16544 Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices

1Section A of the questionnaire requests

information concerning a company’s corporate

structure and business practices, the merchandise

under investigation that it sells, and the sales of the

merchandise in all of its markets. Sections B and

C of the questionnaire request home market sales

listings and U.S. sales listings, respectively.

DEPARTMENT OF COMMERCE

International Trade Administration

[A–588–841]

Notice of Preliminary Determination of

Sales at Less Than Fair Value: Vector

Supercomputers from Japan.

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: April 7, 1997.

FOR FURTHER INFORMATION CONTACT:

Edward Easton or Sunkyu Kim, Office of

AD/CVD Enforcement II, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, N.W., Washington, D.C. 20230;

telephone: (202) 482–1777 or (202) 482–

2613.

The Applicable Statute

Unless otherwise indicated, all

citations to the Tariff Act of 1930, as

amended (the Act), are references to the

provisions effective January 1, 1995, the

effective date of the amendments made

to the Act by the Uruguay Round

Agreements Act (URAA). In addition,

unless otherwise indicated, all citations

to the Department’s regulations are to

the current regulations, as amended by

the interim regulations published in the

Federal Register on May 11, 1995 (60

FR 25130).

Preliminary Determination

We preliminarily determine that there

is a reasonable basis to believe or

suspect that vector supercomputers

from Japan are being, or are likely to be,

sold in the United States at less than fair

value (‘‘LTFV’’), as provided in section

733(b) of the Act. The estimated margins

of sales at LTFV are shown in the

‘‘Suspension of Liquidation’’ section of

this notice.

Case History

Since the initiation of this

investigation on August 19, 1996

(Notice of Initiation of Antidumping

Duty Investigation: Vector

Supercomputers from Japan, 61 FR

43527, August 23, 1996), the following

events have occurred.

On September 12, 1996, the United

States International Trade Commission

(‘‘ITC’’) notified the Department of

Commerce (‘‘the Department’’) of its

affirmative preliminary determination

(see ITC Investigation No. 731–TA–750).

The ITC found that there is a reasonable

indication that an industry in the

United States is threatened with

material injury by reason of imports of

vector supercomputers from Japan.

Based on the information available to

the Department, the following two

companies were named as mandatory

respondents in this investigation:

Fujitsu Limited (‘‘Fujitsu’’) and NEC

Corporation (‘‘NEC’’). On September 30,

1996, we presented Section A of the

Department’s questionnaire 1 to Fujitsu

and NEC. In this case, Section A of the

questionnaire was designed specifically

to elicit the technical information

necessary for determining whether a

constructed value analysis rather than a

comparison to vector supercomputers

sold in the home market or to third

countries was appropriate in this

investigation. NEC did not respond to

the Department’s Section A

questionnaire. Instead, on October 15,

1996, counsel for NEC sent a letter to

the Secretary of Commerce, enclosing a

complimentary copy of its request that

the U.S. Court of International Trade

(‘‘CIT’’) enjoin the Department’s

antidumping investigation. Because

NEC did not respond to Section A of our

questionnaire, we were unable to

prepare the remaining sections of the

questionnaire for NEC. For a further

discussion, see Memorandum to File

from Edward Easton dated November

27, 1996, and the Facts Available

section of the notice. Fujitsu’s response

to Section A was received on October

25, 1996.

At the Department’s request, Cray

Research, Inc. (the petitioner), and

Fujitsu filed comments on the

appropriate product model matching

criteria to be used in this investigation

on October 16 and 17, 1996,

respectively. On November 13, 1996, we

issued Sections B and C of the

Department’s questionnaire to Fujitsu.

On December 17, 1996, Fujitsu

requested that it be allowed to limit its

reporting of home market sales to only

those sales most comparable to Fujitsu’s

single sale to the United States made

during the period of investigation

(‘‘POI’’). The Department, in a letter

dated December 26, 1996, permitted

Fujitsu to report data only for those

home market sales with the same

number of processing elements as its

U.S. sale. Fujitsu submitted its Sections

B and C responses on January 8, 1997.

Based on the information received in

Fujitsu’s Sections A, B and C responses,

the Department issued a supplemental

questionnaire on January 16, 1997.

Fujitsu’s response to the supplemental

questionnaire was received on January

27, 1997.

On December 12, 1996, at the request

of the petitioner, we postponed the

preliminary determination to February

25, 1997. (See Notice of Postponement

of Preliminary Determination:

Antidumping Investigation of Vector

Supercomputers from Japan, 61 FR

66653, December 18, 1996.)

In connection with NEC’s appeal to

the CIT, on February 18, 1997, the court,

with the consent of the parties to the

litigation, enjoined the Department from

issuing its preliminary determination in

this investigation until March 28, 1997.

On March 21, 1997, the CIT denied

NEC’s request for a preliminary

injunction to further enjoin issuance of

the preliminary determination.

Cost of Production Allegation

On November 27, 1996, the petitioner

alleged that there are reasonable

grounds to believe or suspect that

Fujitsu’s home market sales during the

POI were made at prices below the cost

of production (‘‘COP’’). We rejected this

allegation because it was untimely filed

pursuant to 19 CFR 353.31(c)(i)(i.e.,

filed less than 45 days prior to the

scheduled date of the preliminary

determination). On December 17, 1996,

subsequent to the above-cited

postponement of the preliminary

determination, the petitioner submitted

a second sales-below-cost allegation

concerning Fujitsu’s home market sales.

We determined that the second

allegation was inadequate for purposes

of initiating a cost investigation. In a

letter dated January 2, 1997, we

informed the petitioner of our

determination and provided the

petitioner with an outline of

supplementary information that would

be needed for the Department to further

consider its allegation. On January 14,

1997, the petitioner refiled its salesbelow-cost allegation. The petitioner

supplemented that allegation with

additional information on January 24,

1997. Fujitsu submitted rebuttal

comments to the petitioner’s allegations

in January 1997. Fujitsu’s comments are

addressed in memorandums to Richard

W. Moreland dated February 13 and 14,

1997.

Based on our examination of the

petitioner’s January 14, 1997, allegation,

we determined that there are reasonable

grounds to believe or suspect that

Fujitsu sold vector supercomputers in

the home market at prices which were

below their COP. Accordingly, on

January 28, 1997, we initiated a COP

investigation with respect to Fujitsu’s

home market sales. See Memorandum to
Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices 16545

Barbara R. Stafford, dated January 28,

1997.

Section D of the Department’s

questionnaire requesting cost of

production and constructed value

(‘‘CV’’) data was issued to Fujitsu on

February 12, 1997. On March 13, 1997,

the Department extended Fujitsu’s time

to respond to Section D of the

questionnaire to April 14, 1997.

Accordingly, we are not able to include

a COP analysis in our preliminary

determination. We will analyze Fujitsu’s

COP and CV data for our final

determination.

Postponement of Final Determination

and Extension of Provisional Measures

Pursuant to section 735(a)(2)(A) of the

Act, on March 13, 1997, Fujitsu

requested that in the event of an

affirmative preliminary determination

in this investigation, the Department

postpone its final determination until

not later than 135 days after the

publication of an affirmative

preliminary determination in the

Federal Register. Our preliminary

determination is affirmative. In

addition, Fujitsu accounts for a

significant proportion of exports of the

subject merchandise, and as we are not

aware of the existence of any

compelling reasons for denying this

request, we are granting Fujitsu’s

request (under 19 CFR 353.20 (b) (1995))

and postponing the final determination.

Suspension of liquidation will be

extended accordingly. See Preliminary

Determination of Sales at Less Than

Fair Value: Large Newspaper Printing

Presses and Components Thereof,

Whether Assembled or Unassembled

from Japan (61 FR 8029, March 1, 1996).

Scope of Investigation

The products covered by this

investigation are all vector

supercomputers, whether new or used,

and whether in assembled or

unassembled form, as well as vector

supercomputer spare parts, repair parts,

upgrades, and system software shipped

to fulfill the requirements of a contract

for the sale and, if included,

maintenance of a vector supercomputer.

A vector supercomputer is any

computer with a vector hardware unit as

an integral part of its central processing

unit boards.

The vector supercomputers imported

from Japan, whether assembled or

unassembled, covered by this

investigation are classified under

heading 8471 of the Harmonized Tariff

Schedules of the United States (‘‘HTS’’).

Although the HTS heading is provided

for convenience and customs purposes,

our written description of the scope of

this investigation is dispositive.

Period of Investigation

The POI is July 1, 1995 through June

30, 1996.

Facts Available

As discussed above, NEC failed to

answer the Department’s questionnaire.

On October 15, 1996, NEC sent a letter

to the Secretary of Commerce, enclosing

a complimentary copy of its request that

the U.S. Court of International Trade

(‘‘CIT’’) enjoin the Department’s

antidumping investigation. In this letter,

counsel stated that ‘‘* * * my clients

will respectfully withhold their

response to the Department’s

questionnaire until such time as a

qualified independent party * * * is

appointed as a ‘‘special master’’ to

conduct the investigation.’’ We have

placed this letter on the record of this

proceeding and it is the last

communication we have had with NEC

on that record. NEC’s decision not to

respond to the Department’s request for

information has left the Department

with no alternative other than to

proceed on the basis of the facts

available.

Section 776(a)(2) of the Act provides

that if an interested party (1) Withholds

information that has been requested by

the Department, (2) fails to provide such

information in a timely manner or in the

form or manner requested, (3)

significantly impedes an antidumping

investigation, or (4) provides such

information but the information cannot

be verified, the Department is required

to use facts otherwise available (subject

to subsections 782(c)(1) and (e)) to make

its determination. Section 776(b) of the

Act further provides that adverse

inferences may be used in selecting

from the facts otherwise available if the

party failed to cooperate by not acting

to the best of its ability to comply with

requests for information. See also

‘‘Statement of Administrative Action’’

accompanying the URAA, H.R. Rep. No.

316, 103rd Cong., 2d Sess. 870 (‘‘SAA’’).

NEC’s decision not to participate in the

Department’s investigation

demonstrates that it failed to act to the

best of its ability in this investigation.

Therefore, the Department has

determined that an adverse inference is

appropriate. Consistent with

Departmental practice in cases where

respondents decide not to participate, as

facts otherwise available, we are

assigning to NEC the margin stated in

the petition, 454 percent.

Section 776(c) provides that if the

Department relies upon secondary

information, such as the petition, when

resorting to facts otherwise available, it

must, to the extent practicable,

corroborate that information from

independent sources that are reasonably

at its disposal. When analyzing the

petition, the Department examined the

data that the petitioner relied upon in

calculating the estimated dumping

margin. This calculation was based on

a comparison of the export price of an

NEC offer to the normal value of the

NEC vector supercomputer system. The

export price was based on the ‘‘best and

final offer’’ to supply a U.S. customer

with four vector supercomputers

manufactured by NEC. Normal value

was based on the estimated constructed

value of this NEC system.

The Department examined the

accuracy and adequacy of all of the

information from which the margin was

calculated during our pre-initiation

analysis of the petition. For the purpose

of this preliminary determination, we

re-examined the information provided

in the petition. The petition included a

copy of NEC’s English-language

brochure describing the company’s SX–

4 series vector supercomputer,

including the specifications of this

model. The contract value of the

procurement relied upon for the U.S.

sale is in the public domain. The

procurement negotiations for NEC’s

‘‘best and final offer’’ to the U.S.

purchaser are described in an

acquisition announcement released by

the University Corporation for

Atmospheric Research on May 20, 1996.

The estimated cost build up for

constructing the value of the NEC

system used as normal value was based

upon the recent cost experience of the

petitioner in building similar

supercomputer systems. Cray Research,

Inc. is the only U.S. manufacturer of

vector supercomputer systems

comparable in performance to the NEC

SX–4 system. We examined the

methodology for estimating the

dumping margin on the SX–4 after the

filing of the petition and found it to be

satisfactory.

Based on our review of the available

evidence, we find that the information

in the petition continues to be of

probative value. See SAA at 870.

Therefore, we determine that the

petition is corroborated within the

meaning of section 776(c) of the Act.

Product Comparison

As noted above in the ‘‘Case History’’

section, the Department granted

Fujitsu’s request to limit its reporting of

home market sales of vector

supercomputers during the POI to those

sales with the same number of

processing elements as the sale made in
16546 Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices

the United States. We selected the home

market sale most comparable to the U.S.

sale based on the six-model matching

criteria proposed by Fujitsu and the

petitioner. For a further discussion, see

Memorandum to Richard W. Moreland,

dated March 26, 1997.

Level of Trade and CEP Offset

As set forth in section 773(a)(1)(B)(i)

of the Act and in the SAA at 829–831,

to the extent practicable, the

Department will calculate normal value

(‘‘NV’’) based on sales at the same level

of trade as the U.S. sales. When the

Department is unable to find sales in the

comparison market at the same level of

trade as the U.S. sale(s), the Department

may compare sales in the U.S. and

foreign markets at different levels of

trade.

Section 773(a)(7)(A) provides that if

we compare a U.S. sale with a home

market sale made at a different level of

trade, we will adjust the NV to account

for this difference if two conditions are

met. First, there must be differences

between the actual selling functions

performed by the seller at the level of

trade of the U.S. sale and at the level of

trade of the comparison market sale

used to determine NV. Second, the

differences must affect price

comparability, as evidenced by a pattern

of consistent price differences between

sales at the different levels of trade in

the market in which NV is determined.

For constructed export price (‘‘CEP’’)

sales, section 773(a)(a)(7)(B) establishes

the procedure for making a ‘‘CEP Offset’’

when two conditions are met. First, the

NV is established at a level of trade

which constitutes a more advanced

stage of distribution than the level of

trade of the CEP and, second, the data

available do not establish an appropriate

basis for calculating a level-of-trade

adjustment.

In its questionnaire response, Fujitsu

reported that the following functions

were performed in the home market for

sales to end users: market research, sales

activity, contract negotiations, warranty

and other after-sale service, technical

services, installation services, freight

and delivery arrangements, and

maintenance. Fujitsu reported the same

selling functions by Fujitsu America,

Inc., for the U.S. sale, which was also to

an end user. Fujitsu asserts that should

the Department treat its U.S. sale as a

CEP sale, the statutory adjustments to

arrive at CEP would place home market

sales at a more advanced level of trade

than the level of trade of the CEP sale.

This assertion is based only on Fujitsu’s

assumption that a CEP sale is, by

definition, at a different level of trade

than the NV level of trade. Fujitsu did

not provide sufficient factual

information demonstrating a difference

in levels of trade that would affect price

comparability or data to quantify any

such affect.

Based on Fujitsu’s responses, we

cannot establish that different levels of

trade were involved in the different

markets. In response to our original and

supplemental questions concerning

level of trade, Fujitsu reported only very

limited and general information on

types of selling functions, which is

insufficient for a level-of-trade analysis.

Even if it were possible to determine

differences in levels of trade from this

limited data, Fujitsu has not provided

any information which would justify a

level-of-trade adjustment. The

Department’s practice is to not rely on

a presumption that there will be a levelof-trade adjustment or a CEP offset in

CEP price comparisons. The evidence

must establish that the comparison sales

are at a more advanced level of trade

and that available data does not provide

a sufficient basis for an adjustment.

Absent such information, the

Department cannot find that a CEP

offset is authorized by section

773(a)(7)(B).

Fair Value Comparisons

To determine whether Fujitsu’s single

sale of a vector supercomputer system to

the United States during the POI was

made at less than fair value, we

compared CEP to the normal value, as

described in the ‘‘Constructed Export

Price’’ and ‘‘Normal Value’’ sections of

this notice.

Constructed Export Price

We calculated CEP for Fujitsu, in

accordance with sections 772 (b), (c)

and (d) of the Act. We found that CEP

is warranted because all U.S. sales

activities associated with the single U.S.

sale took place in the United States

through a wholly-owned subsidiary of

Fujitsu. We calculated CEP based on the

installed price to the first unaffiliated

customer in the United States. We made

deductions from the starting price for

the following expenses: foreign inland

freight, foreign inland insurance, foreign

brokerage and handling, international

freight, marine insurance, U.S.

brokerage and handling, U.S. inland

freight, and U.S. Customs duties.

Pursuant to section 772(d) of the Act,

we also made deductions for direct

selling expenses, including imputed

credit, installation service, and training

expenses. In addition, we deducted

indirect selling expenses that related to

economic activity in the United States.

These included inventory carrying costs

and indirect selling expenses incurred

in the home market, and the indirect

selling expenses of the U.S. subsidiary.

Finally, we made an adjustment for CEP

profit in accordance with section

722(d)(3) of the Act.

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

Fujitsu’s volume of home market sales

of the foreign like product to the volume

of U.S. sales of the subject merchandise,

in accordance with section 773(a)(1)(C)

of the Act. Fujitsu’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. Accordingly, we

determined that its home market was

viable. As noted above in the Product

Comparison section of the notice, we

based NV on a home market sale of the

product which we identified as the most

comparable to the U.S. sale.

We calculated NV based on the

installed price to an unaffiliated

customer and made deductions from the

starting price for inland freight and

inland insurance. We made adjustments

for differences in the merchandise in

accordance with section 773(a)(6)(C)(ii)

of the Act. For the purposes of this

preliminary determination, we

recalculated the difference-inmerchandise adjustment based on the

costs of hardware reported by Fujitsu. In

recalculating the adjustment, we

included the cost of software as well as

hardware. In addition, in accordance

with section 773(a)(6)(C)(iii) of the Act,

we made circumstance-of-sale

adjustments for direct expenses

including imputed credit, warranty

expenses, installation and technical

service expenses. Finally, we deducted

home market packing costs and added

U.S. packing costs in accordance with

section 773(a)(6)(B) of the Act.

Currency Conversion

We made currency conversions into

U.S. dollars based on the official

exchange rates in effect on the date of

the U.S. sale as certified by the Federal

Reserve Bank.

Section 773A(a) of the Act directs the

Department to convert foreign

currencies based on the dollar exchange

rate in effect on the date of sale of the

subject merchandise, except if it is

established that a currency transaction

on forward markets is directly linked to

an export sale. When a company

demonstrates that a sale on forward

markets is directly linked to a particular

export sale in order to minimize its

exposure to exchange rate losses, the
Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices 16547

Department will use the rate of

exchange in the forward currency sale

agreement.

Section 773A(a) also 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. It is the

Department’s practice to find that a

fluctuation exists when the daily

exchange rate differs from the

benchmark rate by 2.25 percent. The

benchmark is defined as the rolling

average of rates for the past 40 business

days. When we determine a fluctuation

existed, we substitute the benchmark for

the daily rate, in accordance with

established practice. Further, section

773A(b) directs the Department to allow

a 60-day adjustment period when a

currency has undergone a sustained

movement. A sustained movement has

occurred when the weekly average of

actual daily rates exceeds the weekly

average of benchmark rates by more

than five percent for eight consecutive

weeks. (For an explanation of this

method, see, Policy Bulletin 96–1:

Currency Conversions, 61 FR 9434,

March 8, 1996.) Such an adjustment

period is required only when a foreign

currency is appreciating against the U.S.

dollar. The use of an adjustment period

was not warranted in this case because

the Japanese yen did not undergo a

sustained movement, nor were there any

currency fluctuations during the POI.

Verification

As provided in section 782(i) of the

Act, we will verify all information used

in making our final determination.

Suspension of Liquidation

In accordance with section 733(d) of

the Act, we are directing the Customs

Service to suspend liquidation of all

entries of vector supercomputers from

Japan, as defined in the ‘‘Scope of

Investigation’’ section of this notice, that

are entered, or withdrawn from

warehouse for consumption, on or after

the date of publication of this notice in

the Federal Register. For these entries,

the Customs Service will require a cash

deposit or posting of a bond equal to the

estimated amount by which the normal

value exceeds the export price as shown

below.

The entries must be accompanied by

documentation provided by both the

foreign manufacturer/exporter and the

U.S. importer which discloses the

following information: (1) The vector

supercomputer contract pursuant to

which the merchandise is imported, (2)

a description of the merchandise

included in the entry, (3) the actual or

estimated price (agreed to as of the time

of importation) of the complete vector

supercomputer system, and (4) a

schedule of all shipments to be made

pursuant to a particular vector

supercomputer contract, if more than

one shipment is involved. We will also

request that the Japanese manufacturer/

exporter(s) submit to the Department the

contracts pursuant to which subject

merchandise is imported. These

suspension of liquidation instructions

will remain in effect until further notice.

The scope of this investigation

includes both complete and

unassembled shipments. Given that

vector supercomputer systems may be

entered into the United States in

different shipments, it is important to

ensure that the subject merchandise,

particularly parts, components, and

subassemblies, be readily identifiable to

the U.S. Customs Service and to the

Department. To ensure that any

antidumping order which may issue as

a result of this investigation is clear, we

are requesting interested parties to

submit their comments on this subject

to the Department by May 5, 1997.

Reply comments will be due by May 19,

1997.

The weighted-average dumping

margins are as follows:

Exporter/manufacturer

Weightedaverage

margin

percentage

Fujitsu ....................................... 27.17

NEC * ........................................ 454.00

All Others .................................. 27.17

* Facts Available Rate.

Pursuant to section 735(c)(5)(A) of the

Act, the Department has excluded the

margin determined entirely under

section 776 of the Act from the

calculation of the All Others rate.

ITC Notification

In accordance with section 733(f) of

the Act, we have notified the ITC of our

determination. If our final

determination is affirmative, the ITC

will determine before the later of 120

days after the date of this preliminary

determination or 45 days after our final

determination whether these imports

are materially injuring, or threaten

material injury to, the U.S. industry.

Public Comment

Case briefs or other written comments

in at least ten copies must be submitted

to the Assistant Secretary for Import

Administration no later than July 7,

1997, and rebuttal briefs, no later than

July 10, 1997. A list of authorities used

and an executive summary of issues

should accompany any briefs submitted

to the Department. The summary should

be limited to five pages total, including

footnotes. In accordance with section

774 of the Act, we will hold a public

hearing, if requested, to give interested

parties an opportunity to comment on

arguments raised in case or rebuttal

briefs. Tentatively, the hearing will be

held on July 14, 1997, time and room to

be determined, at the U.S. Department

of Commerce, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230. Parties should

confirm by telephone the time, date, and

place of the hearing 48 hours before the

scheduled time.

Interested parties who wish to request

a hearing, or to participate if one is

requested, must submit a written

request to the Assistant Secretary for

Import Administration, U.S. Department

of Commerce, Room 1870, within ten

days of the publication of this notice.

Requests should contain: (1) The party’s

name, address, and telephone number;

(2) the number of participants; and (3)

a list of the issues to be discussed. Oral

presentations will be limited to issues

raised in the briefs. If this investigation

proceeds normally, we will make our

final determination by 135 days after the

date of the preliminary determination.

This determination is published

pursuant to section 733(f) of the Act.

Dated: March 28, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–8766 Filed 4–4–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–489–501]

Notice of Amended Final Results of

Antidumping Duty Administrative

Review: Certain Welded Carbon Steel

Pipe and Tube From Turkey

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: April 7, 1997.

FOR FURTHER INFORMATION CONTACT:

Jennifer Stagner at (202) 482–1673 or

Gabriel Adler at (202) 482–1442, Office

of Antidumping/Countervailing Duty

Enforcement, Import Administration,

International Trade Administration,

U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W.,

Washington, D.C. 20230.