59 FR 43539, August 24, 1994

NOTICES

DEPARTMENT OF COMMERCE

[A-421-806]

Color Negative Photographic Paper (CNPP) and Chemical Components Thereof From
the Netherlands; Suspension of Investigation

Wednesday, August 24, 1994

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

ACTION: Notice.

SUMMARY: The Department of Commerce has decided to suspend the antidumping
investigation involving color negative photographic paper (CNPP) and chemical
components thereof from the Netherlands. The basis for the suspension is an
agreement by the Dutch producers/exporters, which account for substantially all
of the known imports of these products from the Netherlands, to revise their
prices to eliminate sales of this merchandise to the United States at less than
fair value.

EFFECTIVE DATE: August 24, 1994.

FOR FURTHER INFORMATION CONTACT: Steven Presing, 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) 482-3793.

SUPPLEMENTARY INFORMATION:

Case History

On September 20, 1993, the Department initiated an AD investigation on CNPP
and chemical components thereof from the Netherlands based on a petition filed
by the Eastman Kodak Company. The International Trade Commission issued an
affirmative preliminary injury determination on October 15, 1993. On March 29,
1994, the Department preliminarily determined that imports of CNPP from the
Netherlands are being sold at less than fair value in the United States .

Scope of the Agreement

The merchandise covered by this investigation consists of color negative
photographic paper (CNPP) sensitized, unexposed silver-halide color negative
photographic paper, whether in master rolls, smaller rolls or sheets. Subject
chemical components are sensitized (whether chemically or spectrally) and
unsensitized emulsions, couplers and coupler dispersions used in making color
negative photographic paper.
Unsensitized silver-halide emulsions consist of silver-halide microcrystals
dispersed in a gelatin and water matrix after preparation and washing to remove
soluble sales. Unsensitized emulsions are naturally sensitive to blue and
ultraviolet light, but cannot efficiently convert light to form a color image
without further processing. Sensitized emulsions have been treated to increase
*43540 their sensitivity across the entire spectrum and/or treated by the
addition of spectral sensitizing dyes to make the emulsions selectively
sensitive to specific wavelengths of light. A coupler dispersion consists of a
coupler dispersed in a water-gel solution, and may contain organic solvents,
chemicals to stabilize the coupler and other substances.
Specifically excluded from this suspension agreement are: (1) all paper and
chemical products not used in the silver-halide process which are used in other
imaging technologies; (2) precursors of sensitized (whether chemically or
spectrally) and unsensitized emulsions (including "seed emulsions" that are
used exclusively in the process of producing unsensitized emulsions and do not
exceed 0.25 microns in grain size (in cubic edge length)), couplers and coupler
dispersions; and (3) those items entered under the Harmonized Tariff Schedule
of the United States (HTSUS) subheadings 3707.10.0000, 3707.90.3000,
3707.90.6000, 2933.19.3000, 2933.90.2500 and 2934.90.2000, which are precursors
of couplers, emulsions and coupler dispersions (except couplers dispersed in
water gel solution) or are couplers, emulsions, and coupler dispersions not for
actual use in the color negative photographic paper production process.
Products outside the scope include toner and developer chemicals used in
electrostatic or indirect imaging processes (e.g., xerography), products used
in laser printing, and instant photography products.
Also excluded from the scope of this investigation are paper that is designed
exclusively for use in graphic arts proofing, equipment and does not exceed 160
microns in thickness, and emulsions classified under 3707.10.0000 of the
Harmonized Tariff Schedule of the United States (HTSUS) that are used in the
manufacture of monochrome graphic arts film or paper that are not used in the
production of CNPP.
The CNPP subject to this investigation are classifiable under HTSUS
subheadings 3703.10.3030 and 3703.20.3030. Emulsions are currently classifiable
under HTSUS subheadings 3707.10.0000 and 3707.90.3000. Couplers and coupler
dispersions are currently classifiable under HTSUS subheadings 3707.90.3000,
3707.90.6000, 2933.19.3000, 2933.90.2500 and 2934.90.2000.

Period of Investigation

The period of investigation (POI) is March 1, 1993 through August 31, 1993.

Suspension of Investigation

The Department consulted with the parties to the proceeding and has considered
the comments submitted with respect to the proposed suspension agreement. We
have determined that the agreement will eliminate sales of this merchandise to
the United States at less than fair value, that the agreement can be monitored
effectively, and that the agreement is in the public interest. We find,
therefore, that the criteria for suspension of an investigation pursuant to
section 734 of the Act have been met. The terms and conditions of the
agreement, signed August 19, 1994, are set forth in Annex 1 to this notice.
Pursuant to section 734(f)(2)(A) of the Act, effective (date of publication of
Federal Register notice), the suspension of liquidation of all entries, entered
or withdrawn from warehouse, for consumption of CNPP from the Netherlands, as
directed in our notice of "Antidumping Preliminary Determination of Sales at
Less than Fair Value, Color Negative Photographic Paper and Chemical Components
Thereof from the Netherlands" is hereby terminated. Any cash deposits on
entries of CNPP from the Netherlands pursuant to that suspension of liquidation
shall be refunded and any bonds shall be released.
Nothwithstanding the suspension agreement, the Department will continue the
investigation if we receive such a request in accordance with section 734(g) of
the Act within 20 days after the date of publication of this notice. This
notice is published pursuant to section 734(f)(1)(A) of the Act.
Dated: August 19, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

Annex 1: Suspension Agreement; Color Negative Photographic Paper and Chemical
Components Thereof From the Netherlands

Under section 734 of the Tariff Act of 1930, as amended (19 U.S.C. 1673c) (the
Act), and 19 CFR 353.18, the U.S. Department of Commerce (the Department) and
the signatory producers/exporters of color negative photographic paper and
chemical components thereof from the Netherlands enter into this suspension
agreement (the Agreement). On the basis of this suspension agreement, the
Department shall suspend its antidumping investigation initiated on September
20, 1993 (58 FR 50331), with respect to color negative photographic paper and
chemical components thereof from the Netherlands, subject to the terms and
provisions set out below.

(A) Product Coverage

The merchandise subject to this Agreement is the following merchandise which
has the Netherlands as its origin:
(1) For purposes of the Agreement, color negative photographic paper is all
sensitized, unexposed silver-halide color negative photographic paper, whether
in master rolls, smaller rolls or sheets. Subject chemical components are
sensitized (whether chemically or spectrally) and unsensitized emulsions,
couplers, and coupler dispersions used in making color negative photographic
paper.
Unsensitized silver-halide emulsions consist of silver-halide microcrystals
dispersed in a gelatin and water matrix after preparation and washing to remove
soluble salts. Unsensitized emulsions are naturally sensitive to blue and
ultraviolet light, but cannot efficiently convert light to form a color image
without further processing. Sensitized emulsions have been treated to increase
their sensitivity across the entire spectrum and/or treated by the addition of
spectral sensitizing dyes to make the emulsions selectively sensitive to
specific wavelengths of light. A coupler dispersion consists of a coupler
dispersed in a water-gel solution, and may contain organic solvents, chemicals
to stabilize the coupler, and other substances.
Specifically excluded from the Agreement are: (1) all paper and chemical
products not used in the silver-halide process which are used in other imaging
technologies; (2) precursors of sensitized (whether chemically or spectrally)
and unsensitized emulsions (including "seed emulsions" that are used
exclusively in the process of producing unsensitized emulsions and do not
exceed 0.25 microns in grain size (in cubic edge length)), couplers and coupler
dispersions; and (3) those items entered under the Harmonized Tariff Schedule
of the United States (HTSUS) subheadings 3707.10.0000, 3707.90.3000,
3707.90.6000, 2933.19.3000, 2933.90.2500 and 2934.90.2000, which are precursors
of couplers, emulsions and coupler dispersions (except couplers dispersed in
water-gel solution) or are couplers, emulsions, and coupler dispersions not for
actual use in the color negative photographic paper production process.
Products outside the scope include toner and developer chemicals used in
electrostatic or indirect imaging processes (e.g., xerography), products *43541
used in laser printing, and instant photography products.
Also excluded from the scope of the Agreement is paper that is designed
exclusively for use in graphic arts proofing equipment and does not exceed 160
microns in thickness, and emulsions classified under subheading 3707.10.0000 of
the HTSUS that are used in the manufacture of monochrome graphic arts film or
paper that are not used in the production of color negative photographic paper.
(2) The color negative photographic papers subject to this Agreement are
classifiable under HTSUS subheadings 3703.10.3030 and 3703.20.3030. Emulsions
are currently classifiable under HTSUS subheadings 3707.10.0000 and
3707.90.3000. Couplers and coupler dispersions are currently classifiable under
HTSUS subheadings 3707.90.3000, 3707.90.6000, 2933.19.3000, 2933.90.2500 and
2934.90.2000.

(B) U.S. Import Coverage

The signatory producers/exporters collectively are the producers and exporters
in the Netherlands which, during the antidumping investigation on the
merchandise subject to the Agreement, accounted for substantially all (not less
than 85 percent) of the subject merchandise imported into the United States, as
provided in the regulations. The Department may at any time during the period
of the Agreement require additional producers/exporters in the Netherlands to
sign the Agreement in order to ensure that not less than substantially all
imports into the United States are covered by the Agreement.
In reviewing the operation of the Agreement for the purpose of determining
whether this Agreement has been violated or is no longer in the public
interest, the Department will consider imports into the United States from all
sources of the merchandise described in Section A of the Agreement. For this
purpose, the Department will consider factors including, but not limited to,
the following: volume of trade, pattern of trade, whether or not the reseller
is an original equipment manufacturer, and the reseller's purchase price (PP).

(C) Basis of the Agreement

On and after the effective date of the Agreement, each signatory
producer/exporter individually agrees to make any necessary price revisions to
eliminate completely any amount by which the foreign market value (FMV) of this
merchandise exceeds the U.S. price of its merchandise subject to the Agreement.
For this purpose, the Department will determine the FMV in accordance with
section 773(e) of the Act and U.S. price in accordance with section 772 of the
Act.
(1) For all sales occurring on or after the effective date of the Agreement
through November 30, 1994, each signatory producer/exporter agrees not to sell
its merchandise subject to the Agreement to unrelated purchasers in the United
States at prices that are less than its FMV, as determined by the Department
based on cost information for the period December 1, 1993, through May 31,
1994, and provided to parties not later than August 19, 1994; and
(2) For all sales occurring on or after December 1, 1994, each
producer/exporter agrees not to sell its merchandise subject to the Agreement
to any unrelated purchaser in the United States at prices that are less than
its FMV of the merchandise, as determined by the Department on the basis of
information submitted to the Department not later than the dates specified in
section D of the Agreement and provided to parties not later than November 20,
February 20, May 20, and August 20 of each year. This FMV shall apply to sales
occurring during the fiscal quarter beginning on the first day of the month
following the date the Department provides the FMV, as stated in this paragraph.

(D) Monitoring

Each signatory producer/exporter will supply to the Department all information
that the Department decides is necessary to ensure that the producer/exporter
is in full compliance with the terms of the Agreement. As explained below, the
Department will provide each signatory producer/exporter a detailed request for
information and prescribe a required format and method of data compilation, not
later than the beginning of each reporting period.

(1) Sales Information

The Department will require each producer/exporter to report, on computer tape
in the prescribed format and using the prescribed method of data compilation,
each sale (which includes further manufactured sales) of the merchandise
subject to the Agreement, either directly or indirectly to unrelated purchasers
in the United States, including each adjustment applicable to each sale, as
specified by the Department.
The reporting of further manufacturing costs shall be in accordance with
Appendix A.
The first report of sales data shall be submitted to the Department, on
computer tape in the prescribed format and using the prescribed method of data
compilation, not later than December 30, 1994, and shall contain the specified
sales information covering the period August 19, 1994, to November 30, 1994.
Subsequent reports of sales data shall be submitted to the Department not later
than March 31, June 30, September 29, and December 30 of each year, and each
report shall contain the specified sales information for the quarterly period
ending one month prior to the due date, except that if the Department receives
information that a possible violation of the Agreement may have occurred, the
Department may request sales data on a monthly, rather than quarterly basis.

(2) Cost Information

Producer/exporters must request FMVs for all subject merchandise that will be
sold in the United States. For those products which the producer/exporter is
requesting FMVs, the Department will require each producer/exporter to report:
their actual cost of manufacturing; selling, general and administrative (SG&A)
expenses; further manufacturing costs; and profit data on a quarterly basis, in
the prescribed format and using the prescribed method of data compilation.
Further manufacturing costs will be subtracted from the U.S. sale price to
determine compliance with the FMV. As indicated in Appendix B, profit from
sales to a third country [FN1] will be utilized, and country-specific and
consolidated research and development costs will be reported by the
producers/exporters on a quarterly basis. Each such producer/exporter also must
report anticipated increases in production costs and may report anticipated
decreases in production costs in the quarter in which the information is
submitted resulting from factors such as anticipated changes in production
yield, changes in production process, changes in production quantities or
changes in production facilities.

FN1 The Department calculated this figure based on information collected
during the period of investigation.
The first report of cost data shall be submitted to the Department not later
than September 29, 1994, and shall contain the specified cost data covering the
period June 1, 1994, through August 31, 1994. Each subsequent report shall be
submitted to the Department not later than December 30, March 31, June 30, and
September 29 of each year, and each report shall contain specified *43542
information for the quarter ending one month prior to the due date.

(3) Special Adjustment of Foreign Market Value

If the Department determines that the FMV is determined for a previous quarter
was erroneous because the reported costs for that period were inaccurate or
incomplete, or for any other reason, the Department may adjust FMV in a
subsequent period or periods, unless the Department determines that Section F
of the Agreement applies.

(4) Verification

Each producer/exporter agrees to permit full verification of all cost and
sales information semi-annually, or more frequently, as the Department deems
necessary.

(5) Bundling or Other Arrangements

Producers/exporters agree not to circumvent the Agreement. In accordance with
the date set forth in Section D(1) of the Agreement, producers/exporters will
submit a written statement to the Department certifying that the sales reported
herein were not, or are not part of or related to, any bundling arrangement, on-
site processing arrangement, discounts/free goods/financing package, swap, or
other exchange where such arrangement is designed to circumvent the basis of
the Agreement.
Where there is reason to believe that such an arrangement does circumvent the
basis of the Agreement, the Department will request producers/exporters to
provide within 15 days all particulars regarding any such agreement, including,
but not limited to, sales information pertaining to covered and non-covered
merchandise that is manufactured or sold by producers/exporters. The Department
will accept written comments, not to exceed 30 pages, from all parties no later
than 15 days after the date of receipt of such producer/exporter information.
If the Department, after reviewing all submissions, determines that such
arrangement circumvents the basis of the Agreement, it may, as it deems most
appropriate, utilize one of two options: (1) the amount of the effective price
discount resulting from such arrangement shall be reflected in FMV in
accordance with Section D(3), or (2) the Department shall determine that the
Agreement has been violated and take action according to the provisions under
Section F.

(6) Rejection of Submissions

The Department may reject any information submitted after the deadlines set
forth in this section or any information which it is unable to verify to its
satisfaction. If information is not submitted in a complete and timely fashion
or is not fully verifiable, the Department may calculate fair value, FMV,
and/or U.S. price based on best information available, as it determines
appropriate, unless the Department determines that Section F applies.

(E) Disclosure and Comment

(1) The Department may make available to representatives of each domestic
party to the proceeding, under appropriately drawn administrative protective
orders, business proprietary information submitted to the Department during the
reporting period as well as the results of its analysis under section 773 of
the Act.
(2) Not later than November 1, February 1, May 1, and August 1 of each year,
the Department will disclose to each producer/exporter the results and the
methodology of the Department's calculations of its FMV. At that time, the
Department may also make available such information to the domestic parties to
the proceeding, in accordance with this section.
(3) Not later than 7 days after the date of disclosure under paragraph E(2),
the parties to the proceeding may submit written comments to the Department,
not to exceed 15 pages. After reviewing these submissions, the Department will
provide to each producer/exporter its FMV as provided in paragraph C(2). In
addition, the Department may provide such information to domestic interested
parties as specified in this section.

(F) Violations of the Agreement

If the Department determines that the Agreement is being or has been violated
or no longer meets the requirements of section 734 (b) or (d) of the Act, the
Department shall take action it determines appropriate under section 734(i) of
the Act and the regulations. In the event that the Department determines that
the investigation shall be resumed, it will be resumed on the basis of the
original administrative record, and the statutes, regulations, policies, and
practices in effect on the effective date of the Agreement.

(G) Provision for Existing Commitments

Pursuant to Appendix C and the terms and conditions outlined below,
producers/exporters may continue shipments under existing commitments and their
existing terms for a period not to exceed 60 days after the effective date of
the Agreement. Recognizing that certain long-term contracts must be
renegotiated and that terminated customers may require time to find alternative
suppliers, the producers/exporters may continue shipments under existing
contract terms for a period, the deadline of which is equal to the earliest of:
(1) the earliest date on which an alternative supplier can begin supplying the
customer; (2) the earliest date, not to exceed 45 days, on which an existing
customer has renegotiated the contract terms with the producer/exporter, or (3)
60 days after the effective date of the Agreement to customers who are
terminated.
Appendix C contains a list of companies subject to this provision along with
their corresponding requirements that have been approved for shipment by the
producer/exporter under this provision. Total shipments to a specific company
may not exceed that company's corresponding quantity listed on Appendix C or
the aggregate for "all other", in the case for smaller customers. Appendix C
also contains the total shipment quantity allowable under this provision for
all companies; this amount is less than the sum of the individual company
requirements listed on Appendix C. This difference is in anticipation of
termination prior to all permitted shipments taking place to individual
customers.
If a company renegotiates or terminates its commitments with the
producer/exporter prior to receiving and accepting its maximum shipments
approved, this provision no longer applies and the company will be removed from
those eligible under Appendix C. The remaining quantities that have not been
shipped, but were approved for a certain customer, may not be used to increase
another customer's corresponding requirements. The maximum customer-specific
quantities listed in Appendix C cannot be increased to account for
undershipments to other customers. If a customer would like to accept
additional supply above and beyond its corresponding quantity listed in
Appendix C, these sales must be made at or above the applicable FMV.
If a company-specific shipment would bring the total shipments for all
companies to an amount in excess of the total quantity allowable, the
producer/exporter must only ship a quantity that ensures compliance with the
total quantity allowable for all companies. Any quantities in excess of the
total quantity allowable must be sold at or above the applicable FMV.
The producer/exporter shall notify the Department weekly of each shipment made
under this provision and provide a written statement from the producer/exporter
certifying that each shipment is *43543 pursuant to commitments listed in
Appendix C. The certification must contain all particulars concerning each
specific shipment including, but not limited to, customer, date, quantity,
price, and delivery and particulars concerning the terms and conditions under
which the shipment is being made. The Department will review and approve the
certification upon receipt, thereby monitoring on an individual basis all such
shipments to ensure compliance with this provision. Where there is reason to
believe that shipments, which do not meet the criteria described above, have
nonetheless been shipped under this provision, and that certification has been
made falsely, the producer/exporter will share within 5 days of any such
request from the Department all particulars regarding such shipment(s). After
reviewing the information, the Department will determine whether the terms of
this provision have been satisfied. If the Department determines that a
certification has been provided falsely or does not meet the requirements of
this provision, Section F of the Agreement applies.
At the end of the 60 days, the Department will calculate upon request the
total difference between the FMV in effect on the date of shipment and the
actual net price at which the goods were sold. The total difference will be
added to the FMV to be in effect during succeeding period(s). The resulting FMV
will apply to a number of units identical to the number for which a difference
was calculated. The specific units to which this resulting FMV will apply will
be those units first sold in the succeeding quarter.
To the extent necessary, this provision supersedes the dates set forth in
Section C of the Agreement.

(H) Non-Participating Signatories

For signatories which did not receive a questionnaire in the less-than-fair-
value investigation on the subject merchandise, the Department will issue, if
requested in a timely manner, the initial FMV 9 months after the effect date of
the Agreement. The total sales volume made during the 9-month period prior to
the issuance of the initial FMV may not exceed the total sales volume made by
the signatory during the period January 1994 through June 1994. All sales made
by the signatories will be made during this 9-month period at prices that are
not less than fair value.
At the end of the initial 9 months, the Department may upon request review all
sales made during this period. For those sales which have occurred, the
Department will calculate an FMV using information for the most recent 9-month
period available. The Department will calculate the total difference between
the FMV and the actual price at which the goods were sold. The total difference
will be added to the FMV to be in effect during the succeeding period(s). The
resulting FMV will apply to a number of units identical to the number for which
a difference was calculated. The specific units to which this resulting FMV
will apply will be those units first sold in the succeeding quarter(s).
For all sales of covered merchandise made after the 9-month period the
producer/exporter must request an FMV consistent with Section D(2) of the
Agreement. Signatories will collect and report all information required by the
Department for the calculation of FMV in the format specified under the
Agreement.
The Department will consult with the signatories regarding data preparation
and reporting format in order to ensure that all requirements are met.
To the extent necessary, this provision supersedes the dates set forth in
Section C of the Agreement.

(I) Re-Export Provision

Imports into the United States of subject merchandise which are physically
incorporated into a further manufactured product by a related party and are
subsequently exported by the related party, are not covered by the Agreement if
the following conditions apply. Upon request by the producer/exporter, the
Department may approve a system which tracks imports of covered merchandise
through production, to the point of re-export, and allows for verification.
The approved system will reflect an understanding between the Department and
the producer/exporter that there have been a historical volume of entries of
covered merchandise imported into the United States and subsequently exported
in the form of a further manufactured good by a related party. Understanding
this history, and taking into consideration an element for growth, the
Department and the producer/exporter will agree that the volumes of entries for
the duration of the Agreement will not be inconsistent with that history. The
producer/exporter agrees to provide quarterly reports detailing the entries and
subsequent re-exports which will be subject to verification semi-annually or
more frequently as the Department deems appropriate.

(J) Other Provision

(1) In entering into the Agreement, the signatory producers/exporters do not
admit that any sales of the merchandise subject to the Agreement have been made
at less-than-fair-value.
(2) Changes in U.S. legislation resulting from U.S. implementation of Article
VI of GATT 1994, shall be applicable to the requirements and obligations of the
Agreement for the period beginning on the first full quarter after the
effective date of any such changes.

(K) Termination

The Department will not consider requests for termination of this suspended
investigation prior to August 1999. Termination will be conducted in accordance
with section 353.25 of the Department's regulations.
Any producer/exporter may terminate the Agreement at any time upon notice to
the Department. Termination shall be effective 60 days after such notice is
given to the Department. Upon termination, the Department shall follow the
procedures outlined in section 734(i)(1) of the Act.

(L) Definitions

For purposes of the Agreement, the following definitions apply:
(1) U.S. PRICE--means the price at which merchandise is sold by the producer
or exporter to the first unrelated party in the United States, including the
amount of any discounts, rebates, price protection or ship and debit
adjustments, and other adjustments affecting the net amount paid or to be paid
by the unrelated purchaser, as determined by the Department under section 772
of the Act.
(2) FOREIGN MARKET VALUE--means the constructed value (CV) of the merchandise,
as determined by the Department under section 773 of the Act and the
corresponding sections of the Department's regulations, as determined by the
Department.
(3) PRODUCER/EXPORTER--means (1) the foreign manufacturer or producer, (2) the
foreign producer or reseller which also exports, and (3) the related person by
whom or for whose account the merchandise is imported into the United States,
as defined in section 771(13) of the Act.
(4) DATE OF SALE--means the date on which the essential terms of the contract,
including price, are agreed and determinable normally the date of confirmation
of sale.
The effective date of the Agreement is the date on which it is published in
the Federal Register.
*43544 For Dutch Producers/Exporters.
Fuji Photo Film U.S.A. Inc., and Fuji Photo Film B.V.
Date

William H. Barringer, Esq.,

Willkie, Farr & Gallagher.
For U.S. Department of Commerce.
Date

Susan G. Esserman,

Assistant Secretary for Import Administration.

APPENDIX A--COLOR NEGATIVE PHOTOGRAPHIC PAPER (CNPP) AND CERTAIN CHEMICAL
COMPONENTS FROM THE NETHERLANDS SUSPENSION AGREEMENT PRINCIPLES OF COST

General Framework

The cost information reported to the Department that will form the basis of
the FMV calculations for purposes of the Agreement must be:
- comprehensive in nature and based on a reliable accounting system (i.e., a
system based on well-established standards and can be tied to the audited
financial statements);
- representative of the company's costs incurred for the general class of
merchandise;
- calculated on a quarterly weighted-average basis of the plants or cost
centers manufacturing the product;
- based on fully-absorbed costs of production, including any downtime;
- valued in accordance with generally accepted accounting principles;
- reflective of appropriately allocated common costs so that the cost
necessary for the manufacturing of the product are not absorbed by other
products; and
- reflective of the actual cost of producing the product.
Additionally, a single figure should be reported for each cost component.

Cost of Manufacturing

Costs of manufacturing are reported by major cost category and for major
stages of production. Weighted-average costs are used for a product that is
produced at more than one facility (including further manufacturing in the
United States); based on the cost at each facility.
Direct materials--cost of those materials which are input into the production
process and physically become part of the final product.
Direct labor--cost identified with a specific product. These costs are not
allocated among products except when two or more products are produced at the
same cost center. Direct labor costs should include salary, bonus, and overtime
pay, training expenses, and all fringe benefits. Any contracted-labor expense
should reflect the actual billed cost or the actual costs incurred by the
subcontractor when the corporation has influence over the contractor.
Factory overhead--overhead costs include indirect materials, indirect labor,
depreciation, and other fixed and variable expenses attributable to a
production line or factory. Because overhead costs are typically incurred for
an entire production line, an appropriate portion of those costs must be
allocated to covered products, as well as any other products produced on that
line. Acceptable cost allocations can be based on labor hours or machine hours.
Overhead costs should also reflect any idle or downtime and be fully absorbed
by the products.

Cost of Production (COP)

Is equal to the sum of materials, labor, and overhead (COM) plus SG&A expenses
in the home market (HM).
SG&A--those expenses incurred for the operation of the corporation as a whole
and not directly related to the manufacture of a particular product. They
include corporate general and administrative expenses, financing expenses,
financing expenses, and general research and development expenses.
Additionally, direct and indirect selling expenses incurred in the HM for sales
of the product under investigation are included. Such expenses are allocated
over cost of goods sold.

Constructed Value

Is equal to the sum of materials, labor, and overhead (COM) and SG&A expenses
plus profit.

Calculation of Suspension Agreement FMVs

FMVs (for purposes of the Agreement) are calculated by adjusting the CV and
are provided for both PP and ESP transactions. In effect, any expenses uniquely
associated with the covered products sold in the HM are subtracted from the CV,
and any such expenses which are uniquely associated with the covered products
sold in the United States are added to the CV to calculate the FMV.
Purchase price--price at which the exported merchandise is sold to the first
unrelated buyer when the sale occurs prior to the importation. Typically, when
the producer sells directly to an unrelated U.S. importer or to a foreign
trading company for export to the United States. For PP FMVs, the CV is
adjusted for movement costs, packing costs, and differences in direct selling
expenses such as commissions, credit, warranties, technical services,
advertising, and sales promotion.
Exporter's sales price--price at which the exported merchandise is sold to the
first unrelated buyer after importation into the United States. Typically, when
a related party in the United States makes the sale. For ESP FMVs, the CV is
adjusted similar to PP sales, with differences for adjustments to U.S. and HM
indirect-selling expenses.
Home market direct-selling expenses--expenses that are incurred as a direct
result of a sale. These include such expenses as commissions, co-op
advertising, discounts and rebates, credit, warranty expenses, freight costs,
etc. Certain direct-selling expenses are treated individually. They include:
Commission expenses--payments to unrelated parties for sales in the HM.
Credit expenses--expenses incurred for the extension of credit to the HM
customers.
Movement expenses--freight, brokerage and handling, packing, and insurance
expenses.
Home market indirect-selling expenses--fixed portion of a corporation's
expenses and includes such items as salaries of administrative personnel,
warehousing expenses, advertising expenses, and sales promotion. These expenses
will not increase or decrease depending on production or sales.
U.S. direct-selling expenses--the same as HM direct-selling expenses except
that they are incurred in the United States for sales in the United States.
Movement expenses--additional expenses incidental to importation into the
United States. Typically include U.S. inland freight, insurance, brokerage and
handling expenses, U.S. Customs duties, and international ocean, air, or land
freight.
U.S. indirect-selling expenses--include general-fixed expenses incurred by the
U.S. sales subsidiary or related exporter for sales to the United States. They
may also include a portion of indirect expenses incurred in the HM for export
sales.

Further Manufacturing

Further manufacturing costs are calculated by taking the sum of COM, plus SG&A
expenses, plus profit in the U.S. market for further manufacturing. Where
further manufacturing modifies the subject merchandise to the extent that the
finished product is no longer within the scope of the investigation, the
Department will provide its calculations of further manufacturing.

*43545 For ESP Transactions

direct materials
+ direct labor
+ factory overhead
= Cost of Manufacturing
+ home market SG&A [FN2]

FN2 Home market SG&A must be at least 10 percent of the cost of manufacturing.
= Cost of Production
+ Profit [FN3]

FN3 Profit must be at least 8 percent of the cost of production.
= Constructed Value
+ U.S. direct-selling expense
+ U.S. indirect-selling expense
+ U.S. commission expense
+ U.S. movement expense
+ U.S. credit expense
HM direct-selling expense
HM indirect-selling expense [FN4]

FN4 This expense is capped and can be no greater than either (1) the total of
U.S indirect-selling expense or (2) the combined total of U.S. indirect-
selling expense and U.S. commission when no HM commissions are paid.
HM commission expense
HM credit expense
= FMV for ESP sales

For PP Transactions

direct materials
+ direct labor
+ factory overhead
= Cost of Manufacturing
+ home market SG&A [FN5]

FN5 Home market SG&A must be at least 10 percent of the cost of manufacturing.
= Cost of Production
+ Profit [FN6]

FN6 Profit must be at least 8 percent of the cost of production.
= Constructed Value
+ U.S. direct-selling expense
+ U.S. commission expense
+ U.S. movement expense
+ U.S. credit expense
HM direct-selling expense
HM commission expense [FN7]

FN7 If the company does not have HM commissions, HM indirects are subtracted
only up to the amount of U.S. commissions.
HM credit expense
= FMV for PP sales

For Further Manufacturing

direct materials
+ direct labor
+ factory overhead
= Cost of Further Manufacturing
+ further manufacturing SG&A
= Further Manufacturing Cost of Production
+ further manufacturing profit
= Total Further Manufacturing Costs

Appendix B--Profit Calculation

The profit figure represents the profit from sales of CNPP to unrelated
customers in Germany during the period of Investigation (POI). The Department
computed the profit percentage in the following manner:
Gross Sales Price
--Discounts
--Rebates
--Movement Expenses
=Net Price
Less: Cost of Production (materials, labor, overhead, selling, general and
administrative expenses, interest, other, packing)
=Profit per transaction
Profit percentage=Profit from all transactions/COP from all transactions
=[ ] percent

BILLING CODE 3510-DS-M

TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE

*43546 [FR Doc. 94-20869 Filed 8-22-94; 8:45 am]
BILLING CODE 3510-DS-C

59 FR 43539-01, 1994 WL 455361 (F.R.)
END OF DOCUMENT