International Trade Administration

DEPARTMENT OF COMMERCE

International Trade Administration

[A-351-505]

Preliminary Results of Full Sunset Review: Malleable Cast Iron Pipe

Fittings From Brazil

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of full sunset review: malleable

cast iron pipe fittings from Brazil.

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SUMMARY: On January 4, 1999, the Department of Commerce (``the

Department'') initiated a sunset review of the antidumping duty order

on malleable cast iron pipe fittings from Brazil (64 FR 364) pursuant

to section 751(c) of the Tariff Act of 1930, as amended (``the Act'').

On the basis of a notice of intent to participate filed on behalf of

domestic interested parties and subsequent adequate responses from both

domestic and respondent interested parties, the Department is

conducting a full review. As a result of this review, the Department

preliminarily finds that revocation of the antidumping duty order would

be likely to lead to continuation or recurrence of a dumping at the

levels indicated in the Preliminary Results of Review section of this

notice.

FOR FURTHER INFORMATION CONTACT: Scott E. Smith or Melissa G. Skinner,

Office of Policy for Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th & Constitution,

Washington, D.C. 20230; telephone: (202) 482-6397 or (202) 482-1560,

respectively.

EFFECTIVE DATE: July 29, 1999.

Statute and Regulations

This review is being conducted pursuant to sections 751(c) and 752

of the Act. The Department's procedures for the conduct of sunset

reviews are set forth in Procedures for Conducting Five-year

(``Sunset'') Reviews of Antidumping and Countervailing Duty Orders, 63

FR 13516 (March 20, 1998) (``Sunset Regulations''), and 19 C.F.R. Part

351 (1998) in general. Guidance on methodological or analytical issues

relevant to the Department's conduct of sunset reviews is set forth in

the Department's Policy Bulletin 98:3--Policies Regarding the Conduct

of Five-year (``Sunset'') Reviews of Antidumping and Countervailing

Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset

Policy Bulletin'').

Scope

Imports covered by this review are shipments of certain malleable

cast iron pipe fittings, other than grooved, from Brazil. In the

original order, these products were classified in the Tariff Schedules

of the United States, Annotated (TSUSA), under item numbers 610.7000

and 610.7400. These products are currently classifiable under item

numbers 7307.19.90.30, 7307.19.90.60, and 7307.19.90.80 of the

Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS item

numbers are provided for convenience and customs purposes. The written

description remains dispositive.

This order applies to all imports of certain malleable cast iron

pipe fittings from Brazil.

History of the Order

The Department issued a final determination of sales at less than

fair value on March 31, 1986, finding a weighted-average margin of 5.64

percent for Industria de Fundicao Tupy, S.A. (``Tupy''), and for all

others (51 FR 10897). The antidumping duty order on malleable cast iron

pipe fittings from Brazil was published in the Federal Register on May

21, 1986 (51 FR 18640). Since that time the Department has conducted

one administrative review of this order, which covered the period from

May 1, 1993, to April 30, 1994.1

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\1\ See Malleable Cast Iron Pipe Fittings, Other Than Grooved,

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

51 FR 10897 (May 31, 1986); Antidumping Duty Order: Malleable Cast

Iron Pipe Fittings From Brazil, 51 FR 18640 (May 21, 1986); and

Malleable Cast Iron Pipe Fittings From Brazil; Final Results of

Antidumping Duty Administrative Review, 60 FR 41876 (August 14,

1995).

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Background

On January 4, 1999, the Department initiated a sunset review of the

antidumping duty order on malleable cast iron pipe fittings from Brazil

(64 FR 364) pursuant to section 751(c) of the Act. On January 19, 1999,

the Department received a Notice of Intent to Participate on behalf of

the Cast Iron Pipe Fittings Committee and its members, Grinnell

Corporation and Ward Manufacturing (collectively ``CIPFC''), within the

applicable deadline specified in section 351.218(d)(1)(i) of the Sunset

[[Page 41086]]

Regulations. The CIPFC claimed interested party status under section

771(9)(F) of the Act as an ad hoc trade association consisting entirely

of U.S. manufacturers of malleable cast iron pipe fittings.

We received a complete substantive response to the notice of

initiation on February 3, 1999, on behalf of CIPFC. In its substantive

response, CIPFC stated that both it and its two current members have

been participants in both the Department's original investigation and

in the sole administrative review conducted by the Department.

2 We received a complete substantive response on behalf of

Tupy on February 4, 1999. In its substantive response, Tupy claimed

interested party status under section 771(9) of the Act, as a foreign

producer of malleable cast iron pipe fittings. Tupy also asserted that,

to the best of its knowledge, it has always accounted for 100 percent

of the exports to the United States of pipe fittings from Brazil, both

before and after the issuance of the order.

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\2\ CIPFC's current members are Grinnell Corporation and Ward

Manufacturing. The Committee previously consisted of five members,

including Grinnell and Ward. The other three members have since gone

out of business. CIPFC's members represent ``virtually'' all

domestic production of malleable cast iron pipe fittings, other than

grooved.

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On February 8, 1999, we granted an extension to all parties to the

deadline for filing rebuttal comments. We received rebuttal comments

from Tupy and from CIPFC on February 11 and 12, 1999, respectively.

Both Tupy and CIPFC claim that Tupy was, and remains, the only

producer of malleable cast iron pipe fittings from Brazil. Therefore,

Tupy accounted for significantly more than 50 percent of the value of

total exports of the subject merchandise over the five calendar years

preceding the initiation of the sunset review and the response of Tupy

constituted an adequate response to the notice of initiation. Thus,

because the Department received adequate responses from both domestic

and foreign interested parties, we are conducting a full (240 day)

review in accordance with section 351.218(e)(2)(i) of the Sunset

Regulations.

The Department determined that the sunset review of the antidumping

duty order on malleable cast iron pipe fittings from Brazil is

extraordinarily complicated. In accordance with section 751(c)(6)(C)(v)

of the Act, the Department may treat a review as extraordinarily

complicated if it is a review of a transition order (i.e., an order in

effect on January 1, 1995). (See section 751(c)(6)(C) of the Act.)

Therefore, on May 3, 1999, the Department extended the time limit for

completion of the preliminary results of this review until not later

than July 23, 1999, in accordance with section 751(c)(5)(B) of the

Act.3

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\3\ See Malleable Cast Iron Pipe Fittings From Brazil and

Thailand: Extension of Time Limit for Preliminary Results of Five-

Year Reviews, 64 FR 23598 (May 3, 1999).

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Determination

In accordance with section 751(c)(1) of the Act, the Department is

conducting this review to determine whether revocation of the

antidumping duty order would be likely to lead to continuation or

recurrence of dumping. Section 752(b) of the Act provides that, in

making this determination, the Department shall consider the weighted-

averaged dumping margins determined in the original investigation and

subsequent reviews and the volume of imports of the subject merchandise

for the period before and the period after the issuance of the

antidumping duty order and shall provide to the International Trade

Commission (``the Commission'') the magnitude of the margin of dumping

likely to prevail if the order is revoked.

The Department's preliminary determinations concerning continuation

or recurrence of dumping and magnitude of the margin likely to prevail

are discussed below. In addition, parties' comments with respect to

continuation or recurrence of dumping and the magnitude of the margin

likely to prevail are addressed within the respective sections below.

Continuation or Recurrence of Dumping

Party Comments

In its substantive response, CIPFC argued that revocation of the

antidumping duty order would likely result in the continuation or

resumption of dumping of malleable cast iron pipe fittings from

Brazil.4 CIPFC asserted that, since the imposition of the

antidumping duty order in 1986, Tupy has continued dumping at margins

well over a de minimis level. As support for this assertion, CIPFC

argued that the Department's revision of Tupy's margin in the sole

administrative review of this order, from 5.64 percent to 34.64 percent

is evidence that there is likelihood of continuation or recurrence of

dumping as Tupy has continued dumping with the discipline of an order

in place.5

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\4\ See CIPFC substantive response of February 3, 1999, page 6.

\5\ See CIPFC substantive response of February 3, 1999, page 8.

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With respect to whether imports of the subject merchandise have

either fallen dramatically or ceased following the imposition of the

antidumping duty order, CIPFC argued that import volumes dropped

significantly after the order was put into place. CIPFC contended that,

in 1984, prior to the imposition of the order, imports of the subject

merchandise totaled 3,274,000 pounds. In 1985, imports decreased

significantly, to 476,000 pounds, and then rose slightly in 1986 and

1987 to 816,000 pounds and 762,000 pounds, respectively.6

According to CIPFC, these data represent total imports of malleable

cast iron pipe fittings from Brazil, but, since Tupy is the only known

Brazilian exporter of the subject merchandise, it is reasonable to

assume that these numbers represent Tupy's exports to the United States

during those calendar years.

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\6\ See Table 1 in CIPFC's substantive response of February 3,

1999, page 9.

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CIPFC also argued that import volumes in subsequent years gradually

began to rise, although never managing to come close to the peak volume

of 1984. In 1991, the total volume of imports of the subject

merchandise was 721,385 pounds. This volume subsequently increased in

1992, 1993, and 1994 to a range between 1.3 million pounds in 1992 and

1.7 million pounds in 1994.7 CIPFC asserted that, following

the 1995 administrative review in which the Department found that Tupy

was dumping at a rate of 34.64 percent, imports of the subject

merchandise from Brazil (and, accordingly, Tupy's exports of the

subject merchandise) fell dramatically to 818 pounds and have only now

begun to start again.

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\7\ See Table 2 of CIPFC substantive response, page 10.

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CIPFC concluded by arguing that the data, showing a decline in

import volumes of malleable cast iron pipe fittings from Brazil

accompanied by the continued existence of dumping margins after the

order, provide a strong indication that Tupy will continue or resume

dumping if the order is revoked.8 Therefore, CIPFC asserted

that the Department should determine that there is a likelihood of

continuation or recurrence of dumping if the order is revoked.

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\8\ See CIPFC substantive response, page 10.

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Tupy, in its substantive response of February 4, 1999, argued that

the likely effects of revocation of the order on pipe fittings from

Brazil would not be a continuation or recurrence of dumping by Tupy.

Accordingly, because there is no other Brazilian producer and exporter

of pipe fittings, Tupy asserted

[[Page 41087]]

that there is no other reason to expect that pipe fittings from Brazil

will be dumped in the United States in the event the order is

revoked.9

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\9\ See Tupy substantive response of February 4, 1999, page 4.

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Tupy explained in its substantive response that following the

imposition of the incorrect and prohibitive best information available

(BIA) rate of 34.64 percent in the administrative review, Tupy ceased

exports of the subject merchandise to the United States in favor of

other markets and other product lines. Tupy also asserted that it has

recently begun to resume exports of pipe fittings to the United States.

Tupy claims that it has no intention of dumping because it can now

compete in the United States without dumping.

In its rebuttal response of February 11, 1999, CIPFC argued that

Tupy is still interested in the U.S. market and that Tupy's statement

that it has no intention of dumping is nothing more than an

unsubstantiated, self-serving statement and should be disregarded as

such.10 According to CIPFC, Tupy has presented no credible

basis for the Department to find that revocation of the antidumping

duty order is not likely to lead to continuation or recurrence of

dumping.11

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\10\ See CIPFC rebuttal response of February 11, 1999, page 3,

to Tupy's substantive response of February 4, 1999.

\11\ See CIPFC rebuttal response of February 11, 1999, page 4.

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Tupy did not address the issue of whether dumping was likely to

continue were the order to be revoked in its rebuttal comments.

Department's Determination

Drawing on the guidance provided in the legislative history

accompanying the Uruguay Round Agreements Act (``URAA''), specifically

the Statement of Administrative Action (``the SAA''), H.R. Doc. No.

103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt. 1

(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the

Department issued its Sunset Policy Bulletin providing guidance on

methodological and analytical issues, including the basis for

likelihood determinations. The Department clarified that determinations

of likelihood will be made on an order-wide basis (see section II.A.3

of the Sunset Policy Bulletin). Additionally, the Department normally

will determine that revocation of an antidumping duty order is likely

to lead to continuation or recurrence of dumping where (a) dumping

continued at any level above de minimis after the issuance of the

order, (b) imports of the subject merchandise ceased after the issuance

of the order, or (c) dumping was eliminated after the issuance of the

order and import volumes for the subject merchandise declined

significantly (see section II.A.3.a of the Sunset Policy Bulletin).

As discussed in section II.A.3 of the Sunset Policy Bulletin, the

SAA at 890, and the House Report at 63-64, the existence of dumping

margins after the order, or the cessation of imports after the order,

is highly probative of the likelihood of continuation or recurrence of

dumping. If companies continue to dump with the discipline of an order

in place, it is reasonable to assume that dumping would continue if the

order were revoked. If imports cease after the order is issued, it is

reasonable to assume that the exporters could not sell in the United

States without dumping and that, to reenter the U.S. market, they would

have to resume dumping. Since deposit rates above de minimis remain in

effect for exports of malleable cast iron pipe fittings from Brazil,

evidence suggests that exporters cannot sell in the U.S. market without

dumping.

With respect to whether imports of the subject merchandise ceased

following the imposition of the original antidumping duty order, the

Department preliminarily finds that imports of the subject merchandise

to the United States declined dramatically from a high point of

3,274,437 pounds (1485.28 metric tons) in 1984 to 761,050 pounds

(345.21 metric tons), in 1987. Imports increased dramatically in 1988,

exceeding 3 million pounds (1400 metric tons) and then fell again.

However, following the 1995 issuance of the final results of the sole

administrative review conducted by the Department, imports subsequently

ceased and only in 1998 began to resume. Since Tupy is the only

Brazilian producer of malleable cast iron pipe fittings, as stated in

the substantive responses of both parties, it is reasonable to assume

that these numbers accurately reflect Tupy's exports to the United

States. Therefore, since dumping margins have continued over the life

of the order, the Department preliminarily determines that dumping is

likely to continue if the order were revoked.

Magnitude of the Margin

Party Comments

In its February 3, 1999, substantive response, CIPFC argued that

the Department should determine that the margin likely to prevail if

the antidumping duty order were to be revoked is the more recent rate

of 34.64 percent. According to CIPFC, the more recently calculated

margin of 34.64 percent is more representative of Tupy's likely

behavior if the Department revokes the order than the original rate of

5.64 percent.12

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\12\ See CIPFC substantive response of February 3, 1999, page

11.

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CIPFC argued that, since the imposition of the antidumping duty

order in 1986, Tupy has been attempting to increase its share of the

U.S. market for malleable pipe fittings. According to CIPFC, in 1986

Tupy accounted for approximately 0.67 percent of the U.S. market or 0.8

million pounds. CIPFC also argues that, by 1994, when the Department

found a margin of 34.64 percent, Tupy had exported 1.75 million pounds

or approximately twice the volume of its exports in 1986. Thus,

according to the CIPFC, Tupy had been trying to gain a greater

percentage of market share in what CIPFC termed a mature low-growth or

no-growth market.13

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\13\ See CIPFC substantive response of February 3, 1999, page

12.

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Additionally, CIPFC argued that Tupy attempted to secure the 5.64

percent rate of the original investigation by not participating in the

administrative review and forcing the Department to use BIA in

determining the margin. Since the Department's normal procedure is to

limit the BIA rate to the highest rate determined in the original

investigation and since Tupy was the only company investigated, CIPFC

asserted that Tupy believed that it could secure the 5.64 percent rate

when it did not participate in the administrative review. Therefore,

CIPFC contended that the use of the 5.64 percent rate in the context of

this sunset review would permit Tupy to benefit from the very behavior

that the Department sought to sanction in 1995. Therefore, the CIPFC

concluded, the Department should find that a dumping margin of 34.64

percent is a more accurate rate than the original rate, that it better

reflects Tupy's likely dumping in the event of revocation, and that,

therefore, it is the legally correct rate to provide to the

Commission.14

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\14\ See CIPFC substantive response of February 3, 1999, page

13-14.

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In its substantive response of February 4, 1999, Tupy argued that,

pursuant to the Sunset Policy Bulletin, the correct margin to be

applied to Tupy in the event of revocation of the antidumping duty

order is the rate that was determined in the original investigation.

Tupy asserted that the Department may not choose the higher margin from

the final results of review issued in 1995 simply because that rate was

determined more recently. Tupy

[[Page 41088]]

also argued that the record of this case does not justify the higher

rate because Tupy asserts that it has not attempted to increase market

share since the imposition of the order. Tupy argued, therefore, that

the Department should follow its standard practice of determining that

the margin likely to prevail if the order were revoked would be the

margin from the original investigation, 5.64 percent.

In its rebuttal, CIPFC argued that, since U.S. imports from Brazil

increased while at the same time Tupy's margin also increased, it is

reasonable to infer that Tupy was attempting to increase its market

share between 1986 and 1995. 15 Thus, CIPFC asserted that

Tupy increased exports by dumping in the mid-1980s and then, following

the imposition of the order, decreased its imports to the United States

substantially. CIPFC argued that, in the early 1990s, Tupy again

attempted to gain market share and began increasing its exports to the

United States by dumping at higher margins only to cease exporting when

the Department determined that there was a new, higher dumping margin.

Therefore, CIPFC asserted that the margin of dumping that will prevail

if the order is revoked will be the higher margin of 34.64 percent.

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\15\ See CIPFC rebuttal response of February 11, 1999, page 6.

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In its rebuttal comments Tupy continued to argue that the

Department should use the 5.64 percent margin from the original

investigation. Tupy asserted that this is consistent with the

Department's policy and practice. Citing to the final results of the

expedited sunset review on the antidumping duty order on roller chain

from Japan, Tupy asserted that, in order for the Department to consider

a margin other than one determined in an original investigation, the

domestic parties have the burden of affirmatively demonstrating that

higher, more recent margins reflect a consistent pattern of behavior by

respondents to obtain or increase market share. Tupy asserted the CIPFC

has not met this burden. Further, Tupy asserted that it has never held

a commercially significant share of the U.S. market. Tupy disputed the

statistics concerning market share provided by CIPFC but argued

nonetheless that, even if CIPFC's statistics were used, Tupy's share of

the U.S. market was its highest in 1984 at 2.3 percent and that its

market share was 1.18 percent and 1.28 percent in 1993 and 1994,

respectively. Tupy asserted that the slight increase of 0.67 percent in

its 1993 and 1994 market share over its 1986 market share hardly

warrants selecting the 34.64 percent BIA rate.

Department's Determination

In the Sunset Policy Bulletin, the Department stated that,

consistent with the SAA and House Report, the Department normally will

provide to the Commission a margin from the investigation because that

is the only calculated rate that reflects the behavior of exporters

without the discipline of an order or suspension agreement in place.

16 Exceptions to this policy include the use of a more

recently calculated margin, where appropriate, and consideration of

duty absorption determinations.

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\16\ See section II.B.1 of the Sunset Policy Bulletin.

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In its substantive response, CIPFC urged the Department to

determine that the magnitude of the margin likely to prevail if the

order were revoked is 34.64 percent, which is the rate that was

determined in the sole administrative review and the one that is

currently in effect. CIPFC argued, in both its substantive response and

in its rebuttal, that the Department may choose a higher, more recent

margin. Specifically, the Sunset Policy Bulletin, at section II.B.2

states that a company may choose to increase dumping in order to

maintain or increase market share. As a result, increasing margins may

be more representative of a company's behavior in the absence of an

order. Therefore, the Department may, in response to an argument from

an interested party, provide to the Commission a more recently

calculated margin for a particular company where, for that particular

company, dumping margins increased after the issuance of the order,

even if the increase was a result of the use of BIA.

As discussed in Final Results of Expedited Sunset Review: Stainless

Steel Plate From Sweden, 63 FR 67658 (December 8, 1998), the Department

intended to establish a policy of using the margin from the original

investigation as a starting point, thus providing interested parties

the opportunity and incentive to present data which would support a

different estimate. Additionally, in Barium Chloride From the People's

Republic of China, 64 FR 5633, 5635 (February 4, 1999), the Department

determined that where there is an increase in imports corresponding to

the increase in the dumping margin, the Department may determine that

the higher rate is more representative of the behavior of the company

without the discipline of an order in place.

In the instant case, however, the Department finds that annual

import volumes for the subject merchandise have fluctuated during the

life of the order and no consistent pattern of behavior by Tupy can be

discerned. From 1986, the year of the imposition of the order, through

the period prior to the conclusion of the 1993-94 administrative

review, the Department finds no pattern of consistently increasing

imports of subject merchandise associated with increasing dumping

margins. Imports fluctuated during this period, increasing and

decreasing during a period when the deposit rate was constant. Imports

of subject merchandise during this period were both above and below

pre-order levels. In addition, estimates provided by Tupy concerning

its U.S. market share during this period also indicate that there were

fluctuations in its share of the U.S. market.

Given the fluctuations over the life of the order, the Department

finds no reason to believe that Tupy attempted to increase its U.S.

market share through the increased dumping of subject merchandise.

Because of this, the Department preliminarily finds that the use of a

more recently calculated margin in its report to the Commission would

be inappropriate. Therefore, we determine that the margins calculated

in the original investigation best reflect the behavior of producers/

exporters without the discipline of the order and we find that the

margins calculated in the original investigation are probative of the

behavior of Brazilian producers/exporters of the malleable cast iron

pipe fittings if the order were revoked. As such, if these results are

adopted for the Department's final determination, we will report to the

Commission the rate established for Tupy (as well as for all other

producers/exporters of the subject merchandise) in the original

investigation as contained in the Preliminary Results of Review section

of this notice.

Preliminary Results of Review

As a result of this review, the Department preliminarily finds that

revocation of the antidumping duty order would be likely to lead to

continuation or recurrence of dumping. The magnitude of the margin that

is likely to prevail is 5.64 percent.

Any interested party may request a hearing within 30 days of

publication of this notice in accordance with 19 CFR 351.310(c). Any

hearing, if requested, will be held on September 22, 1999. Interested

parties may submit case briefs no later than September 13, 1999, in

accordance with 19 CFR

[[Page 41089]]

351.309(c)(1)(i). Rebuttal briefs, which must be limited to issues

raised in the case briefs, may be filed not later than September 20,

1999. The Department will issue a notice of final results of this

sunset review, which will include the results of its analysis of issues

raised in any such comments, no later than November 30, 1999.

This five-year (``sunset'') review and notice are in accordance

with sections 751(c), 752, and 777(i)(1) of the Act.

Dated: July 23, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-19446 Filed 7-28-99; 8:45 am]

BILLING CODE 3510-DS-P