Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Bar From Korea

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of final determination of sales at less than fair value.

SUMMARY:

The Department of Commerce is conducting an antidumping duty investigation of stainless steel bar from Korea. We determine that stainless steel bar from Korea is being, or is likely to be, sold in the United States at less than fair value, as provided in section 735(a) of the Tariff Act of 1930, as amended. On August 2, 2001, the Department of Commerce published its preliminary determination of sales at less than fair value of stainless steel bar from Korea. Based on the results of verification and our analysis of the comments received, we have made changes in the margin calculations. Therefore, this final determination differs from the preliminary determination. The final weighted-average dumping margins are listed below in the section entitled “Continuation of Suspension of Liquidation.”

EFFECTIVE DATE:

January 23, 2002.

FOR FURTHER INFORMATION CONTACT:

Brian Smith or Sophie Castro, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-1766 or (202) 482-0588, respectively.

SUPPLEMENTARY INFORMATION:

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 (“Department”) regulations are to 19 CFR part 351 (April 2000).

Case History

Since the publication of the preliminary determination in this investigation (see Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Stainless Steel Bar From Korea, 66 FR 40222 (August 2, 2001) (“Preliminary Determination”)), the following events have occurred:

In August through September 2001, we conducted verifications of the questionnaire responses submitted by Changwon Specialty Steel Co., Ltd. (“Changwon”) and Dongbang Industrial Co. Ltd., (“Dongbang”) (collectively, “the respondents”). In October 2001, the respondents submitted revised sales and cost databases pursuant to verification findings at the Department's request. We issued verification reports in November 2001. See “Verification” section of this notice for further discussion.

The petitioners and the respondents filed case and rebuttal briefs, respectively, on November 16 and November 27, 2001. All parties withdrew their request for a hearing on November 28, 2001.

Although the deadline for this determination was originally December 16, 2001, in order to accommodate certain verifications that were delayed because of the events of September 11, 2001, the Department tolled the final determination deadline in this and the concurrent stainless steel bar investigations until January 15, 2002.

Scope of Investigation

For purposes of this investigation, the term “stainless steel bar” includes articles of stainless steel in straight lengths that have been either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise cold-finished, or ground, having a uniform solid cross section along their whole length in the shape of circles, segments of circles, ovals, rectangles (including squares), triangles, hexagons, octagons, or other convex polygons. Stainless steel bar includes cold-finished stainless steel bars that are turned or ground in straight lengths, whether produced from hot-rolled bar or from straightened and cut rod or wire, and reinforcing bars that have indentations, ribs, grooves, or other deformations produced during the rolling process.

Except as specified above, the term does not include stainless steel semi-finished products, cut length flat-rolled products (i.e., cut length rolled products which if less than 4.75 mm in thickness have a width measuring at least 10 times the thickness, or if 4.75 mm or more in thickness having a width which exceeds 150 mm and measures at least twice the thickness), products that have been cut from stainless steel sheet, strip or plate, wire (i.e., cold-formed products in coils, of any uniform solid cross section along their whole length, which do not conform to the definition of flat-rolled products), and angles, shapes and sections.

The stainless steel bar subject to this investigation is currently classifiable under subheadings 7222.11.00.05, 7222.11.00.50, 7222.19.00.05, 7222.19.00.50, 7222.20.00.05, 7222.20.00.45, 7222.20.00.75, and 7222.30.00.00 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 investigation is dispositive.

Prior to the preliminary determination in this investigation, the respondents in the companion stainless steel bar investigations filed comments seeking to exclude certain products from the scope of these investigations. The specific products identified in their exclusion requests were: stainless steel tool steel, welding wire, special-quality oil field equipment steel (“SQOFES”), and special profile wire.

In the preliminary determinations, we concluded that all of these products, except for special profile wire, are within the scope of these investigations. Specifically, regarding stainless steel tool steel, welding wire, and SQOFES, after considering the respondents' comments and the petitioners' objections to the exclusion requests, we preliminarily determined that the scope is not overly broad. Therefore, stainless steel tool steel, welding wire, and SQOFES are within the scope of these stainless steel bar investigations. In addition, we preliminarily determined that SQOFES does not constitute a separate class or kind of merchandise from stainless steel bar. Regarding special profile wire, we preliminarily determined that this product does not fall within the scope as it is written because its cross section is in the shape of a concave polygon. Therefore, we did not include special profile wire in these investigations. (For details, see the Memorandum to Susan Kuhbach and Louis Apple from the Stainless Steel Bar Team, dated July 26, 2001, entitled “Scope Exclusion Requests,” and the Memorandum to Louis Apple from the Stainless Steel Bar Team, dated July 26, 2001, entitled “Whether Special Profile Wire Product is Included in the Scope of the Investigation.”)

Finally, we note that in the concurrent countervailing duty investigation of stainless steel bar from Italy, the Department preliminarily determined that hot-rolled stainless steel bar is within the scope of these investigations. (See Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Countervailing Duty Determination with Final Antidumping Duty Determination: Stainless Steel Bar from Italy, 66 FR 30414 (June 6, 2001).)

With the exception of one respondent in the Germany investigation which filed comments on the Department's preliminary scope decision with respect to SQOFES with which the Department disagrees and has addressed in the January 15, 2002, Decision Memorandum in that case, no other parties filed comments on our preliminary scope decisions. Furthermore, no additional information has otherwise come to our attention to warrant a change in our preliminary decisions. Therefore, we have made no changes for purposes of the final determinations.

Period of Investigation

The period of investigation (“POI”) for this investigation is October 1, 1999, through September 30, 2000.

Fair Value Comparisons

To determine whether sales of stainless steel bar from Korea to the United States were made at less than fair value, we compared export price (“EP”) or constructed export price (“CEP”) to normal value (“NV”). Our calculations followed the methodologies described in the Preliminary Determination, except as noted below, and in the January 15, 2002 Decision Memorandum and each individual respondent's calculation memorandum, which are on file in the Import Administration's Central Records Unit (“CRU”), Room B-099 of the main Department of Commerce building.

Export Price and Constructed Export Price

For certain sales to the United States, we used EP as defined in section 772(a) of the Act. For the remaining sales to the United States, we used CEP as defined in section 772(b) of the Act. We calculated EP and CEP based on the same methodologies described in the Preliminary Determination, with the following exceptions:

Changwon

We accepted Changwon's revised U.S. sales listing pursuant to verification findings. Specifically, we accepted the correction to Changwon's U.S. short-term interest rate and imputed credit calculations, and allowed certain duty drawback adjustments to be made to the U.S. sales listing. We accepted the adjustment to the direct selling expense ratio applicable to Changwon's affiliate, POSTEEL. We also corrected a ministerial error by reclassifying sales through Changwon's U.S. affiliate, POSAM, as CEP sales, consistent with our preliminary and final determinations.

Dongbang

We accepted Dongbang's revised U.S. sales listing pursuant to verification findings. Specifically, we accepted the adjustments to duty drawback and the corrections to the inventory carrying cost calculations.

Normal Value

We used the same methodology as that described in the Preliminary Determination to determine the cost of production (“COP”), whether comparison market sales were at prices below the COP, and the NV, with the following exceptions:

1. Cost of Production Analysis

Changwon

We disallowed Changwon's claimed offset for gains on marketable securities to its reported general and administrative (“G&A”) expenses. We further adjusted Changwon's G&A rate by recalculating Changwon's reported cost of goods sold value exclusive of packing.

Dongbang

Pursuant to verification findings, we accepted Dongbang's corrections to its COP and constructed value (“CV”) databases to adjust for Dongbang's over-allocation of the amount of scrap revenue offset against its raw material costs. We accepted Dongbang's G&A amount to remove the total amount of scrap revenue that was included both as an offset to raw material cost and as part of Dongbang's reported G&A expenses. We adjusted Dongbang's recalculation of its affiliated supplier's G&A and interest expense used in the calculation of COP based on fiscal year 2000 amounts (rather than fiscal year 1999) pursuant to verification findings. Using Dongbang's affiliated supplier's recalculated COP, we revised our major-input analysis of Dongbang's raw material cost to reflect, on a grade-specific basis, the highest of COP, transfer price, or when available, market price. We made an adjustment to the costs reported for certain products sold but not produced during the POI.

2. Calculation of NV

Changwon

Pursuant to verification findings, we accepted Changwon's exclusion of the sales of billets from its home market sales listing because billets are raw materials used to produce the subject merchandise (i.e., stainless steel bars). We also accepted Changwon's correction of clerical errors presented at the onset of verification, namely the corrections to Changwon's interest revenue, warranty and inland freight calculations. We corrected for ministerial errors identified after the preliminary determination. Specifically, we adjusted the preliminary margin calculation by adding (rather than deducting) interest revenue to NV and correcting an error with respect to home market credit expenses which were inadvertently set to zero. We added (rather than deducted) the cost of U.S. packing to NV. We also made an additional correction to account for the omitted duty drawback adjustment related to local export sales.

Dongbang

We accepted the correction Dongbang presented at the onset of verification, namely a correction to Dongbang's home market interest rate used to calculate imputed credit. We adjusted Dongbang's calculation of its indirect selling expense ratio based on verification findings. We corrected for a ministerial error identified after the preliminary determination by adding (rather than deducting) the cost of U.S. packing to NV in the final determination.

Currency Conversions

We made currency conversions in accordance with section 773A of the Act in the same manner as in the Preliminary Determination.

Verification

In this investigation, and in the companion stainless steel bar investigations from Germany, France, Italy, the United Kingdom and Taiwan, verifications were scheduled for all responding companies during the period August through October 2001. Based on the security concerns and logistical difficulties brought about by the events of September 11, we were unable to complete all scheduled verifications in these cases. Specifically, in the Korean investigation, we were unable to verify the information relating to Changwon's U.S. affiliate, POSAM. However, for those companies that we were unable to verify on site, we did verify major portions of the company's questionnaire responses.

While the statute at 782(i)(1) and the Department's regulations at 351.307(b)(1)(i) direct the Department to verify all information relied upon in a final determination of an investigation, the Department's verification process is akin to an “audit” and the Department has the discretion to determine the specific information it will examine in its audits. See PMC Specialties Group, Inc. v. United States, 20 C.I.T. 1130 (1996). The courts concur that verification is a spot check and is not intended to be an exhaustive examination of the respondent's records. See Mansato v. United States, 698 F.Supp. 275, 281 (Ct. Int'l Trade 1988). Furthermore, the courts have noted that Congress has given Commerce wide latitude in formulating its verification procedures. See Micron Tech., Inc. v. United States, 117 F.3d 1386, 1396 (Fed. Cir. 1997).

In these investigations, we believe that we have met the standard for having verified the information being used in these final determinations, despite our inability to complete the verifications as originally scheduled. Although the amount of information verified was less than planned, the respondents did not control what was verified and what was not verified. It was the Department, not the companies, that established the original verification schedule and determined the order in which the segments would be verified. Moreover, each company was fully prepared to proceed with each segment of the original verification based upon the Department's schedule and could not have anticipated that the Department would perhaps not actually verify all segments. Finally, we note that all responding companies and the petitioners fully cooperated with the Department's post-September 11 efforts to conduct as many segments of verification as practicable.

Based on the information verified, we are relying on the responses as submitted, subject to the minor corrections previously noted elsewhere in this notice and the Decision Memorandum.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this investigation are addressed in the January 15, 2001, Decision Memorandum, which is hereby adopted by this notice. Attached to this notice as an appendix is a list of the issues which parties have raised and to which we have responded in the Decision Memorandum. Parties can find a complete discussion of all issues raised in this investigation and the corresponding recommendations in this public memorandum which is on file in the Department's CRU. In addition, a complete version of the Decision Memorandum can be accessed directly on the Web at http://ia.ita.doc.gov/frn/frnhome.htm. The paper copy and electronic version of the Decision Memorandum are identical in content.

Continuation of Suspension of Liquidation

In accordance with section 735(c)(1)(A) of the Act, we are directing the Customs Service to continue to suspend liquidation of all imports of stainless steel bar from Korea that are entered, or withdrawn from warehouse, for consumption on or after August 2, 2001, the date of publication of the Preliminary Determination in the Federal Register. The Customs Service shall continue to require a cash deposit or the posting of a bond equal to the weighted-average amount by which the NV exceeds the EP or CEP, as appropriate, as indicated in the chart below. These suspension of liquidation instructions will remain in effect until further notice.

The weighted-average dumping margins are as follows:

ITC Notification

In accordance with section 735(d) of the Act, we have notified the International Trade Commission (“ITC”) of our determination. As our final determination is affirmative, the ITC will, within 45 days, determine whether these imports are materially injuring, or threaten material injury to, the U.S. industry. If the ITC determines that material injury, or threat of material injury does not exist, the proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order.

This notice also serves as a reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely notification of return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

This determination is issued and published in accordance with sections 735(d) and 777(i)(1) of the Act.

Appendix

List of Comments in the Issues and Decision Memorandum

Common Issues

Comment 1: Product Characteristics and Matching Methodology

Comment 2: Duty Drawback

Comment 3: Application of the Major Input Rule

Comment 4: Ministerial Errors

Company Specific Issues

Changwon Specialty Steel Co., Ltd.

Comment 5: Treatment of Changwon's U.S. Sales Made Through POSTEEL's U.S. affiliate

Comment 6: Whether to Grant a Constructed Export Price (“CEP”) Offset Adjustment for Changwon's CEP Sales

Comment 7: Interest Rate Selection

Comment 8: General & Administrative (“G&A”) Expenses

Comment 9: Denominator Used to Calculate G&A and Interest Ratios

Dongbang Industrial Co., Ltd.

Comment 10: Treatment of Class II Stainless Steel Bar

Comment 11: Selection of Cost for Products Which Were not Produced but Sold During the POI