Gray Portland Cement and Clinker From Mexico: Preliminary Results of Changed-Circumstances Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Preliminary results of changed-circumstances antidumping duty administrative review.

SUMMARY:

The Department of Commerce received information sufficient to warrant initiation of a changed-circumstances administrative review of the antidumping duty order on gray portland cement and clinker from Mexico. Based on information on the record, we preliminarily determine that GCC Cementos, S.A. de C.V., is the successor-in-interest to Cementos de Chihuahua, S.A. de C.V., for purposes of determining antidumping liability.

Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

August 17, 2000.

FOR FURTHER INFORMATION CONTACT:

Minoo Hatten or Davina Hashmi, Office of AD/CVD Enforcement 3, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone (202) 482-1690 or (202) 482-5760 respectively.

SUPPLEMENTARY INFORMATION:

Background

On November 24, 1999, Cementos de Chihuahua, S.A. de C.V. (CDC), requested that the Department of Commerce (the Department) conduct an expedited changed-circumstances review, pursuant to section 751(b)(1) of the Tariff Act of 1930, as amended (the Act). In that letter, CDC stated that effective December 1, 1999, GCC Cementos, S.A. de C.V., (GCCC) a newly created company, will be the successor in interest to CDC due to a corporate reorganization. CDC also stated that it would become a holding company and the parent of GCCC and its subsidiary companies. On December 13, 1999, the petitioner, the Southern Tier Cement Committee, opposed CDC's request that the Department initiate an expedited changed-circumstances review. Since the Department had very little information on the record concerning this corporate reorganization, the Department concluded that it would be inappropriate to conduct an expedited changed-circumstances review and issue a preliminary determination concurrent with the initiation of a changed-circumstance review. Thus, the Department published only a notice of initiation. See Gray Portland Cement and Clinker From Mexico: Notice of Initiation of Antidumping Duty Changed-Circumstances Review, 65 FR 1592 (January 11, 2000). On January 20, 2000, the Department sent a questionnaire to GCCC requesting additional information. On February 9, 2000, the Department received GCCC's response to the questionnaire. On April 6, 2000, the Department sent a supplemental questionnaire to GCCC. GCCC responded on April 27, 2000. On June 23, 2000, the Department conducted a verification of information pertaining to this changed-circumstances review at GCCC's offices in Chihuahua, Mexico.

The Applicable Statute

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 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 (1999).

Scope of the Review

The products covered by this review include gray portland cement and clinker. Gray portland cement is a hydraulic cement and the primary component of concrete. Clinker, an intermediate material product produced when manufacturing cement, has no use other than of being ground into finished cement. Gray portland cement is currently classifiable under the Harmonized Tariff Schedule (HTS) item number 2523.29 and cement clinker is currently classifiable under item number 2523.10. Gray portland cement has also been entered under item number 2523.90 as “other hydraulic cements.”

The HTS subheadings are provided for convenience and customs purposes only. Our written description remains dispositive as to the scope of the product coverage.

Preliminary Results of Review

In accordance with section 751(b) of the Act, the Department initiated a changed-circumstances review to determine whether GCCC is the successor-in-interest to CDC for purposes of determining antidumping duty liability with respect to gray portland cement and clinker from Mexico. In making such a successor-in-interest determination, the Department examines several factors including, but not limited to, changes in the following: (1) Management; (2) production facilities; (3) supplier relationships; (4) customer base. See, e.g., Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From Japan; Final Results of Changed-Circumstances Review, 64 FR 55696, 55697 (October 14, 1999) (AFBs from Japan). While no single or several of these factors will necessarily provide a dispositive indication, the Department will generally consider the new company to be the successor to the previous company if its resulting operation is similar to that of its predecessor. See, e.g., Industrial Phosphoric Acid from Israel; Final Results of Changed-Circumstances Review, 59 FR 6944, 6945-46 (February 14, 1994), Brass Sheet and Strip from Canada; Final Results of Antidumping Duty Administrative Review, 57 FR 20460, 20461 (May 13, 1992) (Brass Sheet and Strip from Canada), and AFBs from Japan. Thus, if the evidence demonstrates that, with respect to the production and sale of the subject merchandise, the new company operates as the same business entity as the former company, the Department will assign the new company the same cash-deposit rate of its predecessor. See, e.g., Brass Sheet and Strip from Canada.

On December 1, 1999, CDC ceased production and marketing operations of merchandise subject to the antidumping duty order on gray portland cement and clinker from Mexico. During verification, the Department examined the audited financial statements for CDC and GCCC for the fiscal year ending December 31, 1999. In addition, the Department also examined the reports from the independent auditors. Both of these documents demonstrate that CDC's current assets, fixed assets, liabilities, stockholder equity, and personnel were transferred to GCCC on December 1, 1999. The Department also examined the “Informe Especial de Escision” (spin-off report), which was presented to the board of directors of CDC and which confirms that GCCC will assume the property of all machinery and equipment from CDC. Further, CDC's February 9, 2000, questionnaire response at 2 also indicated that it transferred all of its production facilities, including its physical plant, equipment, and personnel, to GCCC. The Department also reviewed the contract between the unionized workers and the management of GCCC which stated that GCCC assumed all labor agreements pertaining to CDC. In addition, GCCC demonstrated that it had the same members on its board of directors as were formerly on the CDC board of directors. The Department also examined the CDC general organizational structure for November 1999 and the GCCC general organizational structure for January 2000 which confirmed that there were no changes in personnel or functions.

The Department reviewed a sample letter sent on November 24, 1999, to a customer explaining that GCCC would be created as a spin-off from CDC and that the new company would be producing, selling, and carrying on all activities currently conducted by CDC. In addition, at verification, Department officials discussed the channels of distribution for GCCC and observed that there were no changes from those which CDC used. Also at verification, the Department reviewed exhibits identifying the types of customers which purchase GCCC's cement through the bulk channel of distribution and the bag channel of distribution for the United States and Mexico. These lists were identical to the lists of customer categories provided by CDC in its questionnaire response for the 1998/1999 administrative review of the order currently in progress. In addition, in CDC's February 9, 2000, changed-circumstances questionnaire response at 16, CDC states that GCCC has the identical customer base and supplier relationships as CDC.

During verification, the Department verifiers also examined the list of product codes for CDC prior to the reorganization and the product codes for GCCC after the reorganization and observed that there were no changes. The Department examined the November 1999 cost-of-production worksheets for CDC and tied the consolidated ending-inventory values to the beginning GCCC December 1999 cost-of-production worksheet. The GCCC inventory values tied to the monthly trial balances by plant.

As discussed above, CDC has demonstrated that it transferred its management, production facilities, supplier relationships, and customer base to the newly created company GCCC. As such, based on our analysis of information on the record, we preliminarily determine that GCCC is the successor-in-interest to CDC.

Public Comment

Any interested party may request a hearing within 10 days of publication of this notice. Any hearing, if requested, will be held no later than 25 days after the date of publication of this notice, or the first workday thereafter. Case briefs and/or written comments from interested parties may be submitted not later than 14 days after the date of publication of this notice. Rebuttal briefs and rebuttals to written comments, limited to the issues raised in those comments, may be filed not later than 21 days after the date of publication of this notice. All written comments shall be submitted in accordance with 19 CFR 351.303. Persons interested in attending the hearing, if one is requested, should contact the Department for the date and time of the hearing. The Department will publish the final results of this changed-circumstances review, including the results of its analysis of issues raised in any written comments.

We are issuing and publishing this determination and notice in accordance with sections 751(b)(1) and 777(i)(1) of the Act and 19 CFR 351.216 and 351.222.