Brass Sheet and Strip from Germany: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-602]

Brass Sheet and Strip from Germany: 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 from the petitioners, the Department

of Commerce (the Department) is conducting an administrative review of

the antidumping duty order on brass sheet and strip from Germany. This

review covers one manufacturer and exporter of the subject merchandise,

Wieland-Werke AG (Wieland). The period of review (POR) is March 1,

1996, through February 28, 1997.

We preliminarily determine that sales have been made below normal

value (NV). If these preliminary results are adopted in our final

results of administrative review, we will instruct U.S. Customs to

assess antidumping duties based on to the difference between export

price (EP) and NV.

Interested parties are invited to comment on these preliminary

results. Parties who submit argument in this proceeding are requested

to submit with the argument: (1) a statement of the issue; and (2) a

brief summary of the argument.

EFFECTIVE DATE: April 7, 1998.

FOR FURTHER INFORMATION CONTACT:

Thomas Killiam, Alain Letort, or John Kugelman, Enforcement Group III

Office 8, Import Administration, International Trade Administration,

U.S. Department of Commerce, 14th Street and Constitution Avenue, NW.,

Room 7866, Washington, D.C. 20230; telephone (202) 482-2704 (Killiam),

4243 (Letort), or 0649 (Kugelman).

SUPPLEMENTARY INFORMATION:

Applicable Statute

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 references

to the provisions codified at 19 CFR Part 353 (April 1997). Although

the Department's new regulations, codified at 19 CFR Part 351 (62 FR

27296, May 19, 1997), do not govern these proceedings, citations to

those regulations are provided, where appropriate, to explain current

departmental practice.

Background

The Department published the antidumping duty order on brass sheet

and strip from Germany on March 6, 1987 (52 FR 6997). The Department

published a notice of Opportunity to Request an Administrative Review

of the antidumping duty order for the 1996/97 review period on March 7,

1997 (62 FR 10521). On March 31, 1997, petitioners Hussey Copper Ltd.,

The Miller Company, Outokumpu American Brass, 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 the United

Steelworkers of America (AFL-CIO/CLC), requested that the Department

conduct an administrative review of the antidumping duty order on brass

sheet and strip from Germany for Wieland. We published a notice of

initiation of

[[Page 16964]]

this review on April 24, 1997 (62 FR 19988).

On May 1, 1997, the petitioners requested, pursuant to section

751(a)(4) of the Act, that the Department determine whether antidumping

duties had been absorbed by the respondent during the POR. Section

751(a)(4) provides for the Department, if requested, to determine,

during an administrative review initiated two years or four years after

publication of the order, whether antidumping duties have been absorbed

by a foreign producer or exporter subject to the order if the subject

merchandise is sold in the United States through an importer who is

affiliated with such foreign producer or exporter. Section 751(a)(4)

was added to the Act by the URAA.

The regulations governing this review do not address this provision

of the Act. However, for transition orders as defined in section

751(c)(6)(C) of the Act, i.e., orders in effect as of January 1, 1995,

section 351.213(j)(2) of the Department's new antidumping regulations

provides that the Department will make a duty-absorption determination,

if requested, in any administrative review initiated in 1996 or 1998.

See 19 CFR Sec. 351.213(j)(2), 62 FR at 27394. As noted above, while

the new regulations do not govern the instant review, they nevertheless

serve as a statement of departmental policy. Because the order on brass

sheet and strip from Germany has been in effect since 1987, it is a

transition order in accordance with section 751(c)(6)(C) of the Act.

However, since this review was initiated in 1997, the Department will

not undertake a duty-absorption inquiry as part of this administrative

review.

Under the Act, the Department may extend the deadline for

completion of an administrative review if it determines that it is not

practicable to complete the review within the statutory time limit of

365 days. On November 10, 1997, the Department extended the time limits

for these preliminary results to March 31, 1998. See Brass Sheet and

Strip from Germany; Extension of Time Limits for Antidumping Duty

Administrative Review (62 FR 60469, November 10, 1997).

The Department is conducting this administrative review in

accordance with section 751 of the Act.

Scope of the Review

This review covers shipments of brass sheet and strip, other than

leaded and tinned, from Germany. The chemical composition of the

covered products is currently defined in the Copper Development

Association (C.D.A.) 200 Series or the Unified Numbering System

(U.N.S.) C2000; this review does not cover products the chemical

compositions of which are defined by other C.D.A. or U.N.S. series. In

physical dimensions, the products covered by this review have a solid

rectangular cross section over 0.006 inches (0.15 millimeters) through

0.188 inches (4.8 millimeters) in finished thickness or gauge,

regardless of width. Coiled, wound-on-reels (traverse wound), and cut-

to-length products are included. The merchandise is currently

classified under Harmonized Tariff Schedule (HTS) item numbers

7409.21.00 and 7409.29.00. The HTS item numbers are provided for

convenience and Customs purposes; the written description of the scope

of this order remains dispositive.

The POR is March 1, 1996 through February 28, 1997. This review

covers sales of brass sheet and strip from Germany by Wieland.

Transactions Reviewed

In accordance with section 751 of the Act, the Department is

required to determine the EP (or CEP) and NV of each entry of subject

merchandise.

As in past reviews, we are treating Wieland, Metallwerke

Schwarzwald GmbH (MSV), and Langenberg Kupfer-und Messingwerke GmbH

(LKM) as affiliated parties, identified in the questionnaire response

of June 16, 1997, and have collapsed them as a single producer of brass

sheet and strip in order to analyze the universe of home market

affiliated sales.

Product Comparisons

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

brass sheet and strip, 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 brass

sheet and strip. 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 September 19,

1996 antidumping questionnaire. In making the product comparisons, we

matched foreign like products based on the physical characteristics

reported by the respondent.

Fair Value Comparisons

To determine whether sales of brass sheet and strip by the

respondent 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 777A(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 United States sales based on EP, in

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

merchandise was sold by the producer or exporter outside the United

States to unaffiliated purchasers in the United States prior to the

date of importation.

We calculated EP based on packed prices to unaffiliated customers

in the United States. Where appropriate, we made deductions from the

starting price for discounts, foreign inland freight, foreign brokerage

and handling, international freight, marine insurance, U.S. inland

freight, U.S. brokerage and handling, 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 Act, we based NV on the price at

which the foreign like product was first sold for consumption in the

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

course of trade.

Where appropriate, we deducted rebates, discounts, post-sale

warehousing, inland freight, inland insurance, and packing. We made

adjustments to NV, where appropriate, for differences in credit

expenses.

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

773(a)(6)(A) of the Act. For comparison of U.S. merchandise to home-

market merchandise which was 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. '

Differences in Levels of Trade

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

[[Page 16965]]

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 (``SG&A'') expenses and profit. For EP, the U.S. LOT is

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

exporter to 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 LOT 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. 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 an 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).

In its questionnaire responses Wieland stated that there were no

differences in its selling activities by customer categories within

each market. In order independently to confirm the absence of separate

levels of trade within or between the U.S. and home markets, we

examined Wieland's questionnaire responses for indications that its

functions as a seller differed qualitatively and quantitatively among

customer categories. See commentary to section 351.412 of the

Department's new regulations (62 FR at 27371).

Wieland sold to original equipment manufacturers in both the U.S.

and home markets. Wieland performed the same selling and marketing

functions for its home-market and U.S. customers. Pursuant to section

773(a)(1)(B)(i) of the Act, we consider the selling functions reflected

in the starting price of home-market sales before any adjustments. Our

analysis of the questionnaire response leads us to conclude that sales

within or between each market are not made at different levels of

trade. 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.

Cost-of-Production Analysis

Petitoners alleged on July 16, 1997, that Wieland sold brass sheet

and strip in the home market at prices below cost of production (COP).

Based on these allegations, the Department determined, on August 4,

1997, that it had reasonable grounds to believe or suspect that Wieland

had sold the subject merchandise in the home market at prices below the

COP. We therefore initiated a cost investigation in order to determine

whether the respondent made home-market sales during the POR at prices

below their COP within the meaning of section 773(b) of the Act.

Before making any fair value comparisons, we conducted the COP

analysis described below.

A. Calculation of COP

We used the COP based on the sum of the respondent's cost of

materials and fabrication for the foreign like product, plus amounts

for home-market selling, general, and administrative expenses (SG&A),

and packing costs in accordance with section 773(b)(3) of the Act.

B. Test Home-Market Prices

We used the respondent's weighted-average COP for the period July

1995 to June 1996. We compared the weighted-average COP figures to

home-market sales of the foreign like product as required under section

773(b) of the Act. In determining whether to disregard home-market

sales made at prices below the COP, we examined whether (1) within an

extended period of time, such sales were made in substantial

quantities, and (2) such sales were made at prices which permitted the

recovery of all costs within a reasonable period of time. On a product-

specific basis, we compared the COP to the home-market prices (not

including VAT), less any applicable movement charges, discounts, and

rebates.

C. Results of COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20

percent of respondent's sales of a given product were at prices less

than the COP, we did not disregard any below-cost sales of that product

because we determined that the below-cost sales were not made in

substantial quantities. Where 20 percent or more of respondent's sales

of a given product during the POR were at prices less than the COP, we

found that sales of that model were made in substantial quantities

within an extended period of time, in accordance with sections

773(b)(2) (B) and (C) of the Act, and were not at prices which would

permit recovery of all costs within an extended period of time, in

accordance with section 773(b)(2)(D) of the Act. When we found that

below-costs 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 constructed value (CV) as the

basis for foreign market value when the Department finds 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 Investigation 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 SKC 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

[[Page 16966]]

permitted. Since there were sufficient sales above cost, it was not

necessary to calculate constructed value 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) 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.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that the

following weighted-average dumping margin exists:

Brass Sheet and Strip from Germany

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

Weighted-

average

Producer/manufacturer/exporter margin

(percent)

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

Wieland.................................................... 0.85

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Parties to this proceeding may request disclosure within five days

of publication of this notice and any interested party may request a

hearing within 10 days of publication. Any hearing, if requested, will

be held 44 days after the date of publication, or the first working 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

such briefs or comments, may be filed 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 cash deposit requirements will be effective upon

publication of the final results of this administrative review for all

shipments of the subject merchandise entered, or withdrawn from

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

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

for Wieland 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 these

reviews but covered in a previous segment of these proceedings, 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 original less-than-fair-value (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) if neither the exporter nor the manufacturer

is a firm covered in these or any prior review, the cash deposit rate

will be 8.87 percent, the all others rate established in the LTFV

investigation. These deposit requirements, 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. These preliminary results of

review are issued and published in accordance with sections 751(a)(1)

and 777(i)(1) of the Act and 19 CFR 353.22.

Dated: March 31, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-9095 Filed 4-6-98; 8:45 am]

BILLING CODE 3510-DS-M