66 FR 49625, September 28, 2001
                                                            A-485-806
                                                        Investigation
                                                      Public Document
                                                       G2O5: CDR/TRLV

MEMORANDUM TO: Faryar Shirzad 
               Assistant Secretary
                 for Import Administration

FROM:          Bernard T. Carreau
               Deputy Assistant Secretary 
                 for Group II, Import Administration

SUBJECT: Issues and Decision Memorandum for the Final Determination of
the Antidumping Duty Investigation: Certain Hot-rolled Carbon Steel Flat
Products from Romania

Summary

We have analyzed the case briefs and rebuttal briefs of interested
parties for the final determination of this antidumping duty investigation
covering certain hot-rolled carbon steel flat products (HRS) from Romania.
Comments were received from the petitioners and the respondents. We
recommend that you approve the positions we have developed in the
Department Position sections of this memorandum. 

Background 

On May 3, 2001, the Department of Commerce (the Department) published the
preliminary determination of the antidumping duty investigation of HRS
from Romania. See Notice of Preliminary Determination of Sales at Less
than Fair Value and Postponement of Final Determination: Certain Hot-
Rolled Carbon Steel Flat Products from Romania, 66 FR 22194 (May 3, 2001)
(Preliminary Determination). After analyzing allegations of ministerial
errors in the preliminary determination by some of the petitioners, (1) we
published an amended preliminary determination on June 6, 2001. See Notice
of Amended Preliminary Antidumping Duty Determination of Sales at Less
than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products from
Romania, 66 FR 30411 (June 6, 2001) (Amended Preliminary Determination).
The period of investigation (POI) is April 1 through September 30, 2000.
The respondents in this case are: Sidex S.A. (Sidex), Sidex Trading SRL
(Sidex Trading), Sidex International, Plc (Sidex Intl.),
Metalexportimport, S.A. (MEI), Metanef, S.A. (Metanef) and Metagrimex
Business Group, S.A. (Metagrimex) (collectively, the respondents). We
verified the information submitted on the record by the respondents, and
issued verification reports on August 2, 2001. On August 17 and 24, 2001,
we received case briefs and/or rebuttal briefs, respectively, from the
petitioners (2) as well as the respondents. Certain petitioners and the
respondents requested a public hearing, which was held on August 28, 2001.

List of Comments in the Issues and Decision Memorandum

I. ISSUES SPECIFIC TO SIDEX

     Comment 1: Surrogate Statistics
     Comment 2: Labor Hours
     Comment 3: Electricity 
     Comment 4: Acuterm and Quartz Sand
     Comment 5: Water
     Comment 6: Limestone
     Comment 7: Sulphuric Acid
     Comment 8: Ferromanganese
     Comment 9: Iron Lumps and Pellets
     Comment 10: Iron Slag
     Comment 11: Coke
     Comment 12: Caustic Soda
     Comment 13: Raw Tar
     Comment 14: Coal Powder
     Comment 15: Demineralized Water
     Comment 16: Manganese Ore
     Comment 17: Methane
     Comment 18: Furnace and Coke Gas
     Comment 19: Overhead, SG&A, Interest and Profit Ratios

ISSUES SPECIFIC TO MEI 

     Comment 20: Export Licenses
     Comment 21: Freight Terms

ISSUES SPECIFIC TO METANEF 

     Comment 22: Freight Terms

GENERAL ISSUES 

     Comment 23: Romania-Wide Rate
     Comment 24: Separate Rates for Metanef, MEI and Metagrimex
     Comment 25: Brokerage and Freight
     Comment 26: Barter Transactions
     Comment 27: Expenses Incurred from Imported Inputs from Market 
                 Economy Suppliers 

DISCUSSION OF ISSUES

ISSUES SPECIFIC TO SIDEX: 

Comment 1: Surrogate Statistics

The respondents argue that because it is the Department's longstanding
policy to use contemporaneous data where possible, the Department should
not use 1998 Egyptian data to value factors, as was done in the
Department's preliminary determination. Rather, the Department should
value factors using both 1999 and 2000 data from the Philippines. The
respondents argue that the Egyptian surrogate data are aberrational and
should be disregarded. Specifically, the respondents argue that where
Filipino data are unavailable "the Department should rely on data from the
United States or the European Union, or, if it chooses to rely on Egyptian
data, to rely only on accurate 1999 data." See Rebuttal Case Brief
submitted on behalf of the respondents, at 4 (August 24, 2001)
(Respondents' Rebuttal Case Brief). 

Certain petitioners request that the Department use 1999 Egyptian United
Nations Commodity Trade Statistics (UNCTS) data in the Final
Determination. In the Preliminary Determination, the Department had
utilized Egyptian values taken from 1998 UNCTS. See Case Brief submitted
on behalf of Bethlehem Steel Corporation, LTV Steel Company, Inc.,
National Steel Corporation and United States Steel LLC, at 21 and 22
(August 17, 2001) (Bethlehem's Case Brief).

Certain other petitioners also argue that the Department should reject
the Philippines as the primary surrogate because the Philippines is no
longer a "significant producer of comparable merchandise," as required by
the statute at section 773(c)(4) of the Tariff Act of 1930, as amended
(the Act). Specifically, they argue that with the closure, in November
1999, of National Steel Corporation, the Philippines' largest steel
producer, the Philippines no longer produces a significant amount of hot-
rolled steel. They argue that this fact alone disqualifies the Philippines
as a superior surrogate to Egypt. See Rebuttal Case Brief submitted on
behalf of Gallatin Steel Company, IPSCO Steel Inc., Nucor Corporation,
Steel Dynamics, Inc., Weirton Steel Corporation and the Independent
Steelworkers Union, at 3 (August 24, 2001) (Gallatin's Rebuttal Case
Brief). They also argue that because the Department is unable to verify
whether the quantity and value of imports used to calculate the Filipino
data are accurate, the respondents' submitted Filipino data cannot be
relied upon. See Notice of Final Determination of Sales at Less than Fair
Value: Steel Concrete Reinforcing Bars from Moldova, 66 FR 33525 (June 22,
2001) (Issues and Decision Memorandum for the Final Determination), where
the Department did not use data submitted on the record of the proceeding
because the Department was unable to "determine whether the quantity and
value of imports used to calculate values for these factors were the final
adjusted figures . . . ." Furthermore, they argue that since neither the
United States nor the EU were considered as potential surrogate countries,
the Department should not use these prices as the benchmark for the
Egyptian data. See Gallatin's Rebuttal Case Brief, at 6 and 7.

Department Position: The Department will use, to the extent possible,
prices or costs of factors of production for countries which are 1) at a
comparable level of economic development to the non-market economy country
and 2) significant producers of merchandise comparable to the subject
merchandise. See 773(c)(4) of the Act.

For purposes of the final determination, we find that Egypt remains the
appropriate surrogate country for Romania. As stated in our preliminary
determination, we used Egypt as the surrogate country for Romania because
it provided surrogate value information for the factors of production and
is a significant producer of products comparable to the subject
merchandise. See Preliminary Determination and Amended Preliminary
Determination. In our preliminary determination we used 1998 data obtained
from the United Nations to value the factors of production. Since the
preliminary determination, 1999 data, which are more contemporaneous to
the period of investigation, have become available. Therefore, we agree
with the petitioners that we should use 1999 UNCTS data to value factors
for the final determination. 

When non-aberrational Egyptian information was unavailable, we used
weighted-average unit values calculated from 1999 UNCTS data from Algeria,
Ecuador and El Salvador. It was specifically noted that the Department
would consider Algeria, Ecuador and El Salvador for surrogate value
purposes as all three are at a comparable economic level to Romania. See
Memoranda to Gary Taverman, Director, Office 5, from Jeffrey May,
Director, Office of Policy, regarding the selection of surrogate countries
(January 22, 2001 and March 30, 2001). 

We disagree with the respondents' argument that the Philippines should be
used as the surrogate country for Romania. We agree with the petitioners
that it is not the preferred surrogate country because the Filipino hot-
rolled steel industry was in a precarious economic situation during the
POI with its largest producer of steel, National Steel Corporation,
liquidating its assets just after the close of the POI, October 2000. See
Gov't Eyes NSC Foreclosure, ABS-CBN News (August 30, 2001), and SEC Orders
Steel Firm's Liquidation, Philippine Daily Inquirer (October 4, 2000).
Furthermore, and more importantly, while we agree that the Department
prefers to value factors using the data most contemporaneous to the POI,
the 1999 and 2000 data submitted by the respondents from the Philippines
are lacking supporting published source documentation.

Additionally, our preference is to value all factors of production in a
single surrogate country, when possible. See section 351.408(c)(2) of the
Department's regulations (". . . the Secretary normally will value all
factors in a single surrogate country"). Therefore, we have determined
that Egypt remains the appropriate surrogate country for Romania and have
calculated the normal value, when possible, based on Egyptian surrogate
values. 

Comment 2: Labor Hours

Sidex argues that the Department should accept its methodology for
reporting labor hours. Specifically, Sidex states that it has reported two
distinct forms of labor: 1) labor attributable to specific production
shops involved in the production of subject merchandise (e.g., cokery,
steelmaking plant and the sintering plant) and 2) labor hours allocated to
specific cost centers within production shops (e.g., quality control,
laboratories and transportation). For example, Sidex has reported labor
for any section of the flat-rolling plant that was involved in the
production of subject merchandise, and did not report labor for sections
involved in the production of other products (e.g., heavy plate, cold-
rolled steel, welded pipe). However, Sidex did not report certain indirect
hours attributable to specific lines in production, as it has categorized
them as administrative. 

Certain petitioners allege that Sidex under-reported in its Section D
Response the number of labor hours used in the production of the subject
merchandise. The petitioners state that the "July Sidex Monthly Time
Report" (Exhibit SD-18 of the Factors of Production Verification Report)
obtained by the Department during verification suggests that Sidex
reported only a portion of the total labor hours in the aforementioned
response. Therefore, these petitioners propose that the Department
increase Sidex's reported labor hours attributable to subject merchandise
in order to account for all of the labor hours incurred by Sidex during
the POI. See Bethlehem's Case Brief, at 16 and 17.

Sidex argues that the petitioners' methodology forces it to report not
only labor attributable to the subject merchandise, but labor associated
with all of the company's merchandise. Sidex argues that its methodology
"makes a thorough accounting of all the labor hours which are arguably
associated with the production of subject merchandise." See Respondents'
Rebuttal Case Brief, at 3. Therefore, Sidex states that, should the
Department decide to adjust the labor factor, it should use Sidex's
methodology. 

Certain petitioners argue that, should the Department decide not to
include all unreported hours in Sidex's labor costs, the Department should
at least include all hours which are labeled by the respondents as
"arguably" related to the subject merchandise. See Rebuttal Brief
submitted on behalf of Bethlehem Steel Corporation, LTV Steel Company,
Inc., National Steel Corporation and United States Steel LLC, at 14
(August 24, 2001) (Bethlehem's Rebuttal Case Brief).

Other petitioners argue that because these allocations weren't explained
in detail until verification, the Department should make a facts available
determination to value labor. They argue that "Sidex had ample opportunity
to fully explain its direct labor and indirect labor accounting practices
in questionnaire responses but did not do so." See Gallatin's Rebuttal
Brief, at 6. 

Department Position: We agree with the petitioners in part. At
verification, we determined that the respondents had reported only a
portion of the labor hours, allocable to the subject merchandise, from all
of the production shops involved in the production of the subject
merchandise. We discovered at verification that additional labor hours
pertaining to specific divisions within a production shop should have been
reported. Further, we noted in our verification report that, "Sidex was
unable to provide a clear rule by which it was able to explain the reasons
for which it backed out {or did not include} certain labor from each
production division." See Memorandum on the Sales and Factors of
Production Verification of the Questionnaire Responses of Sidex S.A. and
Sidex Trading SRL, in the Antidumping Duty Investigation of Certain Hot-
rolled Carbon Steel Flat Products from Romania at 13 and Exhibit SD-18
(August 2, 2001) (Sidex Factors Verification Memorandum). 

Therefore, we agree with the petitioners that additional labor must be
reported in order to account for these missing labor hours. Although
certain petitioners have provided the Department with a methodology to
calculate the unreported labor hours, we believe that this calculation
would unfairly allocate to the merchandise under investigation a large
portion of labor hours not attributable to the production of the subject
merchandise, specifically hours attributable to heavy plate, welded pipe
and cold-rolled steel production. Although the respondents have suggested
a methodology for reporting the relevant unreported data, we believe their
methodology only accounts for a portion of the labor hours not reported to
the Department. Specifically, the respondents methodology accounts for
missing labor from the flat-rolling mill, but does not take into account
this labor associated with the other production divisions. See Case Brief
submitted on behalf of the respondents at 4 (August 17, 2001)
(Respondents' Case Brief). 

Through our analysis of Sidex's "July Sidex Monthly Time Report" at
verification, we determined that Sidex neglected to report approximately
20 percent of the labor hours that should have been included in its
original calculations for the flat-rolling mill. Furthermore we determined
that the labor in question was not reported for any of the company's other
production shops. Therefore, based on our analysis of the flat-rolling
mill, we are increasing the labor hours for all of the production
divisions in order to account for these unreported activities not only for
the flat-rolling mill, but all of the production shops. We divided the
number of hours that Sidex defined as arguably reportable for the flat-
rolling mill by the total number of hours initially reported to the
Department from this production shop, and applied this ratio to the total
labor hours attributable to scope merchandise already submitted on the
record to determine an augmented labor amount. 

We have not adjusted the labor hours to include hours attributable to
Sidex's auxiliary shops such as transportation, quality control or
laboratories. It is the Department's practice to treat these costs as a
part of the surrogate overhead cost.

Therefore, the Department's adjustment revises the data to include hours
that should have been reported from the production shops, based on the
detailed information provided to the Department for Sidex's flat-rolling
mill. We believe that this is the most objective method available to
augment the information already submitted on the record. 

Comment 3: Electricity

Sidex argues that a portion of its electricity usage, associated with the
raw material storage facilities, is attributable to a "kind of 'indirect'
electricity not associated with the subject merchandise and need not be
reported." See Respondents' Case Brief submitted, at 12; see, also,
Respondents' Rebuttal Case Brief, at 3 and 28. 

The petitioners contend that Sidex's energy costs utilized in the
constructed value computation should be increased by 10 percent. This
argument is based on the fact that during verification the Department
learned from Sidex that the amount of energy consumed in the production of
the subject merchandise was under-reported by 10 percent. 

Sidex also argues that the information used to value electricity in the
preliminary determination is no longer the most accurate information
available. Sidex argues that the data used in the preliminary
determination was draft data and has not been approved by the World Bank.
See Respondent's Case Brief, at 37. They argue that the information they
submitted on the record on July 2, 2001, provided by the U.S. Foreign
Commercial Service, is more accurate and should be used to value
electricity in the final determination.

The petitioners argue that the information submitted by the respondents
on July 2, 2001 should not be used to value electricity. According to the
petitioners, this information is applicable to "Very High Voltage" users,
and not "large industrial users" as the respondents have suggested. The
petitioners state that the former "measures the intensity of electrical
current" while the latter measures the wattage, or "the amount of
current." See Bethlehem's Rebuttal Brief at 5. While the petitioners agree
that Sidex is a large user of electricity, they assert that there is no
reason to assume that Sidex is also a user of high voltage electricity.
Therefore, the petitioners request that the Department continue to use the
value they submitted which was obtained from World Bank data. In the
absence of that, the petitioners suggest that the Department use the value
for medium voltage users that use over 500 kilowatt hours per month,
included in the price schedule submitted by the respondents.

Department Position: We have confirmed that the data made available by
the World Bank are draft data, while the data published by the U.S.
Foreign Commercial Service (USFCS) are in their approved final form.
Therefore, we agree with Sidex that the surrogate value for electricity it
has submitted on the record is more reliable than that used by the
Department in its preliminary determination. Furthermore, we believe that
Sidex should be considered a "very high voltage" user due to the fact that
its an integrated steel mill with energy-intensive operations similar to
that of the energy-intensive operations of the aluminum factory referenced
in the utility rates chart as a "very high voltage" user as published by
the USFCS. We continue to believe, however, that Sidex should have
reported a portion of the electricity associated with its raw material
storage facilities, as was discovered at verification. According to
company officials at verification, their failure to report this
electricity was an oversight attributable to the fact that the energy
consumption associated with the storage facilities is not normally
allocated to any specific stage of production or any specific production
divisions. See Sidex Factors Verification Memorandum, at 10. Therefore, we
have increased the respondents' reported electricity value by a factor of
10 percent in order to account for the disparity we discovered at
verification. See Factors Valuation Memorandum for the Final Determination
from Christopher Riker and Tisha Loeper-Viti, Case Analysts, to Gary
Taverman, Director, Office 5 at Exhibit G (September 17, 2001) (Factors
Valuation Memorandum for the Final Determination). 

Comment 4: Acuterm and Quartz Sand

Sidex argues that Acuterm and quartz sand should not be reported as raw
material inputs. Sidex states that Acuterm is an "auxiliary material put
in the casters and is used to regulate heat in the caster as well as to
prevent oxidization." See Respondent's Case Brief at 12. Sidex further
argues that, although parties are required to provide raw materials needed
in the production of a unit of the subject merchandise, Acuterm and quartz
sand are both indirect materials and, therefore, should be reported as
part of overhead as was previously done in Brake Drums and Brake Rotors
from the People's Republic of China. See Notice of Final Determination of
Sales at Less Than Fair Value: Brake Drums and Brake Rotors from the
People's Republic of China, 62 FR 9160, 9169 (February 28, 1997).

The petitioners argue that the Department should calculate a value for
both Acuterm and quartz sand because they "are direct materials used in
the steel processing." See Gallatin's Rebuttal Case Brief, at 4.
Specifically, they argue that because these materials are "not used to
service equipment," but are "essential to the production process itself
and consumed in that process," the Department should classify them as
direct materials. The petitioners argue that quartz sand would not be
incorporated in the surrogate value for overhead, and should be assigned a
surrogate value. Furthermore, the petitioners argue that as an input into
the production process to assist in the production of slag, a surrogate
cost must be assigned to quartz sand to offset the credit that Sidex is
receiving for monies received from the sale of slag as a by-product. 

Department Position: We agree with Sidex that Acuterm is an indirect
material that does not become part of the subject merchandise nor part of
a saleable by-product. Although this substance is applied directly to the
subject merchandise, it is not incorporated into the steel, but instead is
lost in further processing. Further, it is not a significant production
input. For this reason, we did not assign Acuterm a surrogate value but
will consider it part of overhead. 

Regarding assigning a value to quartz sand, we agree with the petitioners
that "{i}n the brake drum case cited by Sidex, the molding materials used
in the production of steel brake drums were treated as overhead because
they were used to 'assist in the manufacturing process', {and} were not
related to the actual transformation of the raw materials into {a}
product." See Gallatin's Rebuttal Case Brief, at 4 and 5, see also Notice
of Final Determination of Sales at Less Than Fair Value: Brake Drums and
Brake Rotors from the People's Republic of China, 62 FR 9160, 9169
(February 28, 1997), and Notice of Final Determination of Sales at Less
Than Fair Value: Steel Concrete Reinforcing Bars from the People's
Republic of China, 66 FR 33522 (June 22, 2001) (Issues and Decision
Memorandum Comment 5D). We noted at verification that quartz sand was
incorporated into the production process in order to assist in the
production of slag, a by-product. Therefore, we agree with the petitioners
that this is something that would not normally be incorporated into
overhead. However, the petitioners have not provided any information in
their petition or suggestions in their case briefs on which the Department
could base a value for quartz sand. Due to the absence of a value on the
record with which to value quartz sand, and the fact that this input
represents a small portion of the cost associated with making iron slag, a
very low valued by-product, we have not assigned a value to this factor. 

Comment 5: Water

Sidex argues that water should not be valued as a raw material, as the
company has already reported the labor hours and electricity associated
with obtaining the industrial water. Sidex argues that valuing water as an
input would result in a "double-reporting" for this factor. See
Respondent's Case Brief, at 14. 

Department Position: We agree that the Department should not value water
as a raw material. At verification the Department was able to confirm that
Sidex pumps water from the Danube and that the only cost incurred is in
the form of a nominal tax, for the right to pump the water from the river.
Since Sidex has reported the labor and electricity associated with pumping
the water from the river, we believe that the proper costs associated with
these activities have already been accounted for.

Comment 6: Limestone

Sidex argues that the value for limestone used by the Department in its
preliminary determination is aberrational. Specifically, Sidex states that
the Department based its value for limestone in the preliminary
determination on only US$9,000 of imports into the Philippines. The
respondents further argue that the 1999 Egyptian value submitted by the
petitioners shows an even more aberrational value, approximately US$1,600
per metric ton based on 10 metric tons of imports, when compared with the
US$171.64 per metric ton used in the preliminary determination. Sidex
argues that antidumping margins of over 10 percent resulted from the
Department's use of this aberrational value for limestone. Therefore,
Sidex argues that the Department should value limestone on either U.S. or
EU data. 

The petitioners argue that the Department should not use U.S. or European
data for determining a value for Romanian limestone. They point out that
the Department specifically rejected the use of U.S. or EU data for
valuing Romanian limestone in the Administrative Review of Cut-To-Length
Carbon Steel Plate from Romania. See Bethlehem's Rebuttal Brief, at 4. The
petitioners request that the Department use the 1998 value they previously
submitted for Egyptian limestone under the Harmonized Tariff Schedule of
the United States (HTSUS) Code 2522 (Petitioners' March 23 Letter at
Exhibit 2) which they claim is very similar to HTSUS Code 2521 for
limestone designated by Sidex as the product consumed.

Department Position: We agree with Sidex that the 1999 Egyptian value for
limestone submitted by the petitioners appears to be aberrational.
Although we agree with the petitioners that U.S. and EU data should not be
used for valuing purposes as neither are appropriate surrogate countries
for Romania, we have deemed the Egyptian value of US$1,600.00 per metric
ton aberrational when compared to the surrogate value assigned in the
Department's concurrent investigation of HRS from the People's Republic of
China (US$17.62/MT based on Indian imports) and the value obtained from
5,127 metric tons of limestone imported into El Salvador during 1999
(US$72.31). Therefore, we are using the value of limestone from a second
surrogate country, El Salvador. See Factors Valuation Memorandum for the
Final Determination at Exhibit D.

Comment 7: Sulphuric Acid

In one of its submissions, Sidex presented data indicating the price it
paid to a Bulgarian supplier for sulphuric acid. It then argued in its
case brief that a proper surrogate value for sulphuric acid should be no
more than US$25.00 per metric ton based on U.S. and EU import statistics
placed on the record. Sidex contends that the information used by the
Department for the preliminary determination, as well as the information
submitted on the record by the petitioners for valuing sulphuric acid, is
aberrationally high. 

Department Position: The Department has identified Bulgaria as a non-
market economy, along with several other countries, in Carbon Steel Wire
Rod from Poland: Preliminary Negative Countervailing Duty Determination,
49 FR 6768 (February 23, 1984). This identification was not changed in the
final determination. See Carbon Steel Wire Rod from Poland: Final Negative
Countervailing Duty Determination, 49 FR 19374 (May 7, 1984). Accordingly,
the Department has determined that it is not appropriate to use the price
Sidex paid to a Bulgarian sulphuric acid supplier to value this input. 

For the final determination, we have used 1999 Ecuadorian import data,
which is more contemporaneous than the data used for the preliminary
determination. The contemporaneous 1999 Egyptian import data, which shows
a weighted-average price of approximately US$2,124.91 per metric ton, is
aberrationally high when compared to 1999 Ecuadorian import statistics as
well as U.S. and EU data. Therefore, we have valued sulphuric acid based
on the non-aberrational Ecuadorian value.

Comment 8: Ferromanganese

Sidex argues, based on U.S. and Filipino import prices, that a proper
surrogate value for ferromanganese would be approximately US$423.31 per
metric ton. Sidex argues that the information used by the Department, as
well as the information submitted on the record by the petitioners for
valuing ferromanganese, is aberrationally high. Specifically, Sidex argues
that the Department cannot turn to the 1999 Egyptian data submitted by the
petitioners as it contains imports from Turkey that are over 1000 percent
higher than the other prices on the record for this time period. See
Respondents' Rebuttal Case Brief, at 37. Therefore, Sidex argues that the
Department should value the input on U.S. data or, alternatively, on
Filipino data. 

Department Position: We disagree with Sidex that either U.S. or Filipino
data should be used in valuing ferromanganese as the United States is not
being considered for surrogate purposes, and the Department was unable to
obtain publicly available Filipino data. While Sidex submitted Filipino
data on the record of this proceeding, this information lacked
documentation substantiating its accuracy. However, we do agree with Sidex
that the 1999 Egyptian imports of ferromanganese from Turkey appear to be
aberrational as they are 11 times higher than the next highest weighted-
average unit value. Therefore, we have removed the imports from Turkey, as
well as those from non-market economy countries, from our calculation and
have calculated a surrogate value of US$516.96 for ferromanganese based on
the remaining Egyptian imports. See Factors Valuation Memorandum for the
Final Determination at Exhibit D.

Comment 9: Iron Lumps and Pellets

Sidex argues that, not only should pellets and lumps be assigned the same
surrogate value, but the surrogate value used by the Department in its
preliminary determination was substantially higher than world prices, and
should be revised accordingly. Sidex argues that the United States
Geological Service (USGS) values iron ore at US$26.00 per metric ton.
Sidex argues that since the Department used values from the USGS to value
slag, the Department should either value iron lumps at the market economy
price paid by Sidex, or use a surrogate value from a country such as the
United States with which to value pellets. 

Department Position: While we have valued iron ore lumps based on Sidex's
price paid to a market-economy supplier, we continue to value iron ore
pellets using a surrogate value. Specifically, Sidex reported both of
these as separate inputs added to the production of hot-rolled steel.
Therefore, the price Sidex paid to market-economy suppliers for iron lumps
has not been assigned to iron ore pellets. Regarding the surrogate value
assigned to iron ore pellets, we have removed the data pertaining to
imports from Norway because the value is aberrational. See Factors
Valuation Memorandum for the Final Determination at Exhibit B and E.

Comment 10: Iron Slag

Sidex claimed that the Department has used an aberrational value for iron
slag. 

Department Position: In an effort to use more contemporaneous data to
value inputs for the final determination, we reviewed 1999 UNCTS data and
determined that the 1999 value for Egyptian imports of slag appears to be
aberrational based upon the small quantity of slag imported into Egypt (18
MT) when compared to the quantity imported into Algeria (approximately
161,000 MT). Therefore, we are using 1999 data from a secondary surrogate
country, Algeria, to calculate a value for iron slag of US$31.20 per
metric ton. See Factors Valuation Memorandum for the Final Determination
at Exhibit F.

Comment 11: Coke

Sidex stated that the value used by the Department to value coke in the
preliminary determination, as well as the 1999 Egyptian data submitted by
the petitioners, is aberrational. Sidex has suggested that Filipino data
of US$49.21 per metric ton would be a value which is reflective of
existing market conditions.

Department Position: We do not agree with Sidex that the 1999 Egyptian
data is aberrational in its totality. However, after analyzing the data,
we have determined that the imports from the United States into Egypt are
priced aberrationally. The price per metric ton is approximately
US$84,000, or approximately 210 times higher than the next highest
weighted-average unit value. After removing these data, consistent with
the Department's decision in Steel Wire Rope from the People's Republic of
China and Chrome-Plated Lug Nuts from the People's Republic of China, we
are left with information that is consistent and non-aberrational. See
Notice of Final Determination of Sales at Less Than Fair Value: Steel Wire
Rope from India the People's Republic of China, Notice of Final
Determination of Sales at Not Less Than Fair Value: Steel Wire Rope from
Malaysia, 66 FR 12759 (February 28, 2001) (Issues and Decision Memorandum
for the Investigation of Steel Wire Rope from the People's Republic of
China at Comment 1) (February 14, 2001) (SWR from the PRC), see, also,
Chrome-Plated Lug Nuts from the People's Republic of China: Final Results
of Antidumping Duty Administrative Review, 63 FR 53872 (October 7, 1998)
(Chrome-Plated Lug Nuts from the PRC). Therefore, we have valued coke
based on the adjusted 1999 Egyptian weighted-average unit value of imports
from Australia, Germany, Japan, Norway, Spain and the United Kingdom at
US$147.95. For a more detailed calculation, see Factors Valuation
Memorandum for the Final Determination at Exhibit D.

Comment 12: Caustic Soda

Sidex argues that the value used by the Department to value caustic soda,
as well as the 1999 Egyptian data submitted by the petitioners, are
aberrational. Sidex has suggested that Filipino data of US$56.11 per
metric ton would be a value which is reflective of the international price
of caustic soda.

Department Position: First, we were unable to confirm the accuracy of the
information presented by Sidex from the Philippines as we were unable to
obtain support documentation for the figures presented on the record.
Additionally, we do not agree with Sidex that the 1999 Egyptian data is
aberrational in its totality. However, after analyzing the data, we have
determined that the information related to a small amount of imports from
Greece, Switzerland and the United Kingdom is aberrational. The weighted-
average price per metric ton based on the imported material from these
three countries is approximately US$4,600.00 compared to a weighted-
average of imports from 12 other market-economy countries at US$396.30
based on a significantly greater quantity of imported caustic soda. After
removing the aberrational data, consistent with the Department's decision
in SWR from the PRC and Chrome-Plated Lug Nuts from the PRC, we have
valued caustic soda based on the adjusted 1999 Egyptian weighted-average
unit value of imports inflated to a value of US$419.90. For a more
detailed calculation, see Factors Valuation Memorandum for the Final
Determination at Exhibit D.

Comment 13: Raw Tar

Sidex argues that the Department valued raw tar in an incorrect manner.
The company states that the Department erred in valuing raw tar at US$0.15
per metric ton when the data used by the Department to value raw tar was
actually reported in liters. It further argues that this value conflicts
with data it has submitted on the record and that raw tar should be valued
at a minimum of US$160.28 per thousand liters.

Department Position: We agree with Sidex. The data used by the Department
in its preliminary determination were reported in liters and should have
been converted to metric tons. However, as stated earlier, U.S. and EU
data should not be used for valuing purposes as neither are appropriate
surrogate countries for Romania. Therefore, we have valued raw tar at
US$663.84 per metric ton based on 1999 Egyptian import statistics. For a
more detailed calculation, see Factors Valuation Memorandum for the Final
Determination at Exhibit F.

Comment 14: Coal Powder

Sidex argues that the Department should value injected coal powder based
on its reported price of purchased coal powder from a market economy in
its amended chart of April 6, 2001. See Respondents' Case Brief, at 32.

Department Position: The Department agrees with Sidex and has valued coal
powder based on the price the respondents paid to a market-economy
supplier. As noted in our verification report, we reviewed various entries
from the company's import journal, as well as customs documentation,
invoices, and other related documentation to confirm the origin, value and
quantity of reported market-economy purchases. Since we found no
discrepancies with any information submitted on the record as it relates
to market-economy purchases of coal powder, we are basing the value on the
price Sidex paid to market-economy suppliers. 

Comment 15: Demineralized Water

Sidex argues that no value should be assigned to demineralized water. The
company argues that it is not directly used in the production process, nor
is it an energy source, but rather it is an auxiliary material used to
produce steam and is also used in the cokery. See Respondents' Case Brief,
at 32. Sidex further argues that, as an auxiliary material, it should
properly be reported as part of overhead.

Sidex also states that, should a surrogate value be assigned to value
demineralized water, it must be assigned based on an accurate HTSUS
number. Sidex states that the water it used in its production receives a
minor amount of filtering and does not fall under HTSUS 2201.90, which it
argues clearly covers expensive drinking water. See Respondents' Case
Brief, at 33. Further, Sidex states that, since it has obtained the water
as an offset against sales of de-carbonated water, coke gas and furnace
gas, the water should not have a cost associated with it. 

Department Position: In our verification report, we noted that Sidex
provides coke gas and furnace gas to the on-site electrical facility in
exchange for de-mineralized water. Furthermore, "Sidex informed us that it
does not sell coke gas and furnace gas to any other entities." See Sidex
Factors Verification Memorandum at 10. Therefore, we have not assigned a
cost to the de-mineralized water, nor have we have assigned a credit to
the sales of coke gas and furnace gas.

Comment 16: Manganese Ore

Sidex argues that the value it initially submitted on the record for a
market economy purchase of manganese was inaccurate as it was reflective
of a purchase of electrolytic manganese. The company states that the
Department corroborated this information at verification, and should, in
turn, assign a surrogate value to manganese ore. Further, Sidex argues
that the cost of manganese ore is based on the grade of manganese within
the ore. Specifically, the company argues that international prices
demonstrate the prices for manganese ore, with a manganese content of less
than 47 percent, are less than US$70.00 per metric ton, and the Department
should value this input accordingly. See Respondents' Rebuttal Case Brief,
at 31. Furthermore, Sidex argues that the surrogate value suggested by the
petitioners is "based on a basket category that includes manganese ore of
various concentration{s} and {is} based on a relatively small amount of
imports." See Respondents' Rebuttal Brief, at 3. Finally, the company
argues that the 1998 and 1999 data, provided by the petitioners, differs
so greatly for Egypt that a non-aberrational value for the input cannot be
ascertained from these data. See Respondents' Rebuttal Brief, at 31. 

The petitioners argue that a surrogate value should be used for costs
incurred by Sidex for manganese ore. Whereas it was determined at
verification that Sidex obtained all of its manganese ore domestically,
the values for manganese that had been originally reported by Sidex as
purchased from a market-economy supplier are not valid. Furthermore, the
petitioners argue against using the surrogate values which have since been
provided by Sidex. These values are based on U.S. imports of manganese ore
and the petitioners assert that the United States is not an appropriate
surrogate country for Romania. The petitioners claim that their
information submitted on July 2, 2001, based on 1999 UNCTS data, are the
best on record and should be used for the cost of manganese ore in the
Department's constructed value. See Bethlehem's Case Brief, at 20.

Department Position: We agree with Sidex that the initial information
submitted on the record to value manganese ore, based on market-economy
purchases of electrolytic manganese from the People's Republic of China,
should not be used to value manganese ore for purposes of this
investigation. See Sidex Factors Verification Memorandum, at 14. We
confirmed at verification that Sidex is consuming manganese ore with a
manganese content ranging from 20-30 percent. However, we disagree with
Sidex that the Egyptian data from 1998 differs so significantly from the
data for 1999 that it is unusable. We agree with petitioners that a
surrogate value should be assigned to value the respondents' reported
value for manganese ore and have used the inflated 1999 Egyptian weighted-
average unit value of US$397.00, calculated from the UNCTS. The apparent
aberrational character of the petitioners' data resulted from the fact
that they erred in their unit value calculation in their March 23, 2001
submission. The weighted-average unit value for imports of manganese ore
into Egypt during 1998 was actually approximately US$400.00, based on 674
metric tons of imports valued at a total of US$271,000. See surrogate
values submission filed on behalf of the petitioners, at Exhibit 2 (March
23, 2001). 

Comment 17: Methane

Sidex argues that the Department should value methane based on Egyptian
data they submitted on July 2, 2001. In that submission, Sidex presented
information valuing methane at approximately US$.04 per cubic meter. See
Respondents' Case Brief, at 37. Sidex further argues that the information
submitted by the petitioners is based on "a very large basket category
that also includes propane, butanes, ethylenes and other types of gases."
See Respondents' Rebuttal Case Brief, at 4.

The petitioners argue that the Department should utilize the surrogate
value for methane gas they provided in their March 23, 2001, surrogate
value submission at Exhibit 2. They claim that the surrogate value for
natural gas provided by Sidex does not include stamps, duties, and other
government charges and, therefore, should not be used. See Bethlehem's
Case Brief, at 21. The respondents, however, argue that "there is no proof
on the record of any such charges." See Respondents' Rebuttal Case Brief,
at 32.

Department Position: As we have been unable to obtain a value for methane
gas from the United Nations for 1999, we are basing our value on the
information submitted by Sidex in its surrogate factor values submission
of July 2, 2001. Although the petitioners submitted reliable and
verifiable 1998 data from the United Nations for Egypt, we agree with
respondents that the petitioners' information includes "propane, butanes,
ethylenes and other types of gases" which includes gases not consumed by
Sidex. Furthermore, it is the Department's practice, where available, to
use the most contemporaneous surrogate import values that are free of any
taxes. See Manganese Metal from the People's Republic of China: Final
Results of Second Antidumping Administrative Review, 64 FR 49447
(September 13, 1999). Therefore, we are basing our value on the Egyptian
non-household price for natural gas, from the Minister of Petroleum and
effective January 1, 1998, which was provided by Sidex, and is the most
accurate information on the record of this investigation.

Comment 18: Furnace and Coke Gas

Sidex argues that the Department should calculate values for both furnace
and coke gas. To support its argument, Sidex refers to the Department's
decision in its preliminary determination of sales at less than fair value
in hot-rolled steel from the People's Republic of China, where both were
valued in the Department's normal value calculations,. See Factors of
Production Valuation for Preliminary Determination, Hot-rolled Steel from
the People's Republic of China (A-570-865) (April 23, 2001). Furthermore,
it argues that the Department verified that these products were sold, as
noted in its verification report.

The petitioners argue that the Department should disregard the value for
furnace and coke gas provided by Sidex in its submission of July 2, 2001.
The petitioners also argue that the respondents' surrogate information
fails to define the quantity of furnace gas imported into the United
States, nor does it permit the Department to confirm the accuracy of the
information submitted on the record. 

Department Position: In our verification report, we noted that Sidex
provides coke gas and furnace gas to the on-site electrical facility in
exchange for de-mineralized water. Furthermore, "Sidex informed us that it
does not sell coke gas and furnace gas to any other entities." See Sidex
Factors Verification Memorandum at 10. Therefore, we have not assigned a
cost to the de-mineralized water, nor have we assigned a credit to the
sales of coke gas and furnace gas. See Department Position to Comment 15.

Comment 19: Overhead, SG&A, Interest and Profit Ratios

Sidex argues that the Department should base its ratios for overhead,
SG&A, interest and profit on the financial statements from the Filipino
pipe and tube industry submitted on the record by Sidex after the
Department's preliminary determination. See Respondents' Rebuttal Case
Brief, at 23. Sidex further argues that this information is comparable to
the Romanian hot-rolled steel industry. In support, the respondents cite
to Seamless Pipe from Romania where the Department determined that
information from an Indonesian hot-rolled steel producer was comparable to
the Romanian pipe industry. See Notice of Final Determination of Sales at
Less Than Fair Value: Certain Small Diameter Carbon and Alloy Seamless
Standard, Line and Pressure Pipe from Romania, 65 FR 39125 (June 23, 2000).

Sidex further argues that if the Department disregards the Filipino
financial statements, and chooses to value surrogate financial ratios from
Egyptian financial statements, it should use the Egyptian financial
statements as the sole source for deriving the surrogate ratios. See
Respondents' Rebuttal Case Brief, at 2. Sidex argues that the Department's
policy and precedent mandate the use of financial statements without
adding additional data which may skew the results. Specifically, Sidex
argues that the Department has calculated overhead solely on depreciation
where the data contained in the single financial statements were not as
specific as preferred. See Titanium Sponge from Republic of Kazakhstan:
Notice of Final Results of Antidumping Duty Administrative Review, 64 FR
66169 (November 24, 1999) as discussed in Titanium Sponge from Republic of
Kazakhstan: Notice of Preliminary Results of Antidumping Duty
Administrative Review, 64 FR 48793 (September 8, 1999), see also Steel
Concrete Reinforcing Bars from Belarus: Final Results of Antidumping Duty
Administrative Review, 66 FR 8329 (January 30, 2001), and Persulfates from
the People's Republic of China: Final Results of Antidumping
Administrative Review, 66 FR 42628 (August 14, 2001).

The petitioners argue that it was inappropriate for the Department to
calculate an overhead ratio for Sidex in its constructed value computation
using only depreciation because there is also a significant non-
depreciation component in overhead. See Bethlehem's Case Brief, at 12-14.
The petitioners believe that a comprehensive overhead ratio was not
utilized because the Department was unable to obtain one for the primary
surrogate country. However, the petitioners contend, the Department should
then turn to a second surrogate country's data in order to calculate an
appropriate ratio, rather than omit an important aspect of the constructed
value. See Notice of Final Determination of Sales at Less Than Fair Value:
Beryllium Metal and High Beryllium from the Republic of Kazakhstan, 62 FR
2648 (January 17, 1997) (Beryllium from Kazakhstan).

The petitioners further argue that the surrogate values provided by Sidex
for three Filipino companies are not suitable for calculating overhead as
these companies are not producers of integrated steel products. One of
these companies is a wire and bar rolling mill and the other two are steel
pipe welders. See Bethlehem's Case Brief, at 14, see also Gallatin's
Rebuttal Case Brief, at 3. The petitioners point out that the Department
had declined to use surrogate values from mini-mills in the concurrent
investigation of Hot-Rolled Carbon Steel Flat Products from the People's
Republic of China and contend that the Philippine companies are even less
comparable to integrated steel producers than are mini-mills. The
petitioners state that they have placed on the record financial statements
from integrated steel producers in Indonesia, Turkey, and India which they
claim the Department should utilize in order to calculate the non-
depreciation component of overhead.

Department Position: Although in the past the Department had determined
that the hot-rolled steel industry is comparable to the pipe industry, we
are not basing our surrogate values for financial ratios on the Filipino
data because we have surrogate financial information on the record of this
proceeding for fully integrated steel companies which produces HRS. 

We have continued to base the surrogate ratios on the financial
statements of Alexandria Iron and Steel Company (AISC). To estimate AISC's
amount of non-depreciation overhead expense we have calculated company-
specific non-depreciation overhead rates (non-depreciation overhead
amounts/cost of sales) from the financial statements of three other fully
integrated HRS producers (Steel Authority of India Limited, the Tata Iron
and Steel Company Limited and PT Krakatau Steel and Subsidiaries). We then
took a simple average of the ratios for all three companies (8.08 %) and
applied it to AISC's total cost of sales resulting in a non-depreciation
value for AISC. We added the non-depreciation value for AISC to the
depreciation and amortization amount taken from AISC's cost flow statement
to obtain a total overhead value. We then divided the total overhead value
by AISC's cost of sales minus total overhead value, resulting in an all-
inclusive overhead ratio. 

Furthermore, we have continued to value SG&A, profit and interest on the
AISC financial statements as was done in the preliminary determination.

ISSUES SPECIFIC TO MEI: 

Comment 20: Export Licenses

MEI not only argues that export licenses are granted automatically,
consistent with the ordinance governing the importing-exporting system of
goods, but the notations on the export license were simply a formality
informing Romanian companies that they have an obligation to obey Romanian
law. Furthermore, the respondents argue that the notation from the
government recommending an improvement of the price represents "an
informal 'recommendation' by a government bureaucrat." See Respondents'
Case Brief, at 42. Since there is no evidence that the Government of
Romania forced a price increase, but rather granted the export license
based on the terms submitted, there is no evidence that the Government of
Romania sets prices.

Department Position: Although there is no evidence to support that the
notation made on MEI's export license was "an informal 'recommendation' by
a government bureaucrat," we agree with the respondents that there is also
no evidence that the Government of Romania forced a price increase on this
shipment. In fact, we noted that this shipment was processed based on the
details laid out in the license and was not subject to any further review
by the government. See MEI Verification Report at 3. Therefore, we agree
with the respondents that there is no factual evidence on the record of
this proceeding that the Government of Romania is involved in setting
prices and determine that separate rates should be granted. 

Comment 21: Freight Terms

The respondent argues that the Department incorrectly calculated a cost
for barge freight for observation numbers 65 through 71 whose terms of
delivery were FOB Galati. Therefore, the respondents argue that the
Department should not calculate a freight cost for these observation
numbers in its final determination.

Department Position: Because the terms of delivery were on an FOB basis,
we agree with the respondent and have not calculated freight costs for
these observations. 

ISSUES SPECIFIC TO METANEF: 

Comment 22: Freight Terms

The respondent argues that the Department incorrectly calculated a cost
for barge freight for observation numbers 64 through 161 whose terms of
delivery were FOB Galati. Therefore, Metanef argues that the Department
should not calculate a cost for these observation numbers in its final
determination.

Department Position: Because the terms of delivery were on an FOB basis,
we agree with the respondent and have not calculated freight costs for
these observations.

GENERAL ISSUES 

Comment 23: Romania-Wide Rate

The respondents argue that there is no information on the record which
demonstrates that any non-respondent had made shipments of HRS from
Romania during the POI. The respondents argue that if "Sidex is the only
producer of HRS from Romania and the Department verified that all Sidex-
produced steel exports to the U.S. were reported, then there is no basis
upon which to determine that not all exports were reported." See
Respondents' Case Brief, at 47. The respondents further state that in
cases where a margin was assigned based on facts available, the Department
did so because there was information on the record suggesting that not all
of the imported goods were accounted for by the respondents. Id. 

The petitioners argue that the Department should use adverse facts
available in the calculation of the Romania-wide rate. They claim that
there is no evidence on the record which adequately explains the
discrepancy between U.S. Customs data and total sales reported by Sidex
and its trading companies. See Bethlehem's Rebuttal Brief, at 20. Although
the respondents argue that "{t}here is no evidence that the sales amounts
reported by Sidex and the trading companies are less than the total for
all of Romania," the petitioners cite to the Department's preliminary
determination where the Department stated that "{c}ustoms data indicate
that these exporters do not account for all of the exports of the subject
merchandise to the United States during the POI." See Respondents' Case
Brief, at 47, as well as Bethlehem's Rebuttal Brief, at 20. Because the
petitioners argue that the respondents' speculations regarding the
discrepancy between reported shipments and actual shipments are not
supported by any factual analysis, and the customs data on the record
indicate that the respondents do not account for all imports into the
United States of subject merchandise from Romania, the Department must
continue to base its Romania-wide rate on the facts available. See
Bethlehem's Rebuttal Case Brief, at 20 and 21.

Department Position: We agree with the petitioners that the respondents'
speculations are not supported by any factual basis, and the data on the
record indicate that the respondents do not account for all imports of
subject merchandise from Romania. See Memorandum to the file from the case
analyst, comparing total shipments during the POI with total sales
reported by the respondents (April 19, 2001). Therefore, we continue to
base the Romania-wide rate on the facts available.

Comment 24: Separate Rates for Metanef, MEI, and Metagrimex

The petitioners argue that Metanef, MEI, and Metagrimex should not
receive separate rates due to the fact that they did not make any sales of
subject merchandise during the POI. The petitioners claim that these
companies were acting purely as sales agents on behalf of Sidex, and did
not make any sales of their own. The petitioners reason that because Sidex
did not sell the subject merchandise to Metanef, MEI, and Metagrimex,
these trading companies could not have, in turn, made any sales themselves
to U.S. customers.

The respondents argue that the "exporters have established their
independence of government control and meet the legal test entitling each
of them to a separate antidumping rate." See Respondents' Rebuttal Case
Brief, at 1. They argue that the reported sales were between the exporters
and U.S. importers, and to assign a rate to a non-exporter (i.e., the
producer) would contradict the Department's normal practices. 

The respondents further argued that the petitioners have ignored the
facts that "{t}here is an invoice between the exporters and unrelated U.S.
importers," that "{t}he exporters have the authority to negotiate and sign
contracts," that "{t}he exporters were the official exporters of record"
and that "{t}he exporters were paid directly by the importers." See
Respondents' Rebuttal Case Brief, at 5. Thus, the respondents argue that
these transactions easily satisfy the requirements of section 772(a) of
the Tariff Act of 1930, as amended.

Department Position: We agree with the respondents that the margins
should be assigned to MEI, Metanef, Metagrimex as well as Sidex Trading
and Sidex Intl. (jointly, the Sidex Exporters). First, consistent with the
Department's determination in its Notice of Final Determination of Sales
at Less Than Fair Value: Certain Small Diameter Carbon and Alloy Seamless
Standard, Line and Pressure Pipe from Romania, 65 FR 39125 (June 23,
2000), as discussed in Notice of Preliminary Determination of Sales at
Less Than Fair Value: Certain Small Diameter Carbon and Alloy Seamless
Standard, Line and Pressure Pipe from Romania, 65 FR 5594 (February 4,
2000), the transfer between the producer and the exporter is between two
companies located in Romania, in terms of physical location, place of
incorporation and place of business. As discussed in other NME cases, we
will not base export price on internal transactions between two companies
located in the NME country. (See, e.g., Notice of Final Determination of
Sales at Less Than Fair Value: Creatine Monohydrate From the People's
Republic of China, 64 FR 71104, 71109 (December 20, 1999) and Fresh Garlic
from the People's Republic of China: Final Results of Antidumping Duty
Administrative Review and Partial Termination of Administrative Review, 62
Fed. Reg. 23758, 23759 (May 1, 1997).) 

Second, the facts of the record show that MEI, Metanef, Metagrimex, Sidex
Trading and Sidex Intl. are the official exporters of record who enter
into contracts with their foreign customers, and who negotiated prices
with the U.S. customers, arranged for shipment, issued invoices to, and
received payment in U.S. dollars from, the customers. These facts were
confirmed during the Department's verification of the exporters, in the
context of the Department's examination of the companies' sales processes
and sales documentation. See exhibits MEI-7 through MEI-9 of the August 2,
2001, memoranda, Sales Verification of the Questionnaire Responses of
Metalexportimport S.A. (MEI) in the Antidumping Duty Investigation of
Certain Hot-rolled Carbon Steel Flat Products from Romania. See also
exhibits MBG-6 and MBG-7 of the August 2, 2001, memorandum, Sales
Verification of the Questionnaire Responses of Metagrimex Business Group,
S.A. (Metagrimex) in the Antidumping Duty Investigation of Certain Hot-
rolled Carbon Steel Flat Products from Romania; exhibits MN-8 and MN-9 of
the August 2, 2001, memorandum, Sales Verification of the Questionnaire
Responses of Metanef, S.A. (Metanef) in the Antidumping Duty Investigation
of Certain Hot-rolled Carbon Steel Flat Products from Romania; exhibits ST-
9 and ST-10 of the August 2, 2001, memoranda, Sales and Factors of
Production Verification of the Questionnaire Responses of Sidex S.A. and
Sidex Trading SRL, in the Antidumping Duty Investigation of Certain Hot-
rolled Carbon Steel Flat Products from Romania; and exhibits SI-7 and SI-8
of the August 2, 2001, memoranda, Sales Verification of the Questionnaire
Responses of Sidex International, Plc (Sidex Intl.) in the Antidumping
Duty Investigation of Certain Hot-rolled Carbon Steel Flat Products from
Romania. Therefore, for the above-referenced reasons, we continue to
assign the dumping margins to the exporters, not the producer of the
subject merchandise. 

Comment 25: Brokerage and Freight

The respondents argue that their submitted barge, train, trucking and
brokerage charges, on July 2, 2001, serve as better surrogate values than
the information used in the Department's preliminary determination.
Specifically, the respondents argue that the information used in the
preliminary determination, as submitted by the petitioners, was based on
an e-mail from an unknown source and is unreliable. The respondents argue
that the barge rate they have submitted is similar to the rates used in
previous Romanian steel plate cases handled by the Department where
Indonesia was used as a surrogate country. See Respondents' Case Brief, at
48.

The petitioners state that the respondents' most recent barge freight
calculations omit the cost of stevedoring. The petitioners argue that the
Department should include stevedoring expenses in barge freight costs. See
Bethlehem's Rebuttal Case Brief, at 7. The petitioners also argue that the
Department should dismiss Indonesian values for freight in favor of
Egyptian barge rates already on the record.

Department Position: We agree with the petitioners that Indonesian barge
rates should not be considered for valuing freight in this investigation.
It was specifically noted that the Department would not consider Indonesia
as a suitable surrogate for Romania in this proceeding. See Memorandum to
Gary Taverman, Director, Office 5, from Jeffrey May, Director, Office of
Policy, regarding the selection of a surrogate country (January 22, 2001).
Furthermore, because the respondents have omitted the cost of stevedoring
from their barge rate calculations, we deem the information used by the
Department to value freight in its preliminary determination to be more
comprehensive, and have therefore used this information for the
Department's final determination as well. We noted in our factors of
production memorandum for the preliminary determination that the
information used in this proceeding to value both rail and trucking rates
was accepted to value freight in the Department's prior investigation of
Titanium Sponge from the Republic of Kazakhstan. See Factors of Production
Valuation for Preliminary Determination Memorandum from Christopher Riker,
Case Analyst, to Gary Taverman, Director, Office 5 (April 23, 2001), see
also Titanium Sponge from the Republic of Kazakhstan: Final Results of
Antidumping Duty Administrative Review, 64 FR 66169 (November 24, 1999),
as discussed in Titanium Sponge from the Republic of Kazakhstan:
Preliminary Results of Antidumping Duty Administrative Review, 64 FR 48793
(September 8, 1999) (Titanium Sponge from the Republic of Kazakhstan).

Comment 26: Barter Transactions

According to the petitioners, the use of barter transactions in
calculating the respondents' rates would both violate the Department's
regulations and be inconsistent with previous practice. In the case of
valuing factors of production, the petitioners cite section 351.408 (c)(1)
of the Department's regulations which states that "where a factor is
purchased from a market economy supplier and paid for in a market economy
currency, the . . . {Department} normally will use the price paid to the
market economy supplier." The petitioners assert that in barter
transactions, the factor is not "purchased" and it is not paid for "in a
market economy currency," but in kind. Furthermore, the petitioners stress
that in the fifth and sixth administrative reviews of Cut-to-Length Carbon
Steel Plate from Romania, the Department declined to use barter
transactions in its calculations.

The petitioners also point out that Sidex has re-identified several
transactions as cash transactions in its April 6 response which had
originally been described as barter transactions in its February 26
submission and, therefore, argues that these transactions should not be
used to value raw material purchases. 

The respondents argue, after first introducing the term in their
questionnaire responses, that the term "barter transaction" is a misnomer.
The respondents argue that MEI issued invoices for steel and received
monies in accordance with those invoices, and the transactions are as
simple as that. See Respondents' Case Brief, at 45, see also Respondents'
Rebuttal Case Brief, at 2. Therefore, the respondents argue that the
Department has an obligation to use MEI's prices as reported on the
record. 

The petitioners argue that should the Department decide to assign
separate rates to Metanef, MEI, and Metagrimex, it must disregard all
barter transactions undertaken by these companies in the calculation of
constructed value and export price. The petitioners claim that any nominal
monetary values assigned by Sidex to barter transactions, even those with
market economy producers, would be arbitrary. See Bethlehem's Case Brief,
at 7. 

The respondents argue that purchases were made on a cash basis. See
Respondents' Rebuttal Brief, at 2. They further argue, that as cash
transactions, these purchases satisfy the Department's regulatory
requirements and should be used to value the respective inputs. In fact,
the respondents argue that the Department has recently accepted sales
where part of the price was paid to the exporter and part of the price was
paid to a supplier of raw materials. See Notice of Final Determination of
Sales at Less than Fair Value: Solid Agricultural Grade Ammonium Nitrate
from Ukraine, 66 FR 38632 (July 25, 2001), see also Notice of Final
Determination of Sales at Less than Fair Value: Certain Preserved
Mushrooms from Indonesia, 63 FR 72268, 73380 (December 31, 1998). 

Department Position: Although we agree with the petitioners that the
respondents re-identified several purchases of raw materials as cash
transactions which were originally described as barter transactions, we do
not believe the Department should disregard all such parallel transactions
undertaken by these companies in the calculation of constructed value and
export price. We noted that cash was exchanged between the trading
companies and the customers. See Sales and 

Factors of Production Verification of the Questionnaire Responses of
Sidex S.A. and Sidex Trading SRL, in the Antidumping Duty Investigation of
Certain Hot-rolled Carbon Steel Flat Products from Romania at 14 (August
2, 2001). The respondent simply mis-classified these sales in its initial
responses; this became apparent at verification. Therefore, we have valued
the raw materials that were purchased from market-economy suppliers at the
respective prices paid by Sidex pursuant to the Department's regulations.

Comment 27: Expenses Incurred from Imported Inputs from Market Economy
Suppliers 

The petitioners argue that the all expenses, including commissions,
incurred by Sidex for imports of raw materials from market-economy
suppliers should be accounted for in the cost of inputs for the subject
merchandise. 

The respondents argue that commissions represent a part of SG&A and thus
should not be included in the surrogate values for material inputs in the
Department's calculations. See Respondents' Rebuttal Case Brief, at 28.

Department Position: We agree that the commissions represent a part of
the company's surrogate SG&A figure. The Department has previously
determined that commissions are standard selling expenses, and deemed all
commission expenses to be included in SG&A. See Tapered Roller Bearings
and Parts Thereof, Finished and Unfinished, from the People's Republic of
China: Final Results of 1997-1998 Antidumping Duty Administrative Review
and Final Results of New Shipper Review, 64 FR 61837 (November 15, 1999).

Recommendation

Based on our analysis of the comments received, we recommend adopting the
above positions.

If this recommendation is accepted, we will publish the final
determination in the Federal Register.

AGREE____ DISAGREE____

_________________________

Faryar Shirzad
Assistant Secretary 
  for Import Administration

_________________________
Date 

_________________________________________________________________________
footnotes:

1. The petitioners who alleged ministerial errors were Bethlehem Steel
Corporation, LTC Steel Company, Inc., National Steel Corporation, and
United States Steel LLC. 

2. The petitioners in this investigation are Bethlehem Steel Corporation,
Gallatin Steel Company, IPSCO Steel Inc., LTV Steel Company, Inc.,
National Steel Corporation, Nucor Corporation, Steel Dynamics, Inc.,
United States Steel LLC, Weirton Steel Corporation, the Independent
Steelworkers Union, and the United Steelworkers of America (collectively,
the petitioners).