[Federal Register Volume 63, Number 43 (Thursday, March 5, 1998)]
[Notices]
[Pages 10836-10841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5599]



[[Page 10836]]

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DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-828]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Stainless Steel Wire Rod 
from Taiwan

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: March 5, 1998.

FOR FURTHER INFORMATION CONTACT: Laurel LaCivita or Alexander Amdur, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-4740, or (202) 482-5346, 
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 Uruguay Round Agreements Act 
(URAA). In addition, unless otherwise indicated, all citations to the 
Department's regulations are to the regulations codified at 19 CFR Part 
351, 62 FR 27296 (May 19, 1997).

Preliminary Determination

    We preliminarily determine that stainless steel wire rod (SSWR) 
from Taiwan 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.

Case History

    Since the initiation of this investigation (Notice of Initiation of 
Antidumping Investigations: Stainless Steel Wire Rod from Germany, 
Italy, Japan, Korea, Spain, Sweden, and Taiwan, 62 FR 45224 (August 26, 
1997) (Notice of Initiation)), the following events have occurred:
    On August 21, 1997, the Department issued a cable to the American 
Institute in Taiwan requesting information identifying potential 
Taiwanese producers and/or exporters of the subject merchandise to the 
United States. We did not receive a response from the American 
Institute in Taiwan. However, on August 29, 1997, and September 18, 
1997, we received letters of appearance on behalf of Walsin Cartech 
Specialty Steel Corporation (Walsin) and Yieh Hsing Enterprise 
Corporation, Ltd. (Yieh Hsing), respectively. Based on these letters of 
appearance and information contained in the petition, on September 19, 
1997, the Department issued antidumping questionnaires to both Walsin 
and Yieh Hsing (hereinafter ``the respondents'').
    In September 1997, the United States International Trade Commission 
(ITC) issued an affirmative preliminary injury determination in this 
case (see ITC Investigation No. 731-TA-775).
    On October 10, 1997, the petitioners in this case (i.e., AL Tech 
Specialty Steel Corp., Carpenter Technology Corp., Republic Engineered 
Steels, Talley Metals Technology, Inc., and United Steelworkers of 
America) requested that the Department revise its questionnaire to 
obtain information on the actual nickel, chromium, and molybdenum 
content for each sale of the SSWR made during the period of 
investigation (POI). The Department, upon consideration of the comments 
from all parties on this matter, issued a memorandum on December 18, 
1997, indicating its decision to make no changes in the model-matching 
criteria specified in the September 19, 1997, questionnaire (see 
Memorandum from Team to Holly Kuga, Office Director, dated December 18, 
1997).
    Also in October 1997, the Department received responses to Section 
A of the questionnaire from the respondents. The respondents submitted 
responses to sections B, C, and D of the questionnaire in November 
1997.
    On December 11, 1997, pursuant to section 733(c)(1)(A) of the Act, 
the petitioners made a timely request to postpone the preliminary 
determination. On December 16, 1997, we granted this request and 
postponed the preliminary determination until no later than February 
25, 1998 (62 FR 66849, December 22, 1997).
    We issued supplemental questionnaires to the respondents in 
December 1997 and received responses to these questionnaires in January 
1998.
    On January 26, 1998, the petitioners submitted a ``targeted-
dumping'' allegation with regard to Yieh Hsing's sales in the United 
States. The petitioners requested that the Department compare 
transaction-specific export prices in the U.S. market to the weighted-
average normal values in calculating the antidumping margin for Yieh 
Hsing. Yieh Hsing responded to this allegation on February 6, 1998. 
(See the ``Targeted Dumping'' section of this notice, below, for 
further discussion.)
    We received comments from the petitioners concerning the 
information reported in the respondents' questionnaire responses and 
issues they considered relevant to the preliminary determination on 
February 6, 1998, and February 12, 1998.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on February 6, 1998 and 
February 20, 1998, Yieh Hsing and Walsin, respectively, 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. On 
February 18, 1998, Yieh Hsing amended its request to include a request 
to extend the provisional measures from a four-month period to not more 
than six months. Walsin included its request to extend the provisional 
measures in its February 20, 1998 letter. In accordance with 19 CFR 
351.210(b)(2), because (1) our preliminary determination is 
affirmative, (2) Yieh Hsing and Walsin account for a significant 
proportion of exports of the subject merchandise, and (3) no compelling 
reasons for denial exist, we are granting the respondents' 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.

Scope of Investigation

    For purposes of this investigation, SSWR comprises products that 
are hot-rolled or hot-rolled annealed and/or pickled and/or descaled 
rounds, squares, octagons, hexagons or other shapes, in coils, that may 
also be coated with a lubricant containing copper, lime, or oxalate. 
SSWR is 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 manufactured only by hot-rolling or hot-
rolling, annealing, and/or pickling and/or descaling, 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, and later cold-finished into stainless steel wire or 
small-diameter bar.
    The most common size for such products is 5.5 millimeters or 0.217 
inches in diameter, which represents the smallest size that normally is 
produced on a rolling mill and is the size that most wire-drawing 
machines are set up to draw. The range of SSWR sizes normally sold in 
the United States is between 0.20 inches and 1.312 inches

[[Page 10837]]

diameter. Two stainless steel grades, SF20T and K-M35FL, are excluded 
from the scope of the investigation. The chemical makeup for the 
excluded grades is as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                                
----------------------------------------------------------------------------------------------------------------
                                                      SF20T                                                     
----------------------------------------------------------------------------------------------------------------
Carbon............................  0.05 max.............  Chromium.............  19.00/21.00.                  
Manganese.........................  2.00 max.............  Molybdenum...........  1.50/2.50.                    
Phosphorous.......................  0.05 max.............  Lead.................  Added (0.10/0.30).            
Sulfur............................  0.15 max.............  Tellurium............  Added (0.03 min).             
Silicon...........................  1.00 max.............                                                       
----------------------------------------------------------------------------------------------------------------
                                                     K-M35FL                                                    
----------------------------------------------------------------------------------------------------------------
Carbon............................  0.015 max............  Nickel...............  0.30 max.                     
Silicon...........................  0.70/1.00............  Chromium.............  12.50/14.00.                  
Manganese.........................  0.40 max.............  Lead.................  0.10/0.30.                    
Phosphorous.......................  0.04 max.............  Aluminum.............  0.20/0.35.                    
Sulfur............................  0.03 max.............                                                       
----------------------------------------------------------------------------------------------------------------

    The products under investigation are currently classifiable under 
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0030, 7221.00.0045, and 
7221.00.0075 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and customs purposes, the written description of the scope of this 
investigation is dispositive.

Period of Investigation

    The POI is July 1, 1996, through June 30, 1997.

Targeted Dumping

    On January 26, 1998, the petitioners requested that, for Yieh 
Hsing, the Department compare the transaction-specific export prices in 
the United States market to weighted-average normal values, in 
accordance with the ``targeted-dumping'' provisions of section 
777A(d)(1)(B) of the Act. The petitioners' allegation claimed that Yieh 
Hsing's prices for the subject merchandise in the United States vary 
significantly on the basis of purchaser and that using a weighted-
average price in the Department's analysis would have the effect of 
concealing or minimizing the margin of dumping. On February 6, 1998, 
Yieh Hsing submitted comments challenging the petitioners' targeted-
dumping allegation.
    The Department has denied the petitioners' request to compare the 
transaction-specific prices in the United States market to weighted-
average normal values because the petitioners' analysis failed to meet 
the basic requirements of section 777A(d)(1)(B)(i). The petitioners' 
statistical analysis goes no further than a simple comparison of 
average prices to different customers. Such a comparison, without 
further statistical analysis, does not yield meaningful conclusions 
about a pattern of export prices differing significantly among 
purchasers. See Preliminary Determination of Sales at Less Than Fair 
Value: Certain Pasta From Italy, 61 FR 1344 (January 19, 1996). Also 
see Concurrence Memorandum dated February 25, 1998 (``Concurrence 
Memorandum'') for further discussion of this issue.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determined normal value (NV) based on sales in the 
comparison market at the same level of trade (LOT) as the export price 
(EP) or constructed export price (CEP). 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 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 Steel Plate 
from South Africa, 62 FR 61731 (November 19, 1997).
    Neither respondent claimed a LOT adjustment. Nevertheless, we 
evaluated whether such an adjustment was necessary by examining each 
respondent's distribution system, including selling functions, classes 
of customers, and selling expenses. We found that the selling functions 
performed by each respondent, which included sales negotiation and 
shipping arrangements, where applicable, are sufficiently similar in 
the United States and the home market to consider them as constituting 
the same LOT in the two markets. Accordingly, all comparisons are at 
the same LOT and an adjustment pursuant to section 773(a)(7)(A) of the 
Act is not warranted. See Concurrence Memorandum.

Fair Value Comparisons

    To determine whether sales of SSWR from Taiwan to the United States 
were made at less than fair value, we compared the EP or the CEP to the 
NV, as described in the ``Export Price,'' ``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 EPs 
or CEPs for comparison to weighted-average NVs.
    We have considered price-averaging groups by customer types, but we 
found no basis on which to conclude that we should use price-averaging 
groups in our analysis. Accordingly, we have not based price 
comparisons on customer types.
    On January 8, 1998, the Court of Appeals for the Federal Circuit 
issued a decision in CEMEX v. United States,

[[Page 10838]]

1998 WL 3626 (Fed Cir.). In that case, based on the pre-URAA version of 
the Act, the Court discussed the appropriateness of using CV as the 
basis for foreign market value when the Department finds home market 
sales to be outside the ``ordinary course of trade.'' This issue was 
not raised by any party in this proceeding. However, the URAA amended 
the definition of sales outside the ``ordinary course of trade'' to 
include sales below cost. See Section 771(15) of the Act. Consequently, 
the Department has reconsidered its practice in accordance with this 
court decision and has determined that it would be inappropriate to 
resort directly to CV, in lieu of foreign market sales, as the basis 
for NV if the Department finds foreign market sales of merchandise 
identical or most similar to that sold in the United States to be 
outside the ``ordinary course of trade.'' Instead, the Department will 
use sales of similar merchandise, if such sales exist. The Department 
will use CV as the basis for NV only when there are no above-cost sales 
that are otherwise suitable for comparison. Therefore, in this 
proceeding, when making comparisons in accordance with section 771(16) 
of the Act, we considered all products sold in the home market as 
described in the ``Scope of Investigation'' section of this notice, 
above, that were in the ordinary course of trade for purposes of 
determining appropriate product comparisons to U.S. sales. 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 sales of the most similar foreign like product made in the 
ordinary course of trade, based on the characteristics listed in 
Sections B and C of our antidumping questionnaire. We have implemented 
the Court's decision in this case, to the extent that the data on the 
record permitted.
    With respect to the characteristics used to make product 
comparisons, the Department's questionnaire instructed the respondents 
to report the grades of the SSWR products that they sold during the POI 
in accordance with AISI standards. In their sales listings, the 
respondents reported both AISI and non-AISI (or internal) grades in 
accordance with their sales accounting systems. The petitioners argued 
that the respondents should not make changes to the product 
characteristics once the Department had established such 
characteristics because it could (a) seriously jeopardize the accuracy 
of the Department's investigations, (b) extraordinarily complicate the 
investigations, and (c) permit substantial manipulation of model 
matches.
    It is not the Department's normal practice to allow companies to 
change the criteria to be used for model-match purposes based on their 
own internal product-coding system once such criteria have been 
established. Any such deviation leads to the possibility that the 
margins calculated for each company under investigation could be based 
on completely different product-grouping criteria. In addition, 
allowing companies to deviate from the criteria may permit manipulation 
of model matches, not only for the investigation, but also in future 
reviews, in the event this investigation results in an antidumping duty 
order.
    Therefore, in instances where the respondent has reported a non-
AISI grade (or an internal grade code) for a product that corresponds 
to a single AISI category, we have used the actual AISI grade rather 
than the non-AISI grades reported by the respondent for purposes of our 
preliminary analysis. However, in instances where the respondents 
reported a non-AISI (or an internal grade code) that does not 
correspond to an AISI grade, we have preliminarily used the grade code 
reported by the respondents for purposes of our analysis. For further 
discussion of this issue, see the Concurrence Memorandum dated February 
25, 1998. We intend to examine this issue further for the final 
determination.
    Both Walsin and Yieh Hsing reported that they made sales of non-
prime merchandise in the home market during the POI. However, given the 
limited home market sales quantity of non-prime merchandise and the 
fact that no such sales were made to the United States during the POI, 
where possible, we excluded non-prime sales from our analysis in 
accordance with our past practice. See, e.g., Final Determinations of 
Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat 
Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain 
Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-
Length Carbon Steel Plate from Korea, 58 FR 37176, 37180 (July 9, 
1993). For similar reasons, where possible, we excluded from our 
comparisons all home market sales of defective merchandise. See 
Concurrence Memorandum.

Export Price/Constructed Export Price

    For both respondents, we based our calculations on EP, in 
accordance with section 772(a) of the Act, when the subject merchandise 
was sold by the producer or exporter directly to the first unaffiliated 
purchaser in the United States prior to importation, and CEP 
methodology was not otherwise indicated. In accordance with section 
772(b) of the Act, when the subject merchandise was first sold in the 
United States by or for the account of the producer or exporter of such 
merchandise, or by a seller affiliated with the producer or exporter, 
to an unaffiliated purchaser, we used CEP.
    Yieh Hsing classified all of its sales of SSWR in the United States 
as EP sales in its questionnaire response, including those sales made 
prior to importation through a U.S. sales agent. We examined several 
factors to determine whether sales made prior to importation through a 
U.S. sales agent to an unaffiliated customer in the United States are 
EP sales. These factors are (1) whether the merchandise was shipped 
directly from the manufacturer to the unaffiliated U.S. customer; (2) 
whether the sales follow customary commercial channels between the 
parties involved; and (3) whether the function of the U.S. selling 
agent is limited to that of a ``processor of sales-related 
documentation'' and a ``communication link'' with the unrelated U.S. 
buyer. Where the factors indicate that the activities of the U.S. 
selling agent are ancillary to the sale (e.g., arranging transportation 
or customs clearance), we treat the transactions as EP sales. Where the 
U.S. selling agent is substantially involved in the sales process 
(e.g., negotiating prices), we treat the transactions as CEP sales. See 
Certain Cut-to-Length Carbon Steel Plate from Germany: Final Results of 
Antidumping Administrative Review, 62 FR 18389, 18391 (April 15, 1997).
    Based on our review of the selling activities of the U.S. selling 
agent, we reclassified Yieh Hsing's U.S. sales of SSWR through the 
agent as CEP sales because the agent acted as more than a ``processor 
of sales-related documentation'' and a ``communication link'' with the 
unaffiliated U.S. customer. The U.S. sales agent performed a variety of 
selling functions on behalf of Yieh Hsing in connection with Yieh 
Hsing's SSWR sales in the United States including identifying U.S. 
customers on its own and negotiating the terms of sale with U.S. 
customers. Therefore, we preliminarily determine that Yieh Hsing's U.S. 
sales of SSWR through its U.S. sales agent are CEP sales. For further 
discussion of this issue, see the Concurrence Memorandum.

[[Page 10839]]

A. Export Price

Walsin
    We calculated EP based on packed, delivered prices to unaffiliated 
purchasers in the United States. We made deductions from the starting 
price, where appropriate, for rebates, foreign inland freight, foreign 
brokerage and handling expenses, international freight and marine 
insurance, pursuant to section 772(c)(2)(A) of the Act.
Yieh Hsing
    We calculated EP based on packed, delivered prices to unaffiliated 
purchasers in the United States. We made deductions from the starting 
price, where appropriate, for foreign inland freight, foreign brokerage 
and handling, ocean freight, and marine insurance, pursuant to section 
772(c)(2)(A) of the Act.

B. Constructed Export Price

Walsin
    We calculated CEP based on the packed, delivered price to the first 
unaffiliated customer in the United States in accordance with section 
772(b) of the Act. We made deductions from the starting price for 
rebates, foreign inland freight, foreign brokerage and handling, ocean 
freight, marine insurance, U.S. duty and U.S. brokerage as appropriate, 
in accordance with section 772(c)(2)(A) of the Act.
    In accordance with section 772(d)(1) of the Act, we made additional 
adjustments to the starting price by deducting direct and indirect 
selling expenses associated with economic activities occurring in the 
United States, including credit expenses and unaffiliated-party 
commissions. Finally, we made an adjustment for CEP profit in 
accordance with sections 772(d)(3) and 772(f) of the Act.
Yieh Hsing
    We calculated CEP based on packed, delivered prices to unaffiliated 
purchasers in the United States in accordance with section 772(b) of 
the Act. We made deductions from the starting price, where appropriate, 
for discounts, foreign inland freight, foreign brokerage and handling, 
U.S. customs duties and harbor maintenance and merchandise processing 
fees (which are included in U.S. duties), international freight and 
marine insurance, pursuant to section 772(c)(2)(A) of the Act.
    In accordance with section 772(d)(1) of the Act, we made additional 
adjustments to the starting price by deducting selling expenses 
associated with economic activities occurring in the United States, 
including credit expenses and commissions. However, because the 
deduction of this commission results in a price corresponding as 
closely as possible to an export price, we have not made any additional 
deduction of CEP profit. See Concurrence Memorandum of February 25, 
1998.

Normal Value

    After testing home market viability, whether sales to affiliates 
were at arm's-length prices, and whether home market sales were at 
below-cost prices, we calculated NV as noted in the ``Price-to-Price 
Comparisons'' and ``Price-to-CV Comparisons'' sections of this notice.

1. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV, we 
compared each respondent's 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. Because each 
respondent'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 for each respondent.

2. Affiliated-Party Transactions and Arm's-Length Test

    We excluded sales to affiliated customers in the home market not 
made at arm's-length prices from our analysis because we considered 
them to be outside the ordinary course of trade. See 19 CFR 351.102. To 
test whether these sales were made at arm's-length prices, we compared, 
on a model-specific basis, starting prices of sales to affiliated and 
unaffiliated customers net of all movement charges, direct selling 
expenses, and packing. Where, for the tested models of subject 
merchandise, prices to the affiliated parties were on average 99.5 
percent or more of the price to the unaffiliated parties, we determined 
that sales made to the affiliated parties were at arm's length. See 19 
CFR 351.403(c) and 62 FR at 27355 (preamble to the Department's 
regulations). In instances where no affiliated-customer price ratio 
could be constructed for an affiliated customer because identical 
merchandise was not sold to unaffiliated customers, we were unable to 
determine that these sales were made at arm's-length prices and, 
therefore, excluded them from our LTFV 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 a comparison to the next 
most similar model.

3. Cost-of-Production Analysis

    Based on the cost allegation submitted by the petitioners in the 
petition, the Department found reasonable grounds to believe or suspect 
that Walsin and Yieh Hsing had made sales in the home market at prices 
below the cost of producing the merchandise, in accordance with section 
773(b)(1) of the Act. As a result, the Department initiated an 
investigation to determine whether the respondents made home market 
sales during the POI at prices below their respective COPs within the 
meaning of section 773(b) of the Act. See Notice of Initiation. We 
conducted the COP analysis described below.
A. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated the 
COP for each company based on the sum of the cost of materials and 
fabrication for the foreign like product, plus amounts for home market 
SG&A and packing costs. We made company-specific adjustments to the 
reported COP as follows:
    Walsin. We adjusted the cost of copper that Walsin obtained from an 
affiliate to reflect the market value paid to unaffiliated suppliers. 
We recalculated Walsin's general and administrative (G&A) expense 
factor to include certain miscellaneous income and expense items that 
relate to the general production activity of the company as a whole. 
See Memorandum to Christian Marsh from Stan Bowen and Laurens van 
Houten dated February 25, 1998 (``Cost Memo'').
    Yieh Hsing. Yieh Hsing failed to report a unique COP for each of 
the product categories it reported on its computer sales listing. 
Therefore, we calculated a unique cost for each missing product 
category based on the grade of billet used in that category's 
manufacturing process. We adjusted the cost of billets that Yieh Hsing 
obtained from an affiliated supplier to reflect the market value paid 
to unaffiliated suppliers. In addition, we increased Yieh Hsing's 
reported billet cost to account for grinding loss. We adjusted the 
pickling stage direct labor costs reported in the COP and CV databases 
to reconcile with amounts reported in the Section D supplemental 
response. We adjusted Yieh Hsing's submitted G&A expenses to exclude 
miscellaneous income and expense items, which do not relate to the 
general production

[[Page 10840]]

activities of the company as a whole. See Cost Memo.

B. Test of Home Market Sales Prices

    We used each respondent's submitted POI weighted-average COPs, as 
adjusted (see above). 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 prices below COP. In determining whether to disregard home 
market sales made at prices below the COP, we examined whether: (1) 
Within an extended period of time, such sales were made in substantial 
quantities, and (2) whether such sales were made at prices which 
permitted the recovery of all costs within a reasonable period of time. 
On a product-specific basis, we compared the COP (net of selling 
expenses and packing) to the home market prices, less applicable 
quantity discounts, rebates, movement charges, direct and indirect 
selling expenses, and packing.

C. Results of the COP Test

    Pursuant to section 773(b)(2)(C), 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 section 
773(b)(2)(B) of the Act. In such cases, 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.
    We found that, for certain models of SSWR, more than 20 percent of 
Walsin's and Yieh Hsing's home market sales within an extended period 
of time were at prices less than COP. Further, the prices did not 
provide for the recovery of costs within a reasonable period of time. 
We therefore disregarded the below-cost sales and used the remaining 
above-cost sales as the basis for determining NV, in accordance with 
section 773(b)(1). For those U.S. sales of SSWR for which there were no 
comparable home market sales in the ordinary course of trade, we 
compared EPs or CEPs to CV in accordance with section 773(a)(4) of the 
Act.

D. Calculation of CV

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of the respondents' cost of materials, fabrication, 
SG&A, profit, and U.S. packing costs. We adjusted the COP included in 
the calculation of CV as noted, above, in the ``Calculation of COP'' 
section of the notice. In accordance with section 773(e)(2)(A) of the 
Act, we based SG&A and profit on the amounts incurred and realized by 
each respondent in connection with the production and sale of the 
foreign like product in the ordinary course of trade for consumption in 
Taiwan.

Price-to-Price Comparisons

Walsin

    We calculated NV based on packed, delivered prices to unaffiliated 
home market customers. We made deductions for foreign inland freight, 
bank charges and discounts and rebates where appropriate, pursuant to 
section 773(a)(6)(B) of the Act. Pursuant to section 773(a)(6)(C)(iii) 
of the Act and 19 CFR 351.410(c), we made circumstance-of-sale 
adjustments, where appropriate, for differences in royalty expenses, 
credit expenses and interest revenue. Because Walsin paid commissions 
on U.S. sales, in calculating NV, we offset these commissions using the 
weighted-average amount of indirect selling expenses and inventory 
carrying costs incurred on the home market sales for the comparison 
product, up to the amount of the U.S. commissions. See 19 CFR 
351.410(e).
    We deducted home market packing costs and added U.S. packing costs, 
in accordance with section 773(a)(6) of the Act. Where appropriate, we 
made adjustments to NV to account for differences in physical 
characteristics of the merchandise, in accordance with section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.

Yieh Hsing

    We calculated NV based on packed, delivered prices to home market 
unaffiliated customers and prices to affiliated customers that we 
determined to be at arm's length. We made deductions for early payment 
discounts and foreign inland freight, where appropriate, pursuant to 
section 773(a)(6)(B) of the Act. Pursuant to section 773(a)(6)(C)(iii) 
of the Act and 19 CFR 351.410(c), we made circumstance-of-sale 
adjustments, where appropriate, for differences in credit expenses and 
interest revenue. Because Yieh Hsing paid commissions on U.S. sales, in 
calculating NV, we offset these commissions using the weighted-average 
amount of indirect selling expenses incurred on the home market sales 
for the comparison product, up to the amount of the U.S. commissions. 
See 19 CFR 351.410(e). We did not include inventory carrying costs in 
the weighted-average amount of home market indirect selling expenses 
because Yieh Hsing did not calculate this expense in either its 
original or supplemental responses properly. See Concurrence 
Memorandum.
    We deducted home market packing costs and added U.S. packing costs, 
in accordance with section 773(a)(6) of the Act. Where appropriate, we 
made adjustments to NV to account for differences in physical 
characteristics of the merchandise, in accordance with section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.

Price-to-CV Comparisons

    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act. Where CV was compared 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 in accordance with section 773(a)(6)(C)(iii) of the 
Act. Where CV was compared to CEP, we deducted from CV the weighted-
average home market direct selling expenses (which included credit 
expenses).

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.
    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. It is the Department's practice to 
find that a fluctuation exists when the daily exchange rate differs 
from the benchmark rate by 2.25 percent. The benchmark is defined as 
the moving average of rates for the past 40 business days. When we 
determine a fluctuation to have existed, we substitute the benchmark 
rate for the daily rate, in accordance with established practice. 
Further, section 773A(b) directs the Department to allow a 60-day 
adjustment period when a currency has undergone a sustained movement. A 
sustained movement has occurred when the weekly average of actual daily 
rates exceeds the weekly average of

[[Page 10841]]

benchmark rates by more than five percent for eight consecutive weeks. 
(For an explanation of this method, see Policy Bulletin 96-1: Currency 
Conversions, 61 FR 9434 (March 8, 1996).) Such an adjustment period is 
required only when a foreign currency is appreciating against the U.S. 
dollar. The use of an adjustment period was not warranted in this case 
because the New Taiwan dollar did not undergo a sustained movement 
during the POI.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information determined to be acceptable for use 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 U.S. price, 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- 
                                                               average  
                   Exporter/manufacturer                        margin  
                                                              Percentage
------------------------------------------------------------------------
Walsin Cartech Specialty Steel Corporation.................        27.81
Yieh Hsing Enterprise Corporation, Ltd.....................        10.50
All Others.................................................        17.09
------------------------------------------------------------------------

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 in at least ten copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than May 22, 1998, and rebuttal briefs no later than May 29, 
1998. A list of authorities used and an executive summary of issues 
must 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 on June 2, 1998, time and room to be determined, at the 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 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 thirty 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 by no later than 135 days after the publication of this 
notice in the Federal Register.
    This determination is published pursuant to section 777(i) of the 
Act.

    Dated: February 25, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-5599 Filed 3-4-98; 8:45 am]
BILLING CODE 3510-DS-P