Cold-Rolled Carbon Steel Flat Products From the Netherlands: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-421-804]

Cold-Rolled Carbon Steel Flat Products From the Netherlands:

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 requests from the petitioners and respondent,

the Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on cold-rolled

carbon steel flat products from the Netherlands. The review covers one

manufacturer/exporter of the subject merchandise to the United States

during the period August 1, 1997 through July 31, 1998.

We preliminarily determine that a de minimis dumping margin exists

for this period of review. If these preliminary results are adopted in

our final results of review, we will instruct the U.S. Customs Service

to assess antidumping duties on entries of Hoogovens merchandise during

the period of review, in accordance with the Department's regulations

(19 CFR 353.6).

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 (no longer than five pages, including

footnotes).

EFFECTIVE DATE: September 8, 1999.

FOR FURTHER INFORMATION CONTACT: Ilissa A. Kabak or Robert M. James,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone (202) 482-1395 or 482-5222,

respectively.

Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (the Tariff Act), are references to the provisions

effective January 1, 1995, the effective date of the amendments made to

the Tariff Act by the Uruguay Round Agreements Act of 1994 (URAA). In

addition, unless otherwise indicated, all references to the

Department's regulations are to 19 CFR Part 351 (1998).

SUPPLEMENTARY INFORMATION:

Background

The Department of Commerce published an antidumping duty order on

cold-rolled carbon steel flat products from the Netherlands on August

19, 1993 (58 FR 44172). The Department published a notice of

``Opportunity To Request Administrative Review'' of the antidumping

duty order for the 1997/1998 review period on August 11, 1998 (63 FR

42821). On August 31, 1998, both the respondent, Hoogovens Staal BV

(Hoogovens), and petitioners (Bethlehem Steel Corporation, U.S. Steel

Company (a Unit of USX Corporation), Ispat/Inland Steel, Inc., LTV

Steel Company, and National Steel Corporation) filed requests for

review. We published a notice of initiation of the review on September

29, 1998 (63 FR 51893).

Due to the complexity of the issues involved in this case, the

Department extended the time limit for completion of the preliminary

results until August 31, 1999, in accordance with section 751(a)(3)(A)

of the Tariff Act. The deadline for the final results of this review

will continue to be 120 days after the date of publication of this

notice. The Department is conducting this review in accordance with

section 751 of the Tariff Act.

Scope of the Review

The products covered by this review include cold-rolled (cold-

reduced) carbon steel flat-rolled products, of rectangular shape,

neither clad, plated nor coated with metal, whether or not painted,

varnished or coated with plastics or other nonmetallic substances, in

coils (whether or not in successively superimposed layers) and of a

width of 0.5 inch or greater, or in straight lengths which, if of a

thickness less than 4.75 millimeters, are of a width of 0.5 inch or

greater and which measures at least 10 times the thickness or if of a

thickness of 4.75 millimeters or more are of a width which exceeds 150

millimeters and measures at least twice the thickness, as currently

classifiable in the Harmonized Tariff Schedule (HTS) under item numbers

7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0090, 7209.17.0030,

7209.17.0060, 7209.17.0090, 7209.18.1530, 7209.18.1560, 7209.18.2550,

7209.18.6000, 7209.25.0000, 7209.26.0000, 7209.27.0000, 7209.28.0000,

7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.23.1500, 7211.23.2000,

7211.23.3000,

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7211.23.4500, 7211.23.6030, 7211.23.6060, 7211.23.6085, 7211.29.2030,

7211.29.2090, 7211.29.4500, 7211.29.6030, 7211.29.6080, 7211.90.0000,

7212.40.1000, 7212.40.5000, 7212.50.0000, 7215.50.0015, 7215.50.0060,

7215.50.0090, 7215.90.5000, 7217.10.1000, 7217.10.2000, 7217.10.3000,

7217.10.7000, 7217.90.1000, 7217.90.5030, 7217.90.5060, and

7217.90.5090. Included in this review are flat-rolled products of

nonrectangular cross-section where such cross-section is achieved

subsequent to the rolling process (i.e., products which have been

``worked after rolling'')--for example, products which have been

beveled or rounded at the edges. Excluded from this review is certain

shadow mask steel, i.e., aluminum-killed, cold-rolled steel coil that

is open-coil annealed, has a carbon content of less than 0.002 percent,

is of 0.003 to 0.012 inch in thickness, 15 to 30 inches in width, and

has an ultra flat, isotropic surface. These HTS item numbers are

provided for convenience and Customs purposes. The written description

of the scope of this order remains dispositive.

Verification

As provided in section 782(i)(3) of the Tariff Act, we verified

information provided by Hoogovens at its headquarters in Beverwijk and

IJmuiden, the Netherlands, using standard verification procedures,

including inspection of the manufacturing facilities, examination of

relevant sales and financial records, and selection of original

documentation containing relevant information. We also verified

information provided by Hoogovens Steel USA, Inc. at its office in

Scarsdale, New York.

Export Price (EP)

Sales made by Hoogoven's selling office in the Netherlands directly

to unaffiliated customers in the United States were treated as EP

sales. We calculated EP based on the delivered, duty-paid price to

unaffiliated customers in the United States. We made adjustments for

discounts and post-sale price adjustments. We also made deductions,

where applicable, for foreign inland freight, ocean freight and marine

insurance, brokerage and handling, U.S. inland freight, and U.S.

customs duties in accordance with section 772(c) of the Tariff Act. See

Preliminary Analysis Memorandum (Analysis Memo), August 31, 1999, at 8.

Constructed Export Price (CEP)

Sales made by Hoogoven's selling office in the Netherlands through

the affiliated Rafferty-Brown companies, located in the United States,

to unaffiliated U.S. customers were treated as CEP sales. We based CEP

on the delivered price to unaffiliated customers in the United States.

We made deductions for foreign inland freight, ocean freight and marine

insurance, brokerage and handling, U.S. inland freight, and U.S.

customs duties, in accordance with section 772(c) of the Tariff Act.

Furthermore, in accordance with section 772(d)(1) of the Tariff Act, we

deducted selling expenses associated with economic activities occurring

in the United States, including credit expenses, indirect selling

expenses, and inventory carrying costs. In accordance with section

772(d)(2) of the Tariff Act, for sales made through the affiliated

Rafferty-Brown companies, we also deducted the cost of further

manufacturing, including repacking expenses. Finally, we made an

adjustment for an amount of profit allocated to these expenses in

accordance with section 772(d)(3) of the Tariff Act. See Analysis Memo

at 10.

In the absence of cost of production (COP) data for home market

sales,1 we estimated COP for calculation of the CEP profit

allocation as follows:

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\1\ Hoogovens reported CV data, which provide the cost of

manufacturing the products sold in the United States. As the product

mix is very different in the home market, the CV data are not

representative of total costs.

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1. We estimated the home market fixed costs by calculating the

weighted average ratio of fixed costs to variable costs for U.S. sales

(using the reported VCOMU and TCOMU variables) and multiplying the

reported home market variable costs (VCOMH) by this ratio;

2. We obtained the total cost of manufacturing (COM) by adding the

reported total variable costs and the estimated fixed costs;

3. We obtained general and administrative expenses and interest

expenses from the constructed value (CV) data base and added them to

the total COM to obtain COP.

Normal Value (NV)

In order to determine whether sales of the foreign like product in

the home market are a viable basis for calculating NV, we compared the

volume of home market sales of the foreign like product to the volume

of subject merchandise sold in the United States, in accordance with

section 773(a)(1)(C) of the Tariff Act. Hoogovens's aggregate volume of

home market sales of the foreign like product was greater than five

percent of its aggregate volume of U.S. sales of the subject

merchandise. Therefore, we have based NV on home market sales.

Hoogovens made sales to both affiliated and unaffiliated customers

in the home market during the period of review. We included sales to

affiliated customers when we determined those sales to be at arm's

length (i.e., at weighted-average prices that were 99.5 percent or more

of weighted average prices for identical products sold to unaffiliated

customers in the home market). When the weighted-average price to an

affiliated customer was less than 99.5 percent of the weighted-average

price to unaffiliated customers, or there were no sales of identical

merchandise to unaffiliated customers for purposes of the arm's-length

test, we excluded sales to that affiliated customer from our

calculation of NV. See Antidumping Duties; Countervailing Duties, Final

Rule 62 FR 27296, 27355 (May 19, 1997).

Home market prices were based on the packed, ex-factory or

delivered prices to customers, net of early payment discounts and

rebates. We made deductions from NV for inland freight, pursuant to

section 773(a)(6)(B) of the Tariff Act. In accordance with section

773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 351.410(c), we made

circumstance-of-sale (COS) adjustments for credit and, where

appropriate, warranty expenses.

We deducted home market packing costs and added U.S. packing costs,

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

appropriate, we made adjustments to NV to account for differences in

the physical characteristics of the merchandise, in accordance with

section 773(a)(6)(C)(ii) of the Tariff Act and 19 CFR 351.411.

Level of Trade

In accordance with section 773(a)(1)(B) of the Tariff 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 CEP transaction.

The NV LOT is that of the starting-price sales in the comparison market

or, when NV is based on CV, that of the sales from which we derive

selling, general and administrative expenses and profit. For EP, the

U.S. LOT is also the level of the starting-price sale, which is

normally the sale from exporter to importer. In this case the exporter

sells directly to unaffiliated customers. For CEP, the U.S. LOT 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

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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 Tariff 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 Tariff

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).

To examine LOT in this review, we requested information concerning

the selling functions associated with sales to service centers and to

several categories of end-users in each of Hoogovens's markets and

interviewed sales and technical service managers. In both the home and

U.S. markets larger customers received more frequent visits from sales

personnel. In the home market a higher level of technical service was

provided to automotive customers than to other end-users. However,

Hoogovens stated that ``it cannot differentiate among the selling

functions performed and services offered to different classes of home

market or export price customers.'' Hoogovens's October 21, 1998

section A questionnaire response (Section A response) at 14. Hoogovens

further noted that the higher level of service provided to large end-

users, such as auto makers, was related to the higher volumes of

merchandise purchased by these customers, and not any specific features

of this market sector. Id. at 26. Therefore, based upon the information

on the record we preliminarily determine that there are no significant

differences between the selling functions performed and services

offered to service centers and end-user customers in the home market.

We also preliminarily determine that there are no differences between

the selling functions performed and services offered to service centers

and end-user customers in the U.S. market. Lastly, evidence on the

record indicates that Hoogovens has not changed its selling functions

since the fourth (1996-1997) administrative review (see ``Home Market

Sales Verification Report,'' at 8 (July 8, 1999); see also Certain

Cold-rolled Carbon Steel Flat Products from the Netherlands: Final

Results of Antidumping Duty Administrative Review, 64 FR 11825, (March

10, 1999)).

As for CEP sales, Hoogovens claims it has no home market sales at a

LOT equivalent to the CEP LOT, alleging, ``while the CEP sales have

been adjusted to create, in effect, an ex-factory level of trade, the

starting price of the home market sales reflects many selling

activities not reflected in the adjusted CEP price. These include

indirect selling activities, indirect warranty and technical service

expenses, and inventory carrying costs incurred on home market sales.''

See Section A response (October 21, 1998), at 45 and 46.

We disagree with Hoogovens's claim that the prices used to

determine NV reflect many selling activities not reflected in CEP. In

accordance with section 772(d)(1) the Department calculated CEP by

deducting the imputed credit expenses incurred by the Rafferty-Brown

companies as direct selling expenses. The Department also deducted

indirect selling expenses (ISE), including imputed inventory carrying

costs (ICC) incurred in the United States by the Rafferty-Brown

companies for sales to the first unaffiliated buyers. The Department

did not deduct from CEP those ISE incurred in the Netherlands

pertaining to U.S. sales (reported in computer data fields DINDIRSU and

DINVCARU), nor certain expenses of the U.S. sales office, on the

grounds that these expenses were associated with the sale to

Hoogovens's U.S. affiliates rather than with the sales by the

affiliates to the first unaffiliated buyers. Thus, the CEP includes

Hoogovens's warranty and technical service expenses for U.S. sales, as

well as ISE, including the expenses of the sales offices in IJmuiden

and New York, incurred in connection with the sales to the affiliated

service centers.

For the purposes of the LOT analysis, we found no distinguishable

difference between the selling functions included in the home market

starting price and the selling functions included in the CEP;

Hoogovens's starting price for home market sales includes the provision

of services reflected in the direct warranty and technical service

expenses, ICC, the expenses of the sales office in IJmuiden, and other

indirect selling expenses incurred for home market sales. On the basis

of this analysis, the Department has preliminarily determined that the

record does not support Hoogovens's claim that home market sales are at

a different, more advanced LOT than the adjusted CEP sales.

Sales Comparisons

To determine whether sales of cold-rolled carbon steel flat

products in the United States were made at prices below normal value,

we compared EP or CEP to NV, as described in the ``Export Price,''

``Constructed Export Price'' and ``Normal Value'' sections of this

notice. In accordance with section 777(A) of the Tariff Act, we

calculated monthly weighted-average prices for NV and compared these to

individual U.S. transactions. For comparisons to EP, we made COS

adjustments by deducting direct selling expenses incurred on home

market sales and adding U.S. direct selling expenses. For comparisons

to CEP, we made deductions for direct selling expenses incurred on home

market sales. There were no comparisons to CV for these preliminary

results.

Reimbursement

Section 351.402(f) of the antidumping regulations requires the

Department to deduct from EP or CEP the amount of any antidumping duty

that is reimbursed to the importer. Based on verified evidence on the

record in this review, including the revised agency agreement between

Hoogovens and Hoogovens Steel USA, Inc. (HSUSA) and the refund to

Hoogovens by HSUSA of a portion of the cash deposits advanced to HSUSA

for merchandise entered during the second and fourth administrative

reviews, the Department has preliminarily determined that HSUSA is

solely responsible for the payment of antidumping duties. Further,

evidence on the record in this review shows that HSUSA has sufficient

assets to establish its ability to pay the antidumping duties to be

assessed (see ``United States Verification Report,'' at 3 (July 8,

1999)). Therefore, for this period of review we have determined that

Hoogovens has not reimbursed HSUSA for antidumping duties to be

assessed.

Preliminary Results of Review

We preliminarily determine that the following margin exists for the

period August 1, 1997 through July 31, 1998:

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Margin

Company (percent)

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Hoogovens Staal BV......................................... 0.25

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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 30 days of publication. Any

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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. The

Department will publish the final results of this administrative

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

in any such written comments or at a hearing, within 120 days after the

publication of this notice.

The Department shall determine, and Customs shall assess,

antidumping duties on all appropriate entries. Individual differences

between United States price and NV may vary from the percentage given

above. The Department will issue appraisement instructions directly to

Customs. The final results of this review shall be the basis for the

assessment of antidumping duties on entries of merchandise covered by

this review and for future deposits of estimated duties. For assessment

purposes we intend to calculate importer-specific assessment rates for

cut-to-length carbon steel plate. For both EP and CEP sales we will

divide the total dumping duties for each importer (calculated as the

difference between NV and EP or CEP) by the entered value of the

merchandise. Upon completion of this review we will direct Customs to

assess the resulting ad valorem rates against the entered value of each

entry of subject merchandise by each importer during the POR.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of this administrative review for

all shipments of cold-rolled carbon steel flat products from the

Netherlands entered, or withdrawn from warehouse, for consumption on or

after the publication date of the final results of this administrative

review, as provided by section 751(a)(1) of the Tariff Act: (1) The

cash deposit rate for the reviewed firm will be the rate established in

the final results of administrative review, except if the rate is less

than 0.5 percent, and therefore, de minimis within the meaning of 19

CFR 351.106(c), in which case the cash deposit rate will be zero; (2)

if the exporter is not a firm covered in this review or the original

investigation, but the manufacturer is, the cash deposit rate will be

that established for the manufacturer of the merchandise in the final

results of this review; and (3) if neither the exporter nor the

manufacturer is a firm covered in this or any previous review or the

original fair value investigation, the cash deposit rate will be 19.32

percent.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 351.402(f) to file a certificate

regarding the reimbursement of antidumping duties prior to liquidation

of the relevant entries during these review periods. 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 administrative review and notice are in accordance with

sections 751(a)(1) and 777(i)(1) of the Tariff Act.

Dated: August 31, 1999.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-23321 Filed 9-7-99; 8:45 am]

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