[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)] [Notices] [Pages 8914-8918] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-5259] ----------------------------------------------------------------------- [[Page 8915]] DEPARTMENT OF COMMERCE [A-427-811] Certain Stainless Steel Wire Rods From France: Preliminary Results of Antidumping Duty Administrative Review AGENCY: Import Administration, International Trade Administration, Department of Commerce. ACTION: Notice of Preliminary Results of Antidumping Duty Administrative Review. ----------------------------------------------------------------------- SUMMARY: In response to a request by Imphy S.A., and Ugine-Savoie, respondents, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain stainless steel wire rods from France. This review covers the above manufacturers/exporters of the subject merchandise to the United States. The period of review (POR) is August 5, 1993 through December 31, 1994. We have preliminarily determined that respondents sold subject merchandise at less than normal value (NV) during the POR. Interested parties are invited to comment on these preliminary results. Parties who submit argument in this proceeding should also submit with the argument (1) a statement of the issue, and (2) a brief (no longer than five pages, including footnotes) summary of the argument. EFFECTIVE DATE: February 28, 1996. FOR FURTHER INFORMATION CONTACT: Stephen Jacques or Jean Kemp, Office of Agreements Compliance, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482- 3434 or (202) 482-4037, respectively. SUPPLEMENTARY INFORMATION: The Applicable Statute Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act), by the Uruguay Rounds Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to the current regulations, as amended by the interim regulations published in the Federal Register on May 11, 1995 (60 FR 25130). Background On December 29, 1993, the Department published in the Federal Register (58 FR 68865) the final affirmative antidumping duty determination on certain stainless steel wire rods from France, and published an amended final determination and antidumping duty order on January 28, 1994. On January 12, 1995, the Department published the Opportunity to Request an Administrative Review of this order for the period August 5, 1993-December 31, 1994 ( 60 FR 2941). The Department received a request for administrative review from Imphy, S.A., (``Imphy'') and Ugine Savoie (``Ugine''), related producers/exporters of the subject merchandise on January 30, 1995. We initiated the review on February 15, 1995. On November 7, 1995, the Department published in the Federal Register its notice extending the deadline in this review (60 FR 56142). The Department is now conducting this review in accordance with section 751 of the Act. The review covers sales of certain stainless steel wire rods by Imphy, Ugine, and their affiliated companies, Metalimphy Alloys Corp. (``MAC''), and Techalloy Company, Inc. (``Techalloy''). Scope of the Review The products covered by this administrative review are certain stainless steel wire rods (SSWR), products which are hot-rolled or hot- rolled annealed, and/or pickled rounds, squares, octagons, hexagons, or other shapes, in coils. SSWR are made of alloy steels containing, by weight, 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements. These products are only manufactured by hot-rolling, are normally sold in coiled form, and are of solid cross section. The majority of SSWR sold in the United States is round in cross-sectional shape, annealed, and pickled. The most common size is 5.5 millimeters in diameter. The SSWR subject to this review is currently classifiable under subheadings 7221.00.0005, 7221.00.0015, 7221.00.0020, 7221.00.0030, 7221.00.0040, 7221.00.0045, 7221.00.0060, 7221.00.0075, and 7221.00.0080 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and Customs purposes, our written description of the scope of the order is dispositive. Verification As provided in section 782(i) of the Tariff Act, we verified information provided by the respondent by using standard verification procedures, including onsite inspection of the manufacturer's facilities, the examination of relevant sales and financial records, and selection of original documentation containing relevant information. Our verification results are outlined in the public versions of the verification reports. Transactions Reviewed In accordance with Section 751 of the Act, the Department is required to determine the normal value and export price (EP) or constructed export price (CEP) of each entry of subject merchandise during the relevant review period. Because there can be a significant lag between entry date and sale date for CEP sales, it has been the Department's practice to examine U.S. CEP sales during the period of review. Gray Portland Cement and Clinker from Japan; Final Results of Antidumping Duty Administrative Review, 58 FR 48826 (1993) (Dept. did not consider ESP (now CEP) entries which were sold after the POR). The Court of International Trade has upheld the Department's practice in this regard. See, The Ad Hoc Committee of Southern California Producers of Gray Portland Cement v. United States, CIT Slip Op. 95-195, December 1, 1995.1 \1\ Although the CIT, in Ad Hoc, accepted that ``consideration of all sales, rather than entries, made during the period of review may result in the consideration of entries made prior to the suspension of liquidation'', Ad Hoc is not a case in which the respondent linked specific sales during the POR to specific entries prior to the suspension of liquidation. Ad Hoc, Slip Op. at 19 (emphasis added). --------------------------------------------------------------------------- The Department has adopted an exception to its practice of examining all U.S. sales during the period of review. That exception applies when a respondent is able to demonstrate, to the satisfaction of the Department, that the merchandise covered by a particular sale entered prior to the suspension of liquidation pursuant to the Department's preliminary determination in the LTFV investigation. See, High-Tenacity Rayon Filament Yarn, Preliminary Results of Antidumping Duty Administrative Review, 59 FR 32181 (1994) (specific sales excluded when linked to pre-suspension entries); compare, Certain Corrosion- Resistant Carbon Steel Flat Products from Australia; Preliminary Results of Antidumping Duty Administrative Review, 60 FR 42507 (1995) (sales not excluded when respondent unable to link them to specific pre-suspension entries). Merchandise proven to have entered the U.S. prior to the suspension of liquidation (and in the absence of an affirmative critical circumstances finding) is not subject merchandise within the meaning of section 771(25) of the Act. In this review, respondent claimed that certain merchandise was not [[Page 8916]] subject to review because it entered prior to the period of review for sale by an affiliated U.S. company during the period of review. The Department verified that respondent was able to link certain sales during the period to entries of merchandise prior to the suspension of liquidation. Because respondent has demonstrated that certain merchandise entered prior to the suspension of liquidation, we excluded sales of that merchandise from our analysis. Product Comparisons In accordance with section 771(16) of the Act, we considered all products produced by the respondent, covered by the description in the Scope of the Review section, above, and sold in the home market during the POR, to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. 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 Appendix III of the Department's June 20, 1995 antidumping questionnaire and additional specifications listed in our December 1, 1995 supplemental questionnaire. In making the product comparisons, we matched foreign like products based on the physical characteristics reported by the respondents and verified by the Department. Level of Trade As set forth in section 773(a)(2)(B)(i) of the Act and in the Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act, at 829-831, to the extent practicable, the Department will calculate normal value based on sales at the same level of trade as the U.S. sale. When the Department is unable to find sale(s) in the comparison market at the same level of trade as the U.S. sale(s), the Department may compare sales in the U.S. and foreign markets at a different level of trade. In accordance with section 773(a)(7)(A) of the Act, if we compare a U.S. sale at one level of trade to normal value sales at a different level of trade, the Department will adjust the normal value to account for the difference in level of trade if two conditions are met. First, there must be differences between the actual selling functions performed by the seller at the level of trade of the U.S. sale and at the level of trade of the NV sale. Second, the differences must affect price comparability as evidenced by a pattern of consistent price differences between sales at the different levels of trade in the market in which normal value is determined. When constructed export price is applicable, section 773(a)(7)(B) of the Act establishes the procedures for making a constructed export price offset when: (1) normal value is at a different level of trade, and (2) the data available do not provide an appropriate basis for a level of trade adjustment from the U.S. sale. Also, in accordance with section 773(a)(7)(B), to qualify for a CEP offset, the level of trade in the home market must also constitute a more advanced stage of distribution than the level or trade of the CEP. In order to identify levels of trade, the Department must review information concerning selling functions of the exporter. Therefore, in addition to the questions related to the level of trade in our June 20, 1995, questionnaire, on December 13, 1995, we sent respondents supplemental questions related to level of trade comparisons and adjustments. We asked respondents to establish any claimed levels of trade based on selling functions performed and services offered to each customer or customer class, and to document and explain any claims for a level of trade adjustment. Respondents' reported one level of trade in the home market (to end users) and two channels of distribution: 1) direct to end users; and 2) through Ugine Service, a joint-venture between Imphy and Ugine which acts as a selling arm. We examined and verified the selling functions performed in each channel and found that the two sales channels provided many of the same or similar selling functions including: strategic planning, order evaluation, warranty claims, technical services, inventory maintenance, packing and freight and delivery. We found some differences between the two channels of trade in advertising, customer contacts, computer systems (order input/invoice system), and administrative functions. Overall, we determine that the selling functions between the two sales channels are sufficiently similar to consider them as one level of trade in the home market. For the U.S. market, respondents claimed that they sold to two levels of trade: 1) end users through MAC (EP sales); and 2) distributors, e.g., MAC, Techalloy and US&A (CEP sales). We examined and verified the selling functions performed for U.S. sales to end users through MAC and determined that they are at the same level of trade as home market sales. We then examined and verified that different (fewer) selling functions were performed for U.S. sales to distributors than for home market sales. Specifically, we found the selling functions were sufficiently different in customer sales contacts, technical services, inventory maintenance, computer systems and administrative functions to warrant treating U.S. sales to distributors and the home market sales as different levels of trade. To the extent practicable, we compared normal value at the same level of trade as the U.S. sale. Because we compared these CEP sales to home market sales at a different level of trade, we examined whether a level of trade adjustment may be appropriate. In this case, respondent only sold at one level of trade in the home market; therefore, there is no basis upon which respondent can demonstrate a consistent pattern of price differences between levels of trade. Further, we do not have information which would allow us to examine pricing patterns based on respondent's sales of other products and there are no other respondents or other record information on which such an analysis could be based. Because the data available do not provide an appropriate basis for making a level of trade adjustment but the level of trade in the HM is a more advanced stage of distribution than the LOT of the CEP sale, a CEP offset is appropriate. Respondents claimed a CEP offset for those U.S. CEP and CEP/FM (CEP/Further Manufactured) sales compared to sales in France through Ugine Service. We included a CEP offset for all sales in France which are compared with CEP and CEP/FM sales in the United States since the comparison of home market sales to CEP sales is at a different level of trade. We applied the CEP offset to normal value or constructed value, as appropriate (See Fair Value Comparisons Section, below). The level of trade methodology employed by the Department in these preliminary results of review is based on the facts particular to this review. The Department will continue to examine its policy for making level of trade comparisons and adjustments for its final results of review. Fair Value Comparisons To determine whether sales of SSWR by respondents to the United States were made at less than fair value, we compared the EP or 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)(2), we calculated monthly weighted-average prices for NV and compared these to individual U.S. transactions. Where possible, in calculating a monthly weighted average normal [[Page 8917]] value, we averaged home market sales across the channel of distribution most comparable to that in which the U.S. transaction was made. Where there were no home market sales through that channel of distribution, we averaged home market sales through the other channel of distribution. Export Price and Constructed Export Price We used EP, in accordance with subsections 772(a) and (c) of the Act, where the subject merchandise was sold directly or indirectly to the first unaffiliated purchaser in the United States prior to importation and CEP was not otherwise warranted based on the facts of record. In addition, we used CEP in accordance with subsections 772(b), (c) and (d) of the Act, for those sales to the first unaffiliated purchaser that took place after importation into the United States. We made adjustments as follows: We calculated EP based on packed prices to unaffiliated customers in the United States. Where appropriate, we made deductions from the starting price for discounts, foreign inland freight, foreign brokerage and handling, international freight, U.S. inland freight, U.S. brokerage and handling, and U.S. Customs duties. We also adjusted the starting price for billing adjustments to the invoice price. We calculated CEP sales based on packed prices to unaffiliated customers. Where appropriate, we made deductions for early payment discounts, credit expenses, warranty expenses, other direct selling expenses and commissions. We deducted those indirect selling expenses, including inventory carrying costs and product liability premiums, that related to commercial activity in the United States. We also made deductions for foreign brokerage and handling, foreign inland freight, international freight, U.S. inland freight, U.S. brokerage and handling, and U.S. duty and harbor fees. We also adjusted the starting price for billing adjustments to the invoice price and for interest revenue. Finally, we made an adjustment for CEP profit in accordance with section 772(d)(3) of the Act. Further Manufacturing For product that was further manufactured after importation, we adjusted for all value added in the United States, including the proportional amount of profit attributable to the value added. 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. Normal Value In order to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating NV, we compared respondents' volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise, in accordance with section 773(a)(1)(C) of the Act. Since respondents' 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. Therefore, we have based NV on home market sales. Where appropriate, we deducted discounts, credit expenses, warranty expenses, inland freight, inland insurance and packing. We also adjusted the starting price for billing adjustments to the invoice price and interest revenue. We did not adjust the starting price for commissions in the home market (please see the Concurrence Memo for a discussion of this issue). To calculate the CEP offset, we took the home market indirect selling expenses and deducted this amount from normal value, on home market sales which were compared to U.S. CEP sales. We limited the home market indirect selling expense deduction by the amount of the indirect selling expenses incurred in the United States. 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 the Department's practice, where the difference in merchandise adjustment for any product comparison exceeded 20 percent, we based normal value on CV. In addition, in accordance with section 773(a)(6), we deducted home market packing costs and added U.S. packing costs. Further, because we disallowed all home market commissions, we deducted from normal value the lesser of either (1) the amount of commission paid on a U.S. sale for a particular product, or (2) the amount of indirect selling expenses incurred on the home market sales for a particular product. Price to CV Comparisons Where we compared CV to EP, we deducted from CV the weighted- average home market direct selling expenses and added the weighted- average U.S. product-specific direct selling expenses. Cost of Production Analysis Based on the fact that the Department had disregarded sales in the LTFV investigation because they were made below the cost of production (COP), the Department found reasonable grounds in this review, in accordance with section 773(b)(2)(A)(ii) of the Act, to believe or suspect that respondents made sales in the home market at prices below the cost of producing the merchandise. As a result, the Department initiated an investigation to determine whether the respondents made home market sales during the POR at prices below their COP within the meaning of section 773(b) of the Act. Before making any fair value comparisons, we conducted the COP analysis described below. A. Calculation of COP We calculated the COP based on the sum of respondents' cost of materials and fabrication for the foreign like product, plus amounts for home market selling, general, and administrative expenses (SG&A) and packing costs in accordance with section 773(b)(3) of the Act. We relied on the respondents' reported COP amounts. B. Test of Home Market Prices We used the respondents' weighted-average COP for the POR. We compared the weighted-average COP figures 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 below-cost prices within an extended period of time in substantial quantities, and whether they were at prices which permit recovery of all costs within a reasonable period of time. On a product-specific basis, we compared the COP to the home market prices, less any applicable movement charges, rebates, and direct and indirect selling expenses. C. Results of COP Test Pursuant to section 773(b)(2)(c), where less than 20 percent of respondents' 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 were at prices less than the COP, we disregarded the [[Page 8918]] below-cost sales because we determined that the below-cost sales were made within an extended period of time in ``substantial quantities'' in accordance with section 773(b)(2)(B) of the Act, and because we determined that the below-cost sales of the product were at prices which would not permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. Where all sales of a specific product were at prices below the COP, we disregarded all sales of that product, and calculated NV based on CV, in accordance with section 773(b)(1) of the Act. D. Calculation of CV In accordance with section 773(e) of the Act, we calculated CV based on the sum of respondents' cost of materials, fabrication, SG&A , U.S. packing costs, interest expenses and profit as reported in the U.S. sales databases. In accordance with sections 773(e)(2)(A), we based SG&A 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 the foreign country. We relied on the respondents' reported CV amounts. For selling expenses, we used the weighted-average home market selling expenses. Arm's-Length Sales 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 and indirect selling expenses, discounts and packing. Where the price to the related party was 99.5 percent or more of the price to the unrelated party, we determined that the sale made to the related party was at arm's-length. Where no related customer ratio could be constructed because identical merchandise was not sold to unrelated 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 comparison to the next most similar model. Currency Conversion For purposes of the preliminary results, we made currency conversions based on the official exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank of New York. Section 773A(a) directs the Department to use a daily exchange rate in order to convert foreign currencies into U.S. dollars, unless the daily rate involves a ``fluctuation.'' For these preliminary results of review, we have determined that a fluctuation exists when the daily exchange rate differs from a benchmark by 2.25 percent. The benchmark is defined as the rolling average of rates for the past 40 business days. Therefore, when we determined a fluctuation existed, we substituted the benchmark for the daily rate. Preliminary Results of the Review As a result of our comparison of USP and NV, we preliminarily determine that the following weighted-average dumping margin exists: ------------------------------------------------------------------------ Manufacturer/exporter Period Margin ------------------------------------------------------------------------ Imphy/Ugine-Savoie........................... 8/5/93-12/31/94 5.01 ------------------------------------------------------------------------ Parties to the proceeding may request disclosure within five days of the date of publication of this notice. Any interested party may request a hearing within 10 days of publication. Any hearing, if requested, will be held 44 days after the date of publication or the first business day thereafter. Case briefs and/or other written comments from interested parties may be submitted not later than 30 days after the date of publication. Rebuttal briefs and rebuttals to written comments, limited to issues raised in those comments, may be filed not later than 37 days after the date of publication of this notice. The Department will publish the final results of this administrative review, including its analysis of issues raised in any written comments or at a hearing, not later than 180 days after the date of publication of this notice. Upon completion of this review, the following deposit requirements will be effective upon publication of the final results of this antidumping duty review for all shipments of SSWR from France, entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a) of the Tariff Act: (1) the cash deposit rate for the reviewed companies will be that established in the final results of review; (2) for exporters not covered in this review, but covered in the LTFV investigation, the cash deposit rate will continue to be the company-specific rate from the LTFV investigation; (3) if the exporter is not a firm covered in this review, or the original LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; (4) the cash deposit rate for all other manufacturers or exporters will continue to be 24.51 percent, the ``All Others'' rate made effective by the LTFV investigation. These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review. This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 353.26 to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties. These preliminary results of review are published pursuant to section 751(a)(1) of the Act and 19 CFR 353.22. Dated: February 28, 1996. Susan G. Esserman, Assistant Secretary for Import Administration. [FR Doc. 96-5259 Filed 3-5-96; 8:45 am] BILLING CODE 3510-25-P