[Federal Register Volume 66, Number 113 (Tuesday, June 12, 2001)]
[Notices]
[Pages 31613-31617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-14801]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-828]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review: Stainless Steel Wire Rod from Taiwan

AGENCY: Import Administration, International Trade Administration, U.S. 
Department of Commerce.
SUMMARY: In response to a request by a producer/exporter of the subject 
merchandise, the Department of Commerce (the Department) is conducting 
an administrative review of the antidumping duty order on stainless 
steel wire rod (SSWR) from Taiwan. This review covers one producer/
exporter of the subject merchandise. The period of review (POR) is 
September 1, 1999, through August 31, 2000.
    We preliminarily determine that sales have been made below normal 
value (NV). If these preliminary results are adopted in our final 
results, we will instruct the U.S. Customs Service to assess 
antidumping duties based on the difference between the export price 
(EP) and the NV.
    Interested parties are invited to comment on the preliminary 
results. Parties who submit arguments are requested to submit with each 
argument: (1) A statement of the issue and (2) a brief summary of the 
argument. Further, we would appreciate parties submitting written 
comments to provide the Department with an additional copy of the 
public version of any such comments on diskette.

EFFECTIVE DATE: June 12, 2001.

FOR FURTHER INFORMATION CONTACT: Alexander Amdur or Karine Gziryan, at 
(202) 482-5346 or (202) 482-4081, respectively; AD/CVD Enforcement 
Office IV, Group II, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 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's regulations are to 19 CFR 
part 351 (April 2000).

Case History

    On September 15, 1998, the Department issued an antidumping duty 
order on SSWR from Taiwan. See Notice of Amendment of Final 
Determination of Sales at Less Than Fair Value and Antidumping Duty 
Order: Stainless Steel Wire Rod From Taiwan, 63 FR 49332 (September 15, 
1998) (Amended Final Determination and Order). On September 20, 2000, 
we published in the Federal Register the notice of opportunity to 
request an administrative review of this order. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 65 FR 56868 (September 
20, 2000).
    On September 26, 2000, Walsin Lihwa Corporation (Walsin) requested 
that the Department conduct an administrative review for the period 
from September 1, 1999, through August 31, 2000.
    On October 30, 2000, we published the notice of initiation of this 
antidumping duty administrative review, covering the period September 
1, 1999, through August 31, 2000. See Initiation of Antidumping and 
Countervailing Duty Administrative Reviews, Requests for Revocation in 
Part and Deferral of Administrative Review, 65 FR 64662 (October 30, 
2000).
    On October 20, 2000, we issued an antidumping questionnaire to 
Walsin. The Department received Walsin's response in December 2000. We 
issued supplemental questionnaires to Walsin in January, March, April 
and May 2001, and received responses from Walsin in February, March, 
April and May 2001. In its March 30, 2001 supplemental questionnaire 
response, Walsin requested that it not be required to report an 
insignificant amount of sales made in Taiwan by its Shape, Pipe and 
Special Products Business Unit during the POR. On April 17, 2001, we 
granted this request.

Scope of the Review

    For purposes of this review, SSWR comprises products that are hot-
rolled or hot-rolled annealed and/or pickled and/or descaled rounds, 
squares,

[[Page 31614]]

octagons, hexagons or other shapes, in coils, that may also be coated 
with a lubricant containing copper, lime or oxalate. SSWR is made of 
alloy steels containing, by weight, 1.2 percent or less of carbon and 
10.5 percent or more of chromium, with or without other elements. These 
products are manufactured only by hot-rolling or hot-rolling annealing, 
and/or pickling and/or descaling, are normally sold in coiled form, and 
are of solid cross-section. The majority of SSWR sold in the United 
States is round in cross-sectional shape, annealed and pickled, and 
later cold-finished into stainless steel wire or small-diameter bar. 
The most common size for such products is 5.5 millimeters or 0.217 
inches in diameter, which represents the smallest size that normally is 
produced on a rolling mill and is the size that most wire-drawing 
machines are set up to draw. The range of SSWR sizes normally sold in 
the United States is between 0.20 inches and 1.312 inches in diameter.
    Two stainless steel grades are excluded from the scope of the 
review. SF20T and K-M35FL are excluded. The chemical makeup for the 
excluded grades is as follows:

SF20T

Carbon 0.05 max
Manganese 2.00 max
Phosphorous 0.05 max
Sulfur 0.15 max
Silicon 1.00 max
Chromium 19.00/21.00
Molybdenum 1.50/2.50
Lead-added (0.10/0.30)
Tellurium-added (0.03 min)

K-M35FL

Carbon 0.015 max
Silicon 0.70/1.00
Manganese 0.40 max
Phosphorous 0.04 max
Sulfur 0.03 max
Nickel 0.30 max
Chromium 12.50/14.00
Lead 0.10/0.30
Aluminum 0.20/0.35
    The products subject to this review are currently classifiable 
under subheadings 7221.00.0005, 7221.00.0015, 7221.00.0030, 
7221.00.0045, and 7221.00.0075 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 scope 
of this review is dispositive.

Successorship

    Walsin, in July 1998, purchased the operating assets, including the 
SSWR operations, of its affiliate, Walsin Cartech Specialty Steel 
Corporation (Walsin CarTech), one of the respondents in the original 
investigation of this proceeding. Prior to this purchase, Walsin did 
not produce the subject merchandise. Walsin integrated Walsin CarTech's 
former SSWR operations into its own corporate structure. These 
operations, which are now known as Walsin's Yenshui plant, are part of 
Walsin's stainless steel business unit. Walsin CarTech itself, as of 
March 2000, no longer exists as a corporate entity.
    Walsin did not request that the Department make a successorship 
determination for purposes of applying the antidumping duty law, but 
the Department is now making such a successorship determination in 
order to apply the appropriate and necessary company-specific cash 
deposit rates. In determining whether Walsin is the successor to Walsin 
CarTech for purposes of applying the antidumping duty law, the 
Department examines a number of factors including, but not limited to, 
changes in: (1) Management, (2) production facilities, (3) suppliers, 
and (4) customer base. See, e.g., Brass Sheet and Strip from Canada; 
Final Results of Antidumping Duty Administrative Review, 57 FR 20460 
(May 13, 1992) (Brass Sheet and Strip from Canada); Steel Wire Strand 
for Prestressed Concrete from Japan, Final Results of Changed 
Circumstances Antidumping Duty Administrative Review, 55 FR 28796 (July 
13, 1990); and Industrial Phosphorous From Israel; Final Results of 
Antidumping Duty Changed Circumstances Review, 59 FR 6944 (February 14, 
1994). While examining these factors alone will not necessarily provide 
a dispositive indication of succession, the Department will generally 
consider one company to have succeeded another if that company's 
operations are essentially inclusive of the predecessor's operations. 
See Brass Sheet and Strip from Canada. Thus, if the evidence 
demonstrates, with respect to the production and sale of the subject 
merchandise, that the new company is essentially the same business 
operation as the former company, the Department will assign the new 
company the cash deposit rate of its predecessor.
    The evidence on the record, including Walsin's Yenshui plant's and 
Walsin CarTech's company brochures, customer lists, and lists of 
suppliers, including those listed in Walsin's section D response,\1\ 
demonstrates that with respect to the production and sale of the 
subject merchandise, Walsin is the successor to Walsin CarTech. 
Specifically, the evidence shows that Walsin has the same SSWR 
production facilities, and most of the same customers, suppliers, and 
management, as Walsin CarTech had. Moreover, Walsin's SSWR operations 
are essentially the same as Walsin CarTech's former operations, except 
that the SSWR operations are now an integrated corporate unit of 
Walsin, while previously, the operations were organized as a separate, 
affiliated corporate entity, Walsin CarTech, of which Walsin owned 
93.9% of the equity.
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    \1\ For information on Walsin CarTech, see Memorandum to the 
File dated June 4, 2001 regarding information on Walsin CarTech from 
the investigation state of this proceeding; and for information on 
Walsin, see Walsin's February 28, 2001 section A, B, C, and D 
responses.
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    Therefore, since Walsin's SSWR operations are essentially inclusive 
of Walsin CarTech's former SSWR operations, we preliminarily determine 
that Walsin is the successor to Walsin CarTech for purposes of this 
proceeding, and for the application of the antidumping law.

Fair Value Comparisons

    We compared EP to NV, as described in the Export Price and Normal 
Value sections of this notice. We first attempted to compare 
contemporaneous U.S. and comparison markets sales of products that are 
identical with respect to the following characteristics: grade, 
diameter, further processing and coating. Where we were unable to 
compare sales of identical merchandise, we compared U.S. sales to 
comparison market sales of the most similar merchandise based on the 
above characteristics, which are listed in order of importance for 
matching purposes. Since we were able to find appropriate comparison 
market sales of comparable merchandise for all of the merchandise sold 
in the United States, we made no comparisons to constructed value.

Export Price

    For the price to the United States, we used EP as defined in 
section 772(a) of the Act because the merchandise was sold, prior to 
importation, by Walsin to an unaffiliated purchaser in the United 
States, or to an unaffiliated purchaser for exportation to the United 
States, and constructed export price (CEP) methodology was not 
otherwise warranted based on the facts on the record.
    We calculated EP based on the packed, CIF prices charged to 
unaffiliated customers in the United States or to unaffiliated 
customers for

[[Page 31615]]

exportation to the United States. In accordance with section 
772(c)(2)(A) of the Act, we made deductions from the starting price for 
foreign movement expenses (including brokerage and handling, harbor 
maintenance charges, and inland freight), international freight, and 
marine insurance.

Normal Value

    After testing home market viability, whether sales to affiliates 
were at arm's-length prices, and whether home market sales were at 
below-cost prices, we calculated NV as noted in subsection 4, 
Calculation of NV, below.

1. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
whether the aggregate volume of home market sales of the foreign like 
product is equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared Walsin's volume of home market sales 
of the foreign like product to the volume of its U.S. sales of subject 
merchandise, in accordance with section 773(a)(1) of the Act. Because 
Walsin's aggregate volume of home market sales of the foreign like 
product is greater than five percent of its aggregate volume of U.S. 
sales of subject merchandise, we determined that the home market is 
viable for Walsin.

2. Affiliated-Party Transactions and Arm's-Length Test

    We included arm's-length sales to an affiliated home market 
customer in our analysis because we considered them to be made in the 
ordinary course of trade. See section 773(a)(1)(B)(i) of the Act and 19 
CFR 351.102. To test whether sales to the affiliated customer in the 
home market were made at arm's-length prices, we compared, on a model-
specific and quality-specific (i.e., prime and non-prime quality) 
basis, prices of sales to affiliated and unaffiliated customers net of 
all movement charges, direct selling expenses, and packing. Since, for 
the tested models of subject merchandise, prices to the affiliated 
party were on average 99.5 percent or more of the prices to 
unaffiliated parties, we determined that sales made to the affiliated 
party were at arm's length. See 19 CFR 351.403(c) and 62 FR at 27355 
(preamble to the Department's regulations).

3. Cost of Production (COP) Analysis

    In the investigation of SSWR from Taiwan, the most recently 
completed segment of this proceeding, the Department disregarded Walsin 
CarTech's sales that were found to have failed the cost test. 
Accordingly, the Department, pursuant to section 773(b) of the Act, 
initiated a COP investigation of Walsin (the successor of Walsin 
CarTech) for purposes of this administrative review. We conducted the 
COP analysis as described below.
A. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP, by model, based on the sum of materials and 
fabrication costs, general and administrative (G&A) expenses, and 
packing costs. We relied on the submitted costs except in the specific 
instances noted below, where the submitted costs were not appropriately 
quantified or valued.
    We recalculated Walsin's G&A expenses to account for the company's 
total 1999 non-operating loss on idle assets valuation and 
obsolescence, and non-operating gain from the sale and disposal of 
fixed assets. We made this adjustment because these items relate to the 
general manufacturing activities of the company as a whole. We also 
adjusted Walsin's G&A expenses to reflect foreign exchange gains and 
losses related to accounts payable. We excluded from the G&A 
calculation certain non-operating expense and income items, such as 
other financial income and expense, rent income and expense, and 
commission and royalty income, because these items do not relate to the 
general manufacturing activities of the company.
    We recalculated Walsin's interest expense factor using the 
company's total 1999 consolidated interest expense, foreign exchange 
gains and losses from notes and interest payable, and short-term 
interest income (used as an offset). Walsin had excluded an allocated 
portion of the interest expense related to investment income from its 
calculation of the interest expense factor. Walsin contends that, since 
the Department does not allow investment income as an offset to 
interest expense, it would be distortive, and contrary to the 
``matching principle'' in generally accepted accounting principles 
(GAAP), to include the interest expense related to the same investment 
income in its interest expense. However, it is the Department's 
practice to derive net financing costs based on the borrowing 
experience of the entire consolidated company, including investment 
arms of the consolidated company. See Final Determination of Sales at 
Less Than Fair Value: New Minivans From Japan, 57 FR 21937, 21945 (May 
26, 1992). Furthermore, the Department does not reduce the COP by 
income from long-term investments because we do not consider such 
income to be related to a company's manufacturing operations. See Final 
Determination of Sales at Less than Fair Value: Pasta from Italy, 61 FR 
30326, 30359 (June 14, 1996).
    We also adjusted Walsin's cost of goods sold (COGS) used in the 
calculation of the G&A and interest expense ratios by the amount of the 
applicable scrap revenue offset. We made this adjustment in order to 
make the COGS consistent with the COM (which includes this offset) to 
which the G&A and interest expense ratios are applied.
B. Test of Comparison Market Sales Prices
    As required under section 773(b) of the Act, we compared the 
adjusted weighted-average COP to the comparison market sales of the 
foreign like product, in order to determine whether these sales had 
been made at prices below the COP within an extended period of time in 
substantial quantities, and whether such prices were sufficient to 
permit the recovery of all costs within a reasonable period of time. On 
a product-specific basis, we compared the revised COP to the comparison 
market prices, less any applicable movement charges, billing 
adjustments, and other direct and indirect selling expenses.
C. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of Walsin's sales of a given product were made at prices below 
the COP, we did not disregard any below-cost sales of that product 
because the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of Walsin's sales of a given 
product were made at prices below the COP, we determined that such 
sales were made in substantial quantities within an extended period of 
time (i.e., a period of one year). Further, because we compared prices 
to POI-average costs, we determined that the below-cost prices would 
not permit recovery of all costs within a reasonable time period, and 
thus, we disregarded the below-cost sales in accordance with sections 
773(b)(1) and (2) of the Act.
    We found that for certain products, Walsin made home market sales 
at prices below the COP within an extended period of time in 
substantial quantities. Further, we found that these sales prices did 
not permit the recovery of costs within a reasonable period of time. We 
therefore excluded these sales from our analysis in accordance with 
section 773(b)(1) of the Act.

[[Page 31616]]

4. Calculation of NV

    We determined price-based NVs for Walsin as follows: We calculated 
NV based on packed, delivered prices to all home market customers. We 
made deductions from the starting price for foreign inland freight and 
billing adjustments, where appropriate, pursuant to section 
773(a)(6)(B) of the Act. Pursuant to section 773(a)(6)(C)(iii) of the 
Act and 19 CFR 351.410(c), we made circumstance-of-sale (COS) 
adjustments to the starting price, where appropriate, for differences 
in credit, royalty, and warranty expenses.
    We deducted home market packing costs from, and added U.S. packing 
costs to, the starting price, in accordance with section 773(a)(6) of 
the Act. Where appropriate, we made adjustments to NV to account for 
differences in the physical characteristics of the merchandise sold in 
the U.S. and comparison market, in accordance with section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.

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 transaction. The NV LOT is that 
of the starting-price sales in the comparison market. For EP sales, the 
U.S. LOT is also the level of the starting-price sales.
    To determine whether NV sales are at a different LOT than EP 
transactions, we examine stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer. 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 level-of-trade adjustment under 
section 773(a)(7)(A) of the Act.
    In implementing these principles in this review, we obtained 
information from Walsin about the marketing stages for the reported 
U.S. and comparison market sales, including a description of the 
selling activities performed by Walsin for each channel of 
distribution. In identifying levels of trade for EP and comparison 
market sales, we considered the selling functions reflected in the 
starting price before any adjustments. See 19 CFR 351.412(c)(1)(i) and 
(iii). We expect that, if claimed levels of trade are the same, the 
selling functions and activities of the seller at each level should be 
similar. Conversely, if a party claims that levels of trade are 
different for different groups of sales, the selling functions and 
activities of the seller for each group should be dissimilar.
    In this review, Walsin claimed that all of its sales involved 
identical selling functions, irrespective of the channel of 
distribution or market. We examined these selling functions, and found 
that sales activities were limited in nature and scope in both the 
comparison and U.S. markets, and consisted primarily of providing 
freight services. Therefore, we have preliminarily found that there is 
one LOT in the U.S. and comparison market, and thus, no level-of-trade 
adjustment is required for comparison of U.S. sales to comparison 
market sales. For further details, see Memorandum on Level of Trade 
Analysis dated June 4, 2001.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A of the Act, based on exchange rates in effect on the dates 
of the U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following weighted-average margin exists for the period September 1, 
1999, through August 31, 2000:

------------------------------------------------------------------------
                                                                Margin
                     Manufacter/exporter                       (percent)
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Walsin Lihwa Corporation....................................        4.75
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    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of the publication date of this notice. See 19 
CFR 351.310(c). If requested, a hearing will be held 44 days after the 
date of publication of this notice, or the first workday thereafter. 
Interested parties may submit case briefs within 30 days of the date of 
publication of this notice. Rebuttal briefs, limited to issues raised 
in the case briefs, may be filed not later than 7 days after the 
deadline for filing case briefs. Interested parties are invited to 
comment on the preliminary results. Parties who submit arguments are 
requested to submit with each argument: (1) a statement of the issue, 
(2) a brief summary of the argument and (3) a table of authorities. 
Further, we would appreciate it if parties submitting written comments 
would provide the Department with an additional copy of the public 
version of any such comments on a diskette. The Department will publish 
the notice of the final results of this administrative review, which 
will include the results of its analysis of issues raised in any 
written comments or hearing, within 120 days from the publication date 
of this notice.

Assessment Rate

    Pursuant to 19 CFR 351.212(b), the Department calculated an 
assessment rate for each importer of subject merchandise. Upon 
completion of this review, the Department will instruct the U.S. 
Customs Service to assess antidumping duties on appropriate entries. We 
have calculated each importers' duty assessment rate based on the ratio 
of the total amount of antidumping duties calculated for the examined 
sales to the total entered value of examined sales. Where the 
assessment rate is above de minimis, we will assess the importer-
specific rate uniformly on all entries made during the POR.
    If the Department determines in the final results of this review 
that Walsin is the successor to Walsin CarTech for purposes of applying 
the antidumping duty law, we will further instruct the U.S. Customs 
Service to assign Walsin CarTech's antidumping company identification 
number to Walsin.

Cash Deposit Requirements

    The following deposit rates will be effective upon publication of 
the final results of this administrative review for all shipments of 
SSWR from Taiwan entered, or withdrawn from warehouse, for consumption 
on or after the publication date, as provided by section 751(a)(1) of 
the Act: (1) the cash deposit rate for Walsin Lihwa Corporation will be 
the rate established in the final results of this review, except if the 
rate is less than 0.5 percent and, therefore, de minimis, the cash 
deposit will be zero; (2) for previously reviewed or investigated 
companies not listed above (except for Walsin CarTech\2\), 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 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

[[Page 31617]]

covered in this or any previous review or the LTFV investigation 
conducted by the Department, the cash deposit rate will be 8.29 
percent, the ``All Others'' rate established in the LTFV investigation.
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    \2\ If we determine in the final results that Walsin is the 
successor to Walsin CarTech for purposes of applying the antidumping 
duty law, Walsin CarTech will no longer have its own company-
specific cash deposit rate.
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    These cash deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) 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 the subsequent 
assessment of double antidumping duties.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: June 4, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-14801 Filed 6-11-01; 8:45 am]
BILLING CODE 3510-DS-P