[Federal Register Volume 63, Number 90 (Monday, May 11, 1998)]
[Notices]
[Pages 25821-25824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12316]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-421-701]


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

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: In response to a request by respondent Outokumpu Copper Strip 
B.V. (OBV) and its United States affiliate Outokumpu Copper (USA), Inc. 
(OCUSA), the Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on brass sheet and 
strip (BSS) from the Netherlands (A-421-701). This review covers one 
producer/manufacturer/exporter of the subject merchandise to the United 
States during the period August 1, 1996 through July 31, 1997.
    We preliminarily determine that sales of BSS from the Netherlands 
have not been made below Normal Value (NV). If the preliminary results 
are adopted in our final results of administrative review, we will 
instruct the U.S. Customs Service not to assess antidumping duties on 
entries of the subject merchandise made during period of review.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit comments are requested to submit with the 
argument: (1) A statement of the issues; and (2) a brief summary of the 
argument.

EFFECTIVE DATE: May 11, 1998.

FOR FURTHER INFORMATION CONTACT: Karla Whalen at 202/482-1386 or

[[Page 25822]]

Lisette Lach at 202/482-0190, AD/CVD Enforcement Group III, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department of Commerce's (the 
Department's) regulations are to the regulations last codified at 19 FR 
Part 351 (May 19, 1997).

Background

    On August 12, 1988, the Department published in the Federal 
Register the antidumping duty order on BSS from the Netherlands (53 FR 
30455). On August 4, 1997, the Department published in the Federal 
Register a notice announcing the opportunity to request an 
administrative review of the antidumping duty order on BSS from the 
Netherlands for the period August 1, 1996, through July 31, 1997 (62 FR 
41925). On August 29, 1997, in accordance with 19 CFR 353.213 (b), OBV 
filed a letter requesting an administrative review of its sales in this 
period of review. On September 25, 1997, we published in the Federal 
Register a notice of initiation of this administrative review (62 FR 
50292). On October 23, 1997, petitioners in this proceeding 
<SUP>1</SUP> entered a notice of appearance in this administrative 
review.
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    \1\ Hussey Copper, Ltd.; The Miller Company; Olin Corporation; 
Revere Copper Products, Inc.; International Association of 
Machinists and Aerospace Workers; International Union; Allied 
Industrial Workers of America (AFL-CIO); Mechanics Educational 
Society of America (Local 56) and United Steelworkers of America 
(AFL-CIO/CLC).
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Scope of the 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) C20000 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. Coiled, wound-on-reels (traverse wound), 
and cut-to-length products are included. 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.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
BSS, covered by the descriptions in the ``Scope of the Review'' section 
of this notice, supra, and sold in the home market during the POR, to 
be foreign like products for the purpose of determining appropriate 
product comparisons to U.S. sales of BSS. Where there were no sales of 
identical merchandise in the home market to compare to U.S. sales, we 
compared U.S. sales to the next most similar foreign like product on 
the basis of the characteristics listed in Appendix V of the 
Department's October 24, 1997 antidumping questionnaire. In making the 
product comparisons, we matched foreign like products based on the 
following hierarchy of physical characteristics: (1) Type (alloy); (2) 
gauge (thickness); (3) width; (4) temper; (5) coating; and (6) packed 
form.
    For purposes of the preliminary results, we have used differences 
in merchandise adjustments based on the difference in the variable cost 
of manufacturing between each U.S. model and its most similar home 
market model.

Date of Sale

    On December 11, 1997, petitioners submitted a letter, objecting to 
OBV's use of the invoice date as the date of sale for the period of 
review. Citing a questionnaire response dated November 8, 1991, wherein 
OBV stated that sales in the United States were based primarily on 
long-term contracts generally negotiated on an annual basis and that 
all material terms of sale were established in these long-term 
contracts, petitioners urged the Department to use the frame agreement 
date, rather than the invoice date, as the date of sale.
    On December 22, 1997, OBV responded to petitioners' date of sale 
comment. Citing 19 CFR 351.401(i), respondent asserted that 
petitioners' objection to the use of the invoice date as the date of 
sale ignores recent Department practice. OBV further argued that using 
the frame agreement date as the date of sale would be incorrect because 
frame agreements do not firmly establish the material terms of sale. 
Rather, they contain an estimate by the customer of the type and 
approximate quantity of the merchandise the customer expects to order 
over the period of time covered by the frame agreements. OBV asserted 
that although frame agreements do contain a fabrication price, they do 
not contain a metal price; <SUP>2</SUP> therefore, OBV contended that 
such agreements do not establish the total price to be paid by the 
customer. Furthermore, respondent stated that frame agreements are non-
binding since the quantity will vary from the quantity stated in the 
frame agreement. Finally, OBV stated that since the Department 
determined the use of the invoice date as the date of sale in the 
immediately preceding review, it should continue to find that the 
invoice date constitutes the date of sale.
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    \2\ A ``fabrication price'' is the price charged by companies 
such as OBV to transform raw materials into finished BSS. A ``metal 
price'' is the price OBV charges for the necessary raw materials.
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    In the immediately preceding review, the Department used the 
invoice date as the date of sale because we found that it was the first 
date on which all terms of sale (i.e., quantity, metal price and 
fabrication price) were established. The record in this review supports 
the same conclusion. Therefore, in accordance with 19 CFR 351.401(i) 
and Department practice, we have preliminarily determined that the 
invoice date is the appropriate date of sale for OBV.

Differences in Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the EP or constructed export price 
(CEP) transaction. The NV LOT is that of the starting-price sales in 
the comparison market or, when NV is based on constructed value (CV), 
that of the sales from which we derive selling, general and 
administrative expenses (SG&A) expenses and profit. For EP, the U.S. 
LOT is also the level of the starting-price sale, which is usually from 
the exporter to the importer. For CEP, it is the level of the 
constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different level of trade 
than EP or CEP, we examine stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer.

[[Page 25823]]

If the comparison market sales are at a different LOT, and the 
difference affects price comparability, as manifested in a pattern of 
consistent price differences between the sales on which NV is based and 
comparison market sales at the LOT of the export transaction, we make a 
LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP 
sales, if the NV level is more remote from the factory than the CEP 
level and there is no basis for determining whether the difference in 
the levels between NV and CEP affects price comparability, we adjust NV 
under section 773(a)(7)(B) of the Act (the CEP offset provision). See 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 
(November 19, 1997).
    OBV did not request an adjustment for LOT for this POR. To ensure 
that no such adjustment was necessary, we examined OBV's questionnaire 
responses with regard to its distribution system, including selling 
functions, class of customer and selling expenses. We noted that OBV 
had the same type of channel of distribution and class of customer for 
all sales in both markets. We also noted that its selling expenses for 
the POR were the same for all customers. In addition, we examined 
information concerning OBV's different payment terms (including 
discounts) and any possible selling agents with which OBV works. Based 
on the available information on the record, it appears OBV did not have 
a formal or official policy for providing payment terms, including 
discounts, to different customers, nor did OBV have selling agents. 
Finally, employees of OBV or a sister company, OAB (Outokumpu Copper 
Radiator Strip A.B.), appear to have handled all sales of the foreign 
like product. Accordingly, we preliminarily find that all sales in the 
home market and the U.S. market were made at the same level of trade. 
Therefore, all price comparisons are at the same level of trade and an 
adjustment pursuant to section 773(a)(7)(A) of the Act is unwarranted.

Fair Value Comparisons

    To determine whether OBV's sales of BSS to the United States were 
made at less than fair value, we compared EP to NV, as described in the 
``Export Price'' and ``Normal Value'' sections of this notice. In 
accordance with section 771A(d)(2) of the Act, we calculated monthly 
weighted-average prices for NV and compared these to individual U.S. 
transactions.

Export Price

    We calculated the price of U.S. sales based on EP, in accordance 
with section 772(a) of the Act, because the subject merchandise was 
sold to an unaffiliated U.S. purchaser prior to the date of 
importation.
    We calculated EP based on the packed, delivered prices to 
unaffiliated purchasers in the United States. In accordance with 
section 772(c)(2) of the Tariff Act, where appropriate, we deducted 
from the starting price post-sale warehousing expense, international 
freight expense, inland and marine insurance, U.S. brokerage and 
handling expenses and U.S. Customs duties.

Normal Value

    Based on a comparison of the aggregate quantity of home market and 
U.S. sales, we determined that the quantity of the foreign like product 
sold in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States pursuant to section 773(a) of the Act. Therefore, in accordance 
with section 773(a)(1)(B)(i)of the Tariff Act, we based NV on the price 
at which the foreign like products were first sold for consumption in 
the home market, in the usual commercial quantities and in the ordinary 
course of trade.
    Where appropriate, we deducted discounts, post-sale warehousing 
expense, inland freight expense, marine and inland insurance and 
packing expense. We made adjustments, where appropriate, for 
differences in credit expenses.
    We increased NV by U.S. packing expenses in accordance with section 
773(a)(6)(A) of the Act. To the extent there were comparisons of U.S. 
merchandise to home market merchandise which were not identical but 
similar, we made adjustments to NV for differences in cost attributable 
to differences in physical characteristics of the merchandise pursuant 
to section 773(a)(6)(C)(ii) of the Act.

Cost-of-Production Analysis

    Because we disregarded sales below the cost of production in the 
most recently completed review, we had reasonable grounds to believe or 
suspect that sales of the foreign like product under consideration for 
determining NV in this review may have been at prices below the cost of 
production (COP), as provided in section 773(b)(2)(A)(ii) of the Tariff 
Act. See Brass Sheet and Strip From the Netherlands; Final Results of 
Antidumping Duty Administrative Reviews, 62 FR 51449 (October 1, 1997). 
Therefore, pursuant to section 773(b)(1) of the Tariff Act, we 
initiated a COP investigation of sales by OBV.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Tariff Act, we 
calculated COP based on the sum of the respondent's cost of materials 
and fabrication employed in producing the foreign like product, plus 
the costs for selling, general, and administrative expenses (SG&A), 
interest expense and packing costs. We relied on the home market sales 
and COP information OBV provided in its questionnaire responses.

B. Test of Home Market Prices

    After calculating COP, we tested whether home market sales of 
subject BSS were made at prices below COP within an extended period of 
time in substantial quantities and whether such prices permitted the 
recovery of all costs within a reasonable period of time. We compared 
model-specific COP to the reported home market prices less any 
applicable movement charges and discounts, where appropriate.

C. Results of COP Test

    Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than 
20 percent of OBV's home market sales for a model were at prices less 
than the COP, we did not disregard any below-cost sales of that model 
because we determined that the below cost sales were not made within an 
extended period of time in ``substantial quantities.'' Where 20 percent 
or more of OBV's home market sales of a given product were at prices 
less than the COP, we determined that such sales were made within an 
extended period of time in substantial quantities in accordance with 
section 773(b)(2)(C) of the Tariff Act. To determine whether such sales 
were at prices which would not permit the full recovery of all costs 
within a reasonable period of time, in accordance with section 
773(b)(2)(D) of the Tariff Act, we compared home market prices to the 
weighted-average COP for the POR. When we found that below-cost sales 
had been made in ``substantial quantities'' and were not at prices 
which would permit recovery of all costs within a reasonable period of 
time, we disregarded the below-cost sales in accordance with section 
773(b)(1) of the Act.
    On January 8, 1998, the U.S. Court of Appeals for the Federal 
Circuit issued a decision in Cemex v. United States, WL 3626 (Fed. 
Cir.). In that case, based on the pre-URAA version of the Act, the 
Court discussed the appropriateness of using CV as the basis for 
foreign market value when the Department finds

[[Page 25824]]

foreign market sales to be outside ``the ordinary course of trade.'' 
This issue was not raised by any party in this proceeding. However, the 
URAA amended the definition of sales outside the ``ordinary course of 
trade'' to include sales below cost. See section 771(15) of the Act. 
Consequently, the Department has reconsidered its practice in 
accordance with this court decision and has determined that it would be 
inappropriate to resort directly to CV, in lieu of foreign market 
sales, as the basis for NV if the Department finds foreign market sales 
of merchandise identical or most similar to that sold in the United 
States to be outside the ``ordinary course of trade.'' Instead, the 
Department will use sales of similar merchandise, if such sales exist. 
The Department will use CV as the basis for NV only when there are no 
above-cost sales that are otherwise suitable for comparison. Therefore, 
in this proceeding, when making comparisons in accordance with section 
771(16) of the Act, we considered all products sold in the home market 
as described in the ``Scope of the Review'' section of this notice, 
above, that were in the ordinary course of trade for purposes of 
determining appropriate product comparisons to U.S. sales. Where there 
were no sales of identical merchandise in the home market made in the 
ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade, based on the information provided by OBV in 
response to our antidumping questionnaire. We have implemented the 
Court's decision in this case to the extent that the data on the record 
permitted. Since there were sufficient sales above cost, it was 
unnecessary to calculate CV in this case.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions based on the official exchange rates in effect on the dates 
of the U.S. sales as certified by the Federal Reserve Bank of New York. 
Section 773A(a) of the Act directs the Department to use a daily 
exchange rate in order to convert foreign currencies into U.S. dollars, 
unless the daily rate involves a ``fluctuation.'' There were no 
significant fluctuations during the POR.

Preliminary Results of Review

    As a result of our comparison of EP to NV, we preliminarily 
determine that the weighted-average dumping margin for OBV for this 
administrative review period is as follows:

               Brass Sheet and Strip From the Netherlands               
------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
               Producer/manufacturer/exporter                   margin  
                                                              (percent) 
------------------------------------------------------------------------
Outokumpu Copper Strip B.V. (OBV)..........................         0.00
------------------------------------------------------------------------

    Parties to this proceeding may request disclosure within five days 
of the date of publication of this notice and any interested party may 
request a hearing within ten days of publication. Any hearing, if 
requested, will be held 44 days after the date of publication, or the 
first business day thereafter. Interested parties may submit case 
briefs and/or written comments no later than 30 days after the date of 
publication. Rebuttal briefs and rebuttals to written comments, limited 
to issues raised in the case briefs and comments, may be submitted no 
later than 37 days after the date of publication of this notice. The 
Department will publish a notice of the final results of the 
administrative review, including its analysis of issues raised in any 
written comments or at a hearing, not later than 120 days after the 
date of publication of this notice.

Cash Deposit

    The following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of BSS from the Netherlands entered, or withdrawn from 
warehouse, for consumption on or after the publication of the final 
results of this administrative review, as provided in section 751(a)(1) 
of the Tariff Act: (1) The cash deposit rate for OBV will be the rate 
established in the final results of this administrative review (no 
deposit will be required for a zero or de minimis margin, i.e., margin 
lower than 0.5 percent); (2) For merchandise exported by manufacturers 
or exporters not covered in this review but covered in a previous 
segment of the proceeding, the cash deposit rate will be the company-
specific rate published for the most recent segment; (3) If the 
exporter is not a firm covered in this review, a prior review, or the 
less-than-fair-value 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 or any previous 
review conducted by the Department, the cash deposit rate will be the 
``all others'' rate of 16.99 percent established in the less-than-fair-
value 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, when imposed, shall 
remain in effect until publication of the final results of the next 
administrative review.
    All U.S. sales by the respondent OBV will be subject to one deposit 
rate according to the proceeding. The cash deposit rate has been 
determined on the basis of the selling price to the first unrelated 
customer in the United States. For appraisement purposes, where 
information is available, we will use the entered value of the subject 
merchandise to determine the appraisement rate.
    This notice serves as preliminary reminder to importers of their 
responsibility 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 the 
antidumping duties occurred and the subsequent assessment of double 
antidumping duties. This administrative review and this notice are in 
accordance with section 751(a)(1) of the Tariff Act (19 U.S.C. 
1675(a)(1)).

    Dated: May 4, 1988.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-12316 Filed 5-8-98; 8:45 am]
BILLING CODE 3510-DS-P