02-9263. Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Carbon and Certain Alloy Steel Wire Rod From Brazil

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

April 16, 2002.

FOR FURTHER INFORMATION CONTACT:

Vicki Schepker or Christopher Smith, at [phone] or [phone], respectively; AD/CVD Enforcement Group II Office 5, Import Administration, Room 1870, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

The Applicable Statute and Regulation

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department of Commerce (the Department) regulations refer to the regulations codified at 19 CFR part 351 (2001).

Preliminary Determination

We preliminarily determine that carbon and certain alloy steel wire rod (steel wire rod) from Brazil is being sold, 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.

Case History

This investigation was initiated on September 24, 2001.^[1] See Initiation of Antidumping Duty Investigations: Carbon and Certain Alloy Steel Wire Rod from Brazil, Canada, Egypt, Germany, Indonesia, Mexico, Moldova, South Africa, Trinidad and Tobago, Ukraine, and Venezuela, 66 FR 50164 (October 2, 2001) (Initiation Notice). Since the initiation of the investigation, the following events have occurred:

On October 12, 2001, the United States International Trade Commission (ITC) preliminarily determined that there is a reasonable indication that the domestic industry producing steel wire rod is materially injured by reason of imports from Brazil, Canada, Germany, Indonesia, Mexico, Moldova, Trinidad and Tobago, and Ukraine of carbon and certain alloy steel wire rod.^[2] See Determinations and Views of the Commission, USITC Publication No. 3456, October 2001.

The Department issued a letter on October 16, 2001, to interested parties in all of the concurrent steel wire rod antidumping investigations, providing an opportunity to comment on the Department's proposed model match characteristics and hierarchy. The petitioners submitted comments on October 24, 2001. The Department also received comments on model matching from respondents Hysla S.A. de C.V. (Mexico), Ivaco, Inc., Ispat Sidbec Inc. (Canada). These comments were taken into consideration by the Department in developing the model matching characteristics and hierarchy for all of the steel wire rod antidumping investigations.

On November 9, 2001, the Department issued an antidumping questionnaire to Companhia Siderurgica Belgo Mineira and its fully-owned subsidiary, Belgo-Mineira Participação Industria e Comercio S.A. (BMP), collectively Belgo Mineira.^[3] We issued supplemental questionnaires on December 27, 2001, January 18, and February 13, 2002. On December 5, 2001, the petitioners alleged that there was a reasonable basis to believe or suspect that critical circumstances exist with respect to imports of steel wire rod from Brazil, Germany, Mexico, Moldova, Turkey, and Ukraine.^[4]

On January 17, 2002, the petitioners requested a 30-day postponement of the preliminary determinations in this investigation. On January 28, 2002, the Department published a Federal Register notice postponing the deadline for the preliminary determinations until March 13, 2002. See Notice of Postponement of Preliminary Antidumping Duty Determinations: Carbon and Certain Alloy Steel Wire Rod from Brazil, Canada, Indonesia, Germany, Mexico, Moldova, Trinidad and Tobago, and Ukraine, 67 FR 3877 (January 28, 2002). On March 4, 2002, the petitioners requested an additional 20-day postponement of the preliminary determinations in this investigation. On March 15, 2002, the Department published a Federal Register notice postponing the deadline for the preliminary determinations until April 2, 2002. See Notice of Postponement of Preliminary Antidumping Duty Determinations: Carbon and Certain Alloy Steel Wire Rod From Brazil, Canada, Germany, Indonesia, Mexico, Moldova, Trinidad and Tobago, and Ukraine, 67 FR 11674 (March 15, 2002).

Postponement of Final Determination and Extension of Provisional Measures

Section 735(a)(2)(A) of the Act provides that a final determination may be postponed until not later than 135 days after the date of the publication of the preliminary determination if, in the event of an affirmative preliminary determination, a request for such postponement is made by exporters who account for a significant proportion of exports of the subject merchandise. Section 351.210(e)(2) of the Department's regulations requires that exporters requesting postponement of the final determination must also request an extension of the provisional measures referred to in section 733(d) of the Act from a four-month period until not more than six months. We received a request to postpone the final determination from Belgo Mineira on April 1, 2002. In its request, the respondent consented to the extension of provisional measures to no longer than six months. Since this preliminary determination is affirmative, the request for postponement is made by exporters who account for a significant proportion of exports of the subject merchandise, and there is no compelling reason to deny the respondent's request, we have extended the deadline for issuance of the final determination until the 135th day after the date of publication of this preliminary determination in the Federal Register. Furthermore, any provisional measures imposed by this investigation have been extended from a four month period to not more than six months.

Period of Investigation

The POI is July 1, 2000, through June 30, 2001. This period corresponds to the four most recently completed fiscal quarters prior to the month of the filing of the petition (i.e., August 2001).

Scope of Investigations

The merchandise covered by these investigations is certain hot-rolled products of carbon steel and alloy steel, in coils, of approximately round cross section, 5.00 mm or more, but less than 19.00 mm, in solid cross-sectional diameter.

Specifically excluded are steel products possessing the above-noted physical characteristics and meeting the Harmonized Tariff Schedule of the United States (HTSUS) definitions for (a) stainless steel; (b) tool steel; (c) high nickel steel; (d) ball bearing steel; and (e) concrete reinforcing bars and rods. Also excluded are (f) free machining steel products (i.e., products that contain by weight one or more of the following elements: 0.03 percent or more of lead, 0.05 percent or more of bismuth, 0.08 percent or more of sulfur, more than 0.04 percent of phosphorus, more than 0.05 percent of selenium, or more than 0.01 percent of tellurium).

Also excluded from the scope are 1080 grade tire cord quality wire rod and 1080 grade tire bead quality wire rod. This grade 1080 tire cord quality rod is defined as: (i) Grade 1080 tire cord quality wire rod measuring 5.0 mm or more but not more than 6.0 mm in cross-sectional diameter; (ii) with an average partial decarburization of no more than 70 microns in depth (maximum individual 200 microns); (iii) having no inclusions greater than 20 microns; (iv) having a carbon segregation per heat average of 3.0 or better using European Method NFA 04-114; (v) having a surface quality with no surface defects of a length greater than 0.15 mm; (vi) capable of being drawn to a diameter of 0.30 mm or less with 3 or fewer breaks per ton, and (vii) containing by weight the following elements in the proportions shown: (1) 0.78 percent or more of carbon, (2) less than 0.01 percent of aluminum, (3) 0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 0.006 percent or less of nitrogen, and (5) not more than 0.15 percent, in the aggregate, of copper, nickel and chromium.

This grade 1080 tire bead quality rod is defined as: (i) Grade 1080 tire bead quality wire rod measuring 5.5 mm or more but not more than 7.0 mm in cross-sectional diameter; (ii) with an average partial decarburization of no more than 70 microns in depth (maximum individual 200 microns); (iii) having no inclusions greater than 20 microns; (iv) having a carbon segregation per heat average of 3.0 or better using European Method NFA 04-114; (v) having a surface quality with no surface defects of a length greater than 0.2 mm; (vi) capable of being drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per ton; and (vii) containing by weight the following elements in the proportions shown: (1) 0.78 percent or more of carbon, (2) less than 0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of nitrogen, and (5) either not more than 0.15 percent, in the aggregate, of copper, nickel and chromium (if chromium is not specified), or not more than 0.10 percent in the aggregate of copper and nickel and a chromium content of 0.24 to 0.30 percent (if chromium is specified).

The designation of the products as “tire cord quality” or “tire bead quality” indicates the acceptability of the product for use in the production of tire cord, tire bead, or wire for use in other rubber reinforcement applications such as hose wire. These quality designations are presumed to indicate that these products are being used in tire cord, tire bead, and other rubber reinforcement applications, and such merchandise intended for the tire cord, tire bead, or other rubber reinforcement applications is not included in the scope. However, should petitioners or other interested parties provide a reasonable basis to believe or suspect that there exists a pattern of importation of such products for other than those applications, end-use certification for the importation of such products may be required. Under such circumstances, only the importers of record would normally be required to certify the end use of the imported merchandise.

All products meeting the physical description of subject merchandise that are not specifically excluded are included in this scope.

The products under investigation are currently classifiable under subheadings 7213.91.3010, 7213.91.3090, 7213.91.4510, 7213.91.4590, 7213.91.6010, 7213.91.6090, 7213.99.0031, 7213.99.0038, 7213.99.0090, 7227.20.0010, 7227.20.0020, 7227.20.0090, 7227.20.0095, 7227.90.6051, 7227.90.6053, 7227.90.6058, and 7227.90.6059 of the HTSUS. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this proceeding is dispositive.

See Carbon and Certain Alloy Steel Wire Rod: Requests for exclusion of various tire cord quality wire rod and tire bead quality wire rod products from the scope of Antidumping Duty (Brazil, Canada, Egypt, Germany, Indonesia, Mexico, Moldova, South Africa, Trinidad and Tobago, Ukraine, and Venezuela) and Countervailing Duty (Brazil, Canada, Germany, Trinidad and Tobago, and Turkey) Investigations.

Selection of Respondents

Section 777A(c)(1) of the Act directs the Department to calculate individual dumping margins for each known exporter and producer of the subject merchandise. Where it is not practicable to examine all known producers/exporters of subject merchandise, section 777A(c)(2) of the Act permits us to investigate either (1) a sample of exporters, producers, or types of products that is statistically valid based on the information available at the time of selection, or (2) exporters and producers accounting for the largest volume of the subject merchandise that can reasonably be examined. In the petition, the petitioners identified four producers/exporters of steel wire rod. The data on the record indicate that two of these producers/exporters sold subject merchandise to the United States during the period of investigation (i.e., the period July 2000 through June 2001); however, due to limited resources we determined that we could investigate only the largest exporter, Belgo Mineira. See Respondent Selection Memorandum, from David Bede and Vicki Schepker, dated November 9, 2001.

Product Comparisons

In accordance with section 771(16) of the Act, all products produced by the respondents covered by the description in the Scope of Investigation section, above, and sold in Brazil during the POI are considered to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. We have relied on eight criteria to match U.S. sales of subject merchandise to comparison-market sales of the foreign like product or constructed value (CV): grade range, carbon content range, surface quality, deoxidization, maximum total residual content, heat treatment, diameter range, and coating. These characteristics have been weighted by the Department where appropriate. Where there were no sales of identical merchandise in the home market made in the ordinary course of trade 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 above.

Fair Value Comparisons

To determine whether sales of steel wire rod from Brazil were made in the United States at less than fair value, we compared the export price (EP) and the constructed export price (CEP) to the normal value (NV), as described in the Export Price and Constructed Export Price and Normal Value sections of this notice. In accordance with section 777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs and CEPs. We compared these to weighted-average home market prices or CVs, as appropriate.

Export Price and Constructed Export Price

For the price to the United States, we used, as appropriate, EP or CEP as defined in sections 772(a) and 772(b) of the Act, respectively. Section 772(a) of the Act defines EP as the price at which the subject merchandise is first sold before the date of importation by the producer or exporter outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States, as adjusted under subsection 722(c) of the Act.

Section 772(b) of the Act defines CEP as the price at which the subject merchandise is first sold in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter, as adjusted under subsections 772(c) and (d) of the Act.

We calculated EP and CEP, as appropriate, based on the packed prices charged to the first unaffiliated customer in the United States. In accordance with section 772(c)(2)(A) of the Act, we made deductions from the starting price for movement expenses. These include freight charges incurred in transporting merchandise from the plant to a warehouse, warehousing expenses, brokerage and handling expenses, ocean freight and associated expenses (including marine insurance) for shipments by ocean vessel, as well as, U.S. port, discharge, cleaning and rebanding, inland freight (where applicable), U.S. duty, and other U.S. transportation expenses. We added an amount for duty drawback received on imports of coke used in the production of subject merchandise. We also deducted any rebates from the starting price and added interest revenue.

Section 772(d)(1) of the Act provides for additional adjustments to calculate CEP. Accordingly, where appropriate, we deducted direct and indirect selling expenses incurred in selling the subject merchandise in the United States, including direct selling expenses (credit), indirect selling expenses, and inventory carrying costs. Pursuant to section 772(d)(3) of the Act, where applicable, we made an adjustment for CEP profit.

Where appropriate, in accordance with section 772(d)(2) of the Act, the Department also deducts from CEP the cost of any further manufacture or assembly in the United States, except where the special rule provided in section 772(e) is applied. In this case, Belgo Mineira requested that it be exempted from reporting the costs of further manufacture or assembly in the United States because of the complexity of reporting such data in this case. Section 772(e) of the Act provides that, where the subject merchandise is imported by an affiliated person and the value added in the United States by the affiliated person is likely to exceed substantially the value of the subject merchandise, the Department has the discretion to determine the CEP using alternative methods.

The alternative methods for establishing export price are: (1) The price of identical subject merchandise sold by the exporter or producer to an unaffiliated person; or (2) the price of other subject merchandise sold by the exporter or producer to an unaffiliated person. The Statement of Administrative Action (SAA) notes the following with respect to these alternatives:

“There is no hierarchy between these alternative methods of establishing the export price. If there is not a sufficient quantity of sales under either of these alternatives to provide a reasonable basis for comparison, or if Commerce determines that neither of these alternatives is appropriate, it may use any other reasonable method to determine constructed export price, provided that it supplies the interested parties with a description of the method chosen and an explanation of the basis for its selection. Such a method may be based upon the price paid to the exporter or producer by the affiliated person for the subject merchandise, if Commerce determines that such price is appropriate.” See SAA accompanying the URAA, H.R. Doc. No. 103-316 (1994) at 826.

To determine whether the value added is likely to exceed substantially the value of the subject merchandise, we estimated the value added based on the difference between the averages of the prices charged to the first unaffiliated purchaser for one form of the merchandise sold in the United States and the averages of the prices paid for the subject merchandise by the affiliated person. See 19 CFR 351.402 (2). Based on this analysis, and the information on the record, we determined that the estimated value added in the United States by TrefilArbed Arkansas (TrefilArbed), Belgo Mineira's affiliated further manufacturer in the United States, accounted for at least 65 percent of the price charged to the first unaffiliated customer for the merchandise as sold in the United States.^[5] Therefore, we determined that the value added is likely to exceed substantially the value of the subject merchandise. In this case, all of the products Belgo Mineira sold to its further manufacturer, as defined by the Department's model match criteria, were also sold to unaffiliated CEP customers during the POI. As a consequence, the Department relied on the first methodology, the price of identical merchandise, and calculated Belgo Mineira's margin for these sales by applying the margin for CEP sales of relevant products to the POI quantity of the identical further manufactured product. For further discussion, See Preliminary Determination Calculation Memorandum from Vicki Schepker and Christopher Smith to Constance Handley, April 2, 2002.

Normal Value

A. Selection of Comparison Markets

Section 773(a)(1) of the Act directs that NV be based on the price at which the foreign like product is sold in the home market, provided that the merchandise is sold in sufficient quantities (or value, if quantity is inappropriate), that the time of the sales reasonably corresponds to the time of the sale used to determine EP or CEP, and that there is no particular market situation that prevents a proper comparison with the EP or CEP. The statute contemplates that quantities (or value) will normally be considered insufficient if they are less than five percent of the aggregate quantity (or value) of sales of the subject merchandise to the United States. See section 773(a)(1)(C)(ii)(II). We found that Belgo Mineira had a viable home market for steel wire rod. The respondent submitted home market sales data for purposes of the calculation of NV.

In deriving NV, we made adjustments as detailed in the Calculation of Normal Value Based on Home Market Prices section below.

B. Cost of Production Analysis

Based on allegations contained in the petition, and in accordance with section 773(b)(2)(A)(i) of the Act, we found reasonable grounds to believe or suspect that steel wire rod sales were made in Brazil at prices below the cost of production (COP). See Initiation Notice, 66 FR at 50166. As a result, the Department has conducted an investigation to determine whether the respondent made home market sales at prices below its COP during the POI within the meaning of section 773(b) of the Act. We conducted the COP analysis described below.

1. Calculation of Cost of Production

In accordance with section 773(b)(3) of the Act, we calculated a weighted-average COP based on the sum of Companhia Siderúrgica Belgo Mineira's and BMP's ^[6] cost of materials and fabrication for the foreign like product, plus amounts for the home market general and administrative (G&A) expenses, including interest expenses, selling expenses, and packing expenses. We relied on the COP data submitted by Companhia Siderúrgica Belgo Mineira and BMP, except for Companhia Siderúrgica Belgo Mineira's reported cost of materials purchased from affiliated parties, which we adjusted to reflect the highest of market price, transfer price, or cost of production. In addition, for both Companhia Siderúrgica Belgo Mineira and BMP, we increased the G&A expenses to include non-operating expenses for profit sharing and excluded the non-operational income related to the sale of a subsidiary. We then calculated one weighted-average cost for each CONNUM based on the respective production quantities for the companies.

2. Test of Home Market Sales Prices

We compared the adjusted weighted-average COP to the 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 within an extended period of time (i.e., a period of one year) in substantial quantities and whether such prices were sufficient to permit the recovery of all costs within a reasonable period of time.

On a model-specific basis, we compared the revised COP to the home market prices, less any taxes that are not collected when the product is sold for export, billing adjustments, applicable movement charges, and direct and indirect selling expenses (which were also deducted from COP).

3. Results of the COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of a respondent'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 a respondent's sales of a given product during the POI were at prices less than the COP, we determined such sales to have been made in “substantial quantities” within an extended period of time in accordance with sections 773(b)(2)(B) and 773(b)(2)(C)(i) of the Act. In such cases, because we compared prices to POI average costs, pursuant to section 773(b)(2)(D) of the Act, we also determined that such sales were not made at prices that would permit recovery of all costs within a reasonable period of time. Therefore, we disregarded these below-cost sales.

C. Calculation of Normal Value Based on Home Market Prices

We determined home market prices net of billing adjustments and added interest revenue. Pursuant to section 773(a)(6)(B)(iii) of the Act, we deducted taxes imposed directly on sales of the foreign like product (ICMS, IPI, PIS, and COFINS taxes), but not collected on the subject merchandise. We note that, in some past cases involving Brazil, we have determined that the PIS and COFINS taxes are direct taxes and, as such, should not be deducted from NV. See, e.g., Certain Cut-To-Length Carbon Steel Plate From Brazil: Final Results of Antidumping Duty Administrative Review 63 FR 12744, 12746 (March 16, 1998). However, in a recent countervailing duty (CVD) preliminary determination regarding Certain Cold-Rolled Carbon Steel Flat Products from Brazil, we preliminarily concluded that the PIS and COFINS taxes are indirect. See Notice of Preliminary Affirmative Countervailing Duty Determination and Alignment with Final Antidumping Duty Determinations: Certain Cold-Rolled Carbon Steel Flat Products from Brazil, 67 FR 9652, 9659 (March 4, 2002).

In reaching this decision, we examined the legislation underlying the PIS and COFINS to determine how Brazil assesses these taxes. Article 2 of the COFINS legislation states that “corporate bodies” will contribute two percent, “charged against monthly billings, that is, gross revenue derived from the sale of goods and services of any nature.” Likewise, Article “Second” of the PIS tax law (also found in the PIS and COFINS legislation) provides similar language stating that this tax contribution will be calculated “on the basis of the invoicing.” The PIS legislation further defines invoicing under Article “Third” to be the gross revenue “originating from the sale of goods.”

Section 351.102(b) of the Department's regulations defines an indirect tax as a “sales, excise, turnover, value added, franchise, stamp, transfer, inventory, or equipment tax, border tax, or any other tax other than a direct tax or an import charge.” As noted in the PIS and COFINS legislation, these taxes are derived from the “monthly invoicing” or “invoicing” originating from the sale of goods and services. Therefore, we preliminarily find that the manner in which these taxes are assessed is characteristic of an indirect tax, and we are treating PIS and COFINS taxes as indirect taxes for the purposes of this preliminary determination.

Where applicable, we also made adjustments for packing and movement expenses, such as inland freight and warehousing expenses, in accordance with sections 773(a)(6)(A) and (B) of the Act. In order to adjust for differences in packing between the two markets, we deducted home market packing costs from NV and added U.S. packing costs. For comparisons made to EP sales, we made circumstance-of-sale (COS) adjustments by deducting direct selling expenses incurred on home market sales (commissions, credit, and warranty expenses). We then added U.S. direct selling expenses (e.g., credit). For comparisons made to CEP sales, we deducted home market direct selling expenses, but did not add U.S. direct selling expenses. For matches of similar merchandise, we made adjustments, where appropriate, for physical differences in the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.

D. Arm's-Length Sales

Belgo Mineira reported sales of the foreign like product to affiliated customers. To test whether these sales to affiliated customers were made at arm's length, where possible, we compared the prices of sales to affiliated and unaffiliated customers, net of all movement charges, direct selling expenses, discounts, and packing. Where the price to the affiliated party was on average 99.5 percent or more of the price to the unaffiliated parties, we determined that sales made to the affiliated party were at arm's length. See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27355 (May 19, 1997) (preamble to the Department's regulations). Consistent with § 351.403(c) of the Department's regulations, we excluded from our analysis those sales where the price to the affiliated parties was less than 99.5 percent of the price to the unaffiliated parties.

E. Level of Trade/Constructed Export Price Offset

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 as the EP or CEP transaction. The NV level of trade is that of the starting-price sales in the comparison market or, when NV is based on CV, that of the sales from which we derive SG&A expenses and profit. For EP sales, the U.S. level of trade is also the level of the starting-price sale, which is usually from exporter to importer. For CEP transactions, it is the level of the constructed sale from the exporter to the importer.

To determine whether NV sales are at a different level of trade than EP or CEP transactions, 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 level of trade 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 level of trade of the export transaction, we make a level-of-trade adjustment under section 773(a)(7)(A) of the Act. For CEP sales, if the NV level is more remote from the factory than the CEP level and there is no basis for determining whether the difference in the 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, 61733, 61746 (November 19, 1997).

In implementing these principles in this investigation, we obtained information from Belgo Mineira about the marketing stages involved in the reported U.S. and home market sales, including a description of the selling activities performed by the respondent for each channel of distribution. In identifying levels of trade for EP and home market sales we considered the selling functions reflected in the starting price before any adjustments. For CEP sales, we considered only the selling activities reflected in the price after the deduction of expenses pursuant to section 772(d) of the Act. Generally, if the reported levels of trade are the same, the functions and activities of the seller should be similar. Conversely, if a party reports levels of trade that are different for different categories of sales, the functions and activities may be dissimilar.

In the home market, Belgo Mineira reported three channels of distribution: direct sales to unaffiliated customers, warehouse sales to unaffiliated customers, and sales to affiliated customers. Belgo Mineira also reported two levels of trade in the home market: sales to unaffiliated customers and sales to affiliated customers. According to the respondent, only the most basic selling activities and services are required for sales to unaffiliated companies. In addition, because the sales to affiliates involve inter-company transactions, negotiations with and considerations of credit and collection for affiliated companies are far more standardized and less significant. While we agree that the intensity of selling activities varies between Belgo Mineira's channels of distribution in the home market, we do not agree that the variations support Belgo Mineira's claim of two distinct levels of trade in the home market. First, we note that Belgo Mineira described the same selling activities for all customers, regardless of the channel of distribution. In addition, Belgo Mineira provided the same sales process description for both channels of distribution; therefore, we are not persuaded that the processing of customer orders is affected by affiliation. Furthermore, Belgo Mineira's questionnaire responses contradict its claim that some selling activities are more significant with respect to unaffiliated customers. For example, Belgo Mineira claims that it provides more warranty and technical services to unaffiliated customers.^[7] However, we note that, in Belgo Mineira's section B response, the company did not report any direct warranty expenses. In response to the Department's supplemental questionnaire, Belgo Mineira stated that it does not have a formal warranty program, but developed a customer-specific direct warranty adjustment.^[8] This direct warranty adjustment was reported without regard to the affiliation of the customer. In addition, the company did not report any direct technical services expenses associated with its home market sales. For indirect warranty and technical service expenses, the company calculated a factor to account for the expenses of its quality departments. Again, this factor was the same for all customers, regardless of affiliation and market. Although there may be more negotiations, freight and delivery arrangements, and credit and collection expenses associated with sales to unaffiliated companies, we do not find that these differences support Belgo Mineira's claim that there are two separate levels of trade in the home market.^[9] Therefore, we preliminarily determine that home market sales in the three channels of distribution constitute a single level of trade.

In the U.S. market, Belgo Mineira had both EP and CEP sales. Belgo Mineira reported EP sales through two channels of distribution: sales to unaffiliated trading companies and sales to unaffiliated end-users. The company identified sales through both of these channels as one level of trade. Because the selling activities associated with EP sales were similar to the selling activities in the home market, we have determined that the EP sales are at the same level of trade as the home market sales.

With respect to CEP sales, the company reported these sales through two channels of distribution: sales through TradeArbed and sales to TrefilArbed (an affiliated further manufacturer). The company claimed that its CEP sales (i.e., sales to affiliates) are at a different level of trade than its EP sales (i.e., sales to unaffiliated customers). Similar to its home market level of trade analysis, the company claims that there are two levels of trade in the U.S. market because Belgo Mineira has a close relationship with its affiliated importers, which affects the level of selling activities it performs for those customers. However, as in the home market level of trade analysis, we find Belgo Mineira's arguments unpersuasive. Specifically, we note that Belgo Mineira provides the same selling activities for all of its U.S. customers, regardless of the channel of distribution. In addition, Belgo Mineira provided the same sales process description for all channels of distribution; therefore, we are not persuaded that the processing of customer orders is affected by affiliation. Furthermore, Belgo Mineira's questionnaire responses contradict its claim that some selling activities are more significant with respect to unaffiliated customers. For example, Belgo Mineira claims that it provides more warranty and technical service activities to unaffiliated customers.^[10] However, we note that, in Belgo Mineira's section C response, the company did not report any direct warranty expenses. In addition, the company did not report any direct technical services expenses associated with its U.S. sales. For indirect warranty and technical service expenses, the company calculated a factor to account for the expenses of its quality departments. Again, this factor was the same for all customers, regardless of affiliation and market. Although, as with home market sales, there may be more negotiations and credit and collection expenses associated with sales to unaffiliated companies, we do not find that these differences support Belgo Mineira's claim that there are two separate levels of trade in the U.S. market.

After subtraction of the expenses incurred in the United States, in accordance with section 772(d) of the Act, we preliminarily determine that the selling functions corresponding to the adjusted CEP are the same as the selling functions for Belgo Mineira's home market sales. Therefore, we have determined that home market and CEP sales do not involve substantially different selling activities, as stipulated by § 351.412(c)(2) of the Department's regulations. Because we find that the level of trade for CEP sales is similar to the home market level of trade, we made no level-of-trade adjustment or CEP offset. See section 773(a)(7)(A) of the Act. We will examine this issue further at verification.

Currency Conversions

We made currency conversions into U.S. dollars in accordance with section 773A of the Act based on exchange rates in effect on the dates of the U.S. sales, as obtained from the Federal Reserve Bank (the Department's preferred source for exchange rates).

Verification

In accordance with section 782(i) of the Act, we intend to verify all information relied upon in making our final determination.

Critical Circumstances

In their December 5, 2001, submission, the petitioners' alleged that critical circumstances exist with respect to steel wire rod from Brazil. Throughout the course of this investigation, the petitioners and interested parties have submitted additional comments concerning this issue.

Since the petitioners submitted critical circumstances allegations more than 20 days before the scheduled date of the preliminary determination, § 351.206(c)(2)(i) of the Department's regulations provides that we must issue our preliminary critical circumstances determination not later than the date of the preliminary determination.

If critical circumstances are alleged, section 733(e)(1) of the Act directs the Department to examine whether there is a reasonable basis to believe or suspect that: (A)(i) There is a history of dumping and material injury by reason of dumped imports in the United States or elsewhere of the subject merchandise, or (ii) the person by whom, or for whose account, the merchandise was imported knew or should have known that the exporter was selling the subject merchandise at less than its fair value and there was likely to be material injury by reason of such sales, and (B) there have been massive imports of the subject merchandise over a relatively short period.

In determining whether imports of the subject merchandise have been “massive,” the Department normally will examine (i) the volume and value of the imports, (ii) seasonal trends, and (iii) the share of domestic consumption accounted for by the imports. Section 351.206(h)(2) of the Department's regulations provides that an increase in imports of 15 percent or more during a “relatively short period” may be considered “massive.” In addition, § 351.206(i) of the Department's regulations defines “relatively short period” as generally the period beginning on the date the proceeding begins (i.e., the date the petition is filed) and ending at least three months later. As a consequence, the Department compares import levels during at least the three months immediately after initiation with at least the three-month period immediately preceding initiation to determine whether there has been at least a 15 percent increase in imports of subject merchandise.

In this case, we have determined that imports have not been massive over a “relatively short period of time,” pursuant to 733(e)(1)(B) of the Act. As stated in section 351.206(i) of the Department's regulations, if the Secretary finds importers, exporters, or producers had reason to believe at some time prior to the beginning of the proceeding that a proceeding was likely, then the Secretary may consider a time period of not less than three months from that earlier time.

In determining whether the relevant statutory criteria have been satisfied, we considered: (i) The evidence presented by the petitioners in their December 5, 19, and 21, 2001 and January 25, 2002 letters; (ii) exporter-specific shipment data requested by the Department; (iii) comments by interested parties in response to the petitioners' allegations; (iv) import data available through the ITC's DataWeb website; and (v) the ITC's preliminary injury determination.

For the reasons set forth in the memorandum regarding our critical circumstances determination for Brazil, we find a sufficient basis exists for finding importers, or exporters, or producers knew or should have known antidumping cases were pending on steel wire rod imports from Brazil by June 2001 at the latest. See Antidumping Duty Investigation of Carbon and Certain Alloy Steel Wire Rod from Brazil—Preliminary Negative Determination of Critical Circumstances Memorandum from Bernard T. Carreau to Faryar Shirzad, April 2, 2002. Further, as discussed in the above-cited memo, we determined it appropriate to use six-month base and comparison periods. Accordingly, we determined December 2000 through May 2001 should serve as the “base period,” while June 2001 through November 2001 should serve as the “comparison period” in determining whether or not imports have been massive in the comparison period.

In order to determine whether imports from Brazil have been massive, the Department requested that Belgo Mineira provide its shipment data from January 1999 up until the time of the preliminary determination. Based on our analysis of the shipment data reported, imports have decreased during the comparison period; therefore, we preliminarily find that the criterion under section 733(e)(1)(B) of the Act has not been met, i.e., there have not been massive imports of steel wire rod from Belgo Mineira over a relatively short time. See Antidumping Duty Investigation of Carbon and Certain Alloy Steel Wire Rod from Brazil: Preliminary Negative Critical Circumstances Memorandum, dated April 2, 2002 (Critical Circumstances Memorandum). Because there have not been massive imports in this case, we have determined that it is unnecessary to address the other prong of the critical circumstances test. For this reason, we preliminarily determine that critical circumstances do not exist for imports of steel wire rod produced by Belgo Mineira.

Regarding the “All Others” category, although the mandatory respondent did not have massive imports, we also considered country-wide import data for the products covered under the scope of this investigation. In determining whether massive imports exist for “All Others,” we compared the volume of aggregate imports during the base period to the volume of aggregate imports during the comparison period. Based on our analysis of the country-wide import data, imports of steel wire rod increased during the comparison period, but not by the requisite 15 percent. See Critical Circumstances Memorandum. Accordingly, pursuant to section 733(e) of the Act and § 351.206(h) of the Department's regulations, we preliminarily find that critical circumstances do not exist for imports of steel wire rod produced by the “All Others” category.

Suspension of Liquidation

In accordance with section 733(d) of the Act, we are directing the Customs Service to suspend liquidation of all entries of carbon and certain alloy steel wire rod from Brazil, that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We are also instructing the Customs Service to require a cash deposit or the posting of a bond equal to the weighted-average amount by which the normal value exceeds the EP or CEP, as indicated below. These instructions suspending liquidation will remain in effect until further notice.

The weighted-average dumping margins are as follows:

Manufacturer/exporter	Margin (percent)
Companhia Siderúrgica Belgo Mineira and Belgo-Mineira
Participacao Industria e Comercio S.A. (BMP)	65.76
All Others	65.76

Disclosure

The Department will normally disclose calculations performed within five days of the date of publication of this notice to the parties of the proceeding in this investigation in accordance with 19 CFR 351.224(b).

International Trade Commission Notification

In accordance with section 733(f) of the Act, we have notified the ITC of our determination. If our final antidumping determination is affirmative, the ITC will determine whether the imports covered by that determination are materially injuring, or threaten material injury to, the U.S. industry. The deadline for that ITC determination would be the later of 120 days after the date of this preliminary determination or 45 days after the date of our final determination.

Public Comment

Case briefs for this investigation must be submitted no later than one week after the issuance of the verification reports. Rebuttal briefs must be filed within five days after the deadline for submission of case briefs. A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. Executive summaries should be limited to five pages total, including footnotes. Further, we would appreciate it if parties submitting written comments would provide the Department with an additional copy of the public version of any such comments on diskette.

Section 774 of the Act provides that the Department will hold a hearing to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs, provided that such a hearing is requested by any interested party. If a request for a hearing is made in an investigation, the hearing will tentatively be held two days after the deadline for submission of the rebuttal briefs, at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. In the event that the Department receives requests for hearings from parties to more than one steel wire rod case, the Department may schedule a single hearing to encompass all those cases. 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 within 30 days of the publication of this notice. Requests should specify the number of participants and provide a list of the issues to be discussed. Oral presentations will be limited to issues raised in the briefs.

This determination is issued and published pursuant to sections 733(f) and 777(i)(1) of the Act.

Dated: April 2, 2002.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Footnotes

1.  The petitioners in this investigation are Co-Steel Raritan, Inc., GS Industries, Inc., Keystone Consolidated Industries, Inc., and North Star Steel Texas, Inc.

2.  With respect to imports from Egypt, South Africa, and Venezuela, the ITC determined that imports from these countries during the period of investigation (POI) were negligible and, therefore, these investigations were terminated.

3.  Section A of the questionnaire requests general information concerning a company's corporate structure and business practices, the merchandise under investigation that it sells, and the manner in which it sells that merchandise in all of its markets. Section B requests a complete listing of all home market sales or, if the home market is not viable, of sales in the most appropriate third-country market. Section C requests a complete listing of U.S. sales. Section D requests information on the cost of production (COP) of the foreign like product and the constructed value (CV) of the merchandise under investigation. Section E requests information on further manufacturing.

4.  On December 21, 2001 the petitioners further alleged that there was a reasonable basis to believe or suspect that critical circumstances exist with respect to imports of steel wire rod from Trinidad and Tobago. On February 4, 2002, the Department preliminarily determined that critical circumstances exist with respect to wire rod from Germany, Mexico, Moldova, Trinidad and Tobago, and Ukraine; however, the Department did not make a determination with respect to wire rod from Brazil at that time. See Memorandum to Faryar Shirzad Re: Antidumping Duty Investigation of Carbon and Certain Alloy Steel Wire Rod from Mexico and Trinidad and Tobago—Preliminary Affirmative Determinations of Critical Circumstances (February 4, 2002); See also Carbon and Certain Alloy Steel Wire Rod from Germany, Mexico, Moldova, Trinidad and Tobago, and Ukraine: Notice of Preliminary Determination of Critical Circumstances, 67 FR 6224 (February 11, 2002).

5.  See Memorandum from Vicki Schepker and Chris Smith to Gary Taveman dated February 8, 2002.

6.  BMP leases and operates the Juiz de Fora mill.

7.  See Belgo Mineura;s February 11, 2002 response to the Department's supplemental questionnaire at Exhibit B-16.

8.  Id. at 76.

9.  See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Sweden, and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews, 64 FR 35590 (July 1, 1999).

10.  Id. at Exhibit B-16.