Notice of Preliminary Results of Antidumping Duty Administrative Review and Intent To Revoke Order: Brass Sheet and Strip From the Netherlands

DEPARTMENT OF COMMERCE

International Trade Administration

[A-421-701]

Notice of Preliminary Results of Antidumping Duty Administrative

Review and Intent To Revoke Order: Brass Sheet and Strip From the

Netherlands

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

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

SUMMARY: The Department of Commerce is conducting an administrative

review of the antidumping duty order on brass sheet and strip from the

Netherlands. This review covers imports of brass sheet and strip from

one producer/exporter during the period of review (POR), August 1, 1997

through July 31, 1998.

We preliminarily determine that sales of the subject merchandise

have not been made below normal value. If these preliminary results are

adopted in the final results, we will instruct the Customs Service not

to assess antidumping duties on the subject merchandise exported by

this company. If these preliminary results are adopted in our final

results of this administrative review, we will revoke the antidumping

duty order, based on three consecutive review periods of sales at not

less than normal value by Outokumpu Copper Strip B.V., the sole

producer and exporter of subject merchandise from the Netherlands (see

19 CFR 351.222(b)(i)). See Intent to Revoke section of this notice.

EFFECTIVE DATE: September 8, 1999.

FOR FURTHER INFORMATION CONTACT: John Brinkmann or Jarrod Goldfeder,

Office of AD/CVD Enforcement, Group II, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington, D.C. 20230;

telephone: (202) 482-4126r (202) 482-2305, respectively.

SUPPLEMENTARY INFORMATION:

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 of Commerce's (the

Department's) regulations refer to the regulations codified at 19 CFR

Part 351 (1999).

Background

On August 12, 1988, the Department published in the Federal

Register the antidumping duty order on brass sheet and strip from the

Netherlands (53 FR 30455). On August 11, 1998, we published in the

Federal Register the notice of ``Opportunity to Request an

Administrative Review'' of this order, for the period August 1, 1997

through July 31, 1998 (63 FR 42821). On August 31, 1998, in accordance

with 19 CFR 351.213(b), Outokumpu Copper Strip B.V. (OBV), the sole

producer/exporter requested an administrative review of its exports of

the subject merchandise to the United States for the POR August 1, 1997

through July 31, 1998. In addition, OBV requested that the Department

revoke the antidumping duty order against brass sheet and strip from

the Netherlands, pursuant to 19 CFR 351.222(b), based on the absence of

dumping and the fact that OBV is not likely to sell the subject

merchandise at less than normal value in the future. On September 23,

1998, in accordance with 19 CFR 351.221, the Department initiated this

administrative review (see Initiation of Antidumping and Countervailing

Duty Administrative Reviews and Requests for Revocation in Part, 63 FR

51893 (September 29, 1998)).

On October 2, 1998, the Department issued an antidumping

questionnaire 1 to OBV. After several extensions, OBV

submitted its response to sections A, B, and C in October and November

1998. The Section D questionnaire response was received in December

1998. The Department issued and received responses to Sections A, B,

and C supplemental questionnaires in January 1999. On February 5, 1999,

the Department extended the time limit for completion of the

preliminary results of this administrative review by 120 days, or until

August 31, 1999. See Brass

[[Page 48761]]

Sheet and Strip from the Netherlands: Notice of Extension of Time

Limits for the Sixth Antidumping Duty Administrative Review, 64 FR

5766. In April 1999, the Department issued a Section D supplemental

questionnaire. The response to the supplemental cost questionnaire was

received by the Department in May 1999.

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

\1\ Section A of the questionnaire requests general information

concerning a company's corporate structure and business practices,

the merchandise under review that it sells, and the sales of the

merchandise in all of its markets. Sections B and C of the

questionnaire request comparison market sales listings and U.S.

sales listings, respectively. Section D requests additional

information about the cost of production of the foreign like product

and constructed value of the merchandise under review.

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

Scope of Review

Imports covered by this review are brass sheet and strip, other

than leaded and tin brass sheet and strip, from the Netherlands. The

chemical composition of the products under review is currently defined

in the Copper Development Association (CDA) 200 Series or the Unified

Numbering System (UNS) C2000 series. This review does not cover

products the chemical compositions of which are defined by other CDA or

UNS series. The physical dimensions of the products covered by this

review are brass sheet and strip of solid rectangular cross section

over 0.006 inch (0.15 millimeter) through 0.188 inch (4.8 millimeters)

in gauge, regardless of width. Included in the scope are coiled, wound-

on-reels (traverse wound), and cut-to-length products. The merchandise

under investigation is currently classifiable under item 7409.21.00 and

7409.29.20 of the Harmonized Tariff Schedule of the United States

(HTSUS). Although the HTSUS subheading is provided for convenience and

customs purposes, the written description of the merchandise under

investigation is dispositive.

Verification

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

sales and cost information provided by OBV. The cost verification was

conducted from May 31 to June 6, 1999 and the sales verification was

conducted from July 12 to July 16, 1999. The Department used standard

verification procedures, including on-site inspection of the

manufacturer's facilities and examination of relevant sales and

financial records. Verification results are outlined in the

verification reports placed in the case file.

Product Comparisons

In accordance with section 771(16) of the Act, the Department first

attempted to match contemporaneous sales of products sold in the U.S.

and home markets that were identical with respect to the following

characteristics: (1) type (alloy); (2) gauge (thickness); (3) width;

(4) temper; (5) coating; and (6) packed form. Where there were no sales

of identical merchandise in the home market to compare with U.S. sales,

we compared U.S. sales with the most similar product based on the

characteristics listed above, in descending order of priority.

For purposes of the preliminary results, we have used differences

in merchandise adjustments based on the difference in the variable cost

of manufacturing between each U.S. model and its most similar home

market model.

Date of Sale

During the POR, OBV reported making sales in the home market

pursuant to frame agreements, which are non-binding arrangements with

customers containing estimates of the types and quantities of

merchandise the customer expects to order over a certain period of

time. See Response to Section A of the Department's Questionnaire,

dated October 23, 1998, at A-16. In addition, although the frame

agreements contain a fabrication price, which is the price charged by

companies such as OBV to transform raw materials into finished brass

sheet and strip, such agreements do not contain the price OBV charges

for the necessary raw materials (i.e., the ``metal price''). As such,

the quantity to be purchased and the total price to be paid by the

customer are not established in the frame agreements.

In the immediately preceding review, the Department used the

invoice date as the date of sale rather than the frame agreement date

because we found in that review that the invoice date was the first

date on which all material terms of sale (i.e., quantity, metal price,

and fabrication price) were established. See Brass Sheet and Strip from

the Netherlands: Notice of Preliminary Results of Antidumping Duty

Administrative Review, 63 FR 25821, 25822 (May 11, 1998); see also

Brass Sheet and Strip from the Netherlands: Final Results of

Antidumping Duty Administrative Review, 63 FR 49544 (September 16,

1998) (Final Results 96/97). The record in this review, including our

findings at the sales verification of OBV's submitted data, supports

the same conclusion. Therefore, in accordance with 19 CFR 351.401(i)

and Department practice, we have preliminarily determined that the

invoice date is the appropriate date of sale for OBV.

Comparisons to Normal Value

To determine whether OBV's sales of brass sheet and strip were made

to the United States at less than normal value, the Department compared

the export price (EP) to the normal value (NV), as described in the

``Export Price'' and ``Normal Value'' sections of this notice. In

accordance with section 771A(d)(2) of the Act, the Department

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

individual U.S. transactions.

Export Price

For the price to the United States, we used EP in accordance with

section 772(a) of the Act, because the subject merchandise was sold to

an unaffiliated U.S. purchaser prior to the date of importation and CEP

methodology was not otherwise warranted.

We calculated EP based on the packed, delivered prices to

unaffiliated purchasers in the United States. In accordance with

section 772(c)(2) of the Act, where appropriate, we deducted from the

starting price international freight expense, marine insurance, U.S.

brokerage and handling expenses, and U.S. Customs duties.

We made corrections to the U.S. packing costs and recalculated U.S.

credit expenses based on our verification findings. See Sales

Verification Report, dated August 31, 1999 (Sales Verification Report).

In addition, per the Department's instructions, OBV reported a

transaction to the United States which the company characterized as a

sample sale to a non-U.S. customer. Based on the evidence on the record

of this review, including our findings at verification, we

preliminarily determine that this transaction constitutes a sample sale

to a non-U.S. customer and, therefore, have removed this sale from our

calculations. See Sales Verification Report.

Normal Value

In order to determine whether there was a sufficient volume of

sales in the home market to serve as a viable basis for calculating NV,

we compared OBV's volume of home market sales of the foreign like

product to the volume of its U.S. sales of the subject merchandise.

Pursuant to sections 773(a)(1)(B) and (C) of the Act, since OBV'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, we determined that the home market was viable

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 products were first sold in the home market, in the

usual commercial quantities and in the ordinary course of trade.

Where appropriate, the Department deducted early-payment discounts

and

[[Page 48762]]

rebates. We also deducted inland freight expense (plant-to-customer),

inland insurance, and packing expense from the home market price in

accordance with section 773(a)(6)(B) of the Act. We used the revised

packing expenses provided to us at verification. We made adjustments,

where appropriate, for differences in credit expenses between the U.S.

and home market sales in accordance with section 773(a)(6)(C)(iii) of

the Act.

We increased normal value by U.S. packing expenses in accordance

with section 773(a)(6)(A) of the Act. To the extent there were

comparisons of U.S. merchandise to home market merchandise that was not

identical but similar, the Department made adjustments to NV for

differences in physical characteristics of the merchandise pursuant to

section 773(a)(6)(C)(ii) of the Act.

Cost of Production Analysis

Because we disregarded sales that failed the cost test in the most

recently completed review, we had reasonable grounds to believe or

suspect that sales of the foreign like product under consideration for

determining NV in this review may have been made at prices below the

cost of production (COP), as provided in section 773(b)(2)(A)(ii) of

the Act. See Final Results 96/97. Therefore, pursuant to section

773(b)(1) of the Act, we initiated a COP investigation of sales by OBV.

A. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated COP

based on the sum of the respondent's cost of materials and fabrication

employed in producing the foreign like product, plus the costs for

selling, general, and administrative expenses (SG&A), including

interest expense, and packing costs.

We relied on the home market sales and COP information that OBV

provided in its questionnaire responses, except as follows:

1. Use of Quarterly Cost Data

OBV calculated and reported quarterly per-unit manufacturing costs

because of the significant and consistent decline in metal prices

(i.e., copper and zinc) throughout the POR. On August 11, 1999,

however, OBV requested that the Department calculate weighted-average

costs on a monthly basis for use in the sales-below-cost test.

According to OBV, in this case the Department should deviate from its

preferred method of calculating a single weighted-average POR cost in

order to prevent distortions in the margin calculations that would

result from the metal price fluctuations, since these metal inputs

account for approximately 70 percent of the cost of manufacturing brass

sheet and strip.

Our normal practice for a respondent in a country that is not

experiencing high inflation is to calculate a single weighted-average

cost for the entire period of review except in unusual cases where this

preferred method would not yield an appropriate comparison in the

margin calculation. See, e.g., Final Determination of Sales at Less

Than Fair Value: Stainless Steel Sheet and Strip in Coils from the

Republic of Korea; 64 FR 30664, 30676 (June 8, 1999) (concluding that

weighted-average costs for two periods were permissible where major

declines in currency valuations distorted the margin calculations);

Final Determination of Sales at Less than Fair Value: Static Random

Access Memory Semiconductors from Taiwan, 63 FR 8909, 8925 (February

23, 1998) (calculating quarterly weighted-average costs due to a

significant and consistent price and cost decline in the market); Final

Determination of Sales at Less than Fair Value: Dynamic Random Access

Memory Semiconductors of One Megabit and Above from the Republic of

Korea; 58 FR 15467, 15476 (March 23, 1993) (determining that the

Department may use quarterly weighted-average costs where there exists

a consistent downward trend in both U.S. and home market prices during

the period); Final Determination of Sales at Less than Fair Value:

Erasable Programable Read Only Memories from Japan; 51 FR 39680, 39682

(October 30, 1986) (finding that significant changes in the COP during

a short period of time due to technological advancements and changes in

production process justified the use of quarterly weighted-average

costs).

We have reviewed the information on the record of this case and

note that both OBV's sales prices for the subject merchandise and the

cost of metal used in the manufacture of this merchandise

correspondingly and consistently declined on a quarterly basis

throughout the POR. Since the metal costs represent a significant

percentage of the total cost of producing brass sheet and strip and the

cost of the metal dropped consistently throughout the POR, computing a

single POR weighted average cost would distort the results of the cost

test. In order to avoid this distortion, we have preliminarily relied

upon the submitted quarterly weighted-average costs rather than

calculating single weighted-average POR costs. We did not recalculate

OBV's submitted COP and constructed value (CV) data on a monthly

weighted-average basis because the monthly changes in selling prices

and input metal costs do not appear significant enough to require such

a short averaging period. As such, we compared weighted-average

quarterly COP figures for OBV, adjusted where appropriate (see below),

to home market sales of the foreign like product in the same quarter,

as required under section 773(b) of the Act, in order to determine

whether these sales had been made at prices below the COP.

2. Startup Adjustment

OBV claimed a startup adjustment to costs pursuant to section

773(f)(1)(C)(ii) of the Act, covering a nine-month startup period from

January 1998 through September 1998 for its new continuous strip

casting line, which replaced OBV's ring casting mill. We preliminarily

determine that OBV's new continuous strip casting mill constitutes a

new facility and that the new production facility required substantial

additional investment, within the meaning of section

773(f)(1)(C)(ii)(I) of the Act. The new vertical continuous strip

casting mill represents an investment in a new technology for the

production of brass sheet and strip. Consequently, the continuous strip

casting mill, which entirely replaced the former ring casting mill,

required the construction of an addition to OBV's plant containing

mostly new equipment that was custom made for OBV for installation in

this new mill, thereby also requiring considerable investment.

Secondly, we preliminarily determine that OBV's production levels at

the new facility have been limited due to technical factors associated

with the initial phase of commercial production, as required under

section 773(f)(1)(C)(ii)(II) of the Act. OBV specifically identified

these limiting technical factors in a proprietary memorandum to the

Department in support of its startup cost adjustment dated February 2,

1999. We examined these factors at the verification of OBV's submitted

cost data (see Cost Verification Report, dated August 2, 1999) and have

preliminarily determined that OBV has satisfied the criteria for

receiving a startup adjustment.

Regarding the startup period, we have accepted for the preliminary

results the submitted startup period that ends on September 30, 1998.

We based this preliminary finding, in large part, on a review of the

quantity of material input (i.e., production starts) at the new

facility during the POR. Specifically, the production starts represent

the best

[[Page 48763]]

measure of the facility's ability to produce at commercial production

levels. Based upon our analysis of OBV's production starts, we

preliminarily find that OBV attained commercial production levels in

October 1998. Accordingly, we have accepted OBV's submitted startup

cost adjustment.

3. General and Financial Expenses

We used the revised general and administrative (G&A) and financial

expense rates that OBV provided on the first day of the cost

verification, which the company revised to correct for clerical errors

made in originally calculating these items. In addition, we included in

G&A expenses the loss OBV recognized in the ordinary course of business

from holding metals in inventory.

B. Test of Home Market Prices

After calculating COP, we tested to see whether home market sales

of subject brass sheet and strip were made at prices below COP within

an extended period of time in substantial quantities and whether such

prices permitted the recovery of all costs within a reasonable period

of time. We compared model-specific COP to the reported home market

prices less any applicable movement charges, discounts and rebates,

where appropriate.

C. Results of COP Test

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

percent of OBV's home market sales for a model were at prices less than

the COP, we did not disregard below-cost sales of that model because

the Department determined that the below cost sales were not made

within an extended period of time in ``substantial quantities.'' Where

20 percent or more of OBV's home market sales of a given product were

at prices less than the COP, we determined that such sales were made

within an extended period of time in substantial quantities in

accordance with section 773(b)(2)(C) of the Act. To determine whether

such sales were at prices which would not permit the full recovery of

all costs within a reasonable period of time, in accordance with

section 773(b)(2)(D) of the Act, we compared home market prices to the

weighted-average COP for the POR. When we found that below-cost 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.

Since there were sufficient sales that passed the cost test, it was

unnecessary to calculate CV in this case.

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, the Department determines NV based on sales in the

comparison market at the same level of trade (LOT) as the EP or, if

applicable, 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

(SG&A) and profit. For EP, the U.S. LOT is also the level of the

starting-price sale, which is usually from the exporter to the

importer.

To determine whether comparison market sales are at different LOT's

than EP, the Department examines stages in the marketing process and

selling functions along the chain of distribution between the producer

and the unaffiliated (or arm's length) customers. If the comparison-

market sales are at a different LOT, and the differences affect 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, the Department makes

a LOT adjustment under section 773(a)(7)(A) of the Act.

OBV claims that the Department can match U.S. sales to identical

sales at the same LOT in the home market and that a LOT adjustment is

therefore not necessary. OBV manufactures to order and ships directly

to original equipment manufacturers (OEMs) in the United States and

home market, and also ships directly to a home market trading company.

In order to determine whether U.S. sales were made at the same LOT as

sales in the home market, we examined OBV's questionnaire responses

with regard to its distribution system, including selling functions,

class of customer and selling expenses. We examined the chain of

distribution and the selling activities associated with sales reported

by OBV to its two home market customer categories (i.e., OEMs and

trading company). We found that the two home market customer categories

did not differ significantly from each other with respect to selling

activities, although there were slight differences between them for

sales process/marketing support and freight and delivery. Based on our

overall analysis, we found that the two home market categories

constituted one LOT.

OBV reported EP sales to its unaffiliated customers in one customer

category, OEM's, and therefore only had one level of trade for U.S.

sales. We examined the channel of distribution and the selling

activities associated with sales reported by OBV to the single LOT in

the Netherlands and in the United States and found that the LOT in

these two markets were similar. Therefore, all price comparisons are at

the same LOT and a LOT adjustment pursuant to section 773(a)(7)(A) of

the Act is unwarranted.

Currency Conversion

For purposes of these preliminary results, we made currency

conversions in accordance with section 773A(a) of the Act, based on the

official exchange rates published by the Federal Reserve. Section

773A(a) of the Act 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.'' In accordance with the

Department's practice, we have determined as a general matter that a

fluctuation exists when the daily exchange rate differs from a

benchmark by 2.25 percent. The benchmark is defined as the rolling

average of rates for the past 40 business days. When we determine that

a fluctuation exists, we substitute the benchmark for the daily rate.

Intent To Revoke

On August 31, 1998, OBV submitted a letter stating that OBV was the

sole producer of brass sheet and strip from the Netherlands, and

requested that pursuant to 19 CFR 351.222(b), the Department revoke the

antidumping duty order currently in place against certain brass sheet

and strip from the Netherlands. OBV submitted, along with its

revocation request, a certification stating that: (1) the company sold

subject merchandise at not less than NV during the POR, and that in the

future it would not sell such merchandise at less than NV (see 19 CFR

351.222(e)(1)(i)); and (2) the company has sold the subject merchandise

to the United States in commercial quantities during each of the past

three years. See 19 CFR 351.222(e)(1)(ii).2

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

\2\ On September 1, 1999, OBV amended its request for revocation

to include a certification that, if the Department finds that OBV is

not the sole producer and exporter from the Netherlands, the company

agrees to immediate reinstatement in the order if, subsequent to

revocation, the Department concludes that the company sold the

subject merchandise at less than normal value (see 19 CFR

351.222(b)(iii)). Since the Department has concluded that OBV is the

sole producer and exporter from the Netherlands, the revocation

decision is whether to revoke the order on brass sheet and strip

from the Netherlands in whole.

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

The Department ``may revoke, in whole or in part'' an antidumping

duty

[[Page 48764]]

order upon completion of a review under section 751 of the Act. While

Congress has not specified the procedures that the Department must

follow in revoking an order, the Department has developed a procedure

for revocation that is described in 19 CFR 351.222. This regulation

requires, inter alia, that each exporter and producer covered by the

order submit the following: (1) a certification that the company has

sold the subject merchandise at not less than NV in the current review

period and that the company will not sell at less than NV in the

future; and (2) a certification that the company sold the subject

merchandise in each of the three years forming the basis of the request

in commercial quantities (see 19 CFR 351.222(e)(1).) Upon receipt of

such a request, the Department may revoke an order, if it concludes

that each exporter and producer covered at the time of revocation: (1)

sold subject merchandise at not less than NV for a period of at least

three consecutive years; and (2) is not likely in the future to sell

the subject merchandise at less than NV; see 19 CFR 351.222(b)(1)).

On February 2, 1999, the Department established a time frame for

parties to submit factual information relating to the Department's

consideration of OBV's request for the revocation of the antidumping

duty order on brass sheet and strip from the Netherlands. See Brass

Sheet and Strip From The Netherlands; Notice of Extension of Time

Limits for Sixth Antidumping Duty Administrative Review, 64 FR 5766

(Feb. 5, 1999). OBV and the petitioners submitted comments on April 1,

1999 and rebuttal comments on May 6, 1999.

Petitioners' Comments: The petitioners argue that the Department

should not revoke the order from the Netherlands because the factual

information presented by OBV does not support its position that (1) it

has sold subject merchandise in the United States in commercial

quantities during the last three annual review periods; and (2) it has

demonstrated that it is not likely to resume dumping in the future if

the antidumping order is revoked. The petitioners state that recent

determinations issued by the Department indicate that the ``commercial

quantities'' requirement applies with respect to both the volume of

sales as well as the number of sales made by a party requesting

revocation. See Pure Magnesium From Canada; Final Results of

Antidumping Duty Administrative Review and Determination Not to Revoke

Order in Part, 64 FR 12977, 12978 (Mar. 16, 1999) (Magnesium from

Canada). See also Certain Corrosion-Resistant Carbon Steel Flat

Products and Certain Cut-to-Length Carbon Steel Plate From Canada;

Final Results of Antidumping Duty Administrative Reviews and

Determination To Revoke in Part, 64 FR 2173, 2175 (Jan. 13, 1999)

(Certain Plate from Canada). The petitioners argue that the number and

quantity of sales of subject merchandise (radiator strip brass)

reported by OBV in the last three administrative reviews is a small

fraction of the volume and number of U.S. sales made prior to the

original investigation. They suggest that the only reasonable inference

that can be drawn from such a substantial decrease in sales is that OBV

withdrew from the U.S. market for the products that it was selling

during the original investigation (both radiator strip and electrical

connector strip) because it could not sell these products without

dumping. According to the petitioners, the fact that OBV has chosen to

source a large part of its radiator strip sales in the United States

from production by its American affiliate, Outokumpu American Brass

(American Brass), despite the fact that such merchandise currently

would be subject to a 0% ad valorem cash deposit rate, according to the

petitioner is further proof of OBV's inability to sell subject

merchandise in the United States without dumping. The petitioners argue

that in a similar situation, the Department denied revocation to a

German company who had shifted sourcing to its United States subsidiary

(see Brass Sheet and Strip From Germany; Final Results of Antidumping

Duty Administrative Review and Determination Not to Revoke in Part, 61

FR 49727, 49730 (Sept. 23, 1996) (Brass from Germany).

Finally, in order for the Department to make an objective

determination of the likelihood of future dumping if the order were

revoked, the petitioners requested that the Department undertake an

analysis of OBV's past practices as well as future competitive

conditions that would affect OBV's prices and costs in the United

States and the home market. Specifically, for both OBV and American

Brass, they requested that the Department obtain, for each product

category of subject merchandise, historical shipment data in both the

United States and the home market, production capacities, and

fabrication prices. The petitioners claim that this necessary

information was noticeably absent from OBV's otherwise voluminous

submission supporting revocation and that it is otherwise not available

to the petitioners.

Respondent Comments: OBV claims that it is a well-established past

practice of the Department to make revocation determinations on a case-

by-case basis, taking into consideration the industry in question,

relevant market conditions, and the record evidence. See Dynamic Random

Access Memory Semiconductors of One Megabyte or Above From the Republic

of Korea: Final Results of Antidumping Duty Administrative Review and

Determination Not To Revoke Order In Part, 62 FR 39809, 39812 (July 24,

1997) (DRAMS from Korea). In addition to three years of no dumping,

when evidence is placed on the record relating to the likelihood of

future dumping, the Department is required to consider the evidence.

See Steel Wire Rope From the Republic of Korea: Final Results of

Antidumping Duty Administrative Review and Revocation in Part of

Antidumping Duty Order, 63 FR 17986, 17988 (April 13, 1998) (Wire Rope

from Korea). In Wire Rope from Korea, the Department considered

information placed on the record which included conditions and trends

in the domestic and home market industries, currency movements, and the

ability of the respondent to compete in the U.S. market without

dumping. OBV argues that the information it has placed on the record,

as supported by an economic report that it commissioned from LECG, Inc.

(LECG Report), demonstrates that its sales have in fact been made in

commercial quantities,3 and that it is not likely to sell at

below normal value in the future if the order were revoked.

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

\3\ OBV further argued that the ``commercial quantities'' factor

cited in 19 C.F.R. 351.222 (d)(1) applies only to antidumping

reviews in which the ``middle'' year does not involve a review. In

that regard, it contends that the Department's reliance upon

``commercial quantities'' in Magnesium From Canada notwithstanding,

it is OBV's position that the quantity of imports is only one of

many factors the Department may consider in making a ``likelihood''

determination.

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

OBV notes that in Certain Plate from Canada the Department stated

that ``the Department must be able to determine that the company has

continued to participate meaningfully in the U.S. market during each of

the three years at issue.'' OBV claims that in fact the company shipped

at historical levels over the period covered by the first three

administrative reviews, i.e., February 8, 1988 through July 31, 1991,

discontinued shipments from 1992 until 1995, but resumed shipments when

it to began servicing certain niche markets in the United States. Upon

review and consideration of the ``unusual occurrences which might

affect the potential for production and exportation'' in deciding

commercial quantities (see Notice of Proposed

[[Page 48765]]

Rulemaking and Request for Public Comment, 61 FR 7308, 7320 (February

27, 1996) (Proposed Regulations)), OBV contends that the Department

will find that the shipments made during this and the previous two

administrative reviews were made in commercial quantities.

In evaluating the question of ``commercial quantities'' and

``likelihood,'' OBV argues that it is essential to understand that

OBV's decision to discontinue shipments of subject merchandise to the

United States in 1991 was not because OBV was unable to sell in the

United States at above normal value prices. Rather, it was due to the

acquisition of American Brass, a major United States producer of brass

sheet and strip products (and supporter of the revocation of this

order), by OBV's parent company, Outokumpu Oyj (Outokumpu). OBV claims

that this event caused a significant and permanent structural change in

the U.S. industry, vis-a-vis OBV, which makes it unlikely that OBV

would resume dumping in the United States.

OBV states that following the acquisition of American Brass,

production of subject merchandise was shifted from the Netherlands to

American Brass for a variety of management reasons unrelated to

pricing. Due to its obvious proximity to OBV's customers in the United

States, and the need to address the uncertainty brought about by the

on-going antidumping order, American Brass was required by Outokumpu to

produce in-scope brass radiator strip, while OBV continued to supply

thinner gauge radiator strip not covered by the scope of the order. OBV

resumed shipments of in-scope radiator strip in 1995 to service a niche

market for certain United States customers who prefer brass strip with

more exacting tolerances, which for a variety of reasons cannot be

produced efficiently by American Brass. OBV claims that as a result of

a significant investment made in innovating radiator strip production

at its facilities, which has strengthened OBV's position as the world

cost leader in the production of radiator strip, Outokumpu intends to

shift production of in-scope radiator strip for its United States

customers back to the Netherlands This shift in production would also

allow American Brass, in which Outokumpu has also made significant new

investment in equipment, to focus on non-radiator strip production,

where it has its best efficiency, and away from radiator strip which is

not suited to its production process.

OBV claims that the LECG economic report clearly shows that it is

unlikely that OBV will resume pricing in-scope radiator strip, or any

other subject brass, in the United States market at less than normal

value even as it increases its shipments of radiator strip from the

Netherlands, for the following reasons: (1) The recent investment in

the vertical strip caster at OBV has made OBV the world cost leader in

radiator strip; (2) there is no direct competition to drive-down prices

from any integrated United States mill for in-scope radiator strip; (3)

the parent company to both OBV and American Brass would never allow OBV

to compete with American Brass in non-radiator strip where American

Brass has a comparative advantage. Thus, OBV will not export any

product to the United States except radiator strip; (4) OBV is already

operating at full capacity servicing its worldwide customer base.

Further, OBV could not significantly increase its production of non-

radiator strip brass, or shift production to other types of subject

merchandise, without significant additional investment; (5) many United

States customers of radiator strip are multinational producers who

would not tolerate price discrimination among their worldwide

affiliated entities; (6) the Dutch guilder has been weaker against the

U.S. dollar and is more likely to continue to fall rather than to

appreciate; (7) any increase in radiator strip exports beyond servicing

the current OBV/American Brass customer base would be moderated by the

limited market for radiator brass, given the ongoing advance of

aluminum as the preferred substitute for brass. OBV's conclusion based

on the LECG report is that selling at prices below normal value in the

future would be irrational and self-injurious.

Department Position: In determining whether to revoke an

antidumping order, we must conclude, pursuant to 19 CFR 351.222(b)(1),

that: (1) all producers and exporters have sold the subject merchandise

at not less than normal value to the United States in commercial

quantities for three consecutive reviews; and (2) it is not likely that

those persons will in the future sell the subject merchandise at less

than NV.

In the present case, the Department preliminarily finds that OBV is

the only exporter or producer of subject merchandise shipped to the

United States. This determination was based on an examination of 1997

and 1998 United States import statistics for the HTSUS item numbers

(7409.21 and 7409.29) which cover the subject merchandise as well as

information obtained during verification. See ``memorandum of

``Shipments of Brass Sheet & Strip from the Netherlands,'' dated August

31, 1999, from John Brinkmann to the file (OBV Shipment Memorandum);

see also Verification Report, dated August 31, 1999. The Department

also preliminarily finds that OBV had zero or de minimis dumping

margins for three consecutive reviews. Further, in determining whether

three years of no dumping establish a sufficient basis to make a

revocation determination, the Department must be able to determine that

the company continued to participate meaningfully in the U.S. market

during each of the three years at issue. See Certain Plate from Canada,

64 FR at 2175; see also Magnesium from Canada, 64 FR at 12979. This

practice has been codified in section 351.222(d)(1) of the Department's

regulations, which states that, ``before revoking an order or

terminating a suspended investigation, the Secretary must be satisfied

that, during each of the three (or five) years, there were exports to

the United States in commercial quantities of the subject merchandise

to which a revocation or termination will apply.'' 19 CFR 351.222(d)(1)

(emphasis added); see also 19 CFR 351.222(e)(1)(ii). For purposes of

revocation, the Department must be able to determine that past margins

are reflective of a company's normal commercial activity. Sales during

the POR which, in the aggregate, are an abnormally small quantity do

not provide a reasonable basis for determining that the discipline of

the order is no longer necessary to offset dumping.

With respect to the threshold matter of whether OBV made sales of

subject merchandise to the United States in commercial quantities, we

find that OBV's aggregate sales to the United States were made in

commercial quantities during all segments of this proceeding. Although

both the quantity and number of OBV's shipments to the United States of

subject merchandise have decreased since the imposition of the

antidumping duty order, we find that the Outokumpu acquisition of

American Brass and the subsequent transfer of in-scope radiator strip

production to the United States is reflective of the type of ``unusual

occurrence'' contemplated by the Department, in promulgating its

regulations, as an acceptable explanation of why exports of subject

merchandise have declined. See Proposed Regulations, 61 FR 7307, 7320

(Feb. 27, 1996). Prior to this acquisition, in 1989 and 1990, OBV

continued to ship in similar quantities to the pre-order period and the

subsequent

[[Page 48766]]

cessation of shipments until 1995 was an immediate result of the 1991

acquisition. Based upon these circumstances, it is reasonable to

conclude that the company's commercial practices were permanently

changed in 1991, and that 1991, rather than the pre-order period,

should be the benchmark for measuring whether the company's sales

during the three years without dumping were made in commercial

quantities. Examination of shipments of subject merchandise from OBV

from 1991 to the present shows that shipments began again in 1995 and

increased in quantity and number of sales each year through 1998 (see

OBV Shipment Memorandum). Thus, we can reasonably conclude that the

``zero'' margins calculated for OBV in each of the last three

administrative reviews are reflective of the company's normal

commercial experience.

With respect to 19 CFR 351.222(b)(1)(ii), the likelihood issue,

``when additional evidence is on the record concerning the likelihood

of future dumping, the Department is, of course obligated to consider

the evidence by the parties which relates to the likelihood of future

dumping.'' In doing so, the Department may consider such ``factors as

conditions and trends in the domestic and home market industries,

currency movements, and the ability of the foreign entity to compete in

the U.S. marketplace without [sales at less than normal value].'' Wire

Rope from Korea, 63 FR at 17988 (citing Brass from Germany, 61 FR at

49730); see also Proposed Regulation Concerning the Revocation of

Antidumping Duty Orders, 64 FR 29818, 29820 (June 3, 1999) (explaining

that when additional evidence as to whether the continued application

of an antidumping duty order is necessary to offset dumping is placed

on the record, ``the Department may consider trends in prices and

costs, investment, currency movements, production capacity, as well as

all other market and economic factors relevant to a particular

case.''); and Brass Sheet and Strip from Canada: Preliminary Results of

Antidumping Duty Administrative Review and Notice of Intent to Revoke

Order in Part, 63 FR 6519, 6523 (Feb. 9, 1998). Thus, based upon three

consecutive reviews of zero or de minimis margins, the Department

presumes that dumping is not likely to resume unless the Department has

been presented with evidence to demonstrate that dumping is likely to

resume if the order were revoked.

In this proceeding, the petitioners have not presented evidence

that would demonstrate that dumping is likely to resume if the order

were revoked. However, since the respondent placed information on the

record that addresses the types of factors considered by the

Department, we have considered this information in our determination of

whether dumping is likely to occur if the order on brass sheet and

strip from the Netherlands is revoked.

Based upon the evidence presented in this proceeding, we have

considered various factors in considering whether OBV is likely to sell

merchandise in the future at less than NV. We have reviewed the LECG

economic report and briefs presented by OBV and find no evidence that

indicates the likelihood of future dumping. Although OBV has indicated

that it intends to shift production of subject radiator strip from

American Brass back to the Netherlands, we find that there is no

evidence that this will lead to the reoccurrence of dumping in the

future. Further, the record shows that with the recent investment in

the new vertical strip caster, OBV has a considerable cost advantage

over American Brass in the production of radiator strip. Also, we

confirmed at verification that OBV is already producing to near

capacity and has limited capabilities to shift production from radiator

strip to other subject products, such as electrical connector strip,

where American Brass has a considerable cost advantage. Based on this

and other evidence presented by OBV as to the current structure of the

American market for brass radiator strip, and the relative weakness of

the Dutch guilder to the U.S. dollar, we find that it is not likely

that OBV will sell at less than normal value in the future.

Because both requirements under the regulation have been satisfied,

and the record establishes that OBV is the only known producer and

exporter of the subject merchandise from the Netherlands, we intend to

revoke the antidumping duty order on brass sheet and strip from the

Netherlands. If these preliminary findings are affirmed in our final

results, we will revoke the order with respect to brass sheet and strip

from the Netherlands. In accordance with 19 CFR 351.222(f)(3), we will

terminate the suspension of liquidation for any such merchandise

entered, or withdrawn from warehouse, for consumption on or after the

first day after the period under review, and will instruct Customs to

refund any cash deposit.

Preliminary Results of Review

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

following percentage weighted-average margin exists for the period

August 1, 1997 through July 31, 1998:

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

Margin

Manufacturer/exporter (percent)

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

OBV......................................................... Zero.

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

We will disclose the calculations used in our analysis to parties

to this proceeding within five days of the publication date of this

notice. See 19 CFR 351.224(b). Any interested party may request a

hearing within 30 days of the date of publication of this notice. See

19 CFR 351.310(c). Any hearing, if requested, will be held 44 days

after the date of publication, or the first workday thereafter.

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

publication of this notice. Parties who submit case briefs in this

proceeding should provide a summary of the arguments not to exceed five

pages and a table of statutes, regulations, and cases cited. Rebuttal

briefs, limited to issues raised in the case briefs, may be filed not

later than 7 days after the date of filing of case briefs. The

Department will publish a notice of the final results of this

administrative review, which will include the results of its analysis

of issues raised in any such written comments, within 120 days from the

publication of these preliminary results.

Assessment Rate

Pursuant to 19 CFR 351.212(b), the Department calculated an

assessment rate for the importer of the subject merchandise. Upon

completion of this review, the Department will issue appraisement

instructions to the U.S. Customs Service. If these preliminary results

are adopted in our final results, we will instruct the U.S. Customs

Service to liquidate all entries subject to this review without regard

to antidumping duties.

If these preliminary results are not adopted in the final results,

we will instruct the U.S. Customs Service to assess antidumping duties

on all appropriate entries covered by this review if any importer-

specific assessment rates calculated in the final results of this

review are above de minimis (i.e., at or above 0.5 percent). For

assessment purposes, we intend to calculate importer-specific

assessment rates for the subject merchandise by aggregating the dumping

margins for all U.S. sales to each importer and dividing the amount by

the total entered value of the sales to that importer.

Cash Deposit Requirements

If the final results remain unchanged from these preliminary

results, no future

[[Page 48767]]

cash deposits will be required for the subject merchandise.

Notification to Importers

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 351.402 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This determination is issued and published in accordance with

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

Dated: August 31, 1999.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-23327 Filed 9-7-99; 8:45 am]

BILLING CODE 3510-DS-P