[Federal Register Volume 63, Number 91 (Tuesday, May 12, 1998)]
[Notices]
[Pages 26150-26152]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12593]



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DEPARTMENT OF COMMERCE

International Trade Administration
[A-122-829, A-533-814, A-588-844, A-580-830, A-469-808, A-583-829]


Initiation of Antidumping Duty Investigations: Stainless Steel 
Round Wire from Canada, India, Japan, the Republic of Korea, Spain, and 
Taiwan

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

EFFECTIVE DATE: May 12, 1998.

FOR FURTHER INFORMATION CONTACT: Thomas Schauer (Canada) at (202) 482-
4852; Diane Krawczun (India) at (202) 482-0198; Edward Easton (Japan) 
at (202) 482-1777; Gabriel Adler (the Republic of Korea) at (202) 482-
1442; Michael Panfeld (Spain) at (202) 482-0168; or Michelle Frederick 
(Taiwan) at (202) 482-0186, Import Administration-Room 1870, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, DC 20230.

Initiation of Investigations

The 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 are 
to the regulations published in the Federal Register on May 19, 1997 
(62 FR 27296).

The Petition

    On March 27, 1998, the Department of Commerce (``the Department'') 
received a petition filed in proper form by the following companies: 
ACS Industries, Inc., Al Tech Specialty Steel Corp., Branford Wire & 
Manufacturing Company, Carpenter Technology Corp., Handy & Harman 
Specialty Wire Group, Industrial Alloys, Inc., Loos & Company, Inc., 
Sandvik Steel Company, Sumiden Wire Products Corporation, and Techalloy 
Company, Inc. (``the petitioners''). Sumiden Wire Products Corporation 
is not a petitioner in the Japanese case, and Carpenter Technology 
Corp. and Techalloy Company, Inc., are not petitioners in the Canadian 
case. The Department received numerous supplemental submissions 
throughout the month of April, 1998.
    In accordance with section 732(b) of the Act, the petitioners 
allege that imports of stainless steel round wire (``SSRW'') from 
Canada, India, Japan, the Republic of Korea (Korea), Spain, and Taiwan 
are being, or are likely to be, sold in the United States at less than 
fair value within the meaning of section 731 of the Act, and that such 
imports are materially injuring, or threatening material injury to, an 
industry in the United States.
    The Department finds that the petitioners filed the petition on 
behalf of the domestic industry because they are interested parties as 
defined in section 771(9)(C) and (D) of the Act and they have 
demonstrated sufficient industry support (see discussion below).

Scope of Investigations

    For purposes of these investigations, the product covered is 
stainless steel round wire. Stainless steel round wire is any cold-
formed (i.e., cold-drawn, cold-rolled) stainless steel product, of a 
cylindrical contour, sold in coils or spools, and not over 0.703 inch 
(18 mm) in maximum solid cross-sectional dimension. SSRW is made of 
iron-based alloys containing, by weight, 1.2 percent or less of carbon 
and 10.5 percent or more of chromium, with or without other elements. 
Metallic coatings, such as nickel and copper coatings, may be applied.
    The merchandise subject to these investigations is classifiable 
under subheadings 7223.00.1015, 7223.00.1030, 7223.00.1045, 
7223.00.1060, and 7223.00.1075 of the Harmonized Tariff Schedule of the 
United States (``HTSUS''). Although the HTSUS subheadings are provided 
for convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.
    During our review of the petition, we discussed with the 
petitioners whether the proposed scope was an accurate reflection of 
the product for which the domestic industry is seeking relief. The 
petitioners indicated that the scope in the petition accurately 
reflected the product for which they are seeking relief. Consistent 
with the preamble to the new regulations (62 FR at 27323), we are 
setting aside a period for parties to raise issues regarding product 
coverage. The Department encourages all parties to submit such comments 
by 20 days after the publication of this notice. Comments should be 
addressed to Import Administration's Central Records Unit at Room 1870, 
U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, N.W., 
Washington, D.C. 20230. This period of scope consultation is intended 
to provide the Department with ample opportunity to consider all 
comments and to consult with parties prior to the issuance of the 
preliminary determinations.

Determination of Industry Support for the Petition

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) At least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who account for production 
of the domestic like product. The International Trade Commission 
(``ITC''), which is responsible for determining whether the domestic 
industry has been injured, must also determine what constitutes a 
domestic like product in order to define the industry. While both the 
Department and the ITC are required to apply the same statutory 
provision regarding the domestic like product (section 771(10) of the 
Act), they do so for different purposes and pursuant to separate and 
distinct authority. In addition, the Department's determination is 
subject to limitations of time and information. Although this may 
result in different definitions of the domestic like product, such 
differences do not render the decision of either agency contrary to 
law.<SUP>1</SUP> Section 771(10) of the Act defines domestic like 
product as ``a product which is like, or in the absence of like, most 
similar in characteristics and uses with, the article subject to an 
investigation under this title.'' Thus, the reference point from which 
the domestic like product analysis begins is ``the article subject to 
an investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition. The domestic like product referred to in the petition is the 
single domestic like product defined in the ``Scope of Investigation'' 
section, above. We

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consulted with the ITC, the U.S. Customs Service, and petitioners and 
have, as a result of these discussions, adopted the domestic like 
product definition set forth in the petition.
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    \1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefor from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    On April 8, 1998, the ITC presented us with information indicating 
that there may be as many as 25 additional producers of the domestic 
like product that were not included in the petition. On April 9, 1998, 
Central Wire Industries Ltd. and Greening Donald Co., Ltd., two 
Canadian producers of subject merchandise, submitted a list of 47 non-
petitioning companies that they claimed represented U.S. producers of 
the domestic like product. See Letter from Central Wire Industries Ltd. 
and Greening Donald Co., Ltd. to the Secretary of Commerce dated April 
9, 1998 (the Central Wire submission). Certain of these companies were 
included in the list of non-petitioning producers in the petition, but 
a majority were not. Because there was a question as to whether 
petitioners' met the statutory requirements cited above, we exercised 
our statutory discretion under section 732(c)(1)(B) to extend the 
deadline for determining whether to initiate an investigation to a 
maximum of 40 days from the date of filing in order to resolve this 
issue. See Memorandum to Joseph A. Spetrini from Laurie Parkhill dated 
April 16, 1998. We also invited parties to identify any other potential 
producers of the domestic like product.
    On April 21, 1998, the petitioners provided production information 
concerning 42 of the then 64 nonpetitioning companies that had been 
identified as potential producers by the ITC, the Central Wire 
submission, or by the petitioners themselves at that time. See Letter 
from the petitioners to the Secretary of Commerce, April 21, 1998. The 
sources of this production information are affidavits from co-counsel 
for the petitioners, stating that they have contacted each of the 42 
producers and have received the production information directly from 
the companies. The petitioners also included affidavits from co-counsel 
for the petitioners, as well as one of the petitioning company 
officials, indicating that certain nonpetitioning companies support the 
petition.
    On April 21, 1998, Central Wire submitted a list of all U.S. 
producers (including the petitioners) that it believed produced the 
domestic like product. See Letter from Central Wire Industries Ltd. and 
Greening Donald Co., Ltd. to the Secretary of Commerce, April 21, 1998. 
While most of these potential producers had already been identified, 
there were several potential producers who had not been previously 
identified, and thus were not included in the list of 64 companies 
provided in the petitioners' April 21, 1998 letter.
    We were able to contact all but one of the companies identified, 
and based on the data now on the record, we determine that the 
petitioners have established industry support in accordance with the 
statutory requirements cited above. See Memorandum from Laurie Parkhill 
and Gary Taverman to Richard W. Moreland dated May 6, 1998. 
Accordingly, we determine that the petition is filed on behalf of the 
domestic industry within the meaning of section 732(b)(1) of the Act.

Export Price and Normal Value

    The following are descriptions of the allegations of sales at less 
than fair value upon which our decisions to initiate these 
investigations are based. Should the need arise to use any of this 
information in our preliminary or final determinations for purposes of 
facts available under section 776 of the Act, we may re-examine the 
information and revise the margin calculations, if appropriate.
    With respect to sales to the U.S. market, the petitioners used an 
export price (EP) analysis because the producers in each country make 
their first sale of exports to unaffiliated importers. The petitioners 
based export prices on affidavits based on call reports and price 
quotes, as appropriate. The petitioners calculated EP by subtracting 
domestic inland freight (except in the India and Taiwan cases), ocean 
freight and marine insurance (except in the Canada case), import duties 
(except in the India case), harbor maintenance fees, U.S. merchandise 
processing fees, and U.S. inland freight (except in the Canada and 
India cases). The data for these adjustments was based on market 
research, U.S. Customs statistics, affidavits, and the 1997 import duty 
rates. The petitioners did not deduct domestic inland freight in the 
Indian case because they were not able to obtain such data. Although 
the petitioners did not explain why they did not deduct domestic inland 
freight in the Taiwan case, we note that this will not cause the 
dumping margins to be overstated. All adjustments not mentioned above 
that were not made by the petitioners in specific cases were due to the 
terms of the sales. We restated some of the export prices in the India 
case to conform with the affidavits the petitioners submitted. See 
Memorandum to File dated April 16, 1998.
    The petitioners based normal value (NV) on home market prices, as 
obtained by market research. They adjusted the home market prices by 
deducting foreign inland freight (except in the India case due to the 
terms of sale) and imputed credit, and by adding the imputed credit 
calculated on the U.S. sale (except in the India case). Though the 
petitioners did not adjust for imputed credit in the India case, we 
were able to calculate an imputed credit expense for that case and did 
deduct it from NV. See Memorandum to File dated April 16, 1998. The 
data for the adjustments the petitioners made to NV were based on 
market research and International Financial Statistics (published by 
the International Monetary Fund). The petitioners submitted affidavits 
to support their claims regarding packing costs in the U.S. and 
Japanese markets. However, there was no adjustment for packing in other 
cases, either because information was not available for a country or 
because the petitioners assumed that packing costs were the same for 
sales to the home market and the U.S. market. There is no public 
evidence available to adjust NV for the differences in packing costs 
between the U.S. and home markets. Furthermore, our experience in steel 
cases generally suggests that the packing costs of export sales are 
nearly always greater than or equal to the packing costs of domestic 
sales, because additional precautions are usually necessary to protect 
exported merchandise (for example, from rust) during its longer time in 
transit. Therefore, we conclude that not adjusting for differences in 
packing costs is conservative.
    Pursuant to sections 773(a)(4) and 773(e) of the Act, the 
petitioners also based NV for sales in all countries, except Japan, on 
constructed value (CV). CV consists of COM, selling, general and 
administrative expenses (SG&A), packing and profit. The petitioners 
based their calculations for COM, SG&A and packing on costs obtained by 
market research, affidavits from the petitioning companies' officials, 
and U.S. industry data compiled by the petitioners. We recalculated the 
CVs used in the Canada, India, and Taiwan cases. The nature of the 
recalculations and the reasons for the recalculations are explained in 
Memoranda to File dated April 16, 1998.
    Based on comparisons of EP to NV, the petitioners estimate margins 
of 2.18 to 64.24 percent in the Taiwan case. We recalculated the 
estimated margins to be 2.38 to 40.48 percent in the Canada case, 3.47 
to 36.52 percent in the India case, 2.02 to 29.58 percent in the Japan

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case, 3.46 to 66.44 percent in the Korea case, and 12.99 to 35.80 
percent in the Spain case.

Initiation of Cost Investigations

    Pursuant to section 773(b) of the Act, the petitioners alleged that 
sales in the home market of Canada, India, Korea, and Taiwan were made 
at prices below the cost of production (COP) and, accordingly, 
requested that the Department conduct a country-wide sales-below-COP 
investigation in Canada, India, Korea, and Taiwan. The Statement of 
Administrative Action (``SAA''), submitted to Congress in connection 
with the interpretation and application of the Uruguay Round 
Agreements, states that an allegation of sales below COP need not be 
specific to individual exporters or producers. SAA, H.R. Doc. No. 316, 
103d Cong., 2d Sess., at 833 (1994). The SAA states at 833 that 
``Commerce will consider allegations of below-cost sales in the 
aggregate for a foreign country, just as Commerce currently considers 
allegations of sales at less than fair value on a country-wide basis 
for purposes of initiating an antidumping investigation.''
    The statute at section 773(b) states that the Department must have 
``reasonable grounds to believe or suspect'' that below-cost sales have 
occurred before initiating such an investigation. ``Reasonable 
grounds'' exist when an interested party provides specific factual 
information on costs and prices, observed or constructed, indicating 
that sales in the foreign market in question are at below-cost prices. 
Based upon the comparison of the adjusted prices from the petition of 
the foreign like product in Canada, India, Korea, and Taiwan to the COP 
calculated in the petition (and adjusted in the Canada, India, and 
Taiwan cases as described in Memoranda to File dated April 16, 1998), 
we find ``reasonable grounds to believe or suspect'' that sales of 
these foreign like products were made below their respective COP within 
the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the 
Department is initiating the requested country-wide cost investigation 
for Canada, India, Korea, and Taiwan.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of SSRW from Canada, India, Japan, Korea, Spain, 
and Taiwan are being, or are likely to be, sold at less than fair 
value.

Allegations and Evidence of Material Injury and Causation

    The petition alleges that the U.S. industry producing the domestic 
like product is being materially injured, and is threatened with 
material injury, by reason of the individual and cumulated imports of 
the subject merchandise sold at less than NV. The allegations of injury 
and causation are supported by relevant evidence including business 
proprietary data from the petitioning firms and U.S. Customs import 
data. The Department assessed the allegations and supporting evidence 
regarding material injury and causation and determined that these 
allegations are sufficiently supported by accurate and adequate 
evidence and meet the statutory requirements for initiation.

Initiation of Antidumping Investigations

    We have examined the petition on SSRW and have found that it meets 
the requirements of section 732 of the Act. Therefore, we are 
initiating antidumping duty investigations to determine whether imports 
of SSRW from Canada, India, Japan, Korea, Spain, and Taiwan are being, 
or are likely to be, sold in the United States at less than fair value. 
Unless extended, we will make our preliminary determinations for the 
antidumping duty investigations by September 23, 1998.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of each petition has been provided to the 
representatives of the governments of Canada, India, Japan, Korea, 
Spain, and Taiwan. We will attempt to provide a copy of the public 
version of each petition to each exporter named in the petition (as 
appropriate).

International Trade Commission Notification

    We have notified the ITC of our initiations, as required by section 
732(d) of the Act.

Preliminary Determinations by the ITC

    The ITC will determine by June 1, 1998, whether there is a 
reasonable indication that imports of SSRW from Canada, India, Japan, 
Korea, Spain, and Taiwan are causing material injury, or threatening to 
cause material injury, to a U.S. industry. Negative ITC determinations 
will result in the particular investigations being terminated; 
otherwise, the investigations will proceed according to statutory and 
regulatory time limits.

    Dated: May 6, 1998.
Richard W. Moreland,
Acting Assistant Secretary, Import Administration.
[FR Doc. 98-12593 Filed 5-11-98; 8:45 am]
BILLING CODE 3510-DS-P