[Federal Register Volume 64, Number 1 (Monday, January 4, 1999)]
[Notices]
[Pages 130-137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34466]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-427-814]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Stainless Steel Sheet
and Strip in Coils From France
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: January 4, 1999.
FOR FURTHER INFORMATION CONTACT: Doug Campau or Robert Bolling, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230; telephone: (202) 482-3964 or (202) 482-3434, respectively.
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (``the Act''), are references to the provisions
effective January 1, 1995, the effective date of the amendments made to
the Act by the Uruguay Round Agreements Act (``URAA''). In addition,
unless otherwise indicated, all citations to the Department of Commerce
(``Department'') regulations are to the regulations at 19 CFR Part 351,
(May 19, 1997).
Preliminary Determination
We preliminarily determine that Stainless Steel Sheet and Strip in
Coils (``SSSS'') from France is being, or is likely to be, sold in the
United States at less than fair value (``LTFV''), as provided in
section 733 of the Act. The estimated margins of sales at LTFV are
shown in the ``Suspension of Liquidation'' section of this notice. The
Department used the data submitted December 1, 1998 in its analysis.
Case History
On July 13, 1998, the Department initiated antidumping duty
[[Page 131]]
investigations of imports of stainless steel sheet and strip in coils
from France, Germany, Italy, Japan, Mexico, South Korea, Taiwan and the
United Kingdom (Notice of Initiation of Antidumping Investigations:
Stainless Steel Sheet and Strip in Coils From France, Germany, Italy,
Japan, Mexico, South Korea, Taiwan and the United Kingdom (63 FR 37521
(July 13, 1998)). Since the initiation of this investigation the
following events have occurred.
The Department set aside a period for all interested parties to
raise issues regarding product coverage. On July 27, 1998, Allegheny
Ludlum Corporation, Armco, Inc.,1 J&L Specialty Steel,
Inc.,2 Washington Steel Division of Bethlehem Steel
Corporation (formerly Lukens, Inc.), the United Steelworkers of
America, AFL-CIO/CLC , the Butler Armco Independent Union 3
and the Zanesville Armco Independent Organization, Inc.4
(``petitioners'') submitted comments to the Department stating that
they generally agree with the Department's product characteristics and
model match criteria. However, petitioners noted that the products'
actual alloy content, within certain ranges, must be incorporated from
the outset into the product characteristics that comprise the product
matching hierarchy that create the control numbers (CONNUMs).
Additionally, on July 27, 1998, respondent Usinor submitted comments
stating that the order and categories of some of the elements should be
modified to ensure that the Department's model matching criteria
appropriately identify identical and like products, consistent with the
statute. Further, on July 28, 1998, respondent submitted additional
comments on its product specification information regarding certain
products (i.e., Durphynox 17 and Gilphy 36). On December 3, 1998,
petitioners submitted additional comments, pertaining to all of the
pending SSSS investigations, detailing for the Department the
appropriate basis for product comparison when matching sales of non-
identical merchandise. On December 4, 1998, petitioners submitted
additional comments, specific to the French SSSS case, on the
additional finish information provided by Usinor. On December 7, 1998,
Usinor submitted comments arguing that the Department should disregard
concerns articulated by petitioners in their letters of December 4th
and 7th, 1998. However, Usinor misinterprets the purpose of the early
deadline for commenting on model matching. The purpose of that deadline
is not to cut off comment on all model match related issues, but rather
to let parties know the date by which they must respond in order to
ensure that their comments are considered in formulating initial
questionnaires. In this way the Department tries to avoid situations in
which parties point out relevant matching criteria too late for the
Department to gather necessary data. Petitioners' December comments do
not propose gathering new types of information, but rather suggest
other ways to arrange the criteria already reported. Depending on the
content, such general comments are subject to the deadlines of new
factual information, or for legal arguments. 19 CFR 351.301 and
351.309, respectively.
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\1\ Armco, Inc. is not a petitioner in the Mexico case.
\2\ J&L Specialty Steel, Inc, is not a petitioner in the France
case.
\3\ Butler Armco Independent Union is not a petitioner in the
Mexico case.
\4\ Zanesville Armco Independent Organization, Inc. is not a
petitioner in the Mexico case.
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On July 24, 1998, the United States International Trade Commission
(``ITC'') notified the Department of its affirmative preliminary injury
determination in this case. Additionally, on August 5, 1998, the ITC
published its preliminary determination that there is a reasonable
indication that an industry in the United States is being materially
injured or is threatened with material injury by reason of imports of
the subject merchandise from France (63 FR 29250).
On August 3, 1998, the Department issued an antidumping duty
questionnaire to Usinor and Imphy, S.A. On September 9, 1998, the
Department received Usinor's response to Section A of the
questionnaire. In this response, Usinor stated that it made sales in
the home market through its Ugine division, and through Bernier SNC
(Bernier) and Ugine-Service SAS (Ugine-Service), and in the U.S. market
through its affiliate Uginox. Additionally, on September 29, 1998, the
Department received Usinor's responses to Sections B, C, D, and E of
the questionnaire. On September 29 and October 14, 1998, petitioners
filed comments on Usinor's questionnaire responses. On October 20,
1998, we issued a supplemental questionnaire to Usinor for Sections A,
B, C, D, and E. On November 12 and December 1, 1998, we received
Usinor's responses to the Department's supplemental questionnaire. On
December 2, 1998, petitioners filed comments to the upcoming
preliminary determination with respect to Usinor's sales and
confirmation dates.
On August 31, 1998, in a letter to the Department, respondent
Usinor requested that it not be required to report downstream sales in
France by Bernier or Ugine-Service, or sales in the United States by
Edgcomb Metals, Inc. (Edgcomb). Usinor requested that it not be
required to report downstream sales in France because Bernier's and
Ugine-Service's relevant resales: (1) represent approximately five
percent of sales in France during the POI; (2) are all at a different
level of trade from United States sales; (3) for the most part are not
likely to match U.S. sales; and (4) would entail a disproportionately
large effort to report. Additionally, Usinor also requested that it not
be required to report sales in the United States by Edgcomb, an
affiliated processor/reseller. Usinor stated that the majority of
Ugine's sales of SSSS in the United States are made by Uginox, a
wholly-owned subsidiary of Usinor, and that during the POI, Uginox sold
a small quantity of SSSS to Edgcomb. Also, Usinor argues that while
Edgcomb is affiliated with Usinor, since January 1, 1998, Usinor only
indirectly owns 28.5% of its shares through its control of Sollac,
which is wholly owned by Usinor.5 Usinor asserts that
Edgcomb should not be regarded as affiliated with Uginox because Uginox
and Edgcomb are not under common control, and neither Uginox nor
Edgcomb controls the other. On September 11, 1998, in a letter to the
Department, petitioners contested Usinor's request for exemption from
reporting certain home market and U.S. sales. In the home market,
petitioners argue that Usinor misapplied the Department's five percent
test 6 by calculating the percentage of sales made by
affiliated buyers to their unaffiliated customers rather than
calculating the percentage of sales made by Usinor to all of its
affiliated customers. On October 19, 1998, we determined that Bernier
and Ugine-Service were required to report their home market downstream
sales, and that Edgcomb was required to report its U.S. downstream
sales. See Decision Memorandum from Roland MacDonald, Office Director,
Office VII to Joseph A. Spetrini, Deputy Assistant Secretary, Group
III, dated October 19, 1998. See also, Affiliation Memorandum from Case
Analysts to Roland MacDonald, dated December 14, 1998.
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\5\ Prior to January 1, 1998, Unisor indirectly owned 49% of
Edgcomb through its wholly-owned subsidiary Sollac.
\6\ The Department's practice of not requiring the reporting of
downstream sales for purposes of determining normal value if the
firm in question does not have sales of the foreign like product
over five percent to its affiliated customers.
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On October 6, 1998, pursuant to section 733(c)(1)(A) of the Act,
the petitioners made a timely request to
[[Page 132]]
postpone the preliminary determination for thirty days. The Department
determined that this investigation is extraordinarily complicated and
that the additional time is necessary for the Department to make its
preliminary determination. On October 15, 1998, we postponed the
preliminary determination until no later than December 17, 1998. See
Notice of Postponement of Preliminary Antidumping Duty Investigations
of Stainless Steel Sheet and Strip in Coils: from France, Germany,
Italy, Japan, Mexico, South Korea, Taiwan and the United Kingdom, 63 FR
56909 (October 23, 1998).
Finally, Imphy S.A. reported that it did not produce or sell
subject merchandise. See Memorandum from Robert James, to Joseph A.
Spetrini, Deputy Assistant Secretary through Roland MacDonald, Office
Director, Office VII, Richard Weible, Office Director, Office VIII,
Edward Yang, Office Director, Office IX, Group III, dated December 14,
1998.
Scope of Investigation
For purposes of this investigation, the products covered are
certain stainless steel sheet and strip in coils. Stainless steel is an
alloy steel containing, by weight, 1.2 percent or less of carbon and
10.5 percent or more of chromium, with or without other elements. The
subject sheet and strip is a flat-rolled product in coils that is
greater than 9.5 mm in width and less than 4.75 mm in thickness, and
that is annealed or otherwise heat treated and pickled or otherwise
descaled. The subject sheet and strip may also be further processed
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that
it maintains the specific dimensions of sheet and strip following such
processing.
The merchandise subject to this investigation is classified in the
Harmonized Tariff Schedule of the United States (``HTSUS'') at
subheadings: 7219.13.00.30, 7219.13.00.50, 7219.13.00.70,
7219.13.00.80, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90,
7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35,
7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44,
7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35,
7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44,
7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30,
7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30,
7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25,
7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00,
7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80,
7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60,
7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15,
7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30,
7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and
7220.90.00.80. Although the HTS subheadings are provided for
convenience and Customs purposes, the Department's written description
of the merchandise under investigation is dispositive.
Excluded from the scope of this investigation are the following:
(1) sheet and strip that is not annealed or otherwise heat treated and
pickled or otherwise descaled, (2) sheet and strip that is cut to
length, (3) plate (i.e., flat-rolled stainless steel products of a
thickness of 4.75 mm or more), (4) flat wire (i.e., cold-rolled
sections, with a prepared edge, rectangular in shape, of a width of not
more than 9.5 mm), and (5) razor blade steel. Razor blade steel is a
flat rolled product of stainless steel, not further worked than cold-
rolled (cold-reduced), in coils, of a width of not more than 23 mm and
a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5
percent chromium, and certified at the time of entry to be used in the
manufacture of razor blades. See Chapter 72 of the HTSUS, ``Additional
U.S. Note'' 1(d).
In response to comments by interested parties the Department has
determined that certain specialty stainless steel products are also
excluded from the scope of this investigation. These excluded products
are described below:
Flapper valve steel is defined as stainless steel strip in coils
containing, by weight, between 0.37 and 0.43 percent carbon, between
1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent
manganese. This steel also contains, by weight, phosphorus of 0.025
percent or less, silicon of between 0.20 and 0.50 percent, and sulfur
of 0.020 percent or less. The product is manufactured by means of
vacuum arc remelting, with inclusion controls for sulphide of no more
than 0.04 percent and for oxide of no more than 0.05 percent. Flapper
valve steel has a tensile strength of between 210 and 300 ksi, yield
strength of between 170 and 270 ksi, plus or minus 8 ksi, and a
hardness (Hv) of between 460 and 590. Flapper valve steel is most
commonly used to produce specialty flapper valves in compressors.
Also excluded is a product referred to as suspension foil, a
specialty steel product used in the manufacture of suspension
assemblies for computer disk drives. Suspension foil is described as
302/304 grade or 202 grade stainless steel of a thickness between 14
and 127 microns, with a thickness tolerance of plus-or-minus 2.01
microns, and surface glossiness of 200 to 700 percent Gs. Suspension
foil must be supplied in coil widths of not more than 407 mm, and with
a mass of 225 kg or less. Roll marks may only be visible on one side,
with no scratches of measurable depth. The material must exhibit
residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm
over 685 mm length.
Certain stainless steel foil for automotive catalytic converters is
also excluded from the scope of this investigation. This stainless
steel strip in coils is a specialty foil with a thickness of between 20
and 110 microns used to produce a metallic substrate with a honeycomb
structure for use in automotive catalytic converters. The steel
contains, by weight, carbon of no more than 0.030 percent, silicon of
no more than 1.0 percent, manganese of no more than 1.0 percent,
chromium of between 19 and 22 percent, aluminum of no less than 5.0
percent, phosphorus of no more than 0.045 percent, sulfur of no more
than 0.03 percent, lanthanum of between 0.002 and 0.05 percent, and
total rare earth elements of more than 0.06 percent, with the balance
iron.
Permanent magnet iron-chromium-cobalt alloy stainless strip is also
excluded from the scope of this investigation. This ductile stainless
steel strip contains, by weight, 26 to 30 percent chromium, and 7 to 10
percent cobalt, with the remainder of iron, in widths 228.6 mm or less,
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic
remanence between 9,000 and 12,000 gauss, and a coercivity of between
50 and 300 oersteds. This product is most commonly used in electronic
sensors and is currently available under proprietary trade names such
as ``Arnokrome III.'' 7
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\7\ ``Arnokrome III'' is a trademark of the Arnold Engineering
Company.
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Certain electrical resistance alloy steel is also excluded from the
scope of this investigation. This product is defined as a non-magnetic
stainless steel manufactured to American Society of Testing and
Materials (ASTM) specification B344 and containing, by weight, 36
percent nickel, 18 percent chromium, and 46 percent iron, and is most
notable for its resistance to high temperature corrosion. It has a
melting
[[Page 133]]
point of 1390 degrees Celsius and displays a creep rupture limit of 4
kilograms per square millimeter at 1000 degrees Celsius. This steel is
most commonly used in the production of heating ribbons for circuit
breakers and industrial furnaces, and in rheostats for railway
locomotives. The product is currently available under proprietary trade
names such as ``Gilphy 36.'' 8
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\8\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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Certain martensitic precipitation-hardenable stainless steel is
also excluded from the scope of this investigation. This high-strength,
ductile stainless steel product is designated under the Unified
Numbering System (UNS) as S45500-grade steel, and contains, by weight,
11 to 13 percent chromium, and 7 to 10 percent nickel. Carbon,
manganese, silicon and molybdenum each comprise, by weight, 0.05
percent or less, with phosphorus and sulfur each comprising, by weight,
0.03 percent or less. This steel has copper, niobium, and titanium
added to achieve aging, and will exhibit yield strengths as high as
1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after
aging, with elongation percentages of 3 percent or less in 50 mm. It is
generally provided in thicknesses between 0.635 and 0.787 mm, and in
widths of 25.4 mm. This product is most commonly used in the
manufacture of television tubes and is currently available under
proprietary trade names such as ``Durphynox 17.'' 9
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\9\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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Finally, three specialty stainless steels typically used in certain
industrial blades and surgical and medical instruments are also
excluded from the scope of this investigation. These include stainless
steel strip in coils used in the production of textile cutting tools
(e.g., carpet knives).10 This steel is similar to ASTM grade
440F, but containing, by weight, 0.5 to 0.7 percent of molybdenum. The
steel also contains, by weight, carbon of between 1.0 and 1.1 percent,
sulfur of 0.020 percent or less, and includes between 0.20 and 0.30
percent copper and between 0.20 and 0.50 percent cobalt. This steel is
sold under proprietary names such as ``GIN4 Mo.'' The second excluded
stainless steel strip in coils is similar to AISI 420-J2 and contains,
by weight, carbon of between 0.62 and 0.70 percent, silicon of between
0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent,
phosphorus of no more than 0.025 percent and sulfur of no more than
0.020 percent. This steel has a carbide density on average of 100
carbide particles per square micron. An example of this product is
``GIN5'' steel. The third specialty steel has a chemical composition
similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent,
molybdenum of between 1.15 and 1.35 percent, but lower manganese of
between 0.20 and 0.80 percent, phosphorus of no more than 0.025
percent, silicon of between 0.20 and 0.50 percent, and sulfur of no
more than 0.020 percent. This product is supplied with a hardness of
more than Hv 500 guaranteed after customer processing, and is supplied
as, for example, ``GIN6''.11
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\10\ This list of uses is illustrative and provided for
descriptive purposes only.
\11\ ``GIN4 Mo'', ``GIN5'' and ``GIN6'' are the proprietary
grades of Hitachi Metals America, Ltd.
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Period of Investigation
The Period of Investigation (POI) is April 1, 1997, through March
31, 1998.
Postponement of Final Determination and Extension of Provisional
Measures
Pursuant to Section 735(a)(2) of the Act, on November 25, 1998,
Usinor requested that, in the event of an affirmative preliminary
determination in this investigation, the Department postpone its final
determination until not later than 135 days after the date of the
publication of an affirmative preliminary determination in the Federal
Register, and extend the provisional measures to not more than six
months. In accordance with 19 CFR 351.210(b), because (1) our
preliminary determination is affirmative, (2) Usinor accounts for a
significant proportion of exports of the subject merchandise, and (3)
no compelling reasons for denial exist, we are granting the
respondent's request and are postponing the final determination until
no later than 135 days after the publication of this notice in the
Federal Register. Suspension of liquidation will be extended
accordingly.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by Usinor covered by the description in the Scope of
Investigation section, above, and sold in France during the POI, to be
foreign like products for purposes of determining appropriate product
comparisons to U.S. sales. We have relied on nine characteristics to
match U.S. sales of subject merchandise to comparison sales of the
foreign like product (listed in order of preference): grade, hot/cold
rolled, gauge, finish, metallic coating, non-metallic coating, width,
tempered/tensile strength, and edge trim. The Department's
questionnaire authorized respondents to make distinctions (sub-codes)
within some of these characteristics, but not within others. For
certain product characteristics (i.e., finish and coating) Usinor
reported additional sub-codes which were specifically permitted by the
Department's questionnaire. However, Usinor also reported additional
sub-codes in its hot/cold rolled, and tempered product characteristic
categories. These are characteristics for which the Department's
questionnaire did not explicitly permit sub-codes. Nevertheless, for
this preliminary determination, the Department has included the
additional codes that Usinor reported in the aforementioned categories
in the Department's product matching methodology. See Analysis Memo
from Doug Campau to The File, dated December 17, 1998. We will further
review Usinor's distinctions within characteristics to determine their
appropriateness for the final determination. Where there were no sales
of identical merchandise in the home market to compare to U.S. sales,
we compared U.S. sales to the next most similar foreign like product on
the basis of the characteristics listed in the antidumping duty
questionnaire and the August 3, 1998, reporting instructions.
Date of Sale
In the home market and U.S. market, Usinor has reported date of
sale as the invoice date. Based on information reported in Usinor's
questionnaire response, it appeared that the date of the order
confirmation may be the appropriate date of sale. On October 14, 1998,
petitioners requested that the Department inquire further into how
Usinor reported its date of sale. Given the relevance of petitioners'
comments and the nature of marketing these types of made-to-order
products, petitioners' claims have some merit. Consequently, on October
20, 1998, the Department requested sales data bases reported on that
basis. On November 2, 1998, Usinor submitted a letter requesting that
the Department not require the submission of order confirmation date
data because the companies' record keeping systems were not equipped to
report order acknowledgments, in some cases because order
acknowledgments were not generated, and in some cases because they were
routinely purged from the involved databases. Furthermore, Usinor
reported that the essential terms of the companies' orders change
between the date of order acknowledgment and the invoice date for most,
but not all, of its U.S. and home market sales. On December 1, 1998,
Usinor provided the Department
[[Page 134]]
with a database containing sales by order confirmation date. On
December 2, 1998, petitioners submitted a letter stating that Usinor
misrepresented its date of sale data by reporting invoice date instead
of order date. Petitioners contend that Usinor's material terms of sale
do not change but for changes to sales tolerance levels.
Section 351.401(i) of the Department's regulations states that the
Department will normally use the date of invoice, as recorded in the
exporter's or producer's records kept in the ordinary course of
business, as the date of sale. The preamble to the Final Rules (the
``Preamble'') provides an explanation of this policy and examples of
when the Department may choose to base the date of sale on a date other
than the date of invoice. See 62 FR at 27348-49 (May 19, 1997). For the
reasons given in the November 2, 1998 letter discussed above, Usinor
has argued that invoice date should be considered the proper date of
sale. In accordance with 19 CFR 351.401(i), where appropriate, we based
date of sale on invoice dates recorded in the ordinary course of
business by the involved sellers and resellers of the subject
merchandise. However, we intend to fully verify information concerning
respondent's claims that invoice date is the appropriate date of sale.
Based on the outcome of our verification, we will determine whether it
is appropriate to continue to use the date of invoice as the date of
sale. We will consider, among other things, whether, in fact, there
were any changes to the material contract terms between the original
order confirmation and the date of invoice. See e.g., Notice of Final
Results of Antidumping Duty Administrative Review: Canned Pineapple
Fruit from Thailand, 63 FR 7392 at 7394-95 (February 13, 1988).
Fair Value Comparisons
To determine whether sales of SSSS from France to the United States
were made at LTFV, we compared constructed export price (``CEP'') to
the Normal Value (``NV''), as described in the ``Constructed Export
Price'' and ``Normal Value'' sections of this notice, below. In
accordance with section 777A(d)(1)(A)(i) of the Act, we calculated
weighted-average CEP sales for comparison to weighted-average NV sales
or CV sales.
Constructed Export Price
We calculated CEP in accordance with section 772(b) of the Act
because the first sales to an unaffiliated purchaser took place after
the subject merchandise was imported into the United States.
We based CEP on the packed ex-warehouse or delivered prices to
unaffiliated purchasers in the United States. Where appropriate, we
made deductions from the starting price for discounts, credit, warranty
expenses, and commissions. We also made deductions for the following
movement expenses, where appropriate, in accordance with section
772(c)(2)(A) of the Act: inland freight from plant to distribution
warehouse, inland freight from plant/warehouse to port of exportation,
international freight, marine insurance, U.S. inland freight from port
to warehouse, U.S. inland freight from warehouse to the unaffiliated
customer, U.S. inland insurance, U.S. warehouse expenses, and U.S.
Customs duties. In accordance with section 772(d)(1) of the Act, we
deducted selling expenses associated with economic activities occurring
in the United States, including direct selling expenses, inventory
carrying costs, and other indirect selling expenses. We recalculated
credit expenses for those sales with missing payment dates because
payment has not yet been made. For sales with missing payment dates,
the Department set the date of payment as the projected preliminary
results date. For a further explanation, see Analysis Memo from Doug
Campau to The File, dated December 17, 1998. We also adjusted the
starting price for billing adjustments to the invoice price. For
products that were further manufactured after importation, we adjusted
for all costs of further manufacturing in the United States in
accordance with section 772(d)(2) of the Act. We deducted the profit
allocated to expenses deducted under section 772(d)(1) and (d)(2) in
accordance with sections 772(d)(3) and 772(f) of the Act. In accordance
with section 772(f) of the Act, we computed profit based on total
revenues realized on sales in both the U.S. and home markets, less all
expenses associated with those sales. We then allocated profit to
expenses incurred with respect to U.S. economic activity (including
further manufacturing costs), based on the ratio of total U.S. expenses
to total expenses for both the U.S. and home market. In our U.S. CEP
calculation, we included all downstream sales from Edgcomb and Hague
Steel Corp. (Hague) reported in respondent's December 1, 1998
submission.
Normal Value
After testing home market viability, as discussed below, we
calculated NV as noted in the ``Price-to-CV Comparisons'' and ``Price-
to-Price Comparisons'' sections of this notice.
1. Home Market Viability
In accordance with section 773(a)(1)(C) of the Act, to determine
whether there was sufficient volume of sales in the home market to
serve as a viable basis for calculating NV (i.e., the aggregate volume
of home market sales of the foreign like product is greater than or
equal to five percent of the aggregate volume of U.S. sales), we
compared the respondent's volume of home market sales of the foreign
like product to the volume of U.S. sales of the subject merchandise.
Because Usinor's aggregate volume of home market sales of the foreign
like product was greater than five percent of its aggregate volume of
U.S. sales for the subject merchandise, we determined that the home
market was viable. We therefore based NV on home market sales.
2. Cost of Production Analysis
Based on a cost allegation filed by the petitioners, the Department
found reasonable grounds to believe or suspect that sales by Usinor in
its home market were made at prices below the costs of production
(COP), pursuant to section 773(b)(1). As a result, the Department has
initiated an investigation to determine whether the respondent made
home market sales during the POI at prices below their respective COPs,
within the meaning of section 773(b) of the Act.
A. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated a
weighted-average COP based on the sum of Usinor's cost of materials and
fabrication for the foreign like product, plus amounts for general and
administrative expenses, interest expenses, and packing costs. We
relied on the COP data submitted by Usinor in its original and
supplemental cost questionnaire responses. For this preliminary
determination, we did not make any adjustments to Usinor's submitted
costs.
B. Test of Home Market Prices
We compared the weighted-average COP for Usinor to home market
sales of the foreign like product, as required under section 773(b) of
the Act, in order to determine whether these sales had been made at
prices below the COP. In determining whether to disregard home market
sales made at prices below the COP, we examined whether such sales were
made (1) within an extended period of time in substantial quantities,
and (2) at prices which permitted the recovery of all costs within a
reasonable period of time in the normal course of
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trade, in accordance with section 773(b)(1)(A) and (B) of the Act. On a
product-specific basis, we compared the COP to home market prices, less
any applicable billing adjustments, movement charges, discounts, and
direct and indirect selling expenses.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of Usinor's sales of a given product were at prices less than
the COP, we did not disregard any below-cost sales of that product
because we determined that the below-cost sales were not made in
``substantial quantities.'' Where 20 percent or more of Usinor's sales
of a given product during the POI were at prices less than the COP, we
determined that such sales have been made in ``substantial quantities''
within an extended period of time, in accordance with section
773(b)(2)(B) of the Act. In such cases, because we use POI average
costs, we also determined that such sales were not made at prices which
would permit recovery of all costs within a reasonable period of time,
in accordance with section 773(b)(2)(D) of the Act. Therefore, we
disregarded the below-cost sales. Where all sales of a specific product
were at prices below the COP, we disregarded all sales of that product.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of Usinor's cost of materials, fabrication, G&A, U.S.
packing costs, direct and indirect selling expenses, interest expenses
and profit. In accordance with section 773(e)(2)(A) of the Act, we
based SG&A expenses and profit on the amounts incurred and realized by
Usinor in connection with the production and sale of the foreign like
product in the ordinary course of trade, for consumption in the foreign
country. For selling expenses, we used the actual weighted-average home
market direct and indirect selling expenses.
Price-to-Price Comparisons
For those product comparisons for which there were sales at prices
above the COP, we based NV on prices to home market customers. We made
adjustments, where appropriate, for physical differences in the
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. In
accordance with section 773(a)(6), we deducted home market packing
costs and added U.S. packing costs.
We calculated NV based on prices to unaffiliated home market
customers. Where appropriate, we deducted discounts, rebates, credit
expenses, warranty expenses, inland freight, inland insurance, and
warehousing expense. We also adjusted the starting price for billing
adjustments and freight revenue. We also made adjustments, where
applicable, for home market indirect selling expenses to offset U.S.
commissions in CEP comparisons.
We recalculated credit expenses for those sales with missing
payment dates. For sales with missing payment dates, the Department set
the date of payment to the projected preliminary results date. We also
recalculated indirect selling expenses incurred by Ugine, subtracting
indirect selling expenses not clearly attributable to the scope
merchandise. See Analysis Memo from Doug Campau to The File, dated
December 17, 1998. In our home market NV calculation, we included all
downstream sales from Bernier and Ugine-Service reported in
respondent's December 1, 1998 submission.
For reasons discussed below in the ``Level of Trade'' section, we
allowed a CEP offset for comparisons made at different levels of trade.
To calculate the CEP offset, we deducted the home market indirect
selling expenses from normal value for home market sales that were
compared to U.S. CEP sales. We limited the home market indirect selling
expense deduction by the amount of the indirect selling expenses
deducted in calculating the CEP as required under section 772(d)(1)(D)
of the Act.
Price-to-CV Comparisons
In accordance with section 773(a)(4) of the Tariff Act, we based NV
on CV if we were unable to find a home market match of identical or
similar merchandise. We calculated CV based on the costs of materials
and fabrication employed in producing the subject merchandise, SG&A,
and profit. In accordance with section 773(a)(2)(A) of the Tariff Act,
we based SG&A expense and profit on the amounts incurred and realized
by the respondent in connection with the production and sale of the
foreign like product in the ordinary course of trade for consumption in
France. For selling expenses, we used the weighted-average home market
selling expenses. Where appropriate, we made adjustments to CV in
accordance with section 773(a)(8) of the Tariff Act. We deducted from
CV the weighted-average home market direct selling expenses and allowed
a CEP offset adjustment (see ``Level of Trade'' section).
Arm's-Length Sales
Usinor reported that it made sales in the home market to affiliated
end users. Sales to affiliated customers in the home market not made at
arm's length were excluded from our analysis. To test whether these
sales were made at arm's length, we compared the starting prices of
sales to affiliated and unaffiliated customers net of all movement
charges, direct selling expenses, discounts and packing. Where prices
to the affiliated party were on average 99.5 percent or more of the
price to the unrelated party, we determined that sales made to the
related party were at arm's length. Where no affiliated customer ratio
could be calculated because identical merchandise was not sold to
unaffiliated customers, we were unable to determine that these sales
were made at arm's length and, therefore, excluded them from our
analysis. See Final Determination of Sales at Less Than Fair Value:
Certain Cold-Rolled Carbon Steel Flat Products from Argentina, 58 FR
37062, 37077 (July 9, 1993). Where the exclusion of such sales
eliminated all sales of the most appropriate comparison product, we
made comparisons to the next most similar model.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (LOT) as the EP or CEP transaction. The NV LOT
is that of the starting-price sales in the comparison market, or when
NV is based on constructed value (CV), that of the sales from which we
derive selling, general and administrative (SG&A) expenses and profit.
For EP, the U.S. LOT is also the level of the starting-price sale,
which is usually from exporter to importer. For CEP, it is the level of
the constructed sale from the exporter to the importer.
To determine whether NV sales are at a different LOT than EP or
CEP, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the
unaffiliated customer. If the comparison market sales are at a
different LOT, and the difference affects price comparability as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison market sales at the LOT of
the export transaction, we make a LOT adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is
more remote from the factory than the CEP level and
[[Page 136]]
there is no basis for determining whether the difference in levels
between NV and CEP affects price comparability, we adjust NV under
section 773(a)(7)(B) of the Act (the CEP offset provision). See Notice
of Final Determination of Sales at Less Than Fair Value: Certain Cut-
to-Length Carbon Steel Plate from South Africa; 62 FR 61731, 61732
(November 19, 1997).
In reviewing the selling functions reported by the respondents, we
examined all types of selling functions and activities reported in
respondent's questionnaire response on LOT. In analyzing whether
separate LOTs existed in this review, we found that no single selling
function was sufficient to warrant a separate LOT in the home market.
See Antidumping Duties; Countervailing Duties, Final Rule, 63 FR 65347
(November 25, 1998).)
We determined that Usinor sold merchandise at two LOTs in the home
market during the POI. One level of trade involved sales made through
two channels: 1. Sales by Usinor's Ugine division, directly to
unaffiliated service centers or end users (Channel 1), and 2. Sales
made by Usinor's Ugine division, with the assistance of Ugine-Service
in its capacity as sales agent, to unaffiliated service centers or end
users (Channel 2). The second level of trade involved sales from Ugine
to Usinor's affiliates, Ugine-Service and Bernier, together with
subsequent resales by those affiliates to unaffiliated end users
(Channel 3). From our analysis of the marketing process for these
sales, we determined that sales through Channel 3 were made at a more
remote marketing stage than that for sales through Channels 1 or 2. See
Memorandum from Doug Campau to Roland MacDonald, dated December 12,
1998, on file in Import Administration's Central Records Unit, Room B-
099, U.S. Department of Commerce, 14th & Constitution Avenue, NW.,
Washington, DC. We also found significant distinctions in selling
activities and associated expenses between the sales through channel 3
and those through channel 1 or 2. Based on these differences, we
concluded that two LOTs existed in the home market.
In order to determine whether separate LOTs actually existed
between the U.S. and home market, we reviewed the selling activities
associated with each channel of distribution. Usinor only reported CEP
sales in the U.S. market. Because all of Usinor's CEP sales in the U.S.
market were made through Uginox, there was only one level of trade. For
these CEP sales, we determined that fewer and different selling
functions were performed for CEP sales to Uginox than for sales at
either of the home market LOTs. In addition, we found that the home
market sales were at a more advanced stage of distribution (to end-
users) compared to the CEP sales (to the affiliated distributor).
We examined whether a LOT adjustment was appropriate. The
Department makes this adjustment when it is demonstrated that a
difference in LOTs affects price comparability. However, where the
available data do not provide an appropriate basis upon which to
determine a LOT adjustment, and where the NV is established at a LOT
that is at a more advanced stage of distribution than the LOT of the
CEP transactions, we adjust NV under section 773(a)(7)(B) of the Act
(the CEP offset provision). We were unable to quantify the LOT
adjustment in accordance with section 773(a)(7)(A) of the Act, as we
found that neither of the LOTs in the home market matched the LOT of
the CEP transactions. Because of this, we did not calculate a LOT
adjustment. Instead, a CEP offset was applied to the NV-CEP
comparisons. See Memorandum from Doug Campau to Roland MacDonald, dated
December 12, 1998, on file in Import Administration's Central Records
Unit, Room B-099, U.S. Department of Commerce, 14th and Constitution
Avenue, N.W., Washington, D.C.
Currency Conversion
We made currency conversions into U.S. dollars based on the
exchange rates in effect on the dates of the U.S. sales as certified by
the Federal Reserve Bank, in accordance with section 773A of the Act.
Verification
As provided in section 782(i) of the Act, we will verify all
information relied upon in making our final determination.
Suspension of Liquidation
In accordance with section 733(d) of the Act, we are directing the
Customs Service to suspend liquidation of all imports of subject
merchandise that are entered, or withdrawn from warehouse, for
consumption on or after the date of publication of this notice in the
Federal Register. We will instruct the Customs Service to require a
cash deposit or the posting of a bond equal to the weighted-average
amount by which the NV exceeds the CEP, as indicated in the chart
below. These suspension-of-liquidation instructions will remain in
effect until further notice. The weighted-average dumping margins are
as follows:
------------------------------------------------------------------------
Weighted-
Exporter/manufacturer average margin
(percentage)
------------------------------------------------------------------------
Usinor.................................................. 11.73
All Others.............................................. 11.73
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination, or 45 days after our final
determination, whether these imports are materially injuring, or
threaten material injury to, the U.S. industry.
Public Comment
Case briefs or other written comments may be submitted to the
Assistant Secretary for Import Administration no later than fifty days
after the date of publication of this notice, and rebuttal briefs,
limited to issues raised in case briefs, no later than fifty-five days
after publication of this notice. A list of authorities used and an
executive summary of issues should accompany any briefs submitted to
the Department. Such summary should be limited to five pages total,
including footnotes. In accordance with section 774 of the Act, we will
hold a public hearing, if requested, to afford interested parties an
opportunity to comment on arguments raised in case or rebuttal briefs.
Tentatively, the hearing will be held fifty-seven days after
publication of this notice, time and room to be determined, at the U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230. Parties should confirm by telephone the time,
date, and place of the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, within 30 days of the publication of this notice. Requests should
contain: (1) The party's name, address, and telephone number; (2) the
number of participants; and (3) a list of the issues to be discussed.
Oral presentations will be limited to issues raised in the briefs. If
this investigation proceeds normally, we will make our final
determination no later than 135 days after publication of this notice
in the Federal Register.
This determination is issued and published in accordance with
sections 733(d) and 777(i)(1) of the Act.
[[Page 137]]
Dated: December 17, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-34466 Filed 12-31-98; 8:45 am]
BILLING CODE 3510-DS-P
