Initiation of Antidumping Duty Investigations: Structural Steel Beams From Germany, Japan, South Korea, and Spain

DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-826, A-469-809, A-588-852, A-580-841]

Initiation of Antidumping Duty Investigations: Structural Steel

Beams From Germany, Japan, South Korea, and Spain

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: August 3, 1999.

FOR FURTHER INFORMATION CONTACT: Robert James (Germany) at (202) 482-

5222; Abdelali Elouaradia (Japan) at (202) 482-2243; Rick Johnson

(South Korea) at (202) 482-3818; and Linda Ludwig (Spain), at (202)

482-3833, Import Administration, International Trade Administration,

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

Washington, DC 20230.

Initiation of Investigations

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act (URAA). In addition, unless otherwise

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

to the provisions codified at 19 CFR Part 351 (1998).

The Petition

On July 7, 1999, the Department of Commerce (``the Department'')

received petitions filed in proper form by Northwestern Steel and Wire

Company, Nucor-Yamato Steel Company, TXI-Chaparral Steel Company, and

United Steelworkers of America AFL-CIO (collectively petitioners). The

Department received supplemental information to the petitions on July

8, July 21 and July 22, 1999.

[[Page 42085]]

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

that imports of structural steel beams (``structural beams'') from

Germany, Japan, South Korea, and Spain are being, or are likely to be,

sold in the United States at less than fair value within the meaning of

section 731 of the Act, and that such imports are materially injuring

an industry in the United States.

The Department finds that petitioners filed these petitions on

behalf of the domestic industry because they are interested parties as

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

demonstrated sufficient industry support with respect to each of the

antidumping investigations they are requesting the Department to

initiate (see Determination of Industry Support for the Petition

below).

Scope of Investigations

For purposes of this investigation, the products covered are

doubly-symmetric shapes, whether hot-or cold-rolled, drawn, extruded,

formed or finished, having at least one dimension of at least 80 mm

(3.2 inches or more), whether of carbon or alloy (other than stainless)

steel, and whether or not drilled, punched, notched, painted, coated,

or clad. These products (``Structural Steel Beams'') include, but are

not limited to, wide-flange beams (``W'' shapes), bearing piles (``HP''

shapes), standard beams (``S'' or ``I'' shapes), and M-shapes.

All products that meet the physical and metallurgical descriptions

provided above are within the scope of this investigation unless

otherwise excluded. The following products, are outside and/or

specifically excluded from the scope of this investigation:

Structural steel beams greater than 400 pounds per linear

foot or with a web or section height (also known as depth) over 40

inches.

In addition to the above exclusion, petitioners have requested that

the Department exclude certain special section I-shapes. See Exhibit 5

of the petition, submitted on July 7, 1999, see also Attachment A of

the July 23, 1999 petition amendment. The Department is currently

considering this exclusion request, and attempting to define the

request using physical, mechanical, and chemical criteria.

The merchandise subject to these investigations is classified in

the Harmonized Tariff Schedule of the United States (``HTSUS'') at

subheadings: 7216.32.0000, 7216.33.0030, 7216.33.0060, 7216.33.0090,

7216.50.0000, 7216.61.0000, 7216.69.0000, 7216.91.0000, 7216.99.0000,

7228.70.3040, 7228.70.6000. Although the HTSUS subheadings are provided

for convenience and Customs purposes, the written description of the

merchandise under investigation is dispositive.

During our review of the petition, we discussed the scope with the

petitioners to ensure that the scope in the petition accurately

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

Moreover, as we discussed in the preamble to the Department's

regulations (62 FR 27323), we are setting aside a period for parties to

raise issues regarding product coverage. The Department encourages all

parties to submit such comments by August 16, 1999. Comments should be

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

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

Washington, D.C. 20230. Any product coverage comment filed must be

filed for the record of each structural steel beam investigation (i.e.,

commentors must file all coverage comments on the record of the

investigations for structural steel beams from Germany, Japan, South

Korea (both antidumping and countervailing duty investigations) and

Spain). The period of scope consultations is intended to provide the

Department with ample opportunity to consider all comments and consult

with parties prior to the issuance of the preliminary determination.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Act requires that a petition be filed on

behalf of the domestic industry. Section 732(c)(4)(A) of the Act

provides that a petition meets this requirement if the domestic

producers or workers who support the petition account for: (1) at least

25 percent of the total production of the domestic like product; and

(2) more than 50 percent of the production of the domestic like product

produced by that portion of the industry expressing support for, or

opposition to, the petition.

Section 771(4)(A) of the Act defines the ``industry'' as the

producers of a domestic like product. Thus, to determine whether the

petition has the requisite industry support, the statute directs the

Department to look to producers and workers who produce the domestic

like product. The International Trade Commission (``ITC''), which is

responsible for determining whether ``the domestic industry'' has been

injured, must also determine what constitutes a domestic like product

in order to define the industry. While both the Department and the ITC

must apply the same statutory definition regarding the domestic like

product (section 771(10) of the Act), they do so for different purposes

and pursuant to separate and distinct authority. In addition, the

Department's determination is subject to limitations of time and

information. Although this may result in different definitions of the

like product, such differences do not render the decision of either

agency contrary to the law (see Algoma Steel Corp. Ltd., v. United

States, 688 F. Supp. 639, 642-44 (CIT 1988); High Information Content

Flat Panel Displays and Display Glass Therefore from Japan: Final

Determination; Rescission of Investigation and Partial Dismissal of

Petition, 56 FR 32376, 32380-81 (July 16, 1991).

Section 771(10) of the Act defines the domestic like product as ``a

product which is like, or in the absence of like, most similar in

characteristics and uses with, the article subject to an investigation

under this title.'' Thus, the reference point from which the domestic

like product analysis begins is ``the article subject to an

investigation,'' i.e., the class or kind of merchandise to be

investigated, which normally will be the scope as defined in the

petition. Moreover, petitioners do not offer a definition of domestic

like product distinct from the scope of the investigation.

The domestic like product referred to in the petition is the single

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

section, above. The Department has no basis on the record to find the

petition's definition of the domestic like product to be inaccurate.

The Department has, therefore, adopted the domestic like product

definition set forth in the petition.

In this case, the Department has determined that the petition and

supplemental information to the petition contain adequate evidence of

sufficient industry support (see Attachment to the Initiation Checklist

Re: Industry Support, July 27, 1999). For all countries, producers and

workers supporting the petition represent over 50 percent of total

production of the domestic like product.

Accordingly, the Department determines that these petitions are

filed on behalf of the domestic industry within the meaning of section

732(b)(1) of the Act.

Export Price and Normal Value

The following are descriptions of the allegations of sales at less

than fair value upon which our decisions to initiate these

investigations are based. Should

[[Page 42086]]

the need arise to use any of this information in our preliminary or

final determinations for purposes of facts available under section 776

of the Act, we may re-examine the information and revise the margin

calculations, if appropriate.

Germany

Petitioners have identified Salzgitter AG (Salzgitter) and

Stahlwerk Thuringen GmbH (Stahlwerk Thuringen) as possible exporters of

structural beams from Germany and the primary producers of subject

merchandise in Germany. Petitioners based export price (``EP'') on two

price offerings for structural beams, one by Salzgitter and one by

Stahlwerk Thuringen, made in the fourth quarter of 1998 to unaffiliated

U.S. purchasers. Petitioners deducted inland freight obtained from a

price quote for trucking wide-flange beams from the German mill to the

port of exportation. Petitioners then subtracted ocean freight and

insurance costs, calculated as the difference of the unit customs value

from the unit C.I.F. value of the subject merchandise. In addition,

petitioners deducted port fees, which they acquired from an official

port schedule for one of the price offerings and documented by

affidavit for the other, and U.S. customs duties, which were obtained

from the 1999 HTSUS.

In calculating NV, petitioners used two home market price quotes

(one from Salzgitter and one from Stahlwerk Thuringen). Petitioners

stated that these prices were quoted for wide-flange beams for sale in

the first quarter of 1999 and that the grade offered in these quotes is

equivalent to the grades in the U.S. offerings used to compute EP.

Because the terms of Salzgitter and Stahlwerk Thuringen's sales were on

a delivered basis, petitioners subtracted the cost of delivery to

customers in Germany from the delivered prices. Petitioners obtained

inland freight costs for shipping a truckload of structural beams in

Germany from a freight forwarder. To compute normal value petitioners

also deducted home market credit expenses, which were calculated using

the average days of credit offered on sales of wide-flange beams in

Germany, the home market delivered price, and the average German prime

rate (from the Bundesbank) for January and February 1999. In addition,

petitioners added an amount for imputed U.S. credit expense in

accordance with section 773(a)(6)(C) of the Act. Petitioners derived

the imputed U.S. credit expense using the standard days of credit

offered on sales of German wide-flange beams in the U.S., the U.S.

delivered price, and the average U.S. prime lending rate during the

period of shipment.

Petitioners provided information demonstrating reasonable grounds

to believe or suspect that home market sales of the subject merchandise

were made at prices below the cost of production (``COP''), within the

meaning of section 773(b) of the Act, and requested that the Department

conduct a country-wide sales below cost investigation. Pursuant to

section 773(b)(3) of the Act, COP consists of the cost of manufacturing

(``COM''), selling, general, and administrative expenses (``SG&A''),

and packing costs. To calculate COP, the petitioners based COM on their

own production experiences for COM adjusted for known differences

between costs incurred to produce structural beams in the United States

and Germany. To calculate SG&A petitioners relied on their own

experience. Petitioner's relied upon their own experience for SG&A

because as documented in the petition, they were unable to obtain an

SG&A rate for a German steel producer. In addition, we note that the

SG&A rate used appears to be conservative. To calculate financial

expenses, petitioners relied upon the 1998 net financial expense from

the financial statements of one of the named producers.

Based on our analysis, certain of the home market sales reported in

the petition were shown to be made at prices below the COP. For these

sales, petitioner based NV on the constructed value (``CV'') of the

merchandise, pursuant to section 773(a)(4) and 773(e) of the Act.

Pursuant to section 773(e) of the Act, CV consists of the COM, SG&A

expenses, packing costs and profit of the merchandise. To calculate the

COM, SG&A, and packing costs for CV, petitioners followed the same

methodology used to determine COP. The petitioners derived profit for

CV based on the 1998 financial statements of one of the producers named

in the petition. We adjusted petitioners' calculated profit to exclude

investment write-offs and equity earnings in affiliated companies.

The estimated dumping margins based on a comparison between

Salzgitter and Stahlwerk Thuringen's U.S. prices and CV, as adjusted by

the Department, are 67.78 percent and 88.83 percent, respectively.

Based on a comparison of EP to home market prices, petitioners'

calculated dumping margins range from 45.91 percent to 49.45 percent,

respectively.

Japan

The petitioners based EP for both Tokyo Steel and Nippon Steel on

three U.S. price offerings for sales of wide flange beams to

unaffiliated purchasers during the fourth quarter of 1998 for delivery

in either the first or second quarter of 1999. The terms of sale were

FOB truck or ex-dock duty paid per hundred weight, which the

petitioners multiplied by twenty to calculate a price per short ton.

The petitioners stated that they were unable to obtain rates for

trucking the subject merchandise from the locations of each Japanese

mill to the port of export; therefore, they did not deduct any Japanese

trucking and/or port fees from the U.S. price. However, petitioners did

subtract ocean freight, port fees (from an industry expert's affidavit

and U.S. government statistics, respectively), and U.S. customs duties

(from the 1999 HTSUS schedule).

The petitioners based NV on December 1998 quoted transaction prices

for wide-flange beams identical or similar to those sold in the United

States, produced by Tokyo Steel and Nippon Steel and sold or offered

for sale to customers in Japan. The prices used in the calculation of

NV were ex-factory prices. Petitioners deducted inland freight (from an

industry expert's affidavit) and credit expense from the starting

price. Petitioners used a credit period that was based on a quoted

transaction price, and used an interest rate from the International

Financial Statistics. Petitioners did not add back an amount of U.S.

credit. Further, petitioners did not make any adjustment for

differences in packing.

Petitioners provided information demonstrating reasonable grounds

to believe or suspect that home market sales of the subject merchandise

were made at prices below the COP, within the meaning of section 773(b)

of the Act, and requested that the Department conduct a country-wide

sales below cost investigation. Pursuant to section 773(b)(3) of the

Act, COP consists of the COM, SG&A and packing costs. To calculate COP,

the petitioners based COM on the costs of a surrogate producer because

this producer has comparable scrap-based, electric arc furnace

production facilities. Petitioners stated that the surrogate producer's

costs were representative of Tokyo Steel's and Nippon Steel's cost in

producing the same product. For Nippon, petitioners increased the

surrogates labor cost by five times based on information contained in a

newspaper article. For Nippon, to calculate SG&A, and financial

expenses,

[[Page 42087]]

the petitioners relied upon the non-consolidated financial statements

of Nippon Steel Corporation for fiscal year 1998. For Tokyo Steel, to

calculate depreciation, SG&A, and financial expenses, the petitioners

relied upon the financial statements of Tokyo Steel for the fiscal year

1998. We relied on the cost data contained in the petition except in

the following instances.

1. We revised Nippon's SG&A rate to include miscellaneous income

and expenses, retirement expenses, and past service pension costs. We

also revised Tokyo's SG&A rate to include past service pension costs,

loss on disposal of fixed assets and plant shutdown costs.

2. We recalculated Nippon's net financial expense rate using

Nippon's consolidated financial statements. See Japan Attachment 6 to

the Initiation Checklist. We also reduced Nippon's and Tokyo's

financial expense by short-term interest income. We based the short-

term interest income offset on the ratio of cash and cash equivalents

to total interest bearing assets for both Nippon and Tokyo.

3. We recalculated Tokyo's depreciation expense using the

depreciation expense of the same surrogate producer used to compute the

other manufacturing costs contained in the petition.

4. We did not rely on petitioners' revised labor cost submitted on

July 22, 1999, because the newspaper article which was relied upon

contained inconsistencies. Therefore, we relied on the surrogate's

labor cost as indicated in the affidavit provided in the petition.

Based upon our analysis of the adjusted petition information,

certain of the home market sales reported in the petition were shown to

be made at prices below the COP. Thus, we find reasonable grounds to

believe or suspect that sales of the foreign like product were made

below the COP. Accordingly, we are initiating a country-wide-sales-

below-cost investigation.

For below-cost sales, petitioners based NV on the CV of the

merchandise, pursuant to sections 773(a)(4) and 773(e) of the Act.

Pursuant to section 773(e) of the Act, CV consists of the COM, SG&A,

packing costs, and profit of the merchandise. To calculate the COM,

SG&A expenses and packing costs for CV, petitioners followed the same

methodology used to determine COP. Accordingly, we relied on this

methodology after adjusting certain cost elements as noted above. The

petitioners derived Nippon's profit for CV based on certain sales of

the surrogate producer used to compute COM. The petitioners derived

Tokyo's profit from the one sale which passed the cost test. For

Nippon, we recalculated profit based on Nippon's 1998 unconsolidated

financial statements. Because Tokyo's 1998 financial statements

reflected a net loss, we based the profit for Tokyo on the recalculated

Nippon profit rate. See Japan cost section of Initiation Checklist.

The estimated dumping margins, based on a comparison between Nippon

and Tokyo Steel's U.S. prices and adjusted CV, range from 1.58 percent

to 23.13 percent. Based on a comparison of EP to home market prices,

petitioners calculated dumping margins of 22.21 percent.

South Korea

Petitioners identified Inchon Iron & Steel Co. Ltd (``Inchon'') and

Kangwon Industries Co. Ltd. (``Kangwon'') as the primary producers and

exporters of subject merchandise from South Korea to the United States

in 1998. Petitioners based EP for Inchon on an April 1999 U.S. price

offering for a sale to an unaffiliated purchaser. For Kangwon,

petitioners based EP on a December 1998 offer for sale to an

unaffiliated purchaser. Because the price offers are for products

delivered to the United States, petitioners calculated a net U.S. price

for each product by subtracting estimated costs for shipment from the

factory in South Korea to the port of export and port charges. In

addition, petitioners subtracted unloading and wharfage charges, ocean

freight and insurance, U.S. inland freight, and U.S. Customs duties.

To calculate NV, petitioners obtained home market prices for Inchon

and Kangwon (from foreign market research and an affidavit from a U.S.

producer), contemporaneous with the pricing information used as the

basis for EP, for products offered for sale to customers in South Korea

which are either identical or similar to those sold to the United

States. Petitioners adjusted these prices by subtracting foreign

movement charges and credit expenses.

Petitioners provided information demonstrating reasonable grounds

to believe or suspect that home market sales of the subject merchandise

were made at prices below the COP, within the meaning of section 773(b)

of the Act, and requested that the Department conduct a country-wide-

sales-below-cost investigation. Pursuant to section 773(b)(3) of the

Act, COP consists of the COM, SG&A, and packing costs. To calculate

COP, petitioners based COM on their own experience, adjusted for known

differences between costs incurred to produce structural beams in the

United States and South Korea. To calculate SG&A and financial

expenses, petitioners relied upon the 1997 financial statements for

each of the two South Korean producers named in the petition. We relied

on the cost data contained in the petition except for the following. We

revised the financial expense ratio to include an offset amount for

short-term interest income.

Based on our analysis, certain of the home market sales reported in

the petition were shown to be made at prices below the COP. For these

sales, petitioner based NV on the CV of the merchandise, pursuant to

section 773(a)(4) and 773(e) of the Act. Pursuant to section 773(e) of

the Act, CV consists of the COM, SG&A, packing costs, and profit of the

merchandise. To calculate the COM, SG&A, and packing costs for CV,

petitioners followed the same methodology used to determine COP.

Accordingly, we relied on this methodology after adjusting certain cost

elements as noted above. The petitioners derived profit for CV based on

the South Korean producers' 1997 financial statements.

The estimated dumping margins, based on a comparison between Inchon

and Kangwon's U.S. prices and CV, as adjusted by the Department, range

from 89.67 to 107.07 percent. Based on a comparison of EP to home

market prices, as adjusted by the Department, petitioners' calculated

dumping margins range from 50.00 to 62.95 percent. A description of the

adjustments which the Department made to petitioners' calculations of

export price and normal value are contained in the Initiation

Checklist.

Spain

The petitioners identified Corporacion Jose Maria Aristrain SA

(``Aristrain'' (single Spanish entity) or ``Arbed'' (consolidated group

of companies)) as the possible exporter of structural beams from Spain.

The petitioners further identified this exporter as the primary

producer of subject merchandise in Spain. The petitioners based EP for

Aristrain on a U.S. price offering for the first sale to an

unaffiliated purchaser during the fourth quarter of 1998. Because the

terms of Aristrain's U.S. sale were FOB truck at the U.S. port of

entry, the petitioners calculated a net U.S. price by subtracting

estimated costs for shipment from the factory in Spain to a port of

export (from an industry expert's affidavit regarding the cost of

inland freight). In addition, the petitioners subtracted ocean freight

and insurance, unloading charges, and wharfage (from official U.S.

tariff rates and official U.S.

[[Page 42088]]

import statistics), and estimated costs for U.S. import duties and fees

(both from the 1999 HTSUS schedule).

With respect to NV, petitioners obtained a per metric ton price of

wide-flange steel beams offered (or sold) by Aristrain sold (or to be

sold) in Spain. Petitioners adjusted this price by subtracting credit

expenses (from an industry expert's affidavit and official

International Monetary Fund statistics).

Petitioners failed to provide information demonstrating reasonable

grounds to believe or suspect that home market sales of the subject

merchandise were made at prices below the COP, within the meaning of

section 773(b) of the Act. Therefore, at this time we are not

initiating a sales-below-cost investigation. See Spain cost section of

Initiation Checklist.

The estimated dumping margin in the petition, based on a comparison

between Aristrain's U.S. price and NV, is 66.94 percent.

Initiation of Cost Investigations

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

information demonstrating reasonable grounds to believe or suspect that

sales in the home markets of Germany, Japan, and South Korea were made

at prices below the fully allocated COP and, accordingly, requested

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

investigation in connection with the requested antidumping

investigations on Germany, Japan, and South Korea. The Statement of

Administrative Action (``SAA''), submitted to the Congress in

connection with the interpretation and application of the URAA, states

that an allegation of sales below COP need not be specific to

individual exporters or producers. SAA, H.R. Doc. No. 103-316 at 833

(1994). The SAA, at 833, states that ``Commerce will consider

allegations of below-cost sales in the aggregate for a foreign country,

just as Commerce currently considers allegations of sales at less than

fair value on a country-wide basis for purposes of initiating an

antidumping investigation.''

Further, the SAA provides that ``new section 773(b)(2)(A) retains

the current requirement that Commerce have `reasonable grounds to

believe or suspect' that below cost sales have occurred before

initiating such an investigation. `Reasonable grounds' * * * exist when

an interested party provides specific factual information on costs and

prices, observed or constructed, indicating that sales in the foreign

market in question are at below-cost prices.'' Id. Based upon the

comparison of the adjusted prices from the petition for the

representative foreign like products to their costs of production, we

find the existence of ``reasonable grounds to believe or suspect'' that

sales of the foreign like product in Germany, Japan, and South Korea

were made below their respective COPs within the meaning of section

773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating

the requested country-wide cost investigations for Germany, Japan, and

South Korea (see country-specific sections above and cost attachment to

the initiation checklist).

Fair Value Comparisons

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

believe that imports of structural beams from Germany, Japan, South

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

value.

Allegations and Evidence of Material Injury and Causation

Petitioners allege that the U.S. industry producing the domestic

like product is being materially injured, and is threatened with

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

the subject merchandise sold at less than NV. Petitioners explained

that the industry's injured condition is evident in the declining

trends in output and net operating profits. The allegations of injury

and causation are supported by relevant evidence including U.S. Customs

import data, lost sales, and pricing information. The Department

assessed the allegations and supporting evidence regarding material

injury and causation and determined that these allegations are

supported by accurate and adequate evidence and meet the statutory

requirements for initiation (see Attachments to Initiation Checklist,

Re: Material Injury, July 27, 1999).

Initiation of Antidumping Investigations

Based upon our examination of the petitions on structural beams and

petitioners' responses to our supplemental questionnaire clarifying the

petitions, as well as our discussion with the authors of the foreign

market research reports supporting the petition on South Korea and

other measures to confirm the information contained in these reports,

we have found that the petitions meet the requirements of section 732

of the Act. Therefore, we are initiating antidumping duty

investigations to determine whether imports of structural beams from

Germany, Japan, South Korea, and Spain are being, or are likely to be,

sold in the United States at less than fair value. Unless this deadline

is extended, we will make our preliminary determinations no later than

140 days after the date of publication of this notice.

Distribution of Copies of the Petitions

In accordance with section 732(b)(3)(A) of the Act, a copy of the

public version of each petition has been provided to the

representatives of Germany, Japan, South Korea, and Spain. We will

attempt to provide a copy of the public version of each petition to

each exporter named in the petition (as appropriate).

International Trade Commission Notification

We have notified the ITC of our initiations, as required by section

732(d) of the Act.

Preliminary Determinations by the ITC

The ITC will determine by August 23, 1999, whether there is a

reasonable indication that imports of structural beams from Germany,

Japan, South Korea, and Spain are causing material injury, or

threatening to cause material injury, to a U.S. industry. A negative

ITC determination for any country will result in the investigation

being terminated with respect to that country; otherwise, these

investigations will proceed according to statutory and regulatory time

limits.

This notice is published pursuant to section 777(i) of the Act.

Dated: July 27, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-19919 Filed 8-2-99; 8:45 am]

BILLING CODE 3510-DS-P