Initiation of Antidumping Duty Investigations: Stainless Steel Angle From Japan, Korea, and Spain

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

September 14, 2000.

FOR FURTHER INFORMATION CONTACT:

Davina Hashmi (Spain) at (202) 482-5760, Brian Smith (Korea) at (202) 482-1766, or Jarrod Goldfeder (Japan) at (202) 482-0189, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230.

Initiation of Investigations

The Applicable Statute and Regulations

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 of Commerce's (the Department's) regulations are to 19 CFR part 351 (April 1999).

The Petitions

On August 18, 2000, the Department received petitions filed in proper form by Slater Steels Corporation (Speciality Alloys Division) and the United Steelworkers of America, AFL-CIO/CLC (collectively the petitioners). The Department received supplemental information to the petitions on August 23, 28 and September 5, 6, 2000.

In accordance with section 732(b) of the Act, the petitioners allege that imports of stainless steel angle (SSA) from Japan, Korea, and Spain 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 an industry in the United States.

The Department finds that the petitioners filed these petitions on behalf of the domestic industry because they are interested parties as defined in sections 771(9)(C) and (D) of the Act and they have demonstrated sufficient industry support with respect to each of the antidumping investigations that they are requesting the Department to initiate. (See Determination of Industry Support for the Petitions below.)

Scope of Investigations

For purposes of these investigations, the term “stainless steel angle” includes hot-rolled, whether or not annealed or descaled, stainless steel products of equal leg length angled at 90 degrees that are not otherwise advanced. The stainless steel angle subject to these investigations is currently classifiable under subheadings 7222.40.30.20 and 7222.40.30.60 of the Harmonized Tariff Schedules of the United States (HTSUS). Specifically excluded from the scope of these investigations is stainless steel angle of unequal leg length. Although the HTSUS subheadings are provided for convenience and Customs purposes, our written description of the scope of these investigations is dispositive.

Determination of Industry Support for the Petitions

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 a petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce 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 must apply the same statutory definition 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 like product, such differences do not render the decision of either agency contrary to the law.

Section 771(10) of the Act defines the 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. Moreover, the petitioners do not offer a definition of domestic like product distinct from the scope of the investigations. In this case, “the article subject to an investigation” includes certain products which have not previously been included within the scope of investigations involving stainless steel angle with the exception of Japan. To this end, the Department has reviewed reasonably available information to determine whether the products within the scope of the investigations constitute one or more than one domestic like product.

We reviewed this description with product experts at the Department, the U.S. Customs Service, and the ITC. Based on our analysis of the information the petitioners presented in the petition and the information independently obtained and reviewed by the Department, we have determined that there is a single domestic like product which is defined in the “Scope of Investigations” section above. Moreover, the Department has determined that the petitions contain adequate evidence of industry support and, therefore, polling is unnecessary. (See Import Administration Antidumping Investigation Initiation Checklists, Re: Industry Support, September 7, 2000, hereinafter the IA Initiation Checklists, on file in the Central Records Unit (CRU), Room B-099 of the main Department of Commerce building). The Department received no opposition to the petitions. For all countries, the petitioners established industry support representing over 50 percent of total production of the domestic like product. Accordingly, the Department determines that these petitions are filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.

Initiation Standard for Cost Investigations

Pursuant to section 773(b) of the Act, the petitioners provided information demonstrating reasonable grounds to believe or suspect that sales in the home markets of Japan, Korea, and Spain were made at prices below the cost of production (COP) and, accordingly, requested that the Department conduct country-wide sales-below-COP investigations in connection with the requested antidumping investigations in Japan, Korea, and Spain. The Statement of Administrative Action (SAA), submitted to the Congress in connection with the interpretation and application of the URAA, states that an allegation of sales below COP need not be specific to individual exporters or producers. SAA, H.R. Doc. No. 316 at 833 (1994). The SAA, at 833, states 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.”

Further, the SAA provides that new section 773(b)(2)(A) of the Act retains the requirement that the Department 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. Id. We have analyzed the country-specific allegations as described below.

Export Price and Normal Value

The following are descriptions of the allegations of sales at less than fair value upon which we have based our decisions to initiate these investigations. A more detailed description of these allegations is provided in the respective IA Initiation Checklists. 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.

A. Japan

The petitioners identified Aichi Steel Works, Ltd. (Aichi), Daido Steel Co., Ltd., and Sumitomo Metal Industries, Ltd., as producers and exporters of SSA from Japan. According to the petitioners, these three companies account for the vast majority of subject merchandise exported from Japan to the United States. The petitioners based export price (EP) on C&F and F.O.B. U.S. prices from Aichi directly to an unaffiliated distributor and through a U.S. distributor to an unaffiliated purchaser for two grades of SSA. The petitioners obtained these prices from U.S. industry sources. The petitioners made deductions from EP for ocean freight and insurance (calculated from official U.S. import statistics), duties (from the HTSUS), harbor-maintenance and merchandise-processing fees, and U.S. and foreign inland freight. In addition, with respect to sales made through the distributor, the petitioners adjusted the U.S. prices downward for a distributor mark-up based on pricing data submitted in the petition.

With respect to normal value (NV), the petitioners provided Aichi's home-market prices for two grades of SSA sold to unaffiliated home-market customers which were obtained from foreign market research. These products are comparable to the products exported to the United States which served as the basis for EP. The prices the petitioners used in the calculation of NV were delivered prices, exclusive of taxes. The petitioners made a deduction from NV for foreign inland freight which was also obtained from foreign market research. Pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410(c), the petitioners made a circumstance-of-sale adjustment for differences in credit expenses between home-market and U.S. sales. The petitioners did not adjust the prices for differences in packing costs because they assumed that packing costs were the same for both markets.

Having analyzed the petition, we made revisions to the Japan-specific data contained in the petition. Consistent with the EP calculation, we revised the distributor mark-up such that the mark-up rate is applied to starting prices on a grade-specific basis. For purposes of calculating NV, we recalculated home-market inland freight by relying upon all freight amounts included in the foreign market research. (See IA Initiation Checklist for further discussion of these changes.)

In addition, the petitioners provided information demonstrating reasonable grounds to believe or suspect that sales of SSA in the home market were made at prices below the COP within the meaning of section 773(b) of the Act, and requested that the Department conduct a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Act, COP consists of the cost of manufacturing (COM), selling, general, and administrative (SG&A) expenses (which include financial expenses) and packing costs. To calculate Aichi's COM, the petitioners relied upon their own production experience, adjusted for known differences between costs incurred to produce SSA in the United States and in Japan using information obtained through market research and publicly available data. To calculate SG&A expenses, the petitioners relied upon Aichi's 1999 financial statements.

Based upon the comparison of the adjusted prices of the foreign like product in the home market to the COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation.

Pursuant to sections 773(a)(4), 773(b), and 773(e) of the Act, the petitioners also based NV for sales in Japan on constructed value (CV). The petitioners calculated CV using the same figures for COM, SG&A expenses, and packing costs they used to compute Japanese home-market costs. Consistent with section 773(e)(2) of the Act, the petitioners also added to CV an amount for profit, which was based upon Aichi's 1999 financial statements.

The petitioners provided estimated dumping margins in two ways: (1) Home market price (HMP) compared to EP (with margins ranging from 29.62 to 107.39 percent); (2) CV compared to EP (with margins ranging from 69.00 to 107.70 percent). As a result of our adjustments to the petitioners' calculations noted above, the revised HMP-to-EP and CV-to-EP comparisons result in margins that range from 29.80 to 105.97 percent and from 73.01 to 114.51 percent, respectively.

B. Korea

The petitioners identified Bae Myung Metal Co., Ltd. (Bae Myung), as a producer and an exporter of SSA from Korea. According to the petitioners, Bae Myung accounts for all the subject merchandise exported from Korea to the United States. The petitioners based EP on U.S. prices from Bae Myung to unaffiliated U.S. purchasers through distributors for two grades of SSA. The petitioners obtained these prices from U.S. industry sources. The petitioners made deductions from EP for C.I.F. charges, including ocean freight and insurance (from official U.S. import statistics), duties (from the HTSUS), harbor-maintenance and merchandise-processing fees, and U.S. and foreign inland freight. In addition, with respect to sales made through distributors, the petitioners adjusted the U.S. prices downward for a distributor mark-up based on pricing data they submitted in the petition.

With respect to NV, the petitioners provided Bae Myung's home-market prices for two grades of SSA sold to unaffiliated home-market customers which they obtained from foreign market research. These products are comparable to the products exported to the United States which served as the basis for EP. The prices the petitioners used in the calculation of NV were delivered prices, exclusive of taxes. The petitioners made a deduction from NV for foreign inland freight which they also obtained from foreign market research. Pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410(c), the petitioners made a circumstance-of-sale adjustment for differences in credit expenses between home-market and U.S. sales. The petitioners did not adjust the prices for differences in packing costs because they assumed that packing costs were the same for both markets.

In addition, the petitioners provided information demonstrating reasonable grounds to believe or suspect that sales of SSA in the home market were made at prices below the COP within the meaning of section 773(b) of the Act, and they requested that the Department conduct a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses (which include financial expenses), and packing costs. To calculate Bae Myung's COM, the petitioners relied upon their own production experience, adjusted for known differences between costs incurred to produce SSA in the United States and in Korea using information they obtained through market research and publicly available data. To calculate SG&A expenses, the petitioners relied upon the 1999 financial statements of Pohang Iron and Steel Co. (POSCO), a Korean integrated steel manufacturer.

Based upon the comparison of the adjusted prices of the foreign like product in the home market to the COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation.

Pursuant to sections 773(a)(4), 773(b), and 773(e) of the Act, the petitioners also based NV for sales in Korea on CV. The petitioners calculated CV using the same figures for COM, SG&A expenses, and packing costs they used to compute Korean home-market costs. Consistent with section 773(e)(2) of the Act, the petitioners also added to CV an amount for profit, which was based on POSCO's 1999 financial statements. Because the petitioners' calculation of the profit percentage applied to COP excluded net interest expense from the denominator incorrectly, we recalculated the profit percentage to include this amount accordingly. (See IA Initiation Checklist for further discussion.)

The petitioners provided estimated dumping margins in two ways: (1) HMP compared to EP (with margins ranging from 2.89 to 53.49 percent); (2) CV compared to EP (with margins ranging from 60.45 to 101.15 percent). As a result of our adjustments to the petitioners' calculations noted above, the revised CV-to-EP comparisons result in margins that range from 59.19 to 99.56 percent.

C. Spain

The petitioners identified Roldan, S.A. (Roldan), as a producer and an exporter of SSA from Spain. According to the petitioners, Roldan accounts for the vast majority of the subject merchandise exported from Spain to the United States. The petitioners based EP on C.I.F. U.S. prices from Roldan to a U.S. distributor and through a U.S. distributor to an unaffiliated U.S. purchaser for two grades of SSA. The petitioners obtained these prices from market research. The petitioners made deductions from EP for C.I.F. charges, including ocean freight and insurance (from official U.S. import statistics), duties (from the HTSUS), harbor-maintenance and merchandise-processing fees, and U.S. and foreign inland freight. In addition, with respect to sales made through the distributor, the petitioners adjusted the U.S. prices downward for a distributor mark-up based on pricing data submitted in the petition.

With respect to NV, the petitioners provided Roldan's home-market prices for two grades of SSA sold to unaffiliated home-market customers which they obtained from foreign market research. These products are comparable to the products exported to the United States which served as the basis for EP. The prices used in the calculation of NV were delivered prices, exclusive of taxes. The petitioners made a deduction from NV for foreign inland freight which they also obtained from foreign market research. Pursuant to section 773 (a)(6)(C)(iii) of the Act and 19 CFR 351.410(c), the petitioners made a circumstance-of-sale adjustment for differences in credit expenses between home-market and U.S. sales. The petitioners did not adjust the prices for differences in packing costs because they assumed that packing costs were the same for both markets.

In addition, the petitioners provided information demonstrating reasonable grounds to believe or suspect that sales of SSA in the home market were made at prices below the COP within the meaning of section 773(b) of the Act, and they requested that the Department conduct a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses (which include financial expenses), and packing costs. To calculate Roldan's COM, the petitioners relied upon their own production experience, adjusted for known differences between costs incurred to produce SSA in the United States and in Spain using information obtained through market research and publicly available data. To calculate SG&A expenses, the petitioners relied upon Roldan's 1999 financial statements and the financial statements of its parent company, Acerinox.

Based upon the comparison of the adjusted prices of the foreign like product in the home market to the revised COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation.

Pursuant to sections 773(a)(4), 773(b), and 773(e) of the Act, the petitioners also based NV for sales in Spain on constructed value (CV). The petitioners calculated CV using the same figures for COM, SG&A expenses and packing costs used to compute Spanish home-market costs. Consistent with section 773(e)(2) of the Act, the petitioners also added to CV an amount for profit, which was based upon Roldan's 1999 financial statements.

The petitioners provided estimated dumping margins in two ways: (1) HMP compared to EP (with margins ranging from 6.89 to 36.92 percent); (2) CV compared to EP. The petitioners based their CV-to-EP comparisons on two sales which resulted in the same margin of 61.45 percent.

Fair Value Comparisons

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

Allegations and Evidence of Material Injury and Causation

The petitioners allege 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 petitioners explain that the industry's injured condition is evident in the declining trends in net operating profits, net sales volumes, profit-to-sales ratios, and capacity utilization. The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, lost sales, and pricing information. The Department assessed the allegations and supporting evidence regarding material injury and causation and determined that these allegations are supported by accurate and adequate evidence and meet the statutory requirements for initiation. (See IA Initiation Checklists.)

Initiation of Antidumping Investigations

Based upon our examination of the petitions on SSA and the petitioners' responses to our supplemental questionnaires clarifying the petitions, as well as our discussion with the authors of the market-research reports supporting the petitions on Japan, Korea, and Spain and other measures undertaken to confirm the information contained in these reports (see IA Initiation Checklists), we have found that the petitions meet the requirements of section 732 of the Act. Therefore, we are initiating antidumping duty investigations to determine whether imports of SSA from Japan, Korea, and Spain are being, or are likely to be, sold in the United States at less than fair value. Unless this deadline is extended, we will make our preliminary determinations no later than 140 days after the date of initiation.

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 Japan, Korea, and Spain. We will attempt to provide a copy of the public version of the appropriate petition to each exporter named in the petition.

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 October 2, 2000, whether there is a reasonable indication that imports of SSA from Japan, Korea and Spain are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination for any country will result in the investigation being terminated with respect to that country; otherwise, these investigations will proceed according to statutory and regulatory time limits.

This notice is published pursuant to section 777(i) of the Act.