REPORT OF FINDINGS ON THE DUMPING PROTEST
AGAINST THE IMPORTATION OF HOT-ROLLED STEEL COILS/SHEETS FROM RUSSIA
(HS HDG. NO. 72.08)
UNDER SECTION 301 OF THE TARIFF AND CUSTOMS CODE, AS AMENDED

(Anti-Dumping Inv. No. 99-02)

AUGUST 30, 2000


1. EXECUTIVE SUMMARY AND CONCLUSIONS

1.1 SUMMARY

The anti-dumping protest against the importation of hot-rolled steel coils (HRC) and sheets from the Commonwealth of Independent States (CIS)/Russia was filed with the Department of Finance (DOF) by National Steel Corporation (NSC) on 23 September 1998. The company alleged that said products were imported at dumped prices and were causing material injury to the domestic industry.

The dumping protest was endorsed by the DOF to the Bureau of Import Services (BIS) of the Department of Trade and Industry (DTI) on 13 October 1998 for initial investigation. BIS identified Russia as the primary source country of the allegedly dumped imports of HRC and recommended the initiation of a preliminary anti-dumping investigation. The notice of initiation of investigation was published in the Philippine Daily Inquirer and Philippine Star on 27 February 1999.

On 04 June 1999, an affirmative preliminary finding was made by the BIS, imposing an anti-dumping bond ranging from US$5.90/MT – US$80.05/MT. The DTI-BIS adopted US$255/MT as the appropriate normal value for the purpose of the preliminary investigation. The NV adopted is based on the price range of US$255-280/MT specified in the Anti-Dumping Agreement between the US Department of Commerce and the Minister of Trade of the Russian Federation issued on 22 February 1999. The imposition of the anti-dumping bond was, however, suspended by BIS until such time that NSC can show proof that its HRC Division is already on a normal operation status.

On 07 June 1999, a Motion for Reconsideration on the Affirmative Findings of Dumping and Application of Provisional Measures against HRC from Russia was filed by the protestees, namely, Mayer Steel Corporation, MKK Steel Corporation, Supreme Steel Pipe Corporation, Novolipetsk Iron and Steel Corporation, Magnitogorks Iron and Steel Works and Open Joint Stock Company Severstal through their counsel, Lucenario, Margate and Mogpo.

On 14 June 1999, the DTI-BIS, acting on the said Motion, ordered that the affirmative findings of dumping and application of provisional measures against HRC and sheets from Russia be held in abeyance pending resolution of the said Motion.

On 15 June 1999, NSC, on its part, also filed a Request for Reconsideration on the Affirmative Preliminary Findings specifically on the increase in the amount of "all others rate" from 11.60% to 20%.

On 04 August 1999, the DTI-BIS issued a Resolution lifting the Order holding in abeyance the affirmative preliminary findings on the anti-dumping case against the importation of HRC from Russia. However, the imposition of the anti-dumping bond was suspended until such time that NSC’s hot mill production capacity is at a level when the case was filed in September 1998. On 12 August 1999, the Dispositive Portion of the DTI Resolution lifting the Order holding in abeyance the affirmative preliminary findings on the anti-dumping case against the importation of HRC from Russia was published.

On 09 August 1999, the DTI-BIS endorsed the protest together with its findings to the Tariff Commission (Commission) for formal investigation.

CONCLUSIONS

1.2.1 On the Determination of Like Products

The domestic "like product", for purposes of this investigation, is hot-rolled low-carbon steel coils, of thickness of 2.0 to 12.7 mm, in widths of up to 1220 mm and conforming to JIS G3101, G3131, G3132, G3113 or its equivalent in ASTM standard.

The Commission determines that the domestically produced HRC, constitutes a "like product" to the product under consideration.

1.2.2 On Domestic Industry Support

NSC is the only producer of HRC in the Philippines and thus satisfies the requirement for domestic industry support.

1.2.3 On Price Difference

Export Price

The Commission based its estimates of export price on the import entries on file with the Commission, entries forwarded by the DTI-BIS, and summary of sales invoices submitted by Magnitogorks.

Export prices were adjusted to ex-works level, i.e., net of ocean freight, insurance, inland freight, transshipment services, customs’ clearance, traders’ compensation and profit, if any. Adjustments made on export price to arrive at ex-works level varied depending upon the manufacturer and port of origin.

Novolipetsk, an identified Russian manufacturer, was excluded in the determination of export price since it is not a direct exporter.

With respect to exporters of HRCs originating from Russia whose manufacturers cannot be identified, adjustments in export prices, in addition to customs clearance and trader’s/contract commission, were based on Magnitogorks.

Normal Value

The Commission used adjusted domestic selling prices of Magnitogorsk from the months of January to August. Said values were found to be not below cost of production.

For the months of September to December, adjusted domestic selling prices were below cost of production. Hence, the constructed normal value, based on the cost of production plus selling and administrative expenses and profit margin was used.

Adjusted domestic selling prices submitted by Novolipetsk were not used since the company's exporters cannot be identified, and available import documents do not identify Russian manufacturers from which known exporters were sourcing their HRCs. Severstal did not submit any document which may be used as basis for determining normal value.

Thus, for all of HRCs originating from Russia, the adjusted domestic selling prices and constructed normal value of Magnitogorsk was used. The values ranged from US$108.40-US$229.86/MT.

1.2.4 On Negligible Volume of Dumped Imports

The volume of dumped imports, at 27% of total HRC imports from Russia during the POI, is not negligible.

1.2.5 On the Determination of Material Injury and Causal Linkage

Volume of Dumped Imports

In determining the volume of dumped imports, NSO statistics, 1998 HRC import entries on file with the Commission and entries forwarded by the BIS were used.

NSO statistics show total HRC imports within the POI at 340,308 MT, of which 136,000 MT originated from Russia. However, available import entries accounted for only 116,273 MT of HRC importations from Russia. Based on the latter, the volume of dumped imports was estimated at 90,500 MT or 27% of total HRC imports.

Despite the possibility of being undervalued, the 27% share of dumped imports to total is not negligible.

Price Effect

The incidence or extent of price undercutting was estimated using the landed cost of dumped HRC from Russia against the average ex-factory domestic selling price of local HRC.

Dumped HRC undercut domestic products only in the 1st quarter of 1998 at 10.80% and resulted in almost equal shares of domestic sales and dumped imports to total domestic consumption. There were no dumped imports recorded in the 4th quarter.

Price depression occured in the 4th quarter of 1998 but this cannot be attributed to dumping because no imports of dumped HRC were recorded in that period.

Price suppression was apparent in the 2nd and 3rd quarters. NSC's average selling price in the 2nd quarter fell despite an increase in production cost. In the 3rd quarter, average selling price contracted by a larger margin than that in production cost. The pressure on NSC to reduce prices in these quarters was evident as landed costs of dumped imports were about 10.34% lower than the company's production costs.

Market Share

Total market contracted by an average 25% from 1996 to 1998, while domestic sales of NSC decreased by an average of 30% in the same period. Total imports declined by an average 24%. For imports specifically from Russia, the contraction was even greater at an average 35%.

Production, Sales and Inventory

Volume of production declined from 793,000 MT in 1996 to 693,000 MT in 1997 and to 336,000 MT in 1998.

The inventory level for HRC in 1997 reached 124,000 MT, 10.7% higher than the 1996 level of 112,000 MT. In 1998, however, inventory level decreased by 63.71%, to 45,000 MT.

Capacity Utilization

Declining production resulted in contracting capacity utilization.

NSC’s hot mill has an annual rated capacity of 1.0 million MT. The company’s capacity utilization fell by an average 67%, from 793,000 MT in 1996 to 690,000 MT in 1997, and to 336,000 MT in 1998. Several months of suspended operations in 1998, resulting from deficient working capital, contributed to a decline in capacity utilization.

Cost of Production

The cost to produce and sell a metric ton of HRC was 26% higher in 1998 than in 1997. This was attributed to a 22.40% increase in the peso price conversion of slabs and low capacity utilization. These resulted in an increase in direct material cost by 28.9% and in fixed cost by 102.70%.

Profitability and Return on Sales

Financial statements revealed that HRC manufacturing was operating at a loss (EBIT), amounting to P235 million in 1996, P125 million in 1997 and P781 million in 1998, despite an almost 80% capacity utilization.

The loss is attributed to decreasing sales combined with increasing production cost, and selling and administrative expenses. Declining sales resulted from NSC's decision to favor CRC operations.

Increasing losses sustained over the 3-year period resulted in contracting return on sales, from (9.46%) in 1996 to (5.85%) in 1997, and to (58.46%) in 1998.

Cash Flow

NSC was unable to generate funds from HRC operations in 1996 to 1998, because it sold below cost. Payments of huge interest expense exacerbated the negative cash position. Thus, NSC had to depend largely on borrowings and restructuring to fund its accountabilities.

Investment and Ability to Raise Capital

NSC’s inability to generate investment and raise capital is traced to the fact that the company was saddled with enormous debt, high interest cost, foreign exchange losses and high operating costs.

Employment and Wages

The total manpower complement in HRC operations numbered 233 in 1998 as against 274 in 1996. Dumping did not cause the retrenchment of forty one (41) employees from HRC operation in 1998. It was management’s solution to address the problem of overstaffing.

Factors Other Than Dumping

The Commission evaluated factors, other than dumping, which could have caused major injury to the local HRC industry.

a. Competition From Normal Imports (Undumped Imports)

Normal HRC imports posed stiff competition to the domestic industry as evidenced by their market performance from 1996 to 1998. The market share of HRC from Russia declined from 43% in 1997 to 30% in 1998. Despite the market slump in 1998, however imports from countries other than Russia managed to capture a 46% share of the Philippine market against dumped imports at 18%. Taiwan, Korea and Japan’s share of total imports is at 18%, 16% and 14%, respectively.

Under EO 465 which took effect on 22 January 1998, the tariff duty on HRC was lowered from 10% to 7%. Lower tariffs on HRC reduced its landed cost. To maintain parity or competitiveness, NSC has to adjust its prices accordingly.

b. Transfer of HRC for its own Cold Mill

The bulk of HRC production was transferred to its cold mill for further processing to cold-rolled steel coils (CRC). The competition from imported CRC, coupled by the contracting CRC market adversely affected the operations of its hot mill.

NSC’s cold mill production declined by 37% from P408,000 in 1997 to P259,000 in 1998.

c. Market Contraction

With the Asian financial crisis in mid-1997, the peso devaluation commenced. All countries in Asia had to brace from the economic crisis that resulted to a drastic reduction in

steel consumption. Philippine steel market was no exception from that regional market contraction. The Philippine market for HRC contracted by 14% from 1996 to 1997 and by 36% from 1997 to 1998.

d. High Cost to Produce

The cost to produce HRC was relatively higher than its imported counterpart because NSC had to import its slab requirement.

e. Financial Performance

The slow-down in the Philippine economy had significantly affected the company in terms of higher financing costs and reduced sales and production volume. NSC’s total operation in 1998 incurred its biggest deficit prior to the shutdown of its operations in November 1999.

In 1996, NSC incurred a loss of P2.032 billion on its operation (EBIT) due to revaluation of assets as required by the incoming investor Hottick, resulting to a negative return on sales, assets and stockholder’s equity. In 1997 EBIT improved to P780 million or an increase of 62% compared to previous years. However, in 1998 NSC incurred a loss of P1.79 billion on its operation (EBIT). It may be noted that 1998 net sales of P8.58 billion is 28.74% lower than in 1997 of P12.04 billion.

f. Foreign Currency Losses

As of 31 December 1997, the company had total foreign currency losses of P2.5 billion which went down to P154.9 million in 1998. Though the 1998 figure is much lower, the high cost of money for the servicing of NSC’s dollar denominated loans as a result of the peso devaluation had major adverse impact on the company’s financial position.

1.3 APPLICATION OF PROCEDURAL MATTERS UNDER RA 8752 (ANTI-DUMPING ACT OF 1999)

On 12 August 1999, RA 8752 was signed by the President amending Section 301 of TCCP. The new law became effective on 04 September 1999, i.e., after fifteen (15) days, following its publication on 19 August 1999 in Malaya and Philippine Standard.

Procedural provisions of RA 8752 are applicable to the instant anti-dumping case. In Republic vs. Court of Appeals, G.R. No. 92326, January 24, 1992, the Court held:

"Procedural matters are governed by the law in force when they arise, and procedural statutes are generally retroactive in that they apply to pending proceedings and are not confined to those begun after enactment although, with respect to such pending proceedings, they affect only procedural steps taken after their enactment." (205 SCRA 356).

1.4 FINAL DETERMINATION

The Commission finds that:

1. Price differences existed between the normal values and export prices of HRC originating in or exported from Russia in the 1st, 2nd and 3rd quarters of 1998. No dumped imports were recorded in the 4th quarter hence, no price difference in the same quarter.

2. Dumping, per se, of HRC from Russia during the POI did not cause material injury to the domestic industry but a host of factors other than dumping, i.e., competition from normal imports, transfer of HRC production for its own cold mill (captive production), market contraction, high cost to produce, foreign exchange losses, high interest on its loan obligations and difficulty in opening Letter of Credit (LC) for its raw materials led to the overall impairment in the financial position of the company.

In view of the foregoing, the element of material injury resulting from dumped imports from Russia during the POI, not having been established, it is hereby ordered that the anti-dumping case against Russia be dismissed for lack of merit.

2. ABBREVIATIONS
Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (WTO Anti-Dumping Agreement)
ASTM American Society for Testing and Materials
BIS Bureau of Import Services
BOC Bureau of Customs
BPS Bureau of Product Standards
Cargill Cargill International Trading PTE. Ltd.
C I F Cost, Insurance and Freight
CIS Commonwealth of Independent States
CMC Customs Memorandum Circular
Commission Tariff Commission
CMO Customs Memorandum Order
CRC Cold-Rolled Coils
DAF Delivered At Frontier
DO Department Order
DOF Department of Finance
DOLE Department of Labor and Employment
DTI Department of Trade and Industry
EO Executive Order
FCA Free Carrier Agreement
FOB Freight on Board
FMV Fair Market Value
Gorkovrsky Gorkoversky Metallurgichesky Zavod
HRC Hot-Rolled Coils /Sheets
HS Harmonized System
ISO International Standard Organization
JIS Japanese Industrial Standard
Klockner Klockner East Asia Limited
Magnitogorsk Magnitogorsk Iron and Steel Works
Mayer Mayer Steel Pipe Corporation
MKK MKK Steel Corporation
NI&S Co. Novolipetsk Iron and Steel Works
NSC National Steel Corporation
NSO National Statistics Office
NV Normal Value
PD Presidential Decree
PNS Philippine National Standards
POI Period of Investigation
Portalloy Port Alloy Industrial Supply Corporation
RA Republic Act
RA 7843 Anti-Dumping Act of 1994
RA 8752 Anti-Dumping Act of 1999
SEC Securities and Exchange Commission
SGS Societe Generale de Surveillance
Severstal Severstal Iron and Steel Works
Sumo Sumo Steel Pipe Corporation
Supreme Supreme Steel Pipe Corporation
TCCP Tariff and Customs Code of the Philippines
TMBP Tin Mill Blackplate
SAE Society of Automotive Engineers
WTO World Trade Organization
3. INTRODUCTION

3.1 THE ANTI-DUMPING PROTEST

The anti-dumping protest against the importation of hot-rolled steel coils (HRC) and sheets from Commonwealth Independent States (CIS)/Russia was filed with the Department of Finance (DOF) by National Steel Corporation (NSC) on 23 September 1998. The company alleged that said products were imported at dumped prices and were causing material injury to the domestic industry.

The dumping protest was endorsed by the DOF to the Bureau of Import Services (BIS) of the Department of Trade and Industry (DTI) on 13 October 1998 for initial investigation. BIS identified Russia as the primary source country of the allegedly dumped imports of HRC and recommended the initiation of a preliminary anti-dumping investigation. The notice of initiation of investigation was published in the Philippine Daily Inquirer and Philippine Star on 27 February 1999.

On 04 June 1999, an affirmative preliminary finding was made by the BIS, imposing an anti-dumping bond ranging from US$5.90/MT – US$80.05/MT. The DTI-BIS adopted US$255/MT as the appropriate normal value for the purpose of the preliminary investigation. The NV adopted is based on the price range of US$255-280/MT specified in the Anti-Dumping Agreement between the US Department of Commerce and the Minister of Trade of the Russian Federation issued on 22 February 1999. The imposition of the anti-dumping bond was, however, suspended by BIS until such time that NSC can show proof that its HRC Division is already on a normal operation status.

On 07 June 1999, a Motion for Reconsideration on the Affirmative Findings of Dumping and Application of Provisional Measures against HRC from Russia was filed by the protestees, namely, Mayer Steel Corporation, MKK Steel Corporation, Supreme Steel Pipe Corporation, Novolipetsk Iron and Steel Corporation, Magnitogorks Iron and Steel Works and Open Joint Stock Company Severstal through their counsel, Lucenario, Margate and Mogpo.

On 14 June 1999, the DTI-BIS, acting on the said Motion, ordered that the affirmative findings of dumping and application of provisional measures against HRC and sheets from Russia be held in abeyance pending resolution of the said Motion.

On 15 June 1999, NSC, on its part, also filed a Request for Reconsideration on the Affirmative Preliminary Findings specifically on the increase in the amount of "all others rate" from 11.60% to 20%.

On 04 August 1999, the DTI-BIS issued a Resolution lifting the Order holding in abeyance the affirmative preliminary findings on the anti-dumping case against the importation of HRC from Russia. However, the imposition of the anti-dumping bond was suspended until such time that NSC’s hot mill production capacity is at a level when the case was filed in September 1998. On 12 August 1999, the Dispositive Portion of the DTI Resolution lifting the Order holding in abeyance the affirmative preliminary findings on the anti-dumping case against the importation of HRC from Russia was published.

On 09 August 1999, the DTI-BIS endorsed the protest together with its findings to the Tariff Commission (Commission) for formal investigation.

3.2 THE ROLE OF THE COMMISSION

Pursuant to Section 301 (b) of the TCCP, as amended by RA 7843, and further amended by RA 8752 (Anti-Dumping Act of 1999) and in accordance with Article VI of GATT 1994, the Commission, upon receipt of the endorsement of the case, conducted the formal investigation to determine:

whether or not the protested articles are imported into the Philippines at a price less than its normal value and to ascertain the difference, if any; and if, as a result thereof, the domestic industry producing like articles in the Philippines suffered, or was threatened with, injury or suffered material retardation of the establishment of a domestic industry.

3.3 THE COMMISSION’S APPROACH TO THE ANTI-DUMPING CASE

The formal investigation involved the following actions by the Commission:
  • identification of all parties concerned;
  • notification of foreign governments concerned and sending of questionnaires to all parties, both domestic and foreign;
  • conduct of consultation, pre-hearing conferences and public hearings;
  • gathering of economic and financial data such as production, sales inventory, employment, etc.;
  • conduct of ocular inspection and verification of information submitted by parties concerned;
  • conduct of on-the-spot investigation in the territory of the exporting country;
  • acceptance of position papers, memoranda and counter-memoranda of the parties;
  • evaluation and analysis of all information submitted/gathered to determine the existence of dumping, material injury and causal link;
  • disclosure to all interested parties of the essential facts which form the basis for the decision; and
  • preparation of report of final determination and submission to the DTI for the issuance of a Department Order for the imposition of the definitive anti-dumping duty, if affirmative, or the release of cash bond, if negative.
4. THE COMMISSION’S INQUIRY

4.1 PRODUCT UNDER CONSIDERATION

The imported product covered by the protest is referred to as the "product under consideration."

In its protest, NSC identified all the subheadings of HS Heading No. 72.08 as applying to the allegedly dumped product. Heading 72.08 is described in the HS TCCP as "Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, hot-rolled, not clad, plated or coated." In its preliminary findings, the DTI-BIS included all shipments of HRC and sheets from Russia falling under HS heading 72.08. The Commission, based on its investigation, limited the coverage of the product under consideration to hot rolled low-carbon steel coils and sheets of thickness 2.0 – 12.7 mm with widths of up to 1220 mm which is within the capability of NSC.

The typical domestic applications of HRC are in the production of welded steel pipes/tubes and general/structural fabrication. NSC also processes HRC in its cold mill to produce cold-rolled coils (CRC) for the downstream industries engaged in the production of galvanized and prepainted sheets, drums, welded pipes/tubes, household appliances and general fabrication.

4.2 PERIOD OF INVESTIGATION

For dumping determination, the Commission’s investigation covered imports of HRC for the 12-month period from 01 January 1998 to 31 December 1998. With respect to injury, the period covered were the years 1996 to 1998.

4.3 NOTIFICATION

4.3.1 Formal Investigation/Questionnaire

On 18 August 1999, notification was sent to Ambassador Anatoli Khmelnitski of the Russian Embassy in Makati City and the Philippine Ambassador to Russia, Jaime S. Bautista, informing them that the anti-dumping protest of NSC is now with the Commission for formal investigation. Also notified, through their embassies in Manila, were the governments of the trading firms based outside Russia whose HRC exports from Russia to the Philippines were subjected to temporary suspension of provisional measure.

Individual notifications with attached questionnaires were likewise sent to NSC, twenty-two (22) identified traders, twenty-nine (29) importers, and four (4) Russian steel manufacturers. Parties were given thirty (30) days from receipt of the questionnaire to accomplish and return the same to the Commission.

4.3.2 Consultations

The Commission sent out invitations to consultations on 16 August 1999.

The consultation was held at the Commission on 31 August 1999. Representatives from NSC, Russian Federation, Portalloy and Counsel for the protestees were present. They were informed of the procedure of the investigation and were asked to explore the possibility of amicable settlement.

Counsel for the protestees informed the body that they are open for settlement.

4.3.3 Pre-Hearing Conference

Invitations to the pre-hearing conference were sent out on 21 September 1999 to the protestant, counsel for protestees, identified importers and the Russian Trade Representative, Mr. Nikolay T. Sychev.

The pre-hearing conference was conducted on 30 September 1999 which discussed the schedules and procedures of the public hearing, the presentation of witnesses and documentary evidences and other relevant matters necessary for the expeditious and/or otherwise orderly conduct of the hearing.

The parties agreed on the following hearing dates: 21, 26 and 28 October and 04, 11 and 17 November 1999.

4.3.4 Public Hearing

Notice of public hearing was published in Today and The Philippine Star on 06 October 1999. All known interested parties and concerned government agencies were also sent individual notices.

During the public hearing of 21 October 1999, protestant manifested that it was adopting as its evidence-in-chief the findings of BIS. On 26 October 1999, the Commission ordered the protestant, to clarify their manifestation, among others. The 28 October hearing was cancelled.

With the passage of RA 8752 (Anti-Dumping Act of 1999) and for the speedy disposition of the instant case, the parties agreed on 04 November 1999 on the new schedule and procedure to be followed in the formal investigation. Four (4) marathon hearings was scheduled and considered. All previously scheduled hearings were cancelled. The new notice of public hearing was published in Today and the Philippine Star on 06 January 2000.

The hearings were terminated on 28 January 2000. The protestant and the protestees submitted their memoranda on 29 February and 02 March 2000, respectively. Counter-memoranda were filed on 20 March and 17 March 2000.

4.3.5 Ocular and/or On-the-Spot Investigation and Verification of Information

Agreement to conduct an ocular inspection, examination of books of accounts and verification of information was requested from all concerned domestic parties. NSC, Sumo Steel Pipe Corporation and Hurleson Steel Corporation granted the request.

Simultaneous with the CRC investigation (Anti-Dumping Inv. 98-01), an ocular inspection of the manufacturing plant and verification of information on the three (3) Russian manufacturers, namely, Novolipetsk, Severstal and Magnitorgorsk was conducted by the Commission’s staff on 16,17, 19 and 20 August 1999, respectively, in Russia.

4.4 INQUIRY

For purposes of final determination, the Commission limited its investigation according to the provisions of Section 6.10 of the Agreement which state:

"Authorities may limit their examination either to a reasonable number of interested parties or products by using samples which are statistically valid on the basis of information available to the authorities at the time of the selection, or to the largest percentage of volume of the exports from the country in question which can be reasonably investigated".

Furthermore, parties who failed to submit answers to questionnaire were to be governed by the provisions of Section 6.8 of the Agreement which provide:

"In cases in which any interested party refuses access to, or otherwise does not provide, necessary information within reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of facts available…"

4.5 DOMESTIC PRODUCER

4.5.1 NSC

Company Profile

NSC, formerly a wholly-owned subsidiary of the National Development Company (NDC), is majority-owned by the Malaysian-based Hottick Holdings Co. Berhad. NSC is the only producer of HRC in the Philippines. The company produces HRC in various commercial sizes in accordance with JIS/ASTM standards and specific customer requirements.

Its office is located at 377 Sen. Gil J. Puyat Avenue, Makati City with its plant located at Iligan City. The company was incorporated in 1974. Aside from HRC, NSC also produces electrolytic tinplates, billets and CRC. These products were also subject of an anti-dumping protest.

Position/Issues

NSC claimed that the product under consideration was being sold in the Philippines at a price less than the prevailing normal value, in the ordinary course of trade, in the domestic market in Russia.

The company suffered material injury evidenced by contraction in profits, market share, production and employment as a consequence of dumping.

NSC was capable of supplying the requirements of the domestic market during the period of investigation and therefore remains a domestic industry to protect with the imposition of an anti-dumping bond.

Reply to Questionnaire

NSC submitted its duly accomplished questionnaire on 16 September 1999.

Ocular Inspection

The Commission conducted an ocular inspection of the plant facilities and operations of NSC in Iligan City on 16 and 17 September 1999 and disclosed the following:

The company has four (4) major operating facilities, namely: a hot-mill which produces HRCs from steel slabs; a cold-mill for the production of CRC and TMBP; an electrolytic tinning line to produce tinplates; and a steel billet making plant for the production of billets from steel scraps.

NSC has two (2) hot mill (HM#1 and HM#2). HM#1 is no longer in operation. Its Hot Mill #2 has an annual rated capacity of 1.0 M MT/year. It was confirmed that NSC is still producing HRC during the ocular inspection.

The bulk of their 1999 HRC production is delivered (in-house) to its cold mill for further processing into cold-rolled coils (CRC), either for galvanizing or tinplating purposes.

Records show that NSC continued to import slabs for the same period (1999), totaling 63,560.4 MT, which supports the company’s claim that its hot mill continues to produce HRC during the said period.

The 1999 level of HRC production is below the 1998 performance. Specifically, the 19,257 MT production for July 1999 is well below the September 1998 production of 45,106 MT. NSC claimed that low production was the result of the company’s inability to source its main raw material, plus the lack of orders from HRC consumers. Verification of Information

Verification of the company’s records in Makati City was conducted on 26 and 31 January and 04, 14 and 15 February 2000. Information submitted to the Commission, i.e., production, sales, inventory, etc., was found to be consistent with information contained in the company’s book of records. Information on selling prices submitted by the company was consistent with those reflected in its sales invoices.

4.6 RUSSIAN MANUFACTURERS

4.6.1 Novolipetsk Iron and Steel Corporation (NI&S Co.)

Company Profile

The Company is a publicly-owned joint stock company. NI&S Co. was privatized by the Russian government in 1993. Under the privatization program, two types of shares were issued. Privileged shares, constituting 10-15 percent of the total shares issued, and regular or plain shares, constitutes the remainder. Privileged shares were non-voting, but its holders were guaranteed a fixed dividend. Those holding regular shares were entitled to participate in shareholder meetings and could thereby exercise control over company management decisions.

Reply to Questionnaire

The Commission received Novolipetsk’s faxed letter dated 23 September 1999. The company was adopting the information provided in the BIS Exporter’s Questionnaire as compliance to the Commission’s questionnaire. Additional documents submitted include domestic sales only.

Ocular Inspection

Simultaneous with the CRC investigation (Anti-Dumping Inv. 98-01), an ocular inspection of the company’s manufacturing plant and verification of information provided in exporter’s questionnaire was conducted by the Commission’s staff on 22 and 23 August 1999 in Lipetsk, Russia.

NI&S Co. is one of the largest integrated full-cycle metallurgical enterprise in Russia. It consists of sintering, carbonization, nitrate mineral fertilizer, blast furnace, steel-melting, rolling works, sophisticated power equipment, powerful repair facilities.

Annual volume of hot rolled steel production is about 6 million tons.

It produces a wide range of iron and steel products, including slabs, steel making iron, hot and cold rolled carbon steel in sheets and coils, structural steel, electrical steel and coke by-product such as, liquid ammonia, ammoniacal water, ethyl benzene, solvent, toluene, isopropyl benzene, ammonium sulphate, naphtalene, pitch coke.

Total workforce of the company accounted for 42,000 employees.

4.6.2 Magnitogorsk Iron and Steel Works (Magnitogorsk)

Company Profile

Magnitogorsk, located in Magnitogorsk, Chelyabinsk Region, Russia, is an integrated steel maker and the third largest steel making in Russia. It is the first metallurgic plant to be transformed into a joint stock company at the end of 1992. The company has a huge production capacity up to 16 million tons of steel making per year and up to 11 million tons of rolled metal output per year.

Reply to Questionnaire

The counsel for protestees manifested that the company was adopting the information provided in its earlier submission to the DTI-BIS. The company provided additional data on 1998 cost of production of HRC and 1998 domestic sales and export sales to the Philippines.

Ocular Inspection and Verification of Information

After the ocular inspection/verification of Severstal, the Commission on 19 and 20 August 1999, conducted an ocular investigation of the plant facilities of Magnitogorsk in Chelyabinsk, Russia, as well as verification of information contained its response to the questionnaire.

Magnitogorsk is an open joint stock company with a large number of shareholders (both natural and juridical) – 76% owned by private share holders and 24% by the Ministry of State Property.

The company has a total of 31,757 employees. It also has huge annual production capacity up to 16 million tons of steel smelting and 11 million tons of rolled metal output.

Domestic sales are based on the price list in effect at the time of sale which are revised from time to time depending on changing market conditions, fluctuations of raw material prices and inflation in Russia. Prices are likewise determined on the basis of mode of payment – prepaid, cash on delivery or credit terms. The most common term is the credit of 30 days.

The company exports its products to the international market through unaffiliated foreign trading companies who buy from the company on the FCA Terms (Railway Station) or FOB Port Terms. Export sales are negotiated with foreign trading companies from time to time and are set forth in contracts called "specifications".

The Board of Directors, whose members are elected during the annual shareholder’s meeting pursuant to its charter, is in charge of the overall management of the company.

Situated atop Magnitnaja mountain, the company claims a comparative advantage over its foreign competitors, given the vast iron ore deposits and sustainable and cheap supply of raw materials and fossil-fuels in the region.

4.6.3 Severstal Iron and Steel Works (Severstal)

Company Profile

Severstal is one of the largest iron steel making enterprises in Russia. The company’s plant facilities has a total land area of 30,000 hectares, situated in Cherepovets, Vologda Region, Russia. It produces a wide range of iron and steel products, including metallurgical coke, cast iron, hot-rolled plates, sheet and strip, cold rolled sheets, cold rolled and galvanized bands, medium and light sections, wire rods, electric welded pipes, enameled kitchenware, metal furniture and mineral-based fertilizers.

Reply to Questionnaire

The counsel for protestees manifested that the company was adopting the information provided in its earlier submission to the DTI-BIS. However, based on the documents forwarded by the DTI-BIS to the Commission, no reply to the questionnaire was submitted.

Ocular Inspections/Verification of Information

On 16 and 17 August 1999, the Commission in connection with the CRC investigation, conducted an ocular investigation of the plant facilities of Severstal in Cherepovets, Russia as well as verification of information provided by the company.

Severstal is a publicly-owned company with large number of shareholders (both natural and juridical) – 90% owned by private shareholders and 10% by the government through the state-owned company, "Rossiyskaya Metallurgia".

The company has 45,257 total employees of which 2,840 are directly involved in HRC production.

Annual and actual capacity utilization of HRC during the POI were 7.6 million tons and 6.2 million tons, respectively.

The company determines the price of its products through direct negotiations with customers/trading companies. Domestic sales include wholesale and retail sales, barter, securities, credit and cash sales. Export sales, on the other hand, may either be expressed free on board (FOB), delivered at frontier or territorial boundary of Russia (DAF) or free carrier agreement (FCA) at varying conversion rates during the year.

Export sales are covered by long-term contracts with trading companies/resellers who take possession of the merchandise at the ports in Russia or the Baltic States. The details of contracts are generally agreed between the company and the trading companies. Export pricing is primarily determined by its Export Department.

The company submits quarterly and annual accounting reports to the owners, state inspection agencies and other government agencies. Its financial statements are subject to audit by independent auditors in accordance with international audit standards.

Production cost of the company reflects the actual market costs to produce end products. Fixed Assets are valued at their historical acquisition costs and are subject to straight line depreciation.

Like any other Russian firms, the company is subject to bankruptcy and property ownership laws.

The highest managerial body of the company is the Board of Directors constituted in an annual general meeting of the stockholders.

Severstal mentioned during the ocular inspection that it did not export HRC to the Philippines during the POI. Consolidated Position/Issues submitted by Counsel

Normal Value

Normal values of HRC from Russia for the period 1998 be admitted as evidence for the determination of the case.

Product Under Consideration

The specific width of 1.5 mm thick HRC is limited to 915 mm (3 feet) only. They are not producing nor supplying HRC with a specific size of 1.5 mm thick by 1220 mm (4 feet) in width.

Injury

The alleged decline of NSC’s domestic sales of HRC in 1997-1998 was caused by the company’s failure to deliver the requirements of the customers on a timely and consistent manner. NSC is not a reliable supplier. Moreover, they do not produce the product mix which is being demanded by the market, forcing the local users to import, which resulted to the latter’s high inventories.

Unfavorable economic condition caused the contraction in the market during the years 1996-1998 which in turn depressed market prices and steel demand.

The lifting of import controls on steel and government’s Tariff Liberalization Program has directly and seriously injured NSC, which likewise caused the company to reduce its prices and volume share of the domestic market.

The company’s uncompetitive costs is the true reason for its losses. This is primarily due to NSC’s lack of slab-making facility and the price of its imported slab is high.

NSC’s relatively low and obsolete technology employed in its equipment/manufacturing process has resulted to delay in production, reduce capacity utilization which caused the company to incur non-competitive costs.

Foreign exchange losses materially injured HRC. It further contributed to the deterioration of NSC’s financial position by increasing its peso obligation and interest.

NSC’s mismanagement of its finances particularly loan obligation is the principal cause of its financial difficulties.

The reduction of NSC’s personnel commenced as early as 1993, when major projects did not materialize and later, as a requirement for its privatization. The retrenchment was effected to relieve the company’s excess manpower. 4.6.4 Gorkovesky Metallurgichesky Zavod (Gorkovesky)

A faxed letter from the company was received by the Commission on 14 September 1999 informing that Gorkovesky did not export HRC to the Philippines and therefore has not responded to the questionnaire sent by the Commission.

4.7 TRADERS

4.7.1 Klockner East Asia Limited (Klockner)

The Commission received Klockner’s faxed and original submission on 16 and 28 September 1999, respectively, informing that the company did not export HRC to the Philippines and therefore have not completed the importer’s questionnaire sent by the Commission.

4.7.2 Cargill International Trading PTE Ltd. (Cargill)

Cargill is an international trading company. All of the company’s activities are related to sales and trading of steel and other products. Steel products include hot rolled coil/sheet, cold rolled coil/sheet, galvanized coil/sheet, billet/slab and wire rod/rebar. Cargill maintains a network of trading offices throughout the US, Latin America, Europe, Africa, Asia and the Pacific Rim.

Cargill sent its duly accomplished questionnaire on 27 September 1999. It provided data on the company’s total export sales to the Philippines, list of local customers and export sales to other countries with corresponding commercial invoices.

4.7.3 Port Alloy Industrial Supply Corporation (Portalloy)

The company’s response to the questionnaire was received on 16 September 1999. Portalloy stated that quality wise, there is no difference between the HRC imported from Russia and HRC produced by NSC. Most of the questions were left unanswered.

4.8 IMPORTERS

4.8.1Mayer Steel Pipe Corporation (Mayer)

Company Profile

Since its incorporation in 1972, the company has been dedicated exclusively to the manufacture of steel pipe. Markets for its various products which include galvanized steel pipes, black iron pipes, furniture tubings, spital pipes with different protection, conduit pipes, fabricated elbow and fabricated tanks have expanded over the years to encompass structural and industrial applications in both private and government sectors.

Its office is located at 1221 Tytana Plaza, Plaza Lorenzo Ruiz, Binondo, Manila and manufacturing plants located in Barrio Canumay and Barrio Lingunan, Valenzuela, Metro Manila.

Reply to Questionnaire

The company, through counsel, manifested that they were adopting the DTI-BIS questionnaire.

4.8.2 MKK Steel Corporation (MKK)

MKK was incorporated in 1987 and registered with SEC in 1988. The company’s products are manufactured in accordance with International Standards. The product line includes black iron pipes and galvanized iron pipes. The company’s manufacturing plant is located at Barrio Lingunan, Valenzuela, Metro Manila.

Reply to Questionnaire

MKK manifested through counsel that they were adopting the DTI-BIS questionnaire.

4.8.3 Sumo Steel Pipe Corporation (Sumo)

Company Profile

Sumo is engaged in the manufacture of black and galvanized pipes. Its office is located at 82 P. Delfin St., Marulas, Valenzuela and plant address at 658 T. Santiago St., Lingunan, Valenzuela. The company started commercial operation in 1996. Annual HRC requirements is 1,500 MT, with gauge 1.5 mm and width of 1220 mm (4 feet). It has one (1) cutting line with a capacity of 3 rolls of HRC per day, while the galvanizing line produces 5 MT of galvanized pipe per day on a single shift.

Reply to Questionnaire

The company manifested that they were adopting the DTI-BIS questionnaire as compliance to the Commission’s questionnaire.

Ocular Inspection/Verification of Information

On 24 February 2000, the Commission conducted an ocular inspection and verification of information contained in the company’s submission of purchases from NSC as well as its importations.

4.8.4 Supreme Pipe Corporation (Supreme)

Company Profile

Supreme is engaged in the manufacture of steel pipes. Its plant address is located at Barrio Perez, Meycauayan, Bulacan. The company uses thin gauges HRC (1.5 mm to 2.0 mm) because of its wider application

Consolidated Position/Issues of Domestic Pipe Manufacturers - Protestees based on Affidavits

a. The companies claimed that NSC can not supply thin gauges ( < 2 mm) HRC.

b. There was always a delay in delivery. The period of delivery delays ranges from two (2) to nine (9) months.

c. The companies can only purchase HRC which were available on stock. NSC can not commit to supply because of uncertainty of slab.

d. The companies claimed that NSC can not deliver all the volume indicated in the contract. In some instances, NSC would just replace it with different size.

4.8.5 Other Importers

The following importers who were identified but did not cooperate and failed to submit their answers to the questionnaire, namely, Topmark Steel Corp., Thomson Marketing Corp., Steel Pro Pipe Corp., Starline International Marketing, Inc., Rigid Metal Mfg. Corp., Remington Industrial Sales Corp., Power Construction Supply Co., P.I. Hardware and Mills Supply, Metal Trade Supply Center, Inc., Orbital Industrial Supply, Inc., Marketing Proponents, Inc., Magnitude Steel Mfg. Corp., Linton Commercial Co., Inc., Little Giant Steel Pipe Corp., Kudos Metal Corp., Jarwood Industries., JAPRL Development Corp., Goodyear Steel Pipe Corp., Golden Harvest Construction Supply, Ferro Sales Co., City Industrial Corp., Cathay Metal Corp., Carivans Industrial Corporation, Island Commodities Traders, Inc., Wangs Co., Inc., Alcorp Trading, Inc., and Alexander Commercial, Inc.

4.9 OBSERVER

Steel Corporation of the Philippines (SteelCorp)

SteelCorp participated as an observer. An ISO 9002 certified company, whose commercial cold-rolling/galvanizing operations started only in March 1999. It was registered with the BOI under RA 7103 (Iron and Steel Act) and is entitled to several incentives including availment of a zero tariff incentives on its major raw material – HRC. SteelCorp is a company of Philsteel Holdings Corporation. It has sister companies, namely, PhilSteel Coating Corp., PhilMetal Corp. and SteelFrame Corp.

Philsteel Holdings Corporation is a member of FGI, an umbrella organization of galvanizing companies. The company, however, does not source HRC from Russia.

5. INDUSTRY AND MARKET

5.1 LIKE PRODUCT

Article 2.6 of the Agreement, defines the term "like product" as:

"A product which is identical, i.e., alike in all respects to the product under consideration, or in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration."

5.1.1 Domestic Product

The domestic "like product", for purposes of this investigation, is hot-rolled low-carbon steel coils, of thickness of 2.0 to 12.7 mm, in widths of up to 1220 mm and conforming to JIS G3101, G3131, G3132, G3113 or its equivalent in ASTM standard.

The domestic industry further distinguished its HRC as commercial grade carbon steel (SAE 1006/1008) or structural grade carbon steel (SAE 1016) as required by downstream users.

The domestic applications of HRC are in the production of welded steel pipes/tubes and general/structural fabrication. NSC also processes HRC in its cold mill to produce cold-rolled coils (CRC) for the downstream industries engaged in the production of tinplates, galvanized and prepainted sheets, drums, welded pipes/tubes, household appliances and general fabrication.

5.1.2 Factors Considered in Determining Like Product

The Commission, based on its investigation, limited the coverage of the product under consideration to hot rolled low-carbon steel coils and sheets of thickness of 2.0 – 12.7 mm with widths of up to 1220 mm which is within the capability of NSC.

The formal investigation also excludes from the product coverage the following:

HRC/sheets of thickness exceeding 12.7 mm which fall under subheadings 7208.36 90 and 7208.51 90 and those with patterns in relief falling under subheadings 7208.10 00 and 7208.40 00; and

All other HRC/sheets not falling within HS heading No. 72.08. a. Characteristics

Chemical Composition

NSC produced HRC according to JIS G3101 (Rolled Steel for General Structure), JIS G 3113 (Hot-rolled Steel plates, sheets and strips for automobile structural shapes), JIS G 3131 (Hot-rolled Mild Steel Plates, Sheets and Strip) and JIS G 3132 (Hot-rolled Carbon Steel Strip for Pipes and Tubes) or their equivalent in ASTM standards, e.g., ASTM 569 and 570.

The chemical composition of local HRC based on JIS specifications and its intended application is:

Table 1 – Local HRC’s Chemical Composition
Specification Application % Chemical composition, max.
    C Mn P S
JIS G3101 Gen. Structure - - 0.05 0.05
JIS G3113 Auto Structural - - 0.04 0.04
JIS G3131 SPHC Gen. Fabrication < 0.15 < 0.60 0.05 0.05
JIS G3132 SPHT1 Welded steel pipe and tube 0.10 0.50 0.04 0.04

There is yet no Philippine National Standard (PNS) for HRC adopted by BPS. The local industry practice, as required by customers, is to indicate the material grade, i.e., SAE 1006/1008 (commercial) or SAE 1016 (structural grade). The chemistry of steel slabs processed by NSC to produce HRC meets the following specification:
Table 2 – Local HRC’s Specification
Specification SAE 1006 SAE 1008 SAE 1016
  Commercial Grade Structural Grade
Chemistry
Carbon 0.08% max 0.06 – 0.10% 0.12 – 0.16%
Manganese 0.30 – 0.50 0.30 – 0.50 0.60 – 0.90
Silicon 0.03 max. 0.03 max. 0.03 max.
Phosphorus 0.03 max 0.02 max. 0.02 max.
Sulfur 0.02 max 0.02 max. 0.02 max.
Aluminum 0.02 – 0.06 0.02 - 0.06 0.02 – 0.06
Cr+Cu+Ni 0.20 max. 0.2 max.  
CE (%C + %Mn/6)      
HRC Specs JISG 3131- SPHC
JISG 3131- SPHT-1
JISG 3101- SS400
JISG3132-SPHT3
JISG 3113 – SAPH-310/32
JISG 3113-SAPH-370/38
ASTM A36
Application JIS G3141
GI Application
Pipes
Tubes
Gen. – Fabrication
Wheel rim
Chassis
Pipes
Structural Fabrication
Source: 1996 NSC Slab Specifications

On the other hand, HRC from Russia are identified in import documents under various descriptions such as Russian grades 3sp/ps, 08KP, 2PS/SP or in American standard SAE 1008/1016 per ASTM 568/M, etc. The chemical composition for hot-rolled steel for general applications produced by one Russian manufacturer is given as:

Table 3 – Russian HRC’s Chemical Composition
Chemical Composition, %
C Si Mn Al S P Cr Ni Cu Ni
0.05 –0.10 0.10 max. 0.25 –0.45 0.02 –0.07 0.035 max. 0.030max 0.10max 0.20max 0.20max 0.007max.
Source : Product brochure of a Russian manufacturer-protestee.

The specification of other HRC based on strength class indicates composition of structural grade comparable to SAE 1016.

The Commission is satisfied that the domestic product is comparable to the product under consideration based on their respective chemical composition.

Quality

The issue of quality was not raised by protestees. The affidavits of protestees’ two (2) witnesses did not question the quality of the domestic product and admitted that they purchased HRC in various sizes from NSC and abroad.

The Commission, based on the standards followed by the domestic industry, determines that the domestic HRC in terms of quality is comparable to the product under consideration.

Uses

As mentioned, protestees testified that its HRC are sourced domestically or abroad. Ocular inspection of protestees witness’ pipe making and light structural section facilities shows that both domestic and imported HRC are used in its production operations.

The Commission is satisfied with the interchangeability of usage of the local product and the product under consideration.

Sizes

The available commercial sizes produced by the domestic industry:

Table 4 – Local HRC’s Commercial Sizes
Strip width, mm
  930 1100 1220
Thickness 1.5 – 1.8 1.8 -
Range 2.0 – 12.7 2.0 – 12.7 2.0 – 12.7
Source : NSC brochure (other sizes may be available upon confirmation.)

The Commission finds that NSC’s actual production was based on these three (3) "standard" sizes.

Width

During the POI, NSC produced HRC in widths of 930 mm with a thickness of 1.5 mm and 1220 mm (4’) with thickness of 2.0 mm to 12.7 mm. These widths are standard sizes based on domestic industry demand and are also the basic widths imported by protestees. The Commission, as in its findings in the CRC from Russia anti-dumping investigation, excludes those products with widths greater than 1220 mm from the coverage but includes intermediate widths within the actual capability of the domestic industry.

Thickness

During the public hearings, protestant did not contest the protestees’ witness statement that NSC production of 1.5 mm thick HRC is limited to 930 mm width since it is not protesting HRCs of thickness below 2 mm. Protestant’s witness also manifested that 1.5 mm thick HRC are not sourced from Russia.

The Commission also noted that the brochures of two (2) Russian manufacturer-protestees indicate that they do not produce HRC of thickness less than 2 mm.

The protestant’s inclusion of HRC with thickness below 2 mm in their counter-memorandum and citing the proceedings in the executive session of 25 January 2000 as basis is not accepted by the Commission.

Based on the hearings conducted, the Commission excludes HRC of thickness below 2 mm and limits the product under investigation to thickness of 2.0 to 12.7 mm, inclusive.

Coils vis-a-vis sheets

HRC in sheet form can be obtained from steel coils by cutting the latter in desired lengths whether in-house if a shearing facility is available or through steel service centers. Fabricators can use both HRC in coils or in sheets.

As in the anti-dumping investigation on CRC from Russia (Inv. 98-01), HRC whether in coil or sheet form are covered in this investigation.

b. Manufacturing Methods and Technology

HRCs are produced by hot rolling steel slabs of known chemical composition in a hot mill into desired thickness and width. As in the case of NSC, the process in its hot mill involves the reduction of slabs by heating and rolling at high temperatures in reversing roughing and finishing mills. Water sprays are used to cool the hot rolled strip before it enters the downcoilers where the hot strip is cooled. There was no issue raised regarding differences in manufacturing methods or technology during the public hearings.

The Commission is satisfied that the domestic product, based on manufacturing process, is comparable with the product under consideration.

c. Industry Specifications

As mentioned earlier, the domestic industry produces HRC based on various JIS/ASTM specifications.

From the information obtained from responses provided by traders, HRC are described as conforming, among others, to Russian steel grades described such as 3PS/SP, 08Kp, 2PS/SP or to SAE 1008. Based on the brochure submitted by one Russian manufacturer, these descriptions of steel grades fall within various Russian standards such as GOST 16523-89 (Hot-rolled light gauge of quality and general purpose applications), GOST 14637-89 (Hot-rolled heavy gauge strip of regular carbon steel grades), GOST 4041-71 (Hot-rolled strip for cold-drawing of structural quality steel grades). The tables on mechanical properties of hot rolled steel products according to domestic and foreign standards given in the same brochure indicates that these standards are equivalent to JIS/ASTM standards followed by NSC.

The Commission is satisfied that based on specifications the domestic product is comparable to the product under consideration.

d. Tariff Classification

The protested importation and the domestic product fall under the same appropriate tariff lines under HS heading No. 72.08. The tariff lines covered by the protest are HS subheading Nos. 7208.25 00, 7208.26 00, 7208.27 00, 7208.36 10, 7208.37 00, 7208.38 00, 7208.39 00, 7208.51 10, 7208.52 00, 7208.53 00, 7208.54 00 and 7208.90 00.

During the POI, the rate of duty was 7%. Below is the historical development of tariff rates for the product under consideration.

Table 5 - Historical Development of Tariff Rates of HRC
P.D. 1464
(1978)
E.O. 465*
(1998)
E.O. 63**
(1999)
CMC 437-99 /
CMC 160-2000 ***
10% 7% 7% 3%

* Effective 22 January 1998.
** If HRC capacity utilization of NSC is not sustained at a level of at least 50% from July 1, 1999 per determination of the Board of Investments (BOI), the tariff rate will go down to 3% immediately.
*** Effective 24 September 1999.

5.1.3 Conclusion

The Commission determines that the domestically produced HRC, as described in item 5.1.1 constitutes a "like product" to the product under consideration, i.e., hot-rolled carbon steel coils and sheets, of commercial or structural grade and their equivalents in Russian or other national standards, in widths of up to 1220 mm, thickness of 2.0 -12.7 mm and classified under HS subheading Nos. 7208.25 00, 7208.26 00, 7208.27 00, 7208.36 10, 7208.37 00, 7208.38 00, 7208.39 00, 7208.51 10, 7208.52 00, 7208.53 00, 7208.54 00 and 7208.90 00.

5.2 THE DOMESTIC INDUSTRY

Article 4.1 of the Agreement defines "domestic industry" as:

"Domestic producers as a whole of the like product or to those whose collective output of the product constitutes a major proportion of the total domestic production of those products..."

Article 5.4 of the Agreement states that an investigation shall not be initiated unless the application has been made by or on behalf of the domestic industry:

"The application shall be considered to have been made ‘by or on behalf of the domestic industry’ if it is supported by those domestic producers whose collective output constitutes more than 50 per cent of the total production of the like product produced by that portion of the domestic industry expressing either support for or opposition to the application. However, no investigation shall be initiated when domestic producers expressly supporting the application account for less than 25 per cent of total production of the like product produced by the domestic industry."

NSC is the only producer of HRC in the Philippines and thus satisfies the requirement for domestic industry support.

5.3 THE PHILIPPINE MARKET

The Philippine market for HRC is estimated at 450,000 MT in 1998. Of the total, NSC supplied 24%. The balance is augmented by imports from countries such Russia, 30%; Taiwan, 14%; Korea, 12% and Japan 11%.

Being an industrial product, HRC is offered and sold directly by NSC to customers belonging mostly to those engaged in the production of other steel products, specifically for pipe manufactures and fabrications. Imports on the other hand are sold directly to downstream user industries by trading firms.

6. DUMPING

Dumping occurs when any specific kind or class of foreign article is imported or brought into the Philippines at a price i.e., export price less than normal value.

6.1 EXPORT PRICE

Export price is the price paid or the selling price to an importer in the Philippines of articles purchased at arms length transaction, excluding any post exportation charges, such as, ocean freight and overseas insurance.

The Commission based its estimates of export price on the import entries on file with the Commission, entries forwarded by the DTI-BIS, and summary of sales invoices submitted by Magnitogorsk.

Export prices were adjusted to ex-works level, i.e., net of ocean freight, insurance, inland freight, transshipment services, customs’ clearance, traders’ compensation and profit, if any. Adjustments made on export price to arrive at ex-works level varied depending upon the manufacturer and port of origin.

Novolipetsk, an identified Russian manufacturer, was excluded in the determination of export price since it is not a direct exporter.

With respect to exporters of HRCs originating from Russia whose manufacturers cannot be identified, adjustments in export prices, in addition to customs clearance and trader’s/contract commission, were based on Magnitogorsk.

Below is a summary of HRC export prices by specific exporters during the POI:

Table 8 – 1998 Specific Exporter’s Export Prices
Exporters(s) FOB Export Values
(US$/MT)
Adjusted Export Prices
(US$/MT)
Magnitogorsk Iron & Steel Works-Switzerland 237.57 - 275.00 187.65 – 224.46
Duferco S.A. – Switzerland 230.00 - 331.49 180.21 – 280.02
TCI Trans Commodities AG-Switzerland 216.34 - 267.50 166.98 – 217.09
MMK Metal Worldwide Ltd.-Hongkong 219.42 - 248.78 169.80 – 198.87
UMS United Metal Supply Ltd.-Russia 190.00 - 259.99 140.87 – 209.70
Noble Resources Ltd.-Hongkong 166.92 - 277.91 118.17 – 227.32
Klockner Stand-UN Metalhandel GMBH 240.50 - 320.75 189.01 – 278.53
Cabinmark Ltd.-United Kingdom 240.07 - 250.00 190.11 – 199.88
Inter Globe Trade – Russia 240.00 - 255.00 190.04 – 204.79
Mannesman Handle – Singapore 235.00 - 235.03 185.12 – 185.15
FJ Elsner & Co., Wien – Austria 233.00 183.16
Taco Metalasia Ltd. – Hongkong 223.72 174.02
Voest Alpine Intertrading – Austria 171.49 - 240.30 134.36 – 202.04
Preussag Handel – Germany 245.83 - 245.84 195.78 – 195.79
B.C.L. Trading – Russia 174.73 - 232.00 125.85 – 182.17
Metalsrussia Corp. – Hongkong 187.50 - 220.00 147.49 – 179.45
Cargill Int’l Trading Pte Ltd. – Singapore 212.75 - 215.75 170.61 – 173.56
Vanomet AG-Russia 217.86 - 227.75 168.27 – 177.99
Ispat Karmet –Russia 215.50 - 219.96 165.95 – 170.33
Monte Trading & Shipping – Russia 180.00 131.03
Lebgok 169.75 120.95
Macsteel International Far East Ltd. 230.00-238.10 180.21-188.17
Stemcor UK Ltd. 240.00 190.04
Ilyich Steel Mills 232.00 182.17
Zaporozhye Steel Mill 210.00-213.93 171.34-175.20
Safin Finanzierrung UND 265.83-271.50 215.44-221.02
Industrial Steel Ltd. 237.57 190.60
Sidermetal Ltd. 285.04-285.50 234.34-234.79
FJ Elsner & Co. 233.00 183.16
Source: 1998 Import Entries

6.2 NORMAL VALUE

Article 2.1 of the Agreement states:

"Normal value is the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country".

Article 2.2 further states that:

"When there are no sales of the like product in the ordinary course of trade…."

The Commission used adjusted domestic selling prices of Magnitogorsk from the months of January to August. Said values were found to be not below cost of production.

For the months of September to December, adjusted domestic selling prices were below cost of production. Hence, the constructed normal value, based on the cost of production plus selling and administrative expenses and profit margin was used.

Adjusted domestic selling prices submitted by Novolipetsk were not used since the company's exporters cannot be identified, and available import documents do not identify Russian manufacturers from which known exporters were sourcing their HRCs. Severstal did not submit any document, which may be used as basis for determining normal value.

Thus, for exporters of HRCs originating from Russia whose manufacturers cannot be identified or did not submit data, the adjusted domestic selling prices and constructed normal value of Magnitogorsk was used. The values ranged from US$108.40-US$229.86/MT.

Table 9 - Normal Values
POI (1998) Domestic Selling Price (US$/MT)
January 226.05
February 229.86
March 226.92
April 222.44
May 216.16
June 210.40
July 206.06
August 215.36
  Constructed Normal Value (US$/MT)
September 116.26
October 108.40
November 110.27
December 111.55
Average 183.31
Source: Magnitogorsk

6.3 DETERMINATION OF DUMPING

Article 2.4 of the Agreement sets the terms for comparing normal value and export price:

"A fair comparison shall be made between the export price and normal value. This comparison shall be made at the same level of trade, normally at the ex-factory level, and in respect of sales made at as nearly as possible the same time. Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are also demonstrated to affect price comparability. . . "

Based on adjusted EPs and constructed NVs, the price differences of HRC importations by specific exporter-trader during the POI are:

Table 10 – Dumping Margin
Exporter(s) US$/MT % of Export Price
Legbok AG 94.41 78.06
Taco Metalasia Ltd. – Hongkong 52.03 29.90
Ispat Karmet –Russia 48.78 29.29
Ilych Steel Mills 44.75 24.56
Zaporozhye 44.51 25.93
Macsteel 44.06 23.76
FJ Elsner & Co., Wien – Austria 43.76 23.89
Vanomet AG-Russia 42.23 24.49
TCI Trans Commodities AG-Switzerland 40.59 22.72
Cabinmark Ltd.-United Kingdom 35.29 18.21
Klockner East Asia Ltd.-Hongkong 33.68 17.74
Stemcor UK Ltd. 32.40 17.05
Inter Globe Trade – Russia 28.06 14.34
Mannesman Handle – Singapore 25.27 13.65
Duferco S.A. – Switzerland 25.14 13.47
MMK Metal Worldwide Ltd.-Hongkong 24.42 12.40
Magnitogorsk Iron & Steel Works-Switzerland 22.11 11.30
Preussag Handel – Germany 20.37 10.41
Industrial Steel Ltd. 19.97 18.60
Noble Resources Ltd.-Hongkong 15.96 9.17
Voest Alpine Intertrading – Austria 14.79 8.16
UMS United Metal Supply Ltd.-Russia 14.56 7.26
B.C.L. Trading – Russia 12.90 8.77
Sapin Finanzierungi UND 7.97 3.67
Sidermetal Ltd. 0 0
Monte Trading & Shipping – Russia 0 0
Cargill Int’l Trading Pte Ltd. – Singapore 0 0
Metalsrussia Corp. – Hongkong 0 0
6.4 DE MINIMIS MARGIN OF DUMPING

Article 5.8 of the Agreement states:

"There shall be immediate termination if the margin of dumping is de minimis. The margin of dumping shall be considered de minimis if the margin is less than 2 per cent, expressed as a percentage of the export price."

Except for Sidermetal Ltd, Monte Trading & Shipping (Russia), Cargill International Trading Pte Ltd. (Singapore) and Metalsrussia (HK), whose dumping margins were zero or de minimis, the computed dumping margin per exporter was clearly above de minimis.

7. THE ECONOMIC CONDITION OF THE INDUSTRY

7.1 DETERMINATION OF INJURY

Article 3 of the Agreement sets out the injury factors that must be examined by the investigating authority. These are:
a. volume of dumped imports;
b. effect of the dumped imports on prices in the domestic market for like products; and
c. consequent impact of the dumped imports on domestic producers of such products.
7.1.1 Volume of Dumped Imports

Negligible Volume of Dumped Imports

Article 5.8 of the Agreement provides for the immediate termination of dumping cases where volume of dumped imports is found to be negligible:

"There shall be immediate termination in cases where the authorities determine that .. the volume of dumped imports, actual or potential . . . is negligible. . . The volume of dumped imports shall normally be regarded as negligible if the volume of dumped imports from a particular country is found to account for less than 3 per cent of imports of like product in the importing member..."

Table 11 - Volume of Dumped Imports (in MT)
POI
(1998)
Imports from Russia 1/ Total Phil.
Imports 2/
% Share of Dumped
Imports to Total Phil. Imports
Dumped Undumped    
Q1 40,778 2,596 93,089 44
Q2 21,885 - 92,034 24
Q3 27,837 2,440 81,477 34
Q4 - 20,736 73,708 -
Total 90,500 25,772 340,308 27

Source:
1/ 1998 Import Entries
2/ 1998 NSO Foreign Trade Statistics

In determining the volume of dumped imports, NSO statistics, 1998 HRC import entries on file with the Commission and entries forwarded by the BIS were used.

NSO statistics show total HRC imports within the POI at 340,308 MT, of which 136,000 MT originated from Russia. However, available import entries accounted for only 116,272 MT of HRC importations from Russia. Based on the latter, the volume of dumped imports was estimated at 90,500 MT or 27% of total HRC imports. Despite the possibility of being undervalued, the 27% share of dumped imports to total is not negligible.

Volume Effect

Article 3.2 of the Agreement states:

"With regard to the volume of dumped imports, the investigating authorities shall consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in the importing Member."

The estimated Philippine market for HRC from 1996 to 1998 was contracting by an average 25%. This effected a similar contraction in sales of locally manufactured HRC and imports from countries other than Russia. As for Russian imports, volume initially expanded by 13% in 1997, but contracted by 56% in 1998.

In 1998, dumped imports from Russia were about 67% of total imports from that country, and 20% of total domestic consumption. Quarterly figures show dumped imports to be contracting in absolute terms. The share of dumped imports to domestic consumption was decreasing from 29% in the 1st quarter, to 18% in the 2nd quarter, and increasing to 26% in the 3rd quarter. No dumped imports were recorded in the 4th quarter.

Price Effect

Article 3.2 of the Agreement further states:

"With regard to effect of the dumped imports on prices, the investigating authorities shall consider whether there has been a significant price undercutting by the dumped imports as compared with the price of a like product of the importing Member, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree."

Price undercutting occurs when the prices of dumped imports are significantly lower than the price of the like product.

The incidence or extent of price undercutting was estimated using the landed cost of dumped HRC from Russia against the average ex-factory domestic selling price of local HRC.

Dumped HRC undercut domestic products only in the 1st quarter of 1998 at 10.80% and resulted in almost equal shares of domestic sales and dumped imports to total domestic consumption. There were no dumped imports recorded in the 4th quarter.

Price depression occurs when the price of dumped import forces down the price of like product. Price suppression, on the other hand, occurs when the prices of dumped imports prevent increases in the price of like products, which would otherwise have occurred.

Price depression occured in the 4th quarter of 1998 but this cannot be attributed to dumping because no imports of dumped HRC were recorded in that period.

Price suppression was apparent in the 2nd and 3rd quarters. NSC's average selling price in the 2nd quarter fell despite an increase in production cost. In the 3rd quarter, average selling price contracted by a larger margin than that in production cost. The pressure on NSC to reduce prices in these quarters was evident as landed costs of dumped imports were about 10.34% lower than the company's production costs.

However, apart from the evidence already presented, it shall be shown further that price suppression cannot be attributed solely to dumping.

7.1.2 Injury Factors

Market Share

As discussed, total market, domestic sales and imports from countries other than Russia followed similar patterns of decline from 1996 to 1998.

Imports from Russia, including dumped imports, increased in 1997 but likewise declined in 1998. Apart from the reason of contracting domestic market, the decline is attributed to a shift in Russian import markets. The Asian financial crisis forced Russian manufacturers to seek new markets for its steel products. The manufacturing boom in the United States and Canada served as impetus to tapping these two (2) big markets.

When the peso depreciated during the Asian financial crisis in mid-1997, the increase in the cost of foreign exchange served as a protection against dumped imports. However, the depreciation of the Russian roubles vis-à-vis the US dollar by 115% at the end of the 3rd quarter of 1998 (from 6.704 to 14.440), resulted in cheaper HRC imports. Thus, domestic sales was seen to be contracting faster than imports from Russia during this period, despite a visible cutback in the latter.

By and large, NSC was losing its market to imports. The loss can be partly attributed to dumping as price suppression aided in NSC's maintaining a higher market share than dumped imports in the 2nd and 3rd quarters of 1998. However, the pressure of competition from normal imports cannot be discounted. Its share to total market remained higher than the share of domestic sales over the 3-year period. Further, normal imports consistently picked up the slack left by dumped imports, especially in the absence of dumping in the 4th quarter of 1988.

Production, Sales and Inventory

Volume of production declined from 793,000 MT in 1996 to 693,000 MT in 1997 and to 336,000 MT in 1998.

NSC claimed that difficulty in sourcing slabs, the major raw material used in the manufacture of HRC, caused production stoppages from the 2nd to the 4th quarters of 1998, and resulted in reduced production. Investigation, however, revealed no glut in slab supply from traditional sources including Russia, Australia, Mexico and Brazil in the same year. The Commission traced the cause of reduced production and stoppages to deficient working capital. Documents further show that as early as the 1st quarter of 1998 NSC was purchasing slabs in the account of its customers. Deficient working capital likewise compelled NSC to channel an increasing share of declining production to its cold mill for further processing to CRC, the latter being a more profitable operation.

The company had opportunity to increase market share by increasing domestic sales. NSC's annual production was 96%, 98% and 75% of domestic consumption in 1996, 1997 and 1998, respectively. But the decision to favor CRC manufacturing over domestic sales impacted negatively on the latter. Moreover, the company failed to service orders a hundred percent, causing further contraction in domestic sales in 1998, and consequently its market share. It is therefore understandable that customers shifted to importation. NSC's opportunity loss translated into imports gaining market share.

The inventory level for HRC in 1997 reached 10.7% higher than the 1996 level.. In 1998, however, inventory level decreased by 63.71%.

Inventory levels sustained from 1996 to 1998 confirm that normal imports were competing actively with domestic production. NSC failed to dispose all of its production in 1998, resulting in a 45,000 MT inventory by year-end, even with declining importation of dumped HRC and its absence in the 4th quarter of 1998.

Thus, it can be concluded that dumping was not material in causing contractions in production, inventory, sales and consequently market share.

Capacity Utilization

Declining production resulted in contracting capacity utilization.

NSC’s hot mill has an annual rated capacity of 1.0 million MT. The company’s capacity utilization fell by an average 67%, from 793,000 MT in 1996 to 690,000 MT in 1997, and to 336,000 MT in 1998. Several months of suspended operations 1998, resulting from deficient working capital, contributed to a decline in capacity utilization.

Figures show fluctuating patterns of slab importation and consequently production. But identified periods of production stoppages coincided with high ending inventory levels. This underscores NSC's inability to produce HRC due to lack of working capital.
Table 18 - HRC's Production Cost (In P)
Factors of Production 1997 1998
% Share
to Total Cost to Produce and Sell
% Share
to Total Cost to Produce and Sell
Direct Materials 83.39 79
Conversion Cost:
Direct Labor
Factory Overhead:
Variable
Fixed
Other (Semi-variable)
0.65
9.11
.38
6.47
0.64
6.50
5.5
5.7
Total Cost of Good Mfd.    
Selling, Adm. & Gen. Exp.   7.8
Cost to Produce & Sell    

Source: NSC

Direct materials accounted for the largest share, at 79%, of the cost to produce and sell a metric ton of HRC. This was followed by selling, administrative and general expenses, which accounted for 7.8%.

The cost to produce and sell a metric ton of HRC was 21% higher in 1998 than in 1997. This was attributed to a 22.40% increase in the peso price conversion of slabs and low capacity utilization. These resulted in an increase in direct material cost by 28.9% and in fixed cost by 102.70%.

Based on the preceding, increasing cost contributed to the uncompetitiveness of locally manufactured HRC.

Profitability and Return on Sales

Financial statements revealed that HRC manufacturing was operating at a loss (EBIT), amounting to P235 million in 1996, P125 million in 1997 and P781 million in 1998, despite an almost 80% capacity utilization.

The loss is attributed to decreasing sales combined with increasing production cost, and selling and administrative expenses.

Declining sales resulted from NSC's decision to favor CRC operations, as discussed earlier.

Increasing losses sustained over the 3-year period resulted in contracting return on sales, from (9.46%) in 1996 to (5.85%) in 1997, and to (58.46%) in 1998.

Cash Flow

NSC was unable to generate funds from HRC operations in 1996 to 1998, because it sold below cost. Payments of huge interest expense exacerbated the negative cash position. Thus, NSC had to depend largely on borrowings and restructuring to fund its accountabilities.

Investment and Ability to Raise Capital

NSC’s inability to generate investment and raise capital is traced to the fact that the company was saddled with enormous debt, high interest cost, foreign exchange losses and high operating costs.

NSC’s interest expense in 1998 ballooned to P2.23 billion or an increase of 80% from P1.23 billion in 1997. The high interest expense of P2.23 billion represents 26% of total net sales of P8.58 billion, against 10% interest expense in 1997. This heavy debt servicing exhausted NSC’s financial resources, causing difficulty in sustaining operations and eventually led to a shutdown in November 1999.

The 1998 quarterly HRC Income Statement shows that a significant portion of revenue is used to pay interest expense. Its mounting loan obligations are a major cause of its financial difficulties.

Employment and Wages

The total manpower complement in HRC operations numbered 233 in 1998 as against 274 in 1996. Dumping did not cause the retrenchment of forty one (41) employees from HRC operation in 1998. It was management’s solution to address the problem of overstaffing.

7.1.2 Factors Other Than Dumping

The Commission evaluated factors, other than dumping, which could have caused major injury to the local HRC industry.

a. Competition From Normal Imports (Undumped Imports)

Normal HRC imports posed stiff competition to the domestic industry as evidenced by their market performance from 1996 to 1998. The market share of HRC from Russia declined from 43% in 1997 to 30% in 1998. Despite the market slump in 1998, however imports from countries other than Russia managed to capture a 46% share of the Philippine market against dumped imports at 18%. Taiwan, Korea and Japan’s share of total imports is at 18%, 16% and 14%, respectively.

Under EO 465 which took effect on 22 January 1998, the tariff duty on HRC was lowered from 10% to 7% (See Table 5). Lower tariffs on HRC reduced its landed cost. To maintain parity or competitiveness, NSC has to adjust its prices accordingly.

b. Transfer of HRC to its own Cold Mill

As shown in Table 16, the bulk of HRC production was transferred to NSC’s cold mill for further processing to cold-rolled steel coils (CRC). The competition from imported CRC, coupled by the contracting CRC market adversely affected the operations of its hot mill.

NSC’s cold mill production declined by 37% from P408,000 in 1997 to P259,000 in 1998.

c. Market Contraction

With the Asian financial crisis in mid-1997, the peso devaluation commenced. All countries in Asia had to brace from the economic crisis that resulted to a drastic reduction in steel consumption. Philippine steel market was no exception from that regional market contraction. The Philippine market for HRC contracted by 14% from 1996 to 1997 and by 36% from 1997 to 1998.

d. High Cost to Produce

The cost to produce HRC was relatively higher than its imported counterpart because NSC had to import its slab requirement.

e. Financial Performance

The slow-down in the Philippine economy had significantly affected the company in terms of higher financing costs and reduced sales and production volume. NSC’s total operation in 1998 incurred its biggest deficit prior to the shutdown of its operations in November 1999.

In 1996, NSC incurred a loss of P2.032 billion on its operation (EBIT) due to revaluation of assets as required by the incoming investor Hottick, resulting to a negative return on sales, assets and stockholder’s equity. In 1997 EBIT improved to P780 million or an increase of 62% compared to previous years. However, in 1998 NSC incurred a loss of P1.79 billion on its operation (EBIT). It may be noted that 1998 net sales of P8.58 billion is 28.74% lower than in 1997 of P12.04 billion.

f. Foreign Currency Losses

As of 31 December 1997, the company had total foreign currency losses of P2.5 billion which went down to P154.9 million in 1998. Though the 1998 figure was much lower, still the high cost of money for the servicing of NSC’s dollar denominated loans as a result of the peso devaluation had significant adverse impact on the company’s financial position.

8. FINAL DETERMINATION

8.1 RA 8752 (ANTI-DUMPING ACT OF 1999)

On 12 August 1999, RA 8752 was signed by the President amending Section 301 of TCCP. The new law became effective on 04 September 1999, i.e., after fifteen (15) days, following its publication on 19 August 1999 in Malaya and Philippine Standard.

8.2 APPLICATION OF PROCEDURAL MATTERS UNDER RA 8752

Procedural provisions of RA 8752 are applicable to the instant anti-dumping case. In Republic vs. Court of Appeals, G.R. No. 92326, January 24, 1992, the Court held:

"Procedural matters are governed by the law in force when they arise, and procedural statutes are generally retroactive in that they apply to pending proceedings and are not confined to those begun after enactment although, with respect to such pending proceedings, they affect only procedural steps taken after their enactment." (205 SCRA 356).

8.3 CONCLUSION

The Commission finds that:

Price differences existed between the normal values and export prices of HRC originating in or exported from Russia in the 1st, 2nd and 3rd quarters of 1998. No dumped imports were recorded in the 4th quarter hence, no price difference in the same quarter.

2. Dumping, per se, of HRC from Russia during the POI did not cause material injury to the domestic industry but a host of factors other than dumping, i.e., competition from normal imports, poor production performance of its cold mill (captive production), market contraction, high cost to produce, foreign exchange losses, high interest on its loan obligations and difficulty in opening Letter of Credit (LC) for its raw materials led to the overall impairment in the financial position of the company.

In view of the foregoing, the element of material injury resulting from dumped imports from Russia during the POI, not having been established, it is hereby ordered that the anti-dumping case against Russia be dismissed for lack of merit.

Let copies of the decision be furnished the protestant, the protestees and the Russian Embassy. The Secretary of the Department of Trade and Industry shall, within ten (10) days from receipt of this decision, cause the publication of the dispositive portion of the decision in two (2) newspapers of general circulation.

SO ORDERED.

30 August 2000


EMMANUEL T. VELASCO, Ph.D.
Chairman



ANTHONY R.A. ABAD
Commissioner
EDGARDO B. ABON
Commissioner