Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products From Brazil: Final Results of Antidumping Duty Administrative Review and Termination of the Suspension Agreement

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Final Results of Antidumping Duty Administrative Review of the Suspension Agreement.

SUMMARY:

We published in the Federal Register the preliminary results of review on August 8, 2001. See Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products from Brazil: Preliminary Results of Antidumping Duty Administrative Review of Suspension Agreement, 66 FR 41500 (August 8, 2001) (Preliminary Results). This review covers three manufacturers and exporters of the subject merchandise, Companhia Siderurgica Nacional (CSN), Usinas Siderurgicas de Minas Gerais (USIMINAS), and Companhia Siderurgica Paulista (COSIPA) during the period of review (POR) from July 19, 1999 through June 30, 2000.

Based on our analysis of the comments received, we have made some changes in our calculations. For these final results, we determine that CSN and USIMINAS have made sales below the reference price established by the Suspension Agreement. We also determine that the amount by which the estimated normal value exceeds the export price for each entry by CSN and USIMINAS/COSIPA indicates that the dumping margin on certain entries exceeds 15 percent of the weighted average margin for CSN and USIMINAS/COSIPA in the LTFV investigation. The Department determines that CSN and USIMINAS/COSIPA have violated the Agreement Suspending the Antidumping Investigation on Hot-Rolled Flat-Rolled Carbon-Quality Steel from Brazil (“the Suspension Agreement”). Because we find that the violations were not inconsequential and frustrated the purposes of this Agreement, we are terminating the Suspension Agreement.

EFFECTIVE DATE:

February 11, 2002.

FOR FURTHER INFORMATION CONTACT:

Phyllis Hall (CSN), Michael Ferrier or Dena Aliadinov (USIMINAS/COSIPA), or Abdelali Elouaradia, Enforcement Group III, Office 8, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Room 7866, Washington, DC 20230; telephone (202) 482-1398, (202) 482-1394, (202) 482-3362, and (202) 482-1374, respectively.

SUPPLEMENTARY INFORMATION:

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. In addition, unless otherwise indicated, all citations to the Department of Commerce (Department) regulations are to the regulations at 19 CFR part 351 (April 2000).

Background

We invited parties to comment on our preliminary results of review. Respondents filed a brief on September 7, 2001, and petitioners filed a rebuttal brief on September 17, 2001.

Scope of the Review

The products covered are certain hot-rolled flat-rolled carbon-quality steel products of a rectangular shape, of a width of 0.5 inch or greater, neither clad, plated, nor coated with metal and whether or not painted, varnished, or coated with plastics or other non-metallic substances, in coils (whether or not in successively superimposed layers) regardless of thickness, and in straight lengths, of a thickness less than 4.75 mm and of a width measuring at least 10 times the thickness. Universal mill plate (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 mm, but not exceeding 1250 mm and of a thickness of not less than 4 mm, not in coils and without patterns in relief) of a thickness not less than 4.0 mm is not included within the scope of this agreement.

Specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, and the substrate for motor lamination steels. IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum.

Steel products to be included in the scope of this agreement, regardless of HTSUS definitions, are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:

1.80 percent of manganese, or

1.50 percent of silicon, or

1.00 percent of copper, or

0.50 percent of aluminum, or

1.25 percent of chromium, or

0.30 percent of cobalt, or

0.40 percent of lead, or

1.25 percent of nickel, or

0.30 percent of tungsten, or

0.012 percent of boron, or

0.10 percent of molybdenum, or

0.10 percent of niobium, or

0.41 percent of titanium, or

0.15 percent of vanadium, or

0.15 percent of zirconium.

All products that meet the physical and chemical description provided above are within the scope of this agreement unless otherwise excluded. The following products, by way of example, are outside and/or specifically excluded from the scope of this agreement:

• Alloy hot-rolled steel products in which at least one of the chemical elements exceeds those listed above (including e.g., ASTM specifications A543, A387, A514, A517, and A506).
• SAE/AISI grades of series 2300 and higher.
• Ball bearing steels, as defined in the HTSUS.
• Tool steels, as defined in the HTSUS.
• Silico-manganese (as defined in the HTSUS) or silicon electrical steel with a silicon level exceeding 1.50 percent.
• ASTM specifications A710 and A736.
• USS Abrasion-resistant steels (USS AR 400, USS AR 500).
• Hot-rolled steel coil which meets the following chemical, physical and mechanical specifications:

Width = 44.80 inches maximum; Thickness = 0.063-0.198 inches;

Yield Strength = 50,000 ksi minimum; Tensile Strength = 70,000-88,000 psi.

• Hot-rolled steel coil which meets the following chemical, physical and mechanical specifications:

Width = 44.80 inches maximum; Thickness = 0.350 inches maximum;

Yield Strength = 80,000 ksi minimum; Tensile Strength = 105,000 psi Aim.

• Hot-rolled steel coil which meets the following chemical, physical and mechanical specifications:

Width = 44.80 inches maximum; Thickness = 0.350 inches maximum;

Yield Strength = 80,000 ksi minimum; Tensile Strength = 105,000 psi Aim.

• Hot-rolled steel coil which meets the following chemical, physical and mechanical specifications:

Width = 39.37 inches; Thickness = 0.181 inches maximum;

Yield Strength = 70,000 psi minimum for thicknesses ≤ 0.148 inches and 65,000 psi minimum for thicknesses > 0.148 inches; Tensile Strength = 80,000 psi minimum.

• Hot-rolled dual phase steel, phase-hardened, primarily with a ferritic-martensitic microstructure, contains 0.9 percent up to and including 1.5 percent silicon by weight, further characterized by either (i) tensile strength between 540 N/mm² and 640 N/mm² and an elongation percentage ≥ 26 percent for thicknesses of 2 mm and above, or (ii) a tensile strength between 590 N/mm² and 690 N/mm² and an elongation percentage ≥ 25 percent for thicknesses of 2 mm and above.
• Hot-rolled bearing quality steel, SAE grade 1050, in coils, with an inclusion rating of 1.0 maximum per ASTM E 45, Method A, with excellent surface quality and chemistry restrictions as follows: 0.012 percent maximum phosphorus, 0.015 percent maximum sulfur, and 0.20 percent maximum residuals including 0.15 percent maximum chromium.
• Grade ASTM A570-50 hot-rolled steel sheet in coils or cut lengths, width of 74 inches (nominal, within ASTM tolerances), thickness of 11 gauge (0.119 inch nominal), mill edge and skin passed, with a minimum copper content of 0.20%.

The merchandise subject to this agreement is classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 7208.90.00.00, 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, 7211.19.75.90, 7212.40.10.00, 7212.40.50.00, 7212.50.00.00. Certain hot-rolled flat-rolled carbon-quality steel covered by this agreement, including: vacuum degassed, fully stabilized; high strength low alloy; and the substrate for motor lamination steel may also enter under the following tariff numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Although the HTSUS subheadings are provided for convenience and Customs purposes, the written description of the merchandise under this agreement is dispositive.

Period of Review

The POR is July 19, 1999 through June 30, 2000.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this administrative review are addressed in the “Issues and Decision Memorandum” (Decision Memorandum) from Joseph A. Spetrini, Deputy Assistant Secretary, Import Administration, to Faryar Shirzad, Assistant Secretary for Import Administration, dated February 4, 2002, which is hereby adopted by this notice. A list of the issues raised, all of which are addressed in the Decision Memorandum, is attached to this notice as an Appendix. Parties can find a complete discussion of all issues raised in this review, and the corresponding recommendations in this public memorandum, on file in Room B-099 of the U.S. Department of Commerce.

In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at www.ia.ita.doc.gov/frn . The paper copy and electronic version of the Decision Memorandum are identical in content.

Changes Since the Preliminary Determination

Based on our analysis of comments received, we have made certain changes in the margin calculations. These changes are noted in various sections of the Decision Memorandum, accessible in B-099 and on the World Wide Web at www.ia.ita.doc.gov/frn .

Final Results of Review

The purpose of the review has been to review the current status of, and compliance with, the terms of the Suspension Agreement.

Compliance With Section IV(E) of the Suspension Agreement

Under the statute, the Department is required to review entries made under the Suspension Agreement to determine whether the terms of the Agreement are being complied with by the signatories of the Suspension Agreement. Specifically, section IV(E) of the Suspension Agreement requires that for each entry of each exporter the amount by which the estimated normal value exceeds the export price (or the constructed export price) will not exceed a specified amount. That limit is 15 percent of the weighted average amount by which the estimated normal value exceeded the export price (or the constructed price) for all less-than-fair-value entries of the exporter examined during the course of the investigation.

We examined the extent to which CSN and USIMINAS/COSIPA may have made sales that were not in compliance with this provision of the Suspension Agreement. To this end, we examined (see Department's Analysis Memorandum, dated February 4, 2002, proprietary version) the number of sales which had margins that exceeded the limit established by the Suspension Agreement and the amount by which the margins of these sales exceeded this limit. As a result, we found that at least one company made sales at dumping margins that exceeded the limit established by the Suspension Agreement and that neither the number of sales nor the amount by which they exceeded the limit was insignificant. On this basis, we cannot conclude that these sales with dumping margins inconsistent with those allowed under the Suspension Agreement are inconsequential or inadvertent. See Decision Memorandum and USIMINAS/COSIPA and CSN Final Analysis Memoranda, dated February 4, 2002.

Compliance With Section IV(A) of the Suspension Agreement

Section IV(A) of the Suspension Agreement contains the reference price requirements for merchandise subject to the Suspension Agreement. We compared the price charged by the mill to the first unaffiliated customer in the United States to the reference price for the applicable period for that sale (based upon the order confirmation date). The Suspension Agreement states that the reference price includes all transportation charges to the U.S. port of entry, together with port fees, duties, offloading, wharfage and other charges incurred in bringing the steel to the first customs port of discharge in the U.S. market. In addition, the Suspension Agreement stipulates that if the sale for export is on terms that do not include these expenses, the Signatories will ensure that the actual terms are equivalent to a price that is not lower than the reference price. Therefore, we have added to the price to the first unaffiliated U.S. customer any of these charges that were not included in the price terms to that first unaffiliated U.S. customer, and we compared this total to the applicable reference price.

In our analysis, we examined the quantity of sales below the reference price established by the Suspension Agreement and the amount by which these prices were below the reference price. As a result, we found that for at least one company, neither the number of sales made below the reference price established by the Suspension Agreement nor the amount by which they were below the reference price was insignificant. On this basis, we cannot conclude that these sales with prices inconsistent with the reference price established by the Suspension Agreement are inconsequential or inadvertent. See Decision Memorandum and USIMINAS/COSIPA and CSN's Preliminary Analysis Memoranda, dated February 4, 2002.

Termination of Agreement

Therefore, we determine that CSN and USIMINAS/COSIPA have made sales in violation of the terms of the Suspension Agreement as set out in section IV(E) and section IV(A). Pursuant to section XI(B) of the Agreement, the Department hereby terminates with this notice the Agreement Suspending the Antidumping Investigation on Hot-Rolled Flat-Rolled Carbon-Quality Steel from Brazil. In accordance with section XIII(B) of the Agreement and section 734(1)(A)(i) of the Act, the Department will instruct U.S. Customs to suspend liquidation of unliquidated entries of the merchandise on the date of publication of this determination for all entries entered 90 days before the date of this publication. Given that the Department completed the original investigation (see Notice of Final Determination of Sales at Less Than Fair Value; Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products from Brazil, 64 FR 38756 (July 19, 1999), the Department will publish in the Federal Register an antidumping duty order under section 736(a) of the Act with respect to the suspension of unliquidated entries entered 90 days before the date of this publication.

This determination is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Appendix I—Issues in Decision Memorandum

1. Sales Involving Trading Companies / Agency Sale Approach

2. Adjustment to U.S. Price for Comparison to Reference Price—Commissions

3. Adjustment to U.S. Price for Comparison to Reference Price—Ocean Freight

4. Adjustment to U.S. Price for Comparison to Reference Price—U.S. Inland Freight

5. Adjustment to U.S. Price for Comparison to Reference Price—Credit Insurance

6. Violation of Suspension Agreement—Alleged Inadvertent Nature

7. Margin Calculation—Entry Basis versus Sales Item Basis

8. U.S. Commission Offset—Margin Calculation

9. U.S. Warranty—Direct versus Indirect Expense

10. U.S. Credit Expense—Credit Days

11. U.S. Credit Expense—Interest Rate

12. Freight Costs—Estimated versus Actual

13. PIS /COFINS Taxes