742 Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices

This notice serves as the only

reminder to parties subject to

administrative protective order (‘‘APO’’)

of their responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with 19 CFR 351.305 of the

Department’s regulations. Timely

notification of return/destruction of

APO materials or conversion to judicial

protective order is hereby requested.

Failure to comply with the regulations

and the terms of an APO is a

sanctionable violation.

This five-year (‘‘sunset’’) review and

notice are in accordance with sections

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

Dated: December 28, 1999.

Holy Kuga,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 00–285 Filed 1–5–00; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

(A–421–701)

Notice of Final Results of Antidumping

Duty Administrative Review and

Determination Not To Revoke the

Antidumping Duty Order: Brass Sheet

and Strip From the Netherlands

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce

SUMMARY: On September 8, 1999, the

Department of Commerce (the

Department) published the preliminary

results of its administrative review of

the antidumping duty order on brass

sheet and strip from the Netherlands

and its notice of intent to revoke the

antidumping duty order. We gave

interested parties an opportunity to

comment on the preliminary results. We

have analyzed the comments received

and have made certain changes for the

final results.

This review covers shipments by one

respondent during the period August 1,

1997, through July 31, 1998. For our

final results, we have found that sales of

the subject merchandise have not been

made below normal value. We will

instruct the Customs Service not to

assess antidumping duties on the

subject merchandise exported by this

company. Furthermore, we are not

revoking the antidumping duty order

given that shipments of subject

merchandise to the United States by

Outokumpu Copper Strip B.V. (OBV),

the sole producer and exporter of

subject merchandise from the

Netherlands, have not been made in

commercial quantities for each of the

three consecutive review periods that

formed the basis of the revocation

request. See Determination Not To

Revoke Order section of this notice.

EFFECTIVE DATE: January 6, 2000.

FOR FURTHER INFORMATION CONTACT: John

Brinkmann or Jarrod Goldfeder, Office

of AD/CVD Enforcement VI, 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) 482–4126 or (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’s regulations refer to the

regulations codified at 19 CFR part 351

(1999).

Case History

This review covers OBV, the sole

manufacturer/exporter of merchandise

subject to the antidumping duty order

on brass sheet and strip from the

Netherlands.

On September 8, 1999, the

Department published the preliminary

results of this review. See Notice of

Preliminary Results of Antidumping

Duty Administrative Review and Intent

To Revoke Order: Brass Sheet and Strip

from the Netherlands, 64 FR 48760

(Preliminary Results). On October 20,

1999, we received case briefs from OBV

and the petitioners. We received

rebuttal briefs from OBV and the

petitioners on October 29, 1999. A

public hearing was held on November 2,

1999.

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.

Determination Not To Revoke Order

The Department ‘‘may revoke, in

whole or in part’’ an antidumping duty

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 a company requesting

revocation must submit the following:

(1) A certification that the company has

sold the subject merchandise at not less

than normal value (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)); 19 CFR

351.222(b)(2); see, e.g., Final Results of

Antidumping Duty Administrative

Review and Determination Not To

Revoke Order in Part: Pure Magnesium

from Canada (Pure Magnesium from

Canada), 64 FR 12977, 12982 (March

16, 1999).

In our Preliminary Results, we

preliminarily determined that OBV sold

in commercial quantities during the

period of review (POR) and that it is not

likely that OBV will sell at less than NV

in the future (see Preliminary Results,

64 FR at 48765–48766). However, upon

review of the criteria outlined at section

351.222(b) of the Department’s

regulations, the comments of the parties,

and the evidence on the record, we have

determined that the Department’s

requirements for revocation have not

Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices 743

been met. Based on the final results in

this review and the final results of the

two preceding reviews, OBV has

demonstrated three consecutive years of

sales at not less than NV. However, we

find that OBV’s aggregate sales to the

United States have not been made in

commercial quantities during each of

the three review periods that formed the

basis of OBV’s revocation request. See

Comment 5 for a discussion of the basis

for this decision. The abnormally low

level of sales activity does not provide

a reasonable basis for determining that

the discipline of the antidumping duty

order is no longer necessary.

Consequently, we find that OBV does

not qualify for revocation of the order

on brass sheet and strip under 19 CFR

351.222(e)(1)(ii).

Comparisons

We calculated export price (EP) and

NV based on the same methodology

used in the Preliminary Results.

Cost of Production

As discussed in the Preliminary

Results, we conducted an investigation

to determine whether OBV made home

market sales of the foreign like product

during the POR at prices below its cost

of production (COP) within the meaning

of section 773(b)(1) of the Act.

We found 20 percent or more of

OBV’s sales of a given product during

the 12 month period were at prices less

than the weighted-average COP for the

POR and thus determined that these

below cost sales were made in

‘‘substantial quantities’’ within an

extended period of time, and that such

sales were not made at prices which

would permit recovery of all costs

within a reasonable period of time, in

accordance with section 773(b)(2) (B),

(C), and (D) of the Act. Therefore, for

purposes of these final results, we

disregarded the below-cost sales and

used the remaining sales as the basis for

determining NV, pursuant to section

773(b)(1) of the Act.

We calculated the COP for these final

results following the same methodology

as in the preliminary results, with the

following exceptions:

A. OBV had claimed a nine-month

startup period for January 1998 through

September 1998 for its new continuous

strip casting mill. For the final results,

we have allowed OBV the startup

adjustment. However, we found that the

startup period ended on May 31, 1998

and not September 30, 1998. As a result,

we decreased the amount of OBV’s

startup adjustment. In addition, we

amortized the capitalized startup costs

and included a portion of the amortized

costs in the calculation of COP. See

Comment 1.

B. We have calculated weightedaverage monthly metal costs based on

metal fix prices, which were confirmed

at verification. See Cost Verification

Exhibit (CVE) 18. For fabrication costs,

we have used weighted-average annual

costs based on the data reported in the

COP and constructed value (CV) data

files. See Comment 2.

C. OBV purchased major inputs from

an affiliate and used the transfer prices

in the calculation of its COP and CV.

For the final results, we have increased

the transfer prices to the affiliate’s COP

in calculating OBV’s cost of

manufacture. See Comment 3.

Analysis of Comments Received

We gave interested parties an

opportunity to comment on the

preliminary results. As noted above, we

received comments and rebuttal

comments from OBV and the

petitioners.

Comment 1: Startup Adjustment

The petitioners contend that the

Department should deny OBV’s request

for a startup adjustment because it is not

eligible for such an adjustment. To be

eligible for a startup adjustment, the

petitioners state that a respondent must

either be starting up a completely new

production facility, retooling an existing

facility, or producing a new product.

The petitioners argue, however, that

OBV’s new strip caster does not meet

any of these eligibility requirements

because the company merely installed

an expensive piece of equipment used

in a single stage of the manufacturing

process. In such situations, the

petitioners claim that the Department

has typically found that replacing or

rebuilding only part of an operation,

despite a substantial level of

investment, does not result in a new

facility and does not warrant a startup

adjustment to cost. To support this

claim, the petitioners cite to several

recent cases in which the Department

has denied similar requests. For

example, the petitioners cite Final

Results of Antidumping Administrative

Reviews: Certain Cold Rolled and

Corrosion Resistant Carbon Steel Flat

Products From Korea, 64 FR 12927,

12950 (March 16, 1999) (Flat Products

from Korea); Final Determination of

Sales at Less Than Fair Value: Stainless

Steel Wire Rod from Spain, 63 FR

40391, 40401 (July 29, 1998) (SSWR

from Spain); Final Determination of

Sales at Less Than Fair Value: Certain

Preserved Mushrooms from Chile, 63 FR

56613, 56618 (October 22, 1998)

(Mushrooms from Chile); Final Results

of Antidumping Duty Administrative

Review: Small Diameter Circular

Seamless Carbon and Alloy Steel

Standard, Line and Pressure Pipe from

Germany, 63 FR 13217, 13220 (March

18, 1998) (Pressure Pipe from Germany);

and Final Determination of Sales at Less

Than Fair Value: Certain Preserved

Mushrooms from India, 63 FR 72246,

72253 (December 31, 1998) (Mushrooms

from India). In each of these cases, the

petitioners contend, the Department

disallowed the startup adjustment

because the applicants failed to undergo

‘‘substantially complete retooling’’ or

the improvements did not result in a

‘‘near new facility.’’

To further their position that the

Department should disallow OBV’s

startup adjustment, the petitioners also

assert that the respondent has not met

the Department’s burden of proof

requirements for receiving such an

adjustment. Citing Mushrooms from

Chile, the petitioners claim that the

Department normally denies the startup

adjustment when the respondent has

not sufficiently supported its claim for

such an adjustment. In this case, the

petitioners claim OBV failed to

adequately provide, completely omitted,

or miscalculated the following

information in their startup request.

First, according to the petitioners,

OBV’s investment in the new strip

caster was not significant in comparison

to its total property, plant, and

equipment value. Moreover, the

petitioners argue that OBV overstated

the relative investment made in the strip

caster mill by relying on historical,

rather than inflation-adjusted costs, to

calculate its reported investment

percentages. As a result, the analysis

provided by the respondent leads to the

erroneous conclusion that the amount

invested was significant. The petitioners

contend that without a significant

investment, OBV does not qualify for a

startup adjustment.

Second, according to the petitioners,

the Department should disallow OBV’s

startup claim because the company’s

data demonstrates that technical factors

related to the new strip caster did not

constrain the company’s production

levels. The petitioners contend that the

production limitations that existed

during the POR were the result of the

company’s conscious decision to run

both the old and new casters

simultaneously. This, according to the

petitioners, is not a technical problem.

More importantly, the petitioners claim,

OBV’s production volume approached

maximum capacity during the POR.

Thus, the petitioners conclude that OBV

experienced no reduction in its

production levels while installing the

744 Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices

new strip caster and, therefore,

consistent with its determination in

Mushrooms from India, the Department

must disallow the adjustment. In

addition, the petitioners point out that

an analysis of OBV’s yield data also

demonstrates that technical factors did

not hinder its production levels.

Third, the petitioners argue that OBV

did not provide complete information

concerning technical difficulties.

According to the petitioners, OBV failed

to provide sufficient information on the

types and frequency of technical

problems that the industry generally

incurs in operating casting equipment.

In other words, the company should

have distinguished between normal

repairs and technical difficulties related

to startup. Without this information, the

petitioners argue that it is impossible for

the Department to draw a meaningful

comparison between the operation of

the ring caster and the strip caster. In

prior determinations, the petitioners

claim that the Department has relied

upon this type of failure as sufficient

grounds to deny a startup adjustment

(see, e.g., Mushrooms from Chile).

Finally, according to the petitioners,

OBV’s reported costs after the startup

adjustment were not consistent with

common industry knowledge.

Specifically, the petitioners contend

that the startup adjustment distorts costs

because it shifts costs away from thinner

gauged merchandise.

If for some reason the Department

determines that it should adjust OBV’s

production costs, the petitioners claim

that the Department should account for

the adjustment as a non-recurring cost

adjustment. Moreover, in making such

an adjustment, the petitioners believe

that the Department should specifically

limit the adjustment only to nonrecurring variable costs (i.e., direct labor

and variable overhead).

OBV, on the other hand, believes that

it is entitled to a startup adjustment.

OBV explains that the Department

normally grants this adjustment when a

producer is using a new production

facility and the production levels are

limited by technical factors associated

with the initial phase of commercial

production. According to OBV, the

company’s new continuous strip caster

meets these qualifications because it

qualifies as a new production facility

and evidence on the record

demonstrates that production levels

were limited by technical factors

associated with the initial phase of

commercial production.

On the issue of whether a separate

facility is required by law, OBV

counters that the statute does not

require that a respondent’s new

production facility encompass all the

steps in the production process (see,

e.g., Notice of Final Determination of

Sales at Less Than Fair Value: Static

Random Access Memory

Semiconductors From Taiwan, 63 FR

8909 (February 23, 1998) (SRAMs from

Taiwan)). Instead, OBV claims, the

statute only directs that the startup

adjustment not be the result of making

an ‘‘on-going’’ or ‘‘mere improvement’’

to an existing facility. To support its

claim that its new casting facility is

more than just an improvement, OBV

notes that the evidence provided

demonstrates that the new continuous

strip casting mill constitutes a

wholesale replacement of the old ring

casting mill. To complete this

replacement, OBV states that the new

facility required significant investment

and was a substantial undertaking. OBV

emphasizes that it had to invest in an

entirely new technology which required

the installation of new equipment.

Furthermore, the company had to

construct a new building to house the

operation.

In addition, OBV, in its rebuttal brief,

specifically addresses each of the

petitioners’ arguments for disallowing

the startup adjustment, as follows:

First, OBV states that it realizes that

the burden of demonstrating the

entitlement to a startup adjustment rests

with the party making the claim (see,

e.g., SSWR from Spain). OBV further

notes that the standard of proof for a

start-up adjustment is no greater than

that for any other adjustment claimed by

respondent. In this case, OBV states that

it has met this requirement by providing

evidence which demonstrates that the

new mill meets the statutory criteria for

a startup adjustment.

Second, OBV refutes the petitioners’

contention that the level of investment

was not significant by countering that it

has not overstated the size of its

investment in the new caster. According

to OBV, the record in this case

demonstrates that it has substantially

increased the value of its property,

plant, and equipment base. OBV further

notes that the level of investment is

significant whether one measures the

investment using historical or inflationadjusted costs.

Third, regarding production levels,

OBV argues that they were limited by

technical factors and that the company’s

overall output used in the petitioners’

analysis is not the appropriate

benchmark for determining limitations.

OBV claims that the critical factor in

measuring commercial quantities and

determining the length of the startup

period is the number of units processed,

i.e., ‘‘production throughput’’ of the

strip caster. On this measure, the record

demonstrates that the startup period

continued at least through September

1998. In addition, OBV argues that the

company’s decision to operate its new

and old caster at the same time was

based on sound business reasons that

does not result in an overstatement of

the company’s startup adjustment.

Fourth, OBV asserts that the strip

caster had lower production volumes in

the beginning of commercial production

because specific categories of technical

difficulties caused production delays

and interruptions. Moreover, the

respondent states that it provided all the

necessary information to allow the

Department to evaluate these specific

categories of technical difficulties. OBV

further claims that the type of

difficulties relied upon to support its

claim are distinct from the company’s

ordinary repairs. According to OBV,

production personnel tracked and

recorded these difficulties as they

occurred in an effort to resolve the

problems quickly and to continually

develop procedures to avoid similar

difficulties in the future.

Finally, OBV believes that the

Department should adjust OBV’s

production costs related to the new

caster as ‘‘startup’’ and not as a ‘‘nonrecurring’’ cost adjustment. If the

Department were to treat the adjustment

as a non-recurring cost, OBV believes

that the startup adjustment should not

be limited to non-recurring variable

costs. According to OBV, the Statement

of Administrative Action (SAA) section

describing non-recurring costs does not

state that only variable cost should be

adjusted.

DOC Position: We agree with OBV

and have determined that the

company’s new continuous strip casting

mill is eligible for a startup adjustment

in accordance with section

773(f)(1)(C)(ii) of the Act. As for the

appropriate startup period, however, we

have determined that the period ended

in May 1998, rather than September

1998, as claimed by OBV. Specifically,

section 773(f)(1)(C)(ii) of the Act states

that the Department will make an

adjustment for startup costs where the

following two conditions are met: (1) A

producer is using new production

facilities or producing a new product

that requires substantial additional

investment, and (2) the production

levels are limited by technical factors

associated with the initial phase of

commercial production. We have

examined OBV’s claim and determined

that the criteria for granting a startup

adjustment have been satisfied in this

case.

Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices 745

1This preliminary determination was upheld in

the final results. See Final Results of Antidumping

Duty Administrative Reviews and Determination To

Revoke in Part Certain Corrosion-Resistant Carbon

Steel Flat Products and Certain Cut-to-Length

Carbon Steel Plate From Canada, 64 FR 2173, 2176

(January 13, 1999) (Certain Corrosion-Resistant

Carbon Steel Flat Products from Canada). The

Department denied the startup adjustment on other

grounds.

2To perform this analysis, we excluded the ring

caster investment from the total fixed asset amount

reported on the financial statement. See the

proprietary Memorandum from Stan Bowen to the

File, ‘‘Analysis of Investment,’’ dated December 21,

1999.

During the POR, OBV completed

construction and began operating its

strip caster, which consists of a caster

and a heavy gauge rolling line. The

caster melts copper and zinc into brass,

and the heavy gauge rolling line rolls

the resulting molten brass into master

coils. This new casting line, which is

based on new technology, allows the

company to continuously cast and roll

master coils (a semi-finished product).

In contrast, the old ring caster required

several more production steps because

OBV first had to cast large brass rings

(i.e., ingots). The company would then

heat and roll these ingots into master

coils. After fabricating the master coil,

OBV then re-rolls and slits the semifinished coil to make a finished product.

To complete the new strip casting line,

OBV also constructed a new building to

house the new equipment. During part

of the POR, OBV ran the old and new

casting lines simultaneously. OBV

eventually shut down the ring caster,

but after the POR. For the instant

proceeding, OBV claimed a startup

adjustment to costs pursuant to section

773(f)(1)(C)(ii) of the Act for its new

continuous strip casting line because it

experienced abnormally high costs for

output produced on the strip caster.

OBV’s proposed startup adjustment

covered a nine-month startup period

from January 1998 through September

1998.

In this case, under section

773(f)(1)(C)(ii) of the Act, we have

determined that OBV has satisfied the

first condition of the test in that it is

using a new production facility.

Specifically, OBV replaced its old ring

caster and began using its new strip

casting facility which was a wholesale

replacement of the company’s essential

casting production facility. The

Department has recognized that a

company may satisfy the requirement

for using new production facilities

without completing a top-to-bottom

reconstruction. See, e.g., Notice of Final

Determination of Sales at Less Than

Fair Value: Foam Extruded PVC and

Polystyrene Framing Stock From the

United Kingdom, 61 FR 51412, 51419

(October 2, 1996). Moreover, our

determination that the strip casting

facility in this instance is a new

production facility is consistent with

past Department determinations. See

Preliminary Results of Antidumping

Duty Administrative Reviews and Intent

To Revoke in-Part: Certain CorrosionResistant Carbon Steel Flat Products

and Certain Cut-to-Length Carbon Steel

Plate From Canada, 63 FR 37320, 37325

(July 10, 1998).1 In that case, the

Department determined that the

construction of the respondent’s new

Electric Arc Furnace (EAF) facility,

which is similar to the caster in this

case, constituted a new production

facility under section 773(f)(1)(C)(ii) of

the Act.

As noted by the petitioners, the

Department has disallowed some

startup adjustments in the past because

we found that they resulted from either

making mere improvements to an

existing facility or did not entail the

replacement (or rebuilding) of nearly all

of the respondent’s production

machinery in its claimed new facilities

(see, e.g., Flat Products from Korea, 64

FR at 12950; Pressure Pipe from

Germany, 63 FR at 13220). We find,

however, that OBV’s startup situation

differs from the determinations cited by

the petitioners because OBV

documented that its new casting and

rolling facility was more than a ‘‘mere’’

or ‘‘on-going’’ improvement to the

company’s manufacturing facility. The

information on the record shows that

the new continuous strip casting mill

was the result of a significant

undertaking and substantial investment.

For an example of the significant

undertaking involved, OBV showed that

its new continuous strip casting mill

constituted a wholesale replacement of

the old ring casting mill. Although not

determinative, we further note that this

wholesale replacement required OBV to

structurally modify its production

facility by constructing a new building

and installing new casting and heavy

rolling equipment. See OBV’s February

2, 1999 Startup Memorandum, at

Exhibit 4 (containing before and after

plant diagrams that identify the physical

magnitude of the new facility). As for

substantial investment, record evidence

of the fixed asset expenditures in this

case demonstrates that to construct the

new strip casting facility, OBV

committed a significant amount of

investment capital as part of the

renovation project. For example, OBV

showed that it purchased new

equipment and that the final cost of the

strip casting facility makes up a sizable

percentage of the company’s total fixed

assets value.2 See OBV’s February 2,

1999 Startup Memorandum, at Exhibit

6A (containing a schedule identifying

the original cost basis of all of the fixed

assets owned by OBV as reported on the

audited financial statements); Exhibit 20

of the Supplemental D Questionnaire

Response (containing a schedule

identifying the level of investment on a

constant dollar basis); and CVEs 25 and

27 (containing sample source

documents that support the purchase of

new equipment casting and rolling

equipment).

As for meeting the second condition

of limited production due to technical

factors under section 773(f)(1)(C)(ii) of

the Act, we found that OBV’s

production levels were indeed limited

by technical factors associated with

bringing the new facility online. See the

proprietary Memorandum from Stan

Bowen to the File, ‘‘Analysis of

Technical Factors Related to Startup

Adjustment,’’ dated December 21, 1999.

OBV identified the number of

occurrences of production starts and

provided detailed descriptions on the

technical restraints and problems that

limited the strip caster’s production

volumes. We cannot identify these

technical factors here due to their

proprietary nature, see OBV’s February

2, 1999 Startup Memorandum, at 14–21

(containing detailed descriptions and

identifies the number of occurrences).

At verification, we reviewed these items

with production personnel and found

no reason to consider them ordinary

repairs and maintenance (see Cost

Verification Report, at 33). Based upon

the information on the record, we

disagree with the petitioners that

production levels were not limited by

technical factors; nor do we agree that

OBV failed to provide complete

information concerning the types and

frequency of technical difficulties.

Specifically, we found that the

information on the record does not lead

to the conclusion that OBV’s low

production volumes resulted from

factors unrelated to startup (e.g.,

seasonal demand, business cycle, etc).

In fact, to meet its customers’ demands

during the startup period, OBV

continued to operate its old ring caster

while working out the technical

problems which limited production at

the new strip caster facility. OBV

actually maintained production levels

in total that were consistent with its

past experience. During this period,

OBV incurred the extra cost of operating

two casters simultaneously. However, in

746 Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices

evaluating OBV’s startup adjustment,

we focused upon when the new caster

achieved commercial production

quantities and the operational cost of

this facility.

To determine when the new caster

achieved commercial production levels,

we reviewed the number of units

processed (i.e., starts) at the facility from

January 1998 through October 1998. The

SAA directs the Department to examine

the units processed in determining the

claimed startup period. See SAA at 836.

In SRAMs from Taiwan, we stated ‘‘our

determination of the startup period was

based, in large part, on a review of the

wafer starts at the new facility during

the POI, which represents the best

measure of the facility’s ability to

produce at commercial production

levels.’’ 63 FR at 8930. Consistent with

the SAA and the Department’s practice,

we continue to apply production starts

as the best measure of a facility’s

capability to produce at commercial

production levels. From this analysis,

we find that the OBV had worked out

the majority of technical problems that

had initially restricted its production by

May 1998 (see business proprietary

information contained in Exhibit 19 of

the section D supplemental

questionnaire response and Cost

Verification Exhibit 1). Thus, we

identified May 1998 as the month in

which OBV significantly increased the

number of caster starts. The decision to

significantly increase the number of

caster starts is indicative of OBV’s

resolution of technical problems that

had initially restricted production.

As for the petitioners’ concern that

OBV’s reported costs were not

consistent with common industry

averages due to the startup adjustment,

we disagree. After review of the record,

we found that the startup cost

adjustment does not affect the costs

incurred by the company at the finished

rolling and slitting stages which

determine cost differences for width and

thickness. In fact, OBV separated its

casting costs from the costs that it

incurred for finished rolling, slitting,

and other brass fabrication processes.

Then, OBV isolated only the fabrication

costs associated with the new strip

caster during the startup period and

applied the startup adjustment to only

the CONNUMs processed on the new

caster. As for the costs OBV used to

compute its startup adjustment, we

found that the company appropriately

used the type of unit production costs

referenced in section 773(f)(1)(C)(iii) of

the Act (e.g., depreciation of equipment

and plant, labor costs, insurance, rent,

lease expenses, material costs, and

overhead). Likewise, we found that OBV

correctly excluded non-allowable costs

(e.g., sales expenses, other nonproduction costs, and up-front research

and development costs) that the Act

states are ineligible for a startup

adjustment.

Since we have accepted OBV’s startup

adjustment, we find the arguments on

accounting for the startup adjustment as

a section 773(f)(1)(B) non-recurring cost

adjustment to be moot.

Comment 2: Using Monthly or Quarterly

Raw Material Costs Instead of an

Annual Weighted-Average

The petitioners argue that the

Department should deny OBV’s request

that raw material costs (i.e., metal costs)

be calculated on a quarterly or monthly

basis. According to the petitioners, the

Department’s standard practice is to

calculate POR weighted-average costs

and OBV has provided no basis for

deviating from this practice in this

review. For the Department to deviate,

OBV would have to show that the price

declines it incurred were unusually

significant and consistent. The

petitioners claim that the facts in this

proceeding, however, do not identify

such a decline. Instead, the petitioners

characterize the changes in price as

mere short-term fluctuations that

typically occur in the normal course of

business. Since the Department can

characterize the price fluctuations as

typical, the petitioners conclude that the

calculation of an annual weightedaverage cost adequately mitigates the

effect of price changes because it is a

weighted-average of high and low

prices.

The petitioners provide additional

reasons as to why monthly or quarterly

costs should not be used. The

petitioners claim that OBV has not

demonstrated that calculating costs on a

quarterly basis would more accurately

portray OBV’s total costs recorded

during the POR. In fact, the petitioners

contend, given that OBV fixes the metal

price at a much earlier time than it

actually records its metal cost, the use

of quarterly costs would distort the

results of the Department’s sales-belowcost test. Specifically, the petitioners

claim that a quarterly cost methodology

generates fictitious profits on some

metal transactions that would distort the

Department’s sales below cost analysis.

The petitioners further explain that OBV

can realize these fictitious profits on

certain sales because the higher metal

values reflected on the sales invoice

(fixed at a time prior to the date of sale)

will often be matched with a noncontemporaneous lower quarterly

weighted-average metal acquisition cost.

Thus, the petitioners claim OBV would

realize a profit where none should exist

because metal costs are passed through

to the customers. In addition, the

petitioners argue that the record does

not support a truly contemporaneous

comparison on a quarterly basis because

a number of OBV’s home market sales

have metal fix dates outside the POR. In

order to make proper comparisons, the

petitioners claim that the Department

would need quarterly costs that

occurred before and after the POR.

However, the petitioners note that OBV

has failed to provide this information.

Likewise, the petitioners claim that the

use of monthly weighted-average costs

will result in similar comparisons of

non-contemporaneous metal costs and

metal prices. Since OBV only provided

monthly costs for the POR, rather than

monthly costs outside the POR, the

information necessary to make

contemporaneous comparisons was not

provided.

Furthermore, the petitioners argue

that the declining metal costs were not

the only cause for declining sales prices

in OBV’s home market. According to the

petitioners, fabrication costs also

declined. Thus, the petitioners believe

that associating the decline in home

market sales prices with metal

fluctuations is inappropriate. The

petitioners additionally argue that OBV

failed to provide monthly or quarterly

fabrication costs for comparison

purposes. For these reasons, the

petitioners argue that the Department

should deny OBV’s request to use

monthly or quarterly costs for metal

charges.

OBV counters that a POR weightedaverage metal cost will not counter the

sharp decline in metal prices the

company realized and that the

Department should instead use either

monthly or quarterly metal value costs.

According to OBV, the Department has

commonly used monthly or quarterly

costs in instances where there have been

significant and consistent price declines

throughout a period of investigation or

review. In fact, OBV states, the

Department has used this methodology

in several previous brass sheet

proceedings due to the distortive effects

that metal price fluctuations would have

had on the margin calculations. For

example, OBV states that in the original

investigation the Department made an

adjustment for metal value by dividing

the period of investigation (POI) into

three separate periods. According to

OBV, the Department selected three

periods because, within each period,

metal prices were relatively stable (see

Final Determination of Sales at Less

than Fair Value: Brass Sheet and Strip

From Netherlands, 53 FR 23431, 23432

Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices 747

3The London Metal Exchange is an international

commodity, futures and options exchange that

specializes in non-ferrous metals.

(June 22, 1988) (‘‘Brass Sheet and Strip

from the Netherlands’’)). In an Italian

brass sheet proceeding, OBV claims that

the Department used monthly costs to

resolve the distortive effects the

fluctuating metal prices had on the

margin calculations (see Final Results of

Antidumping Administrative Review:

Brass Sheet and Strip from Italy, 52 FR

9235, 9236 (March 17, 1992) (‘‘Brass

Sheet and Strip from Italy’’)).

As for a preference toward using

quarterly or monthly weighted-average

costs, OBV suggests that the Department

use monthly metal costs in this

proceeding because they provide the

most accurate reflection of metal costs

for the POR. According to OBV,

customers purchase metals at a market

price on a specific date (i.e., metal fix

date) prior to fabrication and, therefore,

the metal price is a direct pass-through

to the customer. OBV further notes that

it maintains the information that

identifies each transaction-specific

metal cost in its accounting records and

even submitted this information to

Department. Thus, OBV believes that

the Department has the necessary data

to accurately measure the metal costs of

any single sales transaction based on the

metal fix date. Moreover, and contrary

to the petitioners’ claims, OBV states

that this information (i.e., metal fix date

and monthly metal weighted-average

costs since 1996) is on the record for all

U.S. and home market sales made

during the POR.

If the Department does not wish to

use monthly weighted-average costs,

then OBV suggests that quarterly

weighted-average costs would provide a

reasonable basis for determining sales

below cost. At a minimum, OBV

believes that this method is more

appropriate than annual costs. OBV also

states that the Department should not be

influenced by the petitioners’ position

on the perceived time lag between metal

fix and invoice dates. OBV explains that

its affiliated supplier ships metals on a

first-in, first-out basis. As a result of this

practice, the metal ordered in one

month is not delivered to OBV until

sometime in the following months.

According to OBV, it records the cost of

metal in its inventory ledgers when the

metal is received. Thus, OBV claims

that any lag between the metal fix date

and the invoice date is mitigated by lag

time between the metal fix date and the

date on which OBV recorded the cost of

that metal in its books and records (i.e.,

the date used by OBV to compute direct

materials costs on a quarterly basis). In

any event, if the petitioners are truly

concerned about contemporaneity, OBV

claims that they should support its

position that the Department use

monthly average costs in this review.

In addition and contrary to the

petitioners’ position, OBV states that the

decline of metal prices during the POR

was significant and consistent.

According to OBV, the cost of metal can

fluctuate widely depending on market

conditions. In this case, OBV contends

that prices decreased dramatically for

the first five months of, and declined

consistently throughout, the POR. To

demonstrate this decline, OBV states

that the variation between the average

review period metal prices and the

metal prices at the beginning and end of

the review period are dramatic.

Furthermore, OBV notes that these

declines were not mere short-term

fluctuations because the metal prices

never recovered.

OBV also disagrees with the

petitioners’ contention that its

fabrication costs declined significantly

and consistently throughout the POR

and should be accounted for in the same

manner as metal costs. According to

OBV, analysis of its fabrication costs

shows that these amounts remained

stable throughout the POR. Therefore,

OBV argues that reporting quarterly or

monthly fabrication costs are not

necessary.

DOC Position: We agree with OBV

that monthly weighted-average metal

costs should be used in the instant

review for the calculation of COP and

CV. In the ordinary course of business,

OBV accounts for metal as a passthrough item. Specifically, OBV requires

customers to purchase the metals before

it will fabricate the product. As a service

to its customers, OBV purchases the

metals on the customer’s behalf and

then bills the customer for the cost of

metals, the terms of which are set forth

on the finished brass sales invoice. The

parties determine the price of the metals

at a metal fix date, which occurs prior

to the invoice dates of finished brass.

Since OBV purchases the metal and

then passes on the cost of the metal to

the customer, the company must record

and recognize the cost of this purchased

metal in its accounting system.

The metal cost included in OBV’s

audited financial statements reflects the

cost at the metal fix date of metal

consumed to produce the sold items.

Rather than reporting the cost of the

metals consumed, OBV used the average

quarterly metal cost at the metal fix date

for metals received. As a result, for any

given month, the average metal cost of

metal physically received reflects a mix

of metal prices from differing time

periods depending on how far in

advance of receipt the metals were

purchased (in certain instances, this

range varies from less than one month

to up to six months). We calculated an

adjustment factor to account for the

differences between the reported

purchase cost and the consumption

cost.

As for the costs of metals (i.e., copper

and zinc) in this review, we have found

and verified that OBV’s reported metal

costs make up a significant portion of

the total cost of manufacturing brass

sheet and strip. See CVE 12 (identifying

the portion metal costs make up of the

total cost of manufacturing). Moreover,

after reviewing the information on the

record, we found that the market values

of these inputs sharply and consistently

decreased from the beginning to the end

of the POR. Specifically, we reviewed

monthly London Metal Exchange

(LME) 3 prices, which we verified as

being the basis for OBV’s metal cost. We

found that the drop in metal prices did

not affect OBV’s brass fabrication

business as a result of the pass through

of the cost of metals to its customers.

However, the drop in price does affect

the margin calculations because the

Department normally calculates direct

material costs as a POR weightedaverage. As a result of using the normal

POR average cost methodology, the

decline in metal prices would tend to

create below-cost sales when the LME

metal purchase price falls below the

weighted-average LME POR price. See,

e.g., OBV’s August 11, 1999 Letter

(identifying OBV’s sales that are above

and below costs). Hence, in this review,

the method of calculating metal costs

does have an impact on the comparisons

used in the margin calculations. For

example, and as noted by the petitioner,

the normal cost methodology could

create fictitious profits (or losses) on

home market sales.

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 POR

except in unusual cases where this

preferred method would not yield an

appropriate comparison. See, e.g., Brass

Sheet and Strip from the Netherlands

(dividing POI into three periods because

of the effect metal price fluctuations had

on the margin calculations and finding

that metal portion of price was a pass

through); Brass Sheet and Strip Italy

(using monthly costs to resolve the

distortive effects the fluctuating metal

prices had on the margin calculations);

Final Determination of Sales at Less

Than Fair Value: Stainless Steel Sheet

and Strip in Coils from the Republic of

748 Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices

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) (the

Department will utilize shorter cost

periods if markets experience significant

and consistent price declines); 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 weighted-average costs of

shorter periods 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 weighted-average costs of less

than a year).

In applying these criteria to this case,

we have reviewed the information on

the record 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 during the POR. Specifically,

our analysis of data from the LME

identifies a significant drop in metal

values. In this case, we have determined

that computing a single POR weightedaverage cost would distort the results of

the cost test because: (1) the cost of

copper and zinc are treated as passthrough items when brass is sold to

customers; (2) these metal costs

represent a significant percentage of the

total cost of producing brass sheet and

strip; and (3) the cost of the metal

dropped consistently and significantly

throughout the POR. To avoid this

distortion, we have relied upon monthly

weighted-average costs rather than

calculating quarterly or a single

weighted-average POR cost for metal.

Moreover, the use of monthly costs for

a pass-through item is consistent with

Brass Sheet and Strip from Italy, 52 FR

9235, 9236; Brass Sheet and Strip from

the Netherlands, 53 FR 23431, 23432;

and Final Results of Administrative

Review: Brass Sheet and Strip from

Canada, 56 FR 57317, 57318 (November

8, 1991) (using monthly metal costs to

calculate differences in merchandise

adjustments).

We find that using monthly weightedaverage metal costs is the most

appropriate method in this proceeding

for several reasons. First, the record

indicates that the monthly changes in

selling prices and input metal costs are

significant. See the proprietary

memorandum from Geoffrey Craig to

John Brinkmann, ‘‘Analysis of Metal

Costs,’’ dated December 28, 1999. In

addition, we have the information on

the record to determine accurate

monthly metal costs that reasonably

correspond to the amounts paid by the

customer, which makes the petitioners’

concerns with quarterly costs moot. We

also note that using monthly metal costs

calculated from the company’s metal fix

prices conforms with the company’s

normal accounting records which are

kept in accordance with home market

generally accepted accounting

principles (GAAP). Finally, by using

weighted-average monthly price fixed

metal cost, we are able to make a

contemporaneous comparison of metal

values which results in a more accurate

calculation of the margin of dumping in

this case than using either the reported

quarterly or POR weighted average

costs.

We also agree with the respondent

that calculating fabrication costs on a

monthly basis is unnecessary. After

reviewing the information on the record,

we found no significant fluctuations in

OBV’s fabrication costs that would

require averaging periods of less than a

year.

For the final results, we recalculated

OBV’s COP and CV. Specifically, we

calculated monthly metal costs using

metal fix date information (see CVE 18)

and calculated annual fabrication costs

using the reported costs in the section

D data file.

Comment 3: Affiliated Purchases and

the Major Input Rule

The petitioners state that the

Department should adjust OBV’s costs

for metals (i.e., copper and zinc)

obtained from affiliated suppliers to

reflect the highest of market price, cost

of production or transfer price.

OBV believes that the Department

should not make this adjustment.

According to OBV, the petitioners’

argument reflects a lack of

understanding of the verified data on

the record. OBV states that the small

differences between market price, cost

of production and transfer prices are not

the result of non-arms length

transactions, but simply the result of

timing differences and differences in

purchase terms. To make a proper

comparison, the company argues that

the timing differences and the difference

in purchase terms would have to be

accounted for. More important, OBV

claims that the Department should

continue to use OBV’s metal costs as

reported since the differences are slight.

DOC position: We agree with the

petitioners. OBV submitted a schedule

which shows that, on average, its POR

purchases of zinc and copper from an

affiliated party were made at prices

lower than the cost of production. We

have adjusted the cost of metals to

reflect the affiliate’s higher cost of

production in accordance with section

773(f)(3) of the Act because the

information provided by OBV supports

the conclusion that the purchases from

the affiliated party were made below the

affiliate’s cost. See CVE 28. We are

unable to address OBV’s claim that

timing differences and the differences in

purchase terms may account for the

difference between the reported transfer

price and the affiliate’s cost of

production, since OBV did not submit

any information to support its

contention.

Comment 4: Including Lower of Cost or

Market Inventory Adjustment in COM

The petitioners claim that the

Department should include OBV’s lower

of cost or market (LCM) adjustment in

the calculation of COP and CV.

According to the petitioners, the SAA

states that the Department normally will

calculate costs on the basis of records

kept by the producer of the

merchandise, provided such records are

kept in accordance with GAAP of the

producing country and reasonably

reflect the costs associated with

production of the merchandise. See

SAA at 834. According to the

petitioners, OBV stated that its

accounting practices are in full

compliance with GAAP in the

Netherlands. The petitioners, therefore,

contend that the Department should

revise OBV’s COP and CV data to

include the lower of cost or market

adjustment reflected in OBV’s

accounting records and in OBV’s

financial statements.

OBV counters that the Department

should not revise the reported costs to

include the company’s LCM adjustment

reflected in the financial statements.

According to OBV, this adjustment has

no impact on the actual cost of materials

used in production because it makes a

monthly adjustment to the balance sheet

reserve accounts. OBV further argues

that inclusion of the adjustment is not

necessary because it did not rely on

inventory movement values to calculate

its reported metal costs. Instead of

Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices 749

inventory movement values, OBV states

that it used actual metal acquisition

costs paid during the review period to

compute metal costs. If the Department

includes the entire LCM adjustment,

OBV claims that metal costs will be

distorted.

DOC Position: We agree with the

petitioners in part because our general

practice is to include the LCM

adjustments associated with raw

materials and work-in-process (WIP) in

the respondent’s COP and CV. We do

not include the loss realized on holding

finished goods (see, e.g., Notice of Final

Determination of Sales at Less Than

Fair Value: Dynamic Random Access

Memory Semiconductors of One

Megabit and Above (DRAMs) From

Taiwan, 64 FR 56308, 56326 (October

19, 1999)); see also Notice of Final

Determination of Sales Less Than Fair

Value: Stainless Steel Wire Rod from

Italy, 63 FR 40422, 40430 (July 29,

1998)).

As for OBV’s concern that including

the LCM adjustment distorts COP and

CV, we disagree. In OBV’s normal

course of business, the company values

its copper and zinc inventory at the

lower of cost or market. Since the

market price of inventoried copper and

zinc (i.e., metals) fell below the

acquisition costs, OBV had to recognize

a loss on metals held in inventory in

accordance with home market GAAP.

Company officials noted that they did

not include this loss in the calculation

of the reported costs and identified the

loss as a reconciling item. However, as

noted above, we normally include this

type of cost in the calculation of COP

and CV. Consistent with section

773(f)(1)(A) of the Act, it is the

Department’s practice to rely upon a

company’s normal books and records

where they are prepared in accordance

with the home country’s GAAP and

reasonably reflect the cost of producing

and selling the subject merchandise. In

this case, we found, consistent with the

Netherlands’ GAAP, that OBV includes,

in its normal books and records, the

write-downs of its raw material

inventories as an element of its current

costs per its financial statements. See

Cost Verification Exhibit 17, which

contains worksheets that reconcile

reported direct material costs to the

corresponding amount reported on the

audited income statement. In addition,

we disagree with OBV’s position that

this cost should be excluded because it

used acquisition cost to compute metal

cost. We note that the LCM adjustment

is a separate and unique expense

associated with maintaining an

adequate base stock of goods to service

daily operating needs. For the final

results, we have included a portion of

OBV’s LCM adjustment relating to raw

material and WIP in the calculation of

COP and CV.

Comment 5: Commercial Quantities

The petitioners contend that OBV’s

request for revocation should be denied

because OBV did not sell in commercial

quantities during each of the three

administrative reviews that formed the

basis of OBV’s revocation request.

According to the petitioners, the

Department is justified, under § 351.222

of the Department’s regulations, in

requiring OBV to have sold subject

merchandise in the United States in

commercial quantities during the three

review periods that form the basis of

OBV’s revocation request. However,

contrary to the Department’s

methodology in the preliminary results,

which focused on OBV’s shipments to

the United States during the period

covering the last three administrative

reviews, the petitioners assert that

commercial quantities should be

evaluated in light of the entire history

of the proceeding, not just a few

segments. A historical overview of

OBV’s shipments to the United States,

the petitioners continue, demonstrates

that OBV has not been making sales to

the United States in commercial

quantities at prices above NV in the

three review periods in question.

The petitioners argue that subsequent

to the antidumping duty order and prior

to the acquisition of Outokumpu

American Brass (American Brass) in

1990 by OBV’s parent company,

Outokumpu Oyj (Outokumpu), OBV

continued to export substantial

quantities of subject merchandise to the

United States at prices below NV, as

evidenced by the margins calculated in

each of the administrative reviews

covering that period. Rather than

eliminating the dumping, the petitioners

contend, the Outokumpu Group shifted

production from OBV to American

Brass, thereby allowing the Outokumpu

Group to maintain its U.S. customer

base while avoiding the imposition of

antidumping duties. The petitioners

contend that OBV has been able to avoid

a finding of dumping in the last three

review periods by shipping a minimal

amount of ‘‘niche’’ or ‘‘specialty’’

product to the United States at prices

intended to result in a de minimis

dumping margin.

Moreover, the petitioners allege that:

(1) OBV’s current shipments to the

United States of the subject brass

products are minuscule compared to

shipment levels both prior and

immediately subsequent to the

imposition of the antidumping duty

order; (2) OBV’s current shipments do

not correspond to the current size of the

U.S. market for radiator strip; (3) OBV’s

current shipments of subject

merchandise to the United States are

significantly lower than its level of

exports of non-subject brass products

that have minimal physical differences

from subject merchandise; (4) OBV’s

current shipments of subject

merchandise to the United States are

significantly lower than its current

home market shipments and its

shipments of total shipments (i.e., both

subject and non-subject merchandise) to

other industrial countries; and (5) OBV’s

current shipments are not reflective of

its projected shipment levels to the

United States, which OBV has

acknowledged will be at a level similar

to the pre-order level and shipments

during the first three annual reviews,

where the company was found to be

dumping. Based on the foregoing, the

petitioners conclude that the

Department should find that OBV has

not made sales to the United States in

commercial quantities and, accordingly,

should deny OBV’s request for

revocation.

OBV counters that its sales to the

United States during the three

consecutive review periods that form

the basis of its revocation request have

been in commercial quantities and at

prices above NV. According to OBV, the

Department properly selected 1990,

rather than the pre-order period, as the

benchmark for the commercial

quantities test because the commercial

quantities test must be applied in light

of Outokumpu’s acquisition of

American Brass. OBV disputes the

contention that the company

discontinued shipments to the United

States because it was unable to sell in

the United States at prices above NV;

instead, OBV attributes its cessation of

U.S. shipments in 1990 exclusively to

the purchase of American Brass, which

OBV characterizes as a ‘‘significant’’ and

‘‘unusual intervening event.’’

Furthermore, OBV states that its parent

company forbids OBV from shipping

subject merchandise to the United

States in order to prevent its products

from competing with those of American

Brass. OBV resumed shipments in order

to service a niche market for certain U.S.

customers of subject brass products that

could not be produced efficiently by

American Brass or where the customers

specifically requested that the brass be

produced by OBV.

OBV further contends that the

petitioners’ proposed assortment of

alternative benchmarks are of no

probative value in determining

commercial quantities, arguing that: (1)

750 Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices

4As discussed in a memorandum to the file dated

December 20, 1999, we cited June 1991 in the

Preliminary Results as the month and year of

Outokumpu’s acquisition of American Brass based

on statements made on the record by OBV.

However, after a thorough review of the responses

and exhibits submitted by OBV, we confirmed with

OBV that American Brass was acquired by

Outokumpu in June 1990, rather than June 1991.

In light of American Brass’ role in the

U.S. market, a pre-order or post-order

comparison is not a reliable indicator of

OBV’s ability to sell in the United States

without dumping; (2) OBV did not need

to continue exporting subject

merchandise in substantial volumes to

preserve its position in the U.S. market

due to the fact that American Brass

produced the same merchandise for sale

in the United States; (3) shipment levels

of non-subject merchandise do not

provide a demonstrable basis for

determining what constitutes

commercial quantities of subject

merchandise; (4) a comparison of OBV’s

U.S. shipments to its shipments to other

industrial countries’ markets is not of

probative value because OBV’s ability to

sell in the U.S. market, unlike its ability

to sell in other industrial countries’

markets, is limited due to the presence

of an affiliated company, American

Brass; and (5) the notion of comparing

current shipment levels to future

shipment levels is flawed because the

Department would be required to defer

revocation in order to conduct

subsequent reviews. Finally, OBV

argues that a comparison of OBV’s U.S.

sales to third country sales demonstrates

that OBV’s U.S. sales are not

aberrational, but instead reflect OBV’s

normal commercial activity. See, e.g.,

Pure Magnesium from Canada, 64 FR

12977, 12979 (March 16, 1999)

(recognizing that comparisons of a

respondent’s U.S. sales to sales made in

other markets by that respondent is a

reliable indicator of whether the U.S.

sales are in commercial quantities).

DOC Position: We agree with the

petitioners that OBV’s U.S. sales during

the three administrative reviews under

consideration for revocation purposes

have not been made in commercial

quantities. As we explained in the

Preliminary Results, ‘‘the Department

must be able to determine that past

margins are reflective of a company’s

normal commercial activity.’’ 64 FR

48760. Although OBV has demonstrated

three consecutive years of sales at not

less than NV, we find that the limited

volume of exports to the United States

of brass sheet and strip from the

Netherlands do not reflect OBV’s

normal commercial behavior. Based on

the facts on the record of this case,

therefore, we find that OBV’s sales to

the United States have not been made in

commercial quantities during any of the

relevant administrative reviews

considered for revocation in this

proceeding.

We have developed a procedure for

revocation that is described in 19 CFR

351.222. This regulation requires that a

company requesting revocation must

submit a certification that the company

sold the subject merchandise in

commercial quantities in each of the

three years forming the basis of the

request. Therefore, we must determine,

as a threshold matter, in accordance

with our regulations, whether the

company requesting revocation sold the

subject merchandise in commercial

quantities in each of the three years

forming the basis of the request. In

examining commercial quantities for

purposes of revocation, the Department

must be able to determine that past

margins are reflective of the company’s

normal commercial activity. See Certain

Corrosion-Resistant Carbon Steel Flat

Products from Canada, 64 FR 2175.

Sales during a POR which, in the

aggregate, are of an abnormally small

quantity, either in absolute terms or in

comparison to an appropriate

benchmark period, do not generally

provide a reasonable basis for

determining that the discipline of the

order is no longer necessary to offset

dumping. Id.; see also Pure Magnesium

From Canada, 64 FR 12977 (March 16,

1999). However, the determination as to

whether or not sales volumes are made

in commercial quantities is made on a

case-by-case basis, based on the unique

facts of each proceeding. Neither the

statute nor the Department’s regulations

prescribes a specific standard for

determining whether sales have been

made in commercial quantities. See

section 751(d) of the Act; 19 CFR

351.222.

When determining whether a

company’s sales have been made in

commercial quantities we must look at

each case on an individual basis. In

many instances, we will use the original

period of investigation (i.e., pre-order

shipment levels) as a benchmark for a

company’s normal commercial

behavior. The period of investigation

generally provides a valid benchmark

for assessing whether sales have been

made in commercial quantities. As we

stated in the Preliminary Results,

however, where a company has

experienced a substantial and unusual

change in business practice since the

imposition of the order that may explain

a substantial sales drop-off in U.S. sales,

a more recent POR that is reflective of

the company’s normal commercial

experience may provide a more

appropriate benchmark. See Pure

Magnesium from Canada, 64 FR at

50489; Professional Electric Cutting

Tools from Japan: Preliminary Results of

Antidumping Administrative Review

and Intent to Revoke in Part, 64 FR

43346, 43351 (August 10, 1999).

In this case, the quantity and number

of OBV’s U.S. sales of subject

merchandise have decreased since the

imposition of the antidumping duty

order, as evidenced by the volume of

sales in the three reviews forming the

basis of OBV’s revocation request. In the

Preliminary Results, however, we found

that OBV’s aggregate sales to the United

States were made in commercial

quantities during the relevant

proceedings examined for purposes of

the revocation determination. We based

this finding on the fact that

Outokumpu’s acquisition of American

Brass and the subsequent transfer of inscope radiator strip production to the

United States represented 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). Specifically, we explained that:

Prior to this acquisition, in 1989 and 1990,

OBV continued to ship in similar quantities

to the pre-order period and the subsequent

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.

64 FR 48760. Thus, we preliminarily

determined that the zero margins

calculated for OBV in each of the last

three administrative reviews were

reflective of the company’s normal

commercial experience. Accordingly,

we preliminarily determined that OBV

met the requirements for revocation of

the order on brass sheet and strip from

the Netherlands with respect to three

consecutive years of sales in commercial

quantities at not less than NV.

Upon review of the comments of the

parties, all of the evidence on the

record, and the Department’s past

practice, we have determined that

OBV’s sales were not made in

commercial quantities during the three

years upon which OBV is relying to

support its request for revocation. We

agree that OBV’s commercial practices

changed subsequent to the 1990

purchase 4 of American Brass by OBV’s

ultimate parent company, Outokumpu.

Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices 751

5This is a range figure provided by the

respondents.

Contrary to our preliminary assessment

of the effects of Outokumpu’s purchase

of American Brass on OBV, however, we

now find that it is not reasonable to

conclude that OBV’s commercial

practices were ‘‘permanently’’ changed

or that OBV’s current selling practice is

reflective of the company’s normal

commercial experience.

First, following Outokumpu’s 1990

purchase of American Brass, OBV did

not maintain consistent export volumes

of its ‘‘niche’’ products, but instead

ceased selling to the United States

altogether for over three years while

American Brass provided subject

merchandise entirely to Outokumpu’s

U.S. customer base. OBV reentered the

U.S. market in 1995 when it began

selling what it termed ‘‘niche products.’’

Our preliminary finding regarding

commercial quantities was based, in

part, on the presumption that ‘‘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.’’ See Preliminary

Results, 64 FR at 48765. However, as

stated by OBV at the public hearing,

during the three year period in which

OBV was shipping radiator strip to the

United States, American Brass was also

producing and selling the same

products to the same customers. See

Public Transcript of the Hearing on

Brass Sheet and Strip from the

Netherlands, dated November 2, 1999,

at 183–85 (Hearing Transcript).

Furthermore, in a prior submission OBV

made the following statement with

respect to the company’s resumption of

shipments to the United States:

In addition to the superior position of

OBV, vis-a-vis American Brass, in terms of

the production of quality radiator strip, OBV

has resumed exporting subject radiator strip

in order to accommodate the ability of

American Brass to focus upon the production

of brass strip for electrical connectors (i.e.,

‘‘electrostrip’’ or ‘‘connector strip’’). As

explained by [American Brass’ president] Mr.

Bartel, the production of radiator strip is

interfering with the ability of American Brass

to focus on production ‘‘for the fastest

growing segment of the brass strip market,

i.e., brass strip used to manufacture electrical

connectors.’’

See OBV’s Memorandum in Support of

Revocation, dated April 1, 1999, at 22–

23. These statements further indicate

that when OBV resumed shipping to the

United States in 1995, its participation

in the U.S. market was not limited to

servicing unique customers with needs

specially suited to OBV’s abilities.

Rather, for whatever considerations, it

was determined by Outokumpu that the

U.S. customers who were purchasing

certain subject brass products from

American Brass would be supplied by

OBV. Thus, we cannot reasonably

conclude that OBV’s participation in the

U.S. market during the three year period

under consideration has been

meaningful.

Second, this case is distinguished

from Professional Electric Cutting Tools

from Japan, where respondent Makita

made a substantial investment in a U.S.

manufacturing facility, and

subsequently shifted production of

subject merchandise to that facility

while maintaining consistent export

volumes of its low-sales-volume

‘‘specialty’’ cutting tools. In that case,

we found that the significant change in

business practice provided a logical

commercial explanation for Makita’s

relative drop in subject merchandise

sales. Further, we noted that the U.S.

production facility now manufactures

comparable volumes of non-specialty

merchandise that was previously being

manufactured by Makita in Japan. Thus,

regardless of any decrease in shipments

during the course of that proceeding, we

determined that Makita was selling in

commercial quantities. Contrary to

Makita, where less dependence was

being placed on the home market

manufacturing facilities, Outokumpu

has recently made a substantial

investment in OBV’s manufacturing

facility. It is Outokumpu’s stated

intention to shift production of brass

radiator strip products from American

Brass to OBV’s manufacturing facilities

in order to supply the U.S. market with

subject merchandise from the

Netherlands. See Hearing Transcript, at

167–70. As confirmed at the sales

verification:

OBV officials stated that due to recent

investment in both American Brass and OBV,

OBV will begin to take over production of the

approximate 7200 metric tons 5 of subject

radiator strip currently produced and sold in

the U.S. by American Brass. Since OBV is

currently producing to capacity, this

additional demand would be met by

adjusting their current product mix and

cutting back on shipment to other export

markets.

Sales Verification Report at 39.

In determining whether a company’s

exports to the United States constitutes

‘‘normal’’ commercial behavior for that

company, where appropriate, we will

weigh other factors. In this case,

Outokumpu made a significant business

decision to supply its U.S. customer

base with subject merchandise

produced at American Brass’ U.S.

facilities rather than from OBV’s

facilities in the Netherlands. However,

the record indicates that the current

Outokumpu business plan is not

intended to be long-term or permanent

in light of OBV’s acknowledgment that

its projected shipment levels to the

United States, should the order be

revoked, will be substantially greater

than its current imports and at a level

similar to when the order was imposed

and the first three annual reviews were

conducted. See Hearing Transcript, at

65–66. Given the temporary nature of

American Brass’ role in the Outokumpu

business plan of servicing subject

radiator strip customers in the U.S.

market and the decision to transfer

radiator strip production for purposes of

servicing the U.S. market back to the

Netherlands at pre-order levels, we find

that OBV’s pre-order import level is the

appropriate benchmark.

Finally, based on the current record

and similar to our findings in Pure

Magnesium from Canada, we find that

OBV’s sales volume during the three

consecutive review periods that form

the basis of the revocation request are so

small when compared to the pre-order

benchmark that we are not able to

conclude that the reviews are reflective

of what the company’s normal

commercial experience would be

without the discipline of an

antidumping duty order. See Pure

Magnesium from Canada, 64 FR 12977,

12982. As discussed in the business

proprietary memorandum from Jarrod

Goldfeder to John Brinkmann,

‘‘Shipments of Brass Sheet and Strip to

the United States by Outokumpu

Copper Strip B.V.,’’ dated December 28,

1999 (Commercial Quantities

Memorandum), OBV sold only a few

tons of subject merchandise in the

United States during the last three

review periods, respectively, whereas

during the period covered by the

antidumping investigation, OBV made

substantially greater sales. For example,

in their brief the petitioners, citing U.S.

Census Bureau data (which OBV did not

contravene), state that OBV exported

approximately 7000 tons of subject

merchandise in 1987, the year in which

the POI fell. See Petitioners’ Case Brief,

at Exhibit 8. In calendar years 1997 and

1998, during which the current POR

falls, OBV exported to the United States

approximately 110 tons of subject

merchandise (23 tons and 86 tons in

1997 and 1998, respectively). See

Commercial Quantities Memorandum,

at Exhibit 1.

Thus, for the most recent review

period under consideration for

revocation, the total volume of

752 Federal Register / Vol. 65, No. 4 / Thursday, January 6, 2000 / Notices

merchandise sold in calendar years

1997 and 1998 was approximately 1.6

percent of the volume of merchandise

sold in 1987, i.e., in the period

preceding the imposition of the order.

OBV’s sales volume figures are so small,

both in absolute terms and in

comparison with the period of

investigation, that we cannot reasonably

conclude that the zero margins OBV

received are reflective of the company’s

normal commercial experience. We

further note that OBV’s projected sales

level to the United States of 7200 tons,

which is similar to the amount sold

prior to issuance of the order, is over 65

times greater than the amount sold

during the period covered by the current

administrative review. Consequently,

this abnormally low level of sales

activity during each of the three review

periods forming the basis of the

revocation request does not provide a

reasonable basis for determining that the

discipline of the antidumping duty

order is no longer necessary to offset

dumping. Based on the record evidence

with respect to OBV’s current sales

practices, we find that the de minimis

margins calculated for OBV were not

based on sales volumes that are

reflective of the company’s normal

commercial experience.

Moreover, even if we continued to

rely upon the 1990 benchmark, rather

than the pre-order period, for measuring

whether the company’s sales during the

three years without dumping were made

in commercial quantities, we would still

conclude that OBV’s total sales volume

for each review is ‘‘abnormally small.’’

In 1990, the last year in which OBV

made sales to the United States prior to

the transfer of production to American

Brass, OBV sold approximately 4750

tons of subject merchandise in the

United States. See Petitioners’ Case

Brief, at Exhibit 8. For each review

period under consideration for

revocation, the volume of merchandise

sold was still only a little more than two

percent of the volume of merchandise

sold in 1990. Thus, by any measure,

OBV’s sales did not meet the minimal

requirement of sales in commercial

quantities that is necessary for the

Department to rely on the three

administrative reviews of de minimis

margins as a reflective of normal

business activity.

Finally, we disagree with OBV’s

argument that a comparison of OBV’s

U.S. sales to third country sales

demonstrates that OBV’s U.S. sales are

not aberrational, but instead reflect

OBV’s normal commercial activity. In

Pure Magnesium from Canada, the

Department concluded that the

respondent’s number and volume sales

were not made in commercial quantities

due, in part, upon an examination of the

respondent’s sales of pure magnesium to

other markets for the three years in

question, which showed that the

respondent had maintained significant

sales volumes of subject merchandise in

other markets that were ‘‘markedly

smaller and more distant than the U.S.

market.’’ 64 FR at 12980. However, the

evidence placed on the record in this

proceeding by OBV details the total

volume of shipments to third countries,

inclusive of both subject and nonsubject brass merchandise. As such, we

are unable to make an accurate

comparison of OBV’s shipments of

subject brass products to the United

States with its shipments of subject

brass products to third country markets.

Comment 6: Likelihood of Future

Dumping

In addition to their arguments

regarding the commercial quantities

threshold requirement, both OBV and

the petitioners submitted comments on

the likelihood of future dumping.

DOC Position: Because we have

determined that OBV is not eligible for

revocation, based on the fact that it did

not make sales in commercial quantities

during the three year period being

analyzed, we do not reach the

likelihood of future dumping issue.

Final Results of Review

As a result of our review, we

determine that the following margins

exist for the period August 1, 1997

through July 31, 1998:

Manufacturer/exporter Margin

(percent)

OBV .......................................... zero.

The Department shall determine, and

the United States Customs Service shall

assess, antidumping duties on all

appropriate entries. In accordance with

19 CFR 351.212 (b)(1), we have

calculated importer-specific assessment

rates by dividing the dumping margin

found on the subject merchandise

examined by the entered value of such

merchandise. We will direct the United

States Customs Service to assess

antidumping duties on appropriate

entries by applying the assessment rate

to the entered value of the merchandise

entered during the POR, except where

the assessment rate is zero or de

minimis (see 19 CFR 351.106(c)(2)).

Cash Deposit Requirements

The following cash deposit

requirements will be effective for all

shipments of the subject merchandise

from the Netherlands entered, or

withdrawn from warehouse, for

consumption upon publication of these

final results of administrative review, as

provided by section 751(a)(2) (A) and

(C) of the Act: (1) The cash deposit rate

for OBV will be zero; (2) for previously

reviewed or investigated companies not

listed above, the cash deposit rate will

continue to be the company-specific rate

published for the most recent period; (3)

if the exporter is not a firm covered in

this review, a prior review, or the

original less-than-fair-value (LTFV)

investigation, but the manufacturer is,

the cash deposit rate will be the rate

established for the most recent period

for the manufacturer of the

merchandise; and (4) if neither the

exporter nor the manufacturer is a firm

covered in this review or in any

previous segment of this proceeding, the

cash deposit rate will be 16.99 percent,

the ‘‘all others’’ rate established in the

LTFV investigation. See Antidumping

Duty Order of Sales at Less Than Fair

Value; Brass Sheet and Strip From the

Netherlands, 53 FR 30455 (August 12,

1988).

These deposit requirements shall

remain in effect until publication of the

final results of the next administrative

review.

This notice serves as final 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 this

review period. Failure to comply with

this requirement could result in the

Secretary’s presumption that

reimbursement of antidumping duties

occurred, and in the subsequent

assessment of double antidumping

duties.

This notice also serves as a reminder

to parties subject to administrative

protective order (APO) of their

responsibility concerning the return or

destruction of proprietary information

disclosed under APO in accordance

with 19 CFR 351.305. Timely

notification of return/ destruction of

APO materials or conversion to judicial

protective order is hereby requested.

Failure to comply is a violation of the

APO.

This determination is issued and

published in accordance with sections

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

Dated: December 28, 1999.

Holly A Kuga,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 00–286 Filed 1–5–00; 8:45 am]

BILLING CODE 3510–DS–P