Cong., 2d Sess. 870. As adverse facts

available, we based the adjustment to U.S. price for duty drawback on

the smallest per-unit amount of duty drawback calculated using any

invoice for steel wire rod purchased during the POR.

Normal Value

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

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

sold in the home market 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 Act, we based NV on the price (exclusive

of value-added tax (VAT)) at which foreign like product was first sold

for consumption in the home market, in the usual commercial quantities

and in the ordinary course of trade. All of Camesa's home market sales

were made to unaffiliated customers.

Cost of Production Analysis

Section 773(b)(1) of the Act provides that, whenever the Department

has reasonable grounds to believe or suspect that home market sales

under consideration for the determination of NV have been made at

below-cost prices, it shall determine whether, in fact, there were

below-cost sales. Based on our analysis of petitioner's September 29,

1997 allegation of sales below COP, and in accordance with section

773(b)(2)(A)(ii) of the Act, the Department determined that reasonable

grounds exist to believe or suspect that Camesa made below-cost home

market sales during the POR. Accordingly, we requested and obtained

from Camesa the cost data necessary to determine whether below-cost

sales occurred during the POR. Before making any NV comparisons for

Camesa, we conducted the COP analysis described below.

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

materials and fabrication employed in producing the foreign like

product, plus amounts for home market selling, general, and

administrative expenses (SG&A), and the cost of all expenses incidental

to placing the foreign like product in condition packed ready for

shipment in accordance with section 773(b)(3) of the Act. Mexico

experienced significant inflation during the POR, as measured by the

Consumer Price Index issued by the Bank of Mexico. Therefore, in order

to avoid the distortive effects of inflation on our comparisons of

costs and prices, we used monthly, model-specific cost data provided by

respondent. See, e.g., Porcelain-On-Steel Cookware from Mexico:

Preliminary Results of Administrative Review, 63 FR 1430, 1432 (January

9, 1998) and Notice of Preliminary Results of Antidumping Duty

Administrative Review: Certain Welded Carbon Steel Pipe and Tube from

Turkey, 63 FR 6155, 6156 (February 6, 1998). We calculated a model-

specific total cost of manufacture (COM) for each month of the POR and

indexed these costs to a common point (i.e. February 1997, the last

month of the POR) using the consumer price index for Mexico as

maintained by the Bank of Mexico. We then divided the sum of the

monthly model-specific costs by the total model-specific production

quantity to obtain a model-specific POR weighted-average cost

corresponding to the February 1997 reference point. The weighted

average COM was then restated based on the currency value of each

respective month. We multiplied Camesa's SG&A and finance rates by the

monthly COMs and added these amounts to derive product-specific monthly

COPs. We relied on the home market sales and COP information provided

by Camesa in its questionnaire responses and implemented changes based

on findings at verification (See the Analysis Memo).

We compared the monthly weight-averaged per unit COP figures,

indexed to account for the effects of inflation as noted above, to home

market sales of foreign like product as required under section 773(b)

of the Act, in order to determine whether these sales were made at

prices below COP. In determining whether to disregard home market sales

made at prices below COP, we examined whether: (1) such sales were made

in substantial quantities within an extended period of time; and (2)

such sales were made at prices which permitted recovery of all costs

within a reasonable period of time. We compared the model-specific COP,

plus packing, and net of direct selling expenses, to the reported home

market prices less any applicable movement charges, discounts, and

direct selling expenses.

In accordance with section 773(b)(2)(C), where less than 20 percent

of home market sales of a given model were made 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 in ``substantial

quantities.'' Where 20 percent or more of home market sales during the

POR were made at prices less than the COP, we disregarded the below-

cost sales because we determined that the below-cost sales were made in

``substantial quantities'' and at prices which would not permit the

recovery of all costs within reasonable period of time in accordance

with section 773(b)(2)(D) of the Act.

On January 8, 1998, the Court of Appeals for the Federal Circuit

issued a decision in CEMEX v. United States, 133 F.3d 897 (Fed Cir.,

1998). In that case, based on the pre-URAA version of the Act, the

Court discussed the appropriateness of using constructed value (CV) as

the basis for foreign market value when the Department finds home

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

[[Page 16970]]

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.'' We will match a

given U.S. sale to foreign market sales of the next most similar model

when all sales of the most comparable model are below cost. 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 above in the ``Scope of Review'' section of this notice,

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 with 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 characteristics listed in Sections B and

C of our antidumping questionnaire.

Price-to-Price Comparisons

Pursuant to section 777A(d)(2), we compared the EPs of individual

transactions to the monthly weighted-average price of sales of the

foreign like product where there were sales at prices above COP, as

discussed above. We based NV on packed, delivered prices to

unaffiliated purchasers in the home market. We made adjustments, where

applicable, in accordance with section 773(a)(6) of the Act. Where

applicable, we made adjustments to home market price for invoice

corrections, discounts, and inland freight. We also made a

circumstance-of-sale adjustment for differences in credit, warranty,

and insurance expenses, pursuant to section 773(a)(6)(C)(iii) of the

Act. Because credit, warranty, and insurance expenses are incurred on a

sale-by-sale basis and directly related to sales, we have treated these

expenses as direct selling expenses in the applicable market(s).

Accordingly, we made the circumstance-of-sale adjustments by adding the

amounts of U.S. credit for each U.S. sale to the NV, and subtracting

the home market credit and warranty expense amounts from NV. At

verification we found that Camesa did not incur U.S. warranty expenses

which it reported. Therefore, we did not add the reported per-unit

warranty expense amount to NV. In order to adjust for differences in

packing between the two markets, we increased home market price by U.S.

packing costs and reduced it by home market packing costs. Prices were

reported net of VAT and, therefore, no deduction for VAT was necessary.

Home Market Credit Expense

During the POR, Camesa did not have any short-term borrowings in

pesos. In cases where there are no borrowings in the currency of the

sales made, it is the Department's practice to use external information

about the cost of borrowing in a particular currency. (See Final

Determination of Sales at Less Than Fair Value: Fresh Cut Roses from

Colombia, 60 FR 6980, 6998 (February 6, 1995); and Import

Administration Policy Bulletin 98.2 (February 23, 1998).) Therefore,

for these preliminary results, we are recalculating Camesa's home

market credit expense using the average interbank equilibrium rate

(abbreviated TIIE in Spanish) for the POR as published by the Bank of

Mexico. We find that the rate is both reasonable and representative of

usual commercial behavior in Mexico based on the sample rates quoted by

other Mexican banks as submitted in Camesa's questionnaire responses.

Sales of Strand to U.S. Affiliate

Pursuant to the final affirmative determination of circumvention of

this antidumping duty order (see Steel Wire Rope from Mexico:

Affirmative Final Determination Circumvention of Antidumping Duty

Order, 60 FR 10831, (February 28, 1995)), steel wire strand, when

manufactured in Mexico by Camesa and imported into the United States

for use in the production of steel wire rope, falls within the scope of

the antidumping duty order on steel wire rope from Mexico. Therefore,

in our June 11, 1997 antidumping questionnaire, we requested that

Camesa: (1) report separately all sales of steel wire strand imported

into the United States during the period of review for use in the

manufacture of steel wire rope; and (2) report the monthly quantity and

value of sales of steel wire strand which is imported into the United

States during the period of review and which is not intended for use in

the manufacture of steel wire rope (see pages C-1 and C-2 of the

questionnaire). In its August 11, 1997 questionnaire response, Camesa

reported that during the POR it ``did not export any strand products

that are subject to the antidumping order to United States, and its

U.S. affiliates did not sell any steel wire rope manufactured using

such imported strand products. Accordingly, all of the U.S. sales

reported in the sales listing provided in Appendix C-1 are sales of

steel wire rope that was entirely produced in and exported from

Mexico.'' (See page 40, footnote 17.) At verification, we found that

Camesa did sell steel wire strand to its U.S. affiliate during the

period of review which it did not report. However, at verification we

examined the specifications of the strand that Camesa sold to the

United States, and found that it falls outside the scope of the order

as defined in the Department's Final Circumvention Determination (60 FR

10831, February 28, 1995) and is not used in the manufacture of steel

wire rope. Therefore, the Department is not applying facts available

under section 776 of the Act (See the March 31, 1998 verification

report and the Analysis Memo.)

Duty Reimbursement

In its September 17, 1997 response, Camesa stated that it was

identified as the importer of record in the U.S. Customs entry summary

corresponding to the U.S. sales during the POR, because Camesa is

responsible for the payment of any import charges to U.S. Customs on

the entry. At verification, Camesa further stated that it paid the

antidumping duties for certain U.S. sales. Section 353.26 of the

Department's regulations state that ``[i]n calculating the United

States price, the Secretary will deduct the amount of any antidumping

duty which the producer or reseller: (i) [p]aid directly on behalf of

the importer; or (ii) [r]eimbursed to the importer.'' 19 CFR

353.26(a)(1). It has been our practice that separate corporate entities

must exist as producer/reseller and importer in order to invoke the

duty reimbursement regulation. (See Circular Welded Non-Alloy Steel-

Pipe and Tube from Mexico: Preliminary Results of Administrative Review

and Partial Termination of Review, 62 FR 64564, 64566, (December 8,

1997).) In the present case, however, we have preliminarily determined

that there are no dumping margins, and hence no antidumping duties will

be assessed on the subject merchandise exported and imported by Camesa.

Therefore, there is no issue regarding reimbursement.

Preliminary Results of the Review

As a result of our comparison of EP and NV, we preliminarily

determine that the following weighted-average dumping margin exists:

[[Page 16971]]

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

Margin

Manufacturer/exporter Period (percent)

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

Aceros Camesa S.A. de C.V. (Camesa)..... 3/1/96-2/28/97 0.00

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Parties to the proceeding may request disclosure within 5 business

days of the date of publication of this notice. Any interested party

may request a hearing within 10 days of publication. Pursuant to 19 CFR

353.38, any hearing, if requested, will be held 44 days after the

publication of this notice, or the first workday thereafter. Interested

parties may submit case briefs within 30 days of the date of

publication of this notice. Rebuttal briefs, which must be limited to

issues raised in the case briefs, may be filed not later than 37 days

after the date of publication. The Department will publish a notice of

final results of this administrative review, which will include the

results of its analysis of issues raised in any such comments, not

later than 120 days after the date of publication of this notice.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. If these

preliminary results are adopted in our final results, we will instruct

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

merchandise subject to review. Upon completion of this review, the

Department will issue appraisement instructions directly to the Customs

Service.

Furthermore, the following deposit rates will be effective upon

publication of the final results of this administrative review for all

shipments of steel wire rope products from Mexico entered, or withdrawn

from warehouse, for consumption on or after the publication date, as

provided for by section 751(a)(2)(c) of the Act: (1) the cash deposit

rate for the reviewed company will be the rate established in the final

results of this review; (2) for merchandise exported by manufacturers

or exporters not covered in this review but covered in the original

investigation of sales at less than fair value (LTFV) or a previous

review, the cash deposit will continue to be the company-specific rate

published for the most recent period; (3) if the exporter is not a firm

covered in this or a previous review, or the original LTFV

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) for all other producers and/or exporters of

this merchandise, the cash deposit rate shall be 111.68 percent, the

``all others'' rate established in the LTFV investigation (58 FR 7531,

February 8, 1993).

These deposit rates, when imposed, shall remain in effect until

publication of the final results of the next administrative review.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 353.26 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 antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This determination is issued and published in accordance with

sections 751(a)(1) of the Act (19 U.S.C. 1675(a)) and 19 CFR 353.22.

Dated: March 31, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-9092 Filed 4-6-98; 8:45 am]

BILLING CODE 3510-DS-P