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[Federal Register Volume 63, Number 102 (Thursday, May 28, 1998)]
[Notices]
[Pages 29179-29181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14150]

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DEPARTMENT OF COMMERCE

International Trade Administration
[A-122-823]

Cut-to-Length Carbon Steel Plate From Canada; Initiation of 
Anticircumvention Inquiry on Antidumping Duty Order

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

ACTION: Notice of initiation of anticircumvention inquiry; cut-to-
length carbon steel plate from Canada.

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SUMMARY: In response to a request from Kentucky Electric Steel Company 
(Kentucky Steel), the Department of Commerce (the Department) is 
initiating an anticircumvention inquiry to determine whether imports of 
boron-added grader blade and draft key steel, falling within the 
physical dimensions outlined in the scope of the order, are 
circumventing the antidumping duty order on cut-to-length carbon steel 
plate from Canada (58 FR 44162, August 19, 1993).

EFFECTIVE DATE: May 28, 1998.

FOR FURTHER INFORMATION CONTACT: Gideon Katz, Eric Scheier, or Maureen 
Flannery, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC, 20230; telephone: (202) 482-4733.
SUPPLEMENTARY INFORMATION:

Applicable Statute

    Unless otherwise stated, 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 
stated, all citations to the Department's regulations are references to 
the regulations as codified at 62 FR 27296 (May 19, 1997).

Background

    On March 14, 1997, the Department initiated a scope inquiry to 
determine whether certain cut-to-length carbon steel plate used to make 
grader blades and draft keys (``grader blade'' and ``draft key'' steel) 
that contain small amounts of boron (approximately 0.0016 percent by 
weight) fall within the scope of the order on certain cut-to-length 
carbon steel plate from Canada. The Department gave interested parties 
the opportunity to provide comments pursuant to 19 CFR Sec. 353.29(i) 
and 19 CFR 353.29(g).
    On January 16, 1998, the Department issued a ruling, based on 19 
CFR Sec. 353.29(i), that boron-added grader blade and draft key steel 
falls outside the scope of the order. The Department concluded that, 
because the petition relied on the HTS definition of carbon steel, 
which excluded other-alloy steel (i.e. steel containing more than 
0.0008 percent boron), and because the petition equated the term 
`carbon steel' with the HTS term `non-alloy steel', variants of grader 
blade and draft key steel which contain at least 0.0008 percent boron 
by weight fell outside the scope of the order. Specifically, the HTSUS 
defines the term ``steel'' as certain ``ferrous materials * * * usually 
malleable and which contain by weight two percent or less of carbon. * 
* * '' and defines the term ``non-alloy'' steel as steel other than A) 
``stainless steel'', i.e. alloy steel containing, by weight, 1.2 
percent or less of carbon and 10.5 percent or more of chromium or B) 
``other alloy steel, i.e. steel * * * containing by weight 0.3 percent 
or more of aluminum or 0.0008 percent or more of boron. See HTSUS, 
Chapter 72, Note 1(d) and (f).
    The Department also solicited comments from interested parties 
concerning the possible applicability of the ``minor alterations'' 
provision pursuant to 19 CFR 353.29(g) (now codified as 
Sec. 351.225(i), see 62 FR 27296, 27404 (May 19, 1997)).

[[Page 29180]]

    On January 30, 1998, Kentucky Steel requested that the Department 
conduct an anticircumvention inquiry pursuant to section 781(c) of the 
Tariff Act to determine whether imports of certain cut-to-length steel 
plate used to make grader blades and draft keys (``grader blade'' and 
``draft key'' steel) that contain small amounts of boron (approximately 
0.0016 percent by weight) and fall within the physical dimensions 
outlined in the scope of the order, are circumventing the antidumping 
duty order on certain cut-to-length carbon steel plate from Canada.

Scope

    The scope language contained in the final determination and 
antidumping duty order describes the covered merchandise as follows:

    Although the Harmonized Tariff Schedule of the United States 
(HTS) subheadings are provided for convenience and customs purposes, 
our written descriptions of the scope of these proceedings are 
dispositive * * *.

Certain Cut-to-Length Carbon Steel Plate

    These products include hot-rolled carbon steel universal mill 
plates (i.e., flat-rolled products rolled on four faces or in a 
closed box pass, of a width exceeding 150 millimeters but not 
exceeding 1,250 millimeters and of a thickness of not less than 4 
millimeters, not in coils and without patterns in relief), of 
rectangular shape, neither clad, plated nor coated with metal, 
whether or not painted, varnished, or coated with plastics or other 
nonmetallic substances; and certain hot-rolled carbon steel flat-
rolled products in straight lengths, of rectangular shape, hot 
rolled, neither clad, plated, nor coated with metal, whether or not 
painted, varnished, or coated with plastics or other nonmetallic 
substances, 4.75 millimeters or more in thickness and of a width 
which exceeds 150 millimeters and measures at least twice the 
thickness, as currently classifiable in the HTS under item numbers 
7208.31.000, 7208.32.000, 7208.33.1000, 7208.33.5000, 7208.41.000, 
7208.42.000, 7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.0000, 
7211.11.0000, 7211.12.0000, 7211.21.0000, 7211.22.0045, 
7211.90.0000, 7212.40.1000, 7212.40.5000, and 7212.50.0000. Included 
in these investigations are flat-rolled products of nonrectangular 
cross-section where such cross-section is achieved subsequent to the 
rolling process (i.e., products which have been ``worked after 
rolling'')-for example, products which have been beveled or rounded 
at the edges. Excluded from these investigations is grade X-70 
plate.

Final Determination; Certain Cold-Rolled Carbon Steel Flat Products 
From Argentina, 58 FR 37063 (July 9, 1993), Appendix I

    See also Antidumping Duty Orders: Certain Corrosion-Resistant 
Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate 
From Canada, 58 FR 44162 (August 19, 1993).
    Kentucky Steel now alleges that since publication of the 
antidumping duty order, exporters of certain cut-to-length carbon steel 
plate from Canada have been circumventing the order by exporting carbon 
steel plate with small amounts of boron added. According to Kentucky 
Steel, the ``inclusion of 0.0016 percent boron by weight to high carbon 
grader blade and draft key steel constitutes a minor alteration'' and 
is thus within the meaning of the provisions detailed in section 781(c) 
of the Tariff Act. See Anticircumvention Application, January 30, 1998 
at 4.
    Kentucky Steel describes the merchandise that is the subject of 
this anticircumvention inquiry as cut-to-length plate made of high-
carbon steel to which boron has been added. Kentucky Steel defines 
``high carbon'' steel to be steel of AISI or SAE grades 1050, 1152, or 
1552, or higher, i.e. carbon steels that may contain 0.55% or more 
carbon by weight.

Initiation of Anticircumvention Proceeding

    Section 781(c) of the Tariff Act states that the Department may 
find circumvention of an order when products which are of the class or 
kind of merchandise subject to an antidumping duty order have been 
``altered in form or appearance in minor respects * * * whether or not 
included in the same tariff classification.'' The applicant asserts 
that, while the statute is silent as to what factors to consider in 
determining whether alterations are properly considered ``minor,'' the 
legislative history of this provision indicates that there are certain 
factors which should be considered before reaching an anticircumvention 
determination.
    The applicant cites to the Senate Finance Committee report on the 
Omnibus Trade and Competitiveness Act of 1988 (which amended the Tariff 
Act of 1930 to include the anticircumvention provisions contained in 
section 781), which states:

    [I]n applying this provision, the Commerce Department should 
apply practical measurements regarding minor alterations, so that 
circumvention can be dealt with effectively, even where such 
alterations to an article technically transform it into a 
differently designated article. The Commerce Department should 
consider such criteria as the overall physical characteristics of 
the merchandise, the expectations of the ultimate users, the use of 
the merchandise, the channels of marketing and the cost of any 
modification relative to the total value of the imported products. 
S. Rep. No. 71, 100th Cong., 1st Sess. 100 (1987).

    The applicant has presented evidence with respect to each of the 
criteria listed in the Senate report. Each of these criteria is 
addressed below.

Overall Physical Characteristics

    The cut-to-length plate for grader blades and draft keys at issue 
in this proceeding have small amounts, usually about 0.0016 percent by 
weight, of boron added to high carbon steel (high carbon being defined 
by the applicant as steel containing at least 0.55 percent carbon by 
weight). The applicant claims that while boron, like carbon, is added 
to steel to improve ``hardenability,'' when the level of carbon is 
already at 0.60 percent by weight or above, the added boron's effect on 
the final product is negligible. The applicant asserts that grader 
blade and draft key steel products are composed of upwards of 0.70 
percent carbon, sufficiently high levels to render the addition of 
boron immaterial to the performance characteristics of the final 
product. The applicant also claims that practice in the industry is not 
to add boron to higher carbon steels, like AISI grades 1070 and 1084, 
which are used to make grader blades and draft keys.

Expectations of the Ultimate Users

    The applicant maintains that carbon steel plate users are 
purchasing imported plate with the expectation that the product be hard 
and durable, and that these characteristics are imparted by the 
presence of sufficient levels of carbon. The applicant states that 
consumers of this product are fully aware that carbon steel of the sort 
at issue here does not rely on or benefit from the presence of boron, 
and thus ``do not expect, seek, or desire'' its presence. The applicant 
notes that its own marketing officials have been advised that many 
consumers of the product do not know that it contains boron, and that 
there is no significant price difference between plain carbon and 
boron-added versions of the product imported from Canada.

Use of the Merchandise

    The applicant maintains that, with or without boron, high carbon 
grader blade and draft key steel have the same uses: making blades on 
grading equipment and locking devices on railroad couplings. The 
applicant states that knowledgeable purchasers would be aware that 
there are no uses of higher carbon steel plate containing 0.0016 
percent boron that cannot fully be met without boron, and that the 
addition of boron neither responds to a new need in

[[Page 29181]]

the market, nor improves the way existing technical needs are met.

Channels of Marketing

    The applicant states that steel producers, with few exceptions, 
sell directly to manufacturers of grader blades and draft keys through 
company sales forces. The applicant claims that, because carbon grader 
blade and draft key steels are used for precisely the same products as 
are the boron-added versions of the products, boron-added grader blade 
and draft key carbon steel from Canada is sold in precisely the same 
sales channels as plain grader blade and draft key carbon steel from 
Canada.

Cost of Modification

    The applicant alleges that, by adding about 0.0016 percent boron to 
high carbon steels, Canadian producers have been able to avoid dumping 
duties ranging from 1.47 percent to 68.7 percent, and that the cost of 
avoiding these duties, relative to the total value of the product 
itself, is negligible. The applicant estimates that Canadian producers 
can realize a value of 1.25 percent to 68.5 percent by avoiding the 
duties under the order in this case by adding 0.0016 percent boron to 
their product.
    Other interested parties, Co-Steel Lasco, Caterpillar Inc., and 
Algoma Steel Inc., submitted comments arguing that the Department 
cannot initiate a ``minor alterations'' anticircumvention inquiry on a 
type of merchandise which the Department has previously determined to 
be outside the scope of the order. These interested parties base their 
argument on the decision of the Court of International Trade (CIT) in 
Hylsa, S.A. v. United States, Slip Op. 98-10 (February 3, 1998), which 
upheld the earlier decision of the CIT in Wheatland Tube Co. v. United 
States, 973 F. Supp. 149 (CIT 1997). As the Department disagrees with 
the decision in Hylsa, and as it is appealing this decision to the 
Federal Circuit, the Department is not bound to apply it to the 
determination of whether to initiate the requested inquiry.
    Based on our evaluation of the application, we determine that a 
formal inquiry is warranted. Accordingly, we are initiating a 
circumvention inquiry concerning the antidumping duty order on cut-to-
length carbon steel plate from Canada, pursuant to section 781(c) of 
the Tariff Act. In accordance with 19 CFR 351.225(l)(2), we will not 
instruct the Customs Service to suspend liquidation and require a cash 
deposit of estimated duties on the merchandise which is the subject of 
this inquiry unless and until we issue an affirmative preliminary 
determination.
    The Department will, following consultation with the interested 
parties, establish a schedule for questionnaires and comments on the 
issues. The Department intends to issue its final determination within 
300 days of the date of publication of this initiation.
    This notice is published in accordance with section 781(c) of the 
Tariff Act (19 U.S.C. 1677j(c)) and 19 CFR 351.225.

    Dated: May 20, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-14150 Filed 5-27-98; 8:45 am]
BILLING CODE 3510-DS-P
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