66 FR 18747, April 11, 2001
                                                                   A-580-809
                                                       ARP: 11/1/98-10/31/99
                                                             PUBLIC DOCUMENT
                                          IA, DAS I, Office 1;GWC, ext. 2239



MEMORANDUM TO: Bernard T. Carreau, fulfilling the duties of
               Assistant Secretary for Import Administration

FROM:          Richard W. Moreland
               Deputy Assistant Secretary 
                 for Import Administration


DATE: April 5, 2001


SUBJECT: Issues and Decision Memo for the Administrative Review of Circular
Welded Non-Alloy Steel Pipe from the Republic of Korea-November 1, 1998 through
October 31, 1999; 

Final Results 


-------------------------------------------------------------------------------


I. BACKGROUND 


On December 6, 2000, the Department of Commerce ("Department") published the
Circular Welded Non-Alloy Steel Pipe from the Republic of Korea; Preliminary
Results and Rescission in Part of Antidumping Administrative Review, 65 FR
76218 (December 6, 2000) ("Preliminary Results"). We invited parties to comment
on the Preliminary Results. The domestic interested parties, as well as the
respondents Hyundai Pipe Co., Ltd. ("HDP"), (1) SeAH Steel Corporation ("SeAH")
and Shinho Steel Co., Ltd. ("Shinho") (collectively referred to as the
"respondents"), submitted case briefs on January 19, 2001 and rebuttal briefs
on January 26, 2001. At the request of certain parties, we held a public
hearing on March 1, 2001. The period of review ("POR") is November 1, 1998,
through October 31, 1999. 



II. DISCUSSION OF ISSUES

A. General Issues

Comment 1: Inclusion of Specification in Matching Criteria

Respondents' Arguments: Shinho and SeAH argue that "specification" should be
included as one of the matching criteria, for the following reasons. First,
Shinho and SeAH contend that, in prior segments of this proceeding, they have
always reflected specification in their CONNUMs. The domestic interested
parties have never disputed the inclusion of specification in the model
matching hierarchy and the Department has never redefined the CONNUMs to
explicitly exclude specification. Accordingly, Shinho and SeAH conclude, the
Department's established practice is to include specification as a matching
criterion in this proceeding, recognizing that different specifications can
have different physical characteristics or otherwise be incompatible. (2) 

The only difference between this review and prior reviews, Shinho and SeAH
continue, is that all specifications, not just identical specifications, have
been accounted for individually. Specifically, in prior reviews the Department
matched identical specifications, where available, based on CONNUMs, but
disregarded specification when matching to similar models or when the model was
not sold in the home market. 

Shinho and SeAH further note that the Department has addressed a similar issue
for SeAH in Korean Stainless Pipe, in which the Department found specification
to be an important consideration. (3) Other cases in which the Department
recognized product differences based on both specification and grade include
Notice of Final Determination of Sales at Less Than Fair Value; Certain Cut-to-
Length Carbon-Quality Steel Plate Products from Korea, 64 FR 73196, 73200
(December 29, 1999); and Final Results of Antidumping Duty Administrative
Review; Certain Cut-to-Length Carbon Steel Plate from Finland, 63 FR 2952, 2955
(January 20, 1998) (Plate from Finland). In Plate from Finland, Shinho and SeAH
argue, the Department refused to ignore differences in specification even when
grade was identical. Specifications are utilized in the market and are
reflected in the price and use of a given product. 

Likewise, HDP argues that, consistent with the questionnaire and the
Department's past practice, the Department should match by specification. HDP
notes that the Matching Criteria Memo establishes "grade/specification" as the
most important matching criterion, with each grade consisting of a broad
grouping of product uses (e.g., ordinary pipe, conduit). The Department
considers specification in conjunction with grade so as to ensure that each
U.S. sale is compared to the most similar home market sale. Moreover, HDP
continues, in the previous review the Department expressly took specification
into account in comparing U.S. to home market sales by using a two-step process
that compared differences in grade and specification in tandem. Specifically,
if there was a difference in grade between two products and the products had
different specifications, the Department increased the magnitude of the
difference in grade. In other words, the Department treated differences in
specification as if they were differences in grade.

Domestic Interested Parties' Arguments: The domestic interested parties
counter that a "specification" matching criterion, as propounded by the
respondents, has not been used in prior reviews and should not be adopted in
this review because it distorts the model comparisons and provides no
meaningful addition to the existing list of characteristics. Grade, nominal
pipe size, wall thickness, surface finish and end-finish together fully
describe the merchandise under review without omitting any important physical
characteristic. 


Additionally, the domestic interested parties argue that the Department's
model match hierarchy describes physical differences, rather than industry
specifications, because pipe is sold in the U.S. market to U.S. specifications
and in the Korean market to Korean specifications. The fact that a sale is made
in Korea to U.S. specifications does not mean that comparable sales to Korean
specifications should be excluded from the comparison. Rather, the fact that
one specification can be sold in the other market confirms the essential
interchangeability of the products based on physical characteristics.

The domestic interested parties further argue that the respondents' contention
that the Department has previously matched by specification in this proceeding
is misleading. The domestic interested parties argue that the model matching
characteristic "grade/specification" discussed in the Matching Criteria Memo
refers to a different meaning of the term from that suggested by the
respondents. Moreover, the use of specification (as advocated by the
respondents) in matching has never been specifically argued by parties in prior
reviews or prior to the Preliminary Results. The domestic interested parties
also recognize that the Department apparently matched by specification in
Korean Stainless Pipe, but note that the domestic interested parties were not
represented by counsel in that review

Department's Position: For the final results, we have not included
specification as a matching criterion in identifying similar matches. (4) Our
reasons are as follows.

First, matching to similar sales on the basis of criteria other than
specification is consistent with our methodology in prior reviews of this
order. Though our precise approach in making similar matches may have evolved
over the course of this proceeding (reflecting changes in the Department's
standard computer program), our fundamental methodology has been to not
explicitly match according to specification when matching to similar sales. (5)
This is reflected in our questionnaire, which does not include a field for
specification among the requested matching criteria data. 

Second, there is little evidence on the record of this review addressing the
extent, if any, to which specification captures important differences in
physical characteristics not otherwise reflected in the other matching
criteria. The respondents have not demonstrated, for example, that there are
significant differences-affecting price-in the physical characteristics of A53B
versus A587. Therefore, the respondents have not articulated a compelling
reason, apart from their interpretation of our methodology in prior reviews, to
identify similar matches according to specification.

Regarding the issue of the effect of different national standards on the
matching of similar sales, we recognize that in Korean Stainless Pipe the
Department found differences between different standards to be an important
consideration in matching sales. Specifically, we stated 

(at Comment 4), "Specification defines product qualitites such as acceptable
tolerance levels in product characteristics, and how product quality is
tested.. . ." (6) However, there is no evidence on the record of this review
that considerations such as tolerance levels and product-quality testing are as
significant in the case of non-alloy pipe as in stainless steel pipe. 

Therefore, for the final results we have revised Shinho and SeAH's margin
calculations by removing specification as one of the matching criteria for
similar matches. HDP's preliminary margin calculation did not include
specification as a criterion in determining similar matches and, therefore, we
have made no changes to HDP's program in this regard. We further note, however,
that the parties' comments on this topic have raised important issues about
what the appropriate matching criteria--particularly regarding grade,
specification and standard--ought to be in this proceeding. Therefore, we may
reexamine this issue in more detail in any future reviews of this order. 

Comment 2: Exclusion of Certain Sales Entered During POR

Respondents' Arguments: The respondents argue that, in the Preliminary
Results, the Department incorrectly excluded certain sales that entered during
the POR but that had dates of sale prior to the POR. This was an error, the
respondents explain, because the statute instructs the Department to determine
a margin for each POR entry. This exclusion was also contrary to the
Department's preferred practice, as applied in Korean Pipe IV, (7) of reviewing
all entries during the POR regardless of date of sale, which has been upheld by
the CIT. (8) The respondents note that there are certain situations in which
the Department reviews sales rather than entries, namely: 1) when the entry
date for an export price sale is unknown and 2) when a constructed export price
(CEP) sale occurs after importation. However, the respondents contend, neither
of those exceptional situations are evidenced here because entry dates have
been reported for all of the POR entries and all CEP sales were made prior to
entry. Moreover, prior reviews in this proceeding have been conducted on the
basis of entries and, therefore, to change now to a sales-based approach would
distort the final results. Thus, the respondents conclude, in the instant case,
there is no justification for the Department's deviating from its preferred
practice.

Domestic Interested Parties' Arguments: The domestic interested parties argue
that the Department should continue with its approach in the Preliminary
Results of reviewing POR sales rather than entries as it is, contrary to the
respondents' contentions, fully consistent with the statute and the
Department's practice. The domestic interested parties argue, citing to NSK
Ltd. v. United States, 825 F. Supp. 315, 320 ( CIT 1993) and Ad Hoc Committee
v. United States, 914 F. Supp. 535, 544 (CIT 1995), that the Department's
practice of reviewing sales rather than entries has been affirmed by the Court
as reasonable. Moreover, the domestic interested parties contend, the cases
cited by the respondents do not conflict with the Department's margin
calculation methodology in the Preliminary Results. Specifically, Helmerich
approved the use of an entry-based approach for EP sales, but a sales-based
approach for CEP sales. In American Silicon, the Court specifically rejected
the argument that the statute requires an entry-based approach in calculating
dumping margins, even for EP sales. Moreover, the domestic interested parties
note, the respondents did not report actual entry dates in their questionnaire
responses. 

Department's Position: For the final results we have based the margin
calculations on sales of merchandise entered during the POR rather than on
merchandise sold during the POR. We have done so because of the unique
circumstances in this case. 

In the preamble to the new regulations, the Department explained its general
policy, for sales made after importation, of examining sales made during the
POR and applying any margin of dumping calculated on those sales to the entries
made during the POR. (9) The Department noted, however, that it retains the
discretion to select a different methodology where the circumstances warrant:

. . . {O}n a case-by-case basis, the Department may consider whether the
ability to link sales with entries should cause the Department to base a review
on sales of merchandise entered during the period of review, rather than on
sales that occurred during the period of review. (10) 

The Department commented that the methodology of basing a review on entries
would be inappropriate where the respondent could not tie sales to entries:

Because of the inability to tie entries to sales, the Department normally must
base its review on sales made during the period of review. Where a respondent
can tie its entries to its sales, we potentially can trace each entry of
subject merchandise made during a review period to the particular sale or sales
of that same merchandise to unaffiliated customers, and we conduct the review
on that basis. (11)

Therefore, under the Department's policy, a review of sales of merchandise
entered during the POR could only be appropriate first when the respondent
could tie sales to entries.

We note that in Mn Metal IV (12) the Department elected to base its review of
CEP sales on sales made during the POR, rather than on entries during the POR,
even though entry dates of sales were available. In doing so, the Department
made specific reference to the preamble, noting the Department's movement away
from a prior practice of attempting to match particular U.S. sales with
entries. (13) The Department noted that "the current practice of reviewing
sales to determine amounts to be assessed, and not entries, has been upheld by
the U.S. Court of International Trade in FAG Kugelfischer Georg Schafer KgaA v.
United States (1995 CIT LEXIS 209, *10 (1995), aff'd, 1996 U.S. App.LEXIS 11544
(Fed. Cir. 1996)." (14) However, Mn Metal IV merely established that while an
ability to tie sales to entries is a necessary pre-condition for basing a
review on entries, the ability to tie does not require such a methodology.
Rather, where a respondent can tie its sales to entries the Department will
base the review on entries only where other facts indicate that such a
methodology is appropriate.

In the present case there is no dispute that the respondents can tie their
sales to specific entries during the POR. This is because the respondents' U.S.
sales are made to order, the date of sale occurs prior to the date of entry,
and the merchandise is shipped directly from the factory to the final customer.
(15) Also, the respondents generally are the importer of record. This ability
to tie sales to entries is not surprising given that, prior to this review, the
respondents were also able to tie sales-then classified as EP sales-to specific
entries. In this case, the Department has re-classified these sales not because
of any change in the facts, but merely because of the intervening holding of
the Court of Appeals in AK Steel Corp. v. United States, 226 F.3d 1361 (Fed.
Cir. 2000). 

Having determined that the respondent can tie sales to entries, however, does
not completely answer the question of whether the Department should exercise
its discretion to base its review on entries rather than sales. In the Final
Regulations, the Department stated that: 

. . . {T}he determination of whether to conduct a review sales of merchandise
entered during the period of review hinges on such case-specific factors as
whether certain sales of subject merchandise may be missed because, for
example, the preceding review covered sales made during the review period or
sales may not have occurred in time to be captured by the review. Additionally,
the Department must consider whether a respondent has been able to link sales
and entries previously for prior review periods and whether it appears likely
that the respondent will continue to be able to link sales and entries in
future reviews. The Department must consider these factors because of the
distortions that could arise by switching from one method to another in
different review periods. (16)

In Korean Pipe IV, we reviewed entries rather than sales. Continuing to do so
in this review would enhance consistency in how we apply our margin results to
a particular period of entries. In fact, basing the final results on sales
during the POR rather than entries during the POR, based on the data currently
on the record, would likely result in the very kinds of distortion the Final
Regulations stated we should avoid. This is because the respondents' U.S. and
home market sales databases have been reported, as we requested, on the basis
of entries, rather than sales. Given that there can be a significant period of
time between sale date and entry date, shifting the basis of this review at
this stage may exclude a significant number of sales with entry dates within
the POR but sale dates outside the POR. Because sale date precedes entry date
under the facts of this case, those sales would not be caught by future reviews.

Therefore, given that respondent can tie entries to sales, that we have based
prior reviews on entries rather than sales, and that we did not direct the
respondents to revise their databases on a date of sale basis, we have based
the margin calculations on sales of merchandise that entered during the POR.
However, in subsequent reviews, we may reconsider this issue and may revise our
methodology at that time if the facts of that review indicate that it would be
appropriate to do so.

Comment 3: Exclusion of Certain Sales in Contemporaneous Window

Respondents' Arguments: HDP contends that, in accordance with the instructions
in the Department's questionnaire, it reported all home market sales from three
months before the date of sale of the earliest reported U.S. sale to two months
after the latest reported U.S. sale. As noted in Comment 2, however, some of
HDP's reported U.S. sales were sold prior to the POR (though entered during the
POR). Therefore, some of the reported sales in this 6-month contemporaneous
window had dates of sale earlier than 3 months prior to the POR. 

Contrary to the Department's regulations and past practice, HDP contends, the
Department improperly excluded from its analysis all home market sales with
dates of sale more than three months prior to the POR. HDP maintains that the
regulations define the "contemporaneous month," from which it selects a
matching home market sale, as either the month in which the U.S. sale was made,
the most recent of the three months before the U.S. sale was made, or the most
recent of the two months after the U.S. sale was made. (17) Further supporting
its argument, HDP cites to Porcelain-on-Steel Cookware from Mexico, 65 FR
63562, 63564 (October 24, 2000) as evidence of the Department's practice in
this regard. Thus, HDP concludes, the Department should revise its margin
calculation by including these previously-excluded home market sales.

Domestic Interested Parties' Arguments: The domestic interested parties
provided no rebuttal to this specific argument.

Department's Position: As we explained in Comment 2, for the final results in
this particular case we have included all U.S. sales that entered during the
POR. Therefore, consistent with our normal practice, our window for potential
contemporaneous matches to home market sales should include all sales that were
made within three months prior to the earliest reported U.S. sale, even though
that date of sale preceded the POR. Accordingly, we have made the necessary
revision to our final results for all respondents.

Comment 4: G&A and Interest Ratios

Domestic Interested Parties' Arguments: The domestic interested parties argue
that the respondents erred in reporting their G&A and interest ratios because
these ratios were calculated using a cost of goods sold denominator that
includes packing expenses. However, packing costs were not included in the
respondents' cost of manufacturing ("COM") to which these ratios were applied
and, therefore, the G&A and interest expenses are understated. According to the
domestic interested parties, the Department should correct this under-statement
by adding packing cost to the COM before calculating the G&A and interest
expenses for these companies. The domestic interested parties rely on the
Issues and Decision Memorandum incorporated by Brass Sheet and Strip From
Canada; Final Results of Antidumping Administrative Review, 65 FR 37520 (June
15, 2000) for the proposition that it is the Department's practice to "correct
the calculations of the G&A and interest expenses by including packing costs in
the total cost of manufacture." In addition, the domestic interested parties
rely on the Issues and Decision Memorandum incorporated by Notice of Final
Determination of Sales at Less Than Fair Value: Certain Polyester Staple Fiber
from the Republic of Korea, 65 FR 16880 (March 30, 2000) for the distinction
that "{w}hen company-wide packing costs are available our preference is to
exclude this amount from the total cost of sale. However, when company-wide
packing expenses are not available, we include packing costs in COM."

Alternatively, the domestic interested parties suggest, the Department could
deduct the packing cost from the reported cost of goods sold when calculating
the G&A and interest ratios. 

Respondents' Argument: SeAH and Shinho do not object to the adjustment
proposed by the domestic interested parties as, they argue, it has a negligible
impact on the reported ratios. SeAH and Shinho do not dispute that packing
costs are reflected in the reported cost of goods sold figure, used for
purposes of calculating G&A, but not added to the cost of manufacturing. SeAH
and Shinho suggest that the Department account for packing costs by applying
the general and financing expense factors to the sum of the cost of
manufacturing and packing. The total cost of production would then be the sum
of the cost of manufacture plus the recalculated amounts for general expenses
and financing. 

HDP argues that no adjustment is required to its reported G&A and interest
expense ratios which were used in the Preliminary Results. Although the
domestic interested parties argue that the G&A and interest expense ratios were
calculated using the cost of goods sold including packing costs, HDP reported
G&A and interest expense ratios that were calculated using the cost of goods
sold excluding packing costs. 

Department's Position: Pertaining to SeAH and Shinho, we agree with the
domestic interested parties. We note that we have addressed similar comments in
a prior review of this order. In Korean Pipe I we stated that

While we typically prefer that respondents calculate the SG&A and interest
expense factors using data contained in the financial statements, they should
have calculated the factor on the same cost basis as the COM to which they
applied the factor. As noted by domestic interested parties, respondents'
methodology for calculating the factors understates the reported SG&A and
interest expenses. To correct this problem, we have added packing expenses to
the reported COM for SeAH and Shinho to recalculate SG&A and interest expenses.
This ensures that the factors, and the COM to which we apply them, are
comparable and corrects the under-reporting of SG&A and interest expenses. (18)

Generally, the Department's practice is that where company-wide packing costs
are available, our preference is to exclude this amount from the total cost of
sales. See, e.g., Notice of Final Results and Partial Rescission of Antidumping
Duty Administrative Review: Certain Pasta From Turkey, 63 FR 68429, 68434
(December 11, 1998). However, when company-wide packing expenses are not
available, we include packing costs in COM. See, e.g., Notice of Final
Determination of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip
in Coils from Japan, 64 FR 30574, 30591 (June 8, 1999). Company-wide packing
costs are not available on the record of the instant review. Therefore, for the
final results of this review, we have added packing expenses to the reported
COM for SeAH and Shinho and recalculated G&A and interest expenses.


Pertaining to HDP, we agree that no adjustment is required to its reported G&A
and interest expense ratios. As evidence on the record indicates, HDP reported
G&A and interest expense ratios that were calculated using the cost of goods
sold excluding packing costs. (19) Therefore, there is neither reason to add
packing expenses to COM nor to adjust the G&A ratio, and no change has been
made to HDP's margin calculation in this regard.

B. HDP Specific Issues

Comment 5: HDP's Overrun Sales

Domestic Interested Parties' Arguments: The domestic interested parties argue
the Department incorrectly excluded overrun sales as a whole as outside the
ordinary course of trade, rather than examining each individual overrun sale to
determine whether that particular sale was outside the ordinary course of
trade. Citing to Laclede Steel Co. v. United States ("Laclede"), 19 CIT 1076
(CIT 1995), the domestic interested parties state that in examining overrun
sales, the Department must pay particular attention to the number of home
market customers, product standards and uses, and price and profit
differentials vis--vis sales made in the ordinary course of trade. The
domestic interested parties also suggest that the evidence must show, as in
Laclede, a low demand for overrun merchandise in the foreign market. 

According to the domestic interested parties, the court in Laclede affirmed
the Department's analysis of overrun merchandise in the remand determination.
In that case, the Department found overrun sales to be outside the ordinary
course of trade because profits were "significantly" lower for overrun pipe
than for commercial pipe; overrun pipe customers were "minuscule" in comparison
with commercial pipe customers; the average quantity of overrun pipe was "much
smaller" than of commercial pipe sales; and overrun sales comprised only "a
small percentage" of home market sales. 

However, according to the domestic interested parties, the facts in this case
do not resemble the facts in Laclede. In addition, the domestic interested
parties claim that HDP reported several times the number of overrun sales as
SeAH, evidencing a high demand for overrun pipe in Korea.

Respondent's argument: HDP argues the Department determined overrun sales, as
a whole, were outside the ordinary course of trade in a manner consistent with
past reviews of this order. According to HDP, analyzing each individual sale in
order to determine whether it should be outside the ordinary course of trade,
as suggested by the domestic interested parties, is unreasonable and
unsupported by the facts of this case. HDP suggests it is illogical to examine
each individual sale to determine whether it is outside the ordinary course of
trade since the reason for examining overrun sales is because the
characteristics of overrun sales as a whole are different from the
characteristics of regular sales. 

HDP states the domestic interested parties' argument regarding the high demand
for overrun pipe in Korea is not evidenced by the facts. In fact, according to
HDP, overrun sales constituted only a small portion of HDP's home market
transactions, indicating a lack of demand for overrun merchandise. Moreover,
HDP argues that comparing HDP's overrun sales to SeAH's overrun sales is
irrelevant; instead the relevant comparison is HDP's sales of overrun
merchandise relative to its own sales of commercial pipe. 

HDP also disagrees with the domestic interested parties' focus on the volume
of HDP's overrun sales as opposed to the conditions of the sale. (20) In this
case, according to HDP, overrun pipe is used only in crude structural
applications, whereas commercial pipe is certified to meet precise
specifications. Accordingly, HDP claims, regardless of the volume of overrun
sales, overrun pipe is subject to different sale conditions from commercial
pipe.

In making the determination to not treat overrun sales as being in the
ordinary course of trade, HDP agrees with the Department's evaluation of all of
the circumstances involved in the sale of pipe, rather then isolating only one.
(21)

Finally, HDP refutes the domestic interested parties' reading of Laclede and
their interpretation of the facts in this case. Specifically, HDP argues that
in the Laclede Remand, the Court rejected the argument that overrun sales were
within the ordinary course of trade based on the average sales quantities for
overrun sales being similar and sometimes larger than the average sales
quantities for commercial sales. (22) Moreover, according to HDP, the specific
facts of this case show that profit margins on overrun sales were significantly
lower than for commercial sales; the number of customers that purchased solely
overrun pipe was minuscule; overrun pipe constituted a small percentage of all
home market sales; and overrun pipe did not have the same quality assurances
and end uses as commercial pipe.

Department's position: In the Preliminary Results of this review, we found
overrun pipe sales to be outside the ordinary course of trade as a result of
our analysis of several factors. For the final results, in light of our
quantitative analysis and the qualitative differences between overrun pipe and
commercial pipe, we continue to conclude that overrun pipe sales are outside
the ordinary course of trade. Since a full analysis of this issue requires the
discussion of business proprietary information, we have included a complete
description of our examination of this issue in a separate memorandum. (23)
This separate memorandum is incorporated by reference into this document.

Comment 6: Application of the Arm's-length Test to HDP's Home Market Sales

Domestic Interested Parties' Arguments: The domestic interested parties argue
that, although the Department stated that it applied the arm's-length test to
HDP's home market sales, it did not. Thus, the domestic interested parties
request that the Department do so for the final results.

Respondent's argument: HDP did not comment on this issue.

Department's position: We agree with the domestic interested parties and have
applied the arm's-length test for the final results. (24)

Comment 7: Calculation of HDP's Interest Expense Ratio

Domestic Interested Parties' Arguments: The domestic interested parties argue
that the Department incorrectly based the calculation of HDP's interest expense
ratio on unconsolidated financial statements rather than consolidated financial
statements. The domestic interested parties cite to Dynamic Random Access
Memory Semiconductors of One Megabit or Above From the Republic of Korea, 65 FR
68976 (Nov. 1, 2000) and accompanying Decision Memo at Comment 19, as stating
the Department's practice of using consolidated financial statements rather
than unconsolidated financial statements. The Department's reason for using
consolidated financial statements, according to the domestic interested
parties, is the fungible nature of invested capital resources within the
consolidated group and because the controlling entity has the power to
determine the capital structure of each member within the group. The domestic
interested parties request that the Department follow past practice and
calculate HDP's interest expense ratio using consolidated financial statements.

Respondent's argument: HDP argues that the Department correctly calculated
HDP's interest expense ratio using its unconsolidated financial statements.
According to HDP, as in prior reviews, reliance on unconsolidated financial
statement is warranted because all of the consolidated subsidiary operations
are foreign entities. Therefore, HDP claims, its unconsolidated financial
statements more accurately capture the costs of manufacturing the subject
merchandise in Korea. In any event, HDP states, should the Department want to
use its consolidated financial statements, these statements are already on the
record. Finally, HDP notes, calculating the interest expense ratio from its
consolidated financial statements results in a lower interest expense ratio.

Department's position: We agree with the domestic interested parties that our
practice is to use consolidated financial statements to calculate financial
ratios. In this case, however, it appears that the consolidated financial
statements on the record have not been audited, whereas the unconsolidated
financial statements on the record have been audited. Moreover, sales and cost
of goods sold reported in the unconsolidated financial statements constitute
approximately 96% of sales and cost of goods sold reported in the consolidated
financial statements. As for the financial expenses, interest income and
interest expenses from the unconsolidated financial statements constitute 99.7%
and 98.3%, respectively, of the interest income and interest expenses from the
consolidated financial statements. Clearly, the operations of HDP were the most
significant among the consolidated companies and any effect of capital being
shifted among consolidated companies would have very little impact in this
situation.

For these reasons, we find the unconsolidated financial statements to provide
an adequate measure of interest expense in this case.

Comment 8: Product Matching Codes for End Finish

Respondent's argument: HDP argues the Department created an incorrect
hierarchy of codes for the matching criterion relating to end finish.
Specifically, HDP states that in the Preliminary Results, we coded, inter alia,
"plain end" pipe as "1," "threaded end" pipe as "2," and "threaded and coupled"
pipe as "3." HDP notes this coding hierarchy assumes threaded pipe is equally
similar to both plain end pipe and threaded and coupled pipe. According to HDP,
this hierarchy is unreasonable since the physical differences between threaded
and coupled pipe and threaded pipe is greater than the differences between
plain end pipe and threaded pipe. HDP describes threaded pipe as merely plain
end pipe that has been threaded. On the other hand, HDP describes threaded and
coupled pipe as threaded pipe with an additional piece of pipe with inner
threads attached. Therefore, according to HDP, threaded and coupled pipe is
significantly different from threaded pipe, and should be coded accordingly.
Moreover, HDP argues, in the previous administrative review, the Department
assigned code "1" for plain pipe, code "2" for threaded pipe, and "4" for
threaded and coupled pipe.

Domestic Interested Parties' Arguments: The domestic interested parties did
not comment on this issue.

Department's position: We agree with HDP. Since the difference between
"threaded end" pipe and "threaded and coupled" pipe is larger than the
difference between "threaded end" pipe and "plain end" pipe, for the final
results, we have re-coded the end finish criterion as follows: Plain end = 1;
Threaded end = 2; Threaded and coupled = 4; Vitaulic Joint = 5; and Roll
grouping = 0. (25) This is consistent with our coding in prior reviews.

Comment 9: Separate Analysis of Products Produced by HDP and Those Further
Manufactured by HDP

Respondent's argument: Due to a programming error, HDP claims the Department
did not separately analyze products produced by HDP and those further
manufactured by HDP. According to HDP, the Department intended to analyze these
products separately.

Domestic Interested Parties' Arguments: The domestic interested parties did
not comment on this issue.

Department's position: We agree with HDP and for the final results, we have
corrected the calculation program. (26)

C. SeAH & Shinho Specific Issues

Comment 10: Bad Debt Expenses

Domestic Interested Parties' Arguments: The domestic interested parties argue
that the Department should reclassify all bad debt expenses reported by SeAH
and Shinho as direct selling expenses and then recalculate SeAH's and Shinho's
direct and indirect selling expenses ratios. According to the domestic
interested parties, bad debt expenses are direct selling expenses. In support
of their assertion, the domestic interested parties cite to Notice of Final
Determination of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip
in Coils From the Republic of Korea ("Sheet"), 64 FR 30664, 30674 (June 8,
1999) for the proposition that the Department's practice is "to include sales
which incur bad debt in the database and treat the bad debt expense as a direct
selling expense when the expense is incurred on sales of subject merchandise."
The domestic interested parties further argue, citing to 19 CFR 351.410(c),
that direct selling expenses are defined as expenses which "result from, and
bear a direct relationship to, the particular sale in question." Hence, the
domestic interested parties argue, because there would be no bad debt expenses
without sales, a bad debt expense is directly related to sales.


Respondents' Argument: SeAH and Shinho argue that the domestic interested
parties' reliance on Sheet and Notice of Final Determination of Sales at Less
Than Fair Value: Stainless Steel Plate in Coils from the Republic of Korea,
("Plate"), 64 FR 15444 (March 31, 1999) is misguided for two reasons. 

First, both proceedings were subject to a WTO panel decision ruling that the
United States had acted inconsistently with the WTO Antidumping Agreement. See
United States-Anti-Dumping Measures on Stainless Steel Plate in Coils and
Stainless Steel Sheet and Strip from Korea, WT/DS179/R. 

Second, the circumstances of both Sheet and Plate were factually different
from the instant review. In Sheet and Plate, SeAH and Shinho argue, the
question was how to treat a number of unpaid, U.S. sales of subject merchandise
that were made during the period of investigation. The Department treated the
bad debt associated with those sales as a direct selling expense. However, SeAH
and Shinho argue that they have always treated home market bad debt expenses in
their indirect selling expense, in this case and in all other dumping cases in
which they have been involved. 

Furthermore, SeAH and Shinho point out that classification of home market bad
debt expenses as indirect selling expenses has never been an issue in this
case. They rely on Coalition for the Preservation of American Brake Drum and
Rotor Aftermarket Manufactures v. United States ("American Brake Drum"), 44 F.
Supp. 2d 229 (CIT 1999) in arguing that new factual issues are generally
supposed to be raised prior to the filing of case briefs. However, the domestic
interested parties failed to raise this argument in their comment letters of
September 14, May 1, April 19 and April 25, 2000, which replied to the Korean
respondents' questionnaire responses.

Additionally, SeAH and Shinho argue that their respective financial statements
have allowance accounts for bad debt. During the POR, SeAH and Shinho expensed
the allowance for bad debt. This allowance is not limited to actual expenses
incurred for bad debt during the POR since it also includes estimated bad debt.
Shinho offset the allowance by reporting income associated with redemption of
bad debt in G&A. SeAH and Shinho rely on the May 3, 2000 Decision Memorandum
incorporated by Porcelain-on-Steel Cookware From Mexico; Final Results of
Antidumping Administrative Review, 65 FR 30068 (May 10, 2000) for the
proposition that it is the Department's practice to treat expensed bad debt as
an indirect selling expense.

SeAH and Shinho argue that in the only case, other than Sheet and Plate, on
which the domestic interested parties rely to support their claim that bad debt
should be a direct selling expense, the Department verified that the bad debt
expenses tied directly to sales on the database. See Color Television Receivers
from the Republic of Korea; Final Results of Antidumping Administrative Review,
61 FR 4408 (February 6, 1996). SeAH and Shinho further argue that it is the
Department's practice to treat actual bad debt which cannot be tied to
individual sales on the database as an indirect selling expense. See
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof
From France, Germany, Italy, Japan, Romania, Sweden, and the United Kingdom;
Final Results of Antidumping Duty Administrative Reviews, 64 FR 35590 (July 1,
1999); Certain Fresh Cut Flowers From Colombia; Final Determination of Sales at
Less Than Fair Value, 52 FR 6842 (March 5, 1987); Stainless Steel Wire Rod From
Korea; Final Determination of Sales at Less Than Fair Value, 63 FR 40404 (July
29, 1998); Bicycles From the People's Republic of China; Final Determination of
Sales at Less Than Fair Value, 61 FR 19026 (April 30, 1996). Because SeAH and
Shinho reported imputed credit expenses for home market sales on the basis of
average accounts receivable, the portion of reported bad debt expenses
associated with receivables during the POR could not be linked to individual
sales. Thus, SeAH and Shinho argue, there is no legal or factual basis to
support the domestic interested parties' claims that bad debt should be
classified as a direct expense. 

Department's Position: We agree with SeAH and Shinho that their home market
bad debt expenses should be categorized as indirect selling expenses in the
instant review. Therefore, we have continued to rely on the respondents'
information as submitted. (27)

As the Department's past practice indicates, we may consider bad debt expense
to be either direct or indirect depending on the relationship between the bad
debt expense and the sale. (28) However, in cases where bad debt cannot be tied
to specific sales of subject merchandise, the Department generally treats bad
debt expenses as indirect selling expenses. (29) 

Although the Department did treat certain bad debt expenses as direct selling
expenses in Sheet and Plate, those cases are factually distinct from the
instant review. In both Sheet and Plate, POSAM classified certain unpaid sales
as a type of bad debt but did not maintain separate bad debt accounts. (30)
However, in the instant review both SeAH and Shinho do maintain separate
accounts for bad debt which, according to respondents, include allowances for
estimated bad debt. (31) Furthermore, the bad debt expenses at issue in Sheet
and Plate could be tied directly to specific sales of subject merchandise in
the United States because these sales were reversed in POSAM's books by issuing
negative invoices to its customers. (32) In the current case, the bad debt
expenses cannot be tied directly to sales of subject merchandise and no
evidence on the record indicates a similar negative invoicing system. 

Therefore, we continue to treat SeAH's and Shinho's bad debt expenses as
indirect selling expenses.

Comment 11: Non-Operating Related Income Offsetting G&A Expenses

Domestic Interested Parties' Arguments: The domestic interested parties argue
that the Department should not allow Shinho to offset certain G&A expenses with
income that is unrelated to the general operations of Shinho. The specific
income categories in question are gains on investment by equity method, (33)
gains on disposal of investment assets, (34) gains on redemption of bad debt,
and liability exemption gains. (35) Citing to Structural Steel Beams from South
Korea; Final Determination of Sales at Less Than Fair Value ("Steel Beams"), 65
FR 41437 (July 5, 2000), where the Department found that "a substantial gain
related to non-depreciable assets, which were unrelated to the general
operations of the company, could not offset G&A expenses," the domestic
interested parties argue that it is contrary to the Department's practice to
allow the respondents to lower their cost of production and constructed value
by offsetting their expenses with income that is unrelated to the general
operations of the company. 

Because gains on investment by equity method and on disposal of investment
assets were related to the company's investment activity and not to the general
operations of the company, the domestic interested parties argue, they should
not be allowed to offset the G&A expenses.

In addition, because gain on redemption of bad debt was a gain related to a
prior period the offset of such gain would distort cost reporting in the
current POR. The bad debt to which this gain relates was reported by Shinho in
accounting records for prior periods. Furthermore, the domestic interested
parties argue that the gain on redemption of bad debt does not relate to the
production of subject merchandise during the period of review and, thus, should
not be allowed as an income offset to G&A expenses in the calculation of the
G&A ratio. 

Finally, the liability exemption gain should not be allowed as an income
offset to G&A expenses because it neither related to the production cost of the
subject merchandise nor was derived from activities during the period of
review. 

Respondent's Argument: Shinho counters the domestic interested parties'
arguments by first noting that the Department has not sought additional
clarification with regard to these expense and income items, nor have the
domestic interested parties raised the issue prior to the deadline for the
submission of new factual information. Shinho relies on American Brake Drum,
which supported the Department's rejection of a petitioner's analysis of
information when submitted for the first time in its case brief, because it was
considered new factual information. 

Shinho argues that its G&A calculation properly includes these expenses and
the offsetting income associated with those expense accounts. Shinho does not
dispute that it is the Department's practice to disallow gains unrelated to the
general operations of the company. However, it contends that all of the
expenses and corresponding revenues are related to Shinho's general operations.
Shinho makes the following arguments as to why certain individual expense and
income accounts are related to Shinho's general operations.

With regard to bad debt expenses, Shinho disputes the relevance of the
following arguments made by domestic interested parties: that bad debt
redemption may include payment of prior period receivables, that expenses may
include write-offs of prior period sales, and that the allowance of bad debt
expense is an estimate of future period receivables and, therefore, not related
to Shinho's general operations during the POR. Shinho asserts that these
expenses are indirect and general as they cannot be tied to individual sales.
Therefore, Shinho argues, it properly reported the income associated with bad
debt redemption in its G&A expenses and the bad debt expenses as indirect
selling expenses.

As to liability exemption gains, Shinho asserts that the domestic interested
parties' reliance on Steel Beams is misguided. Shinho argues that its reported
liability exemption gain was not associated with future interest but was
instead a reduction to interest during the POR for early payment of bank loans
during the same period. Thus, the Department's concern in Steel Beams is
inapplicable in the instant review. Specifically, in Steel Beams, the
respondent recorded a gain on exemption of debt covering multiple accounting
periods in the POI but amortized the associated expenses over several years, a
practice the Department found distortive. In the instant review, there is no
evidence that the reported gain had any relationship to future expenses and,
thus, was properly reported. 

Shinho further asserts that it is equally the Department's practice to
disallow expenses unrelated to the general operations of the company. Thus,
Shinho argues, if the Department were to disallow the income items that the
domestic interested parties allege are unrelated to the general expenses of the
company, then the correlating expenses should also be excluded from G&A
expenses. 

Department's Position: We agree, in part, with the domestic interested parties
and, in part, with Shinho. Pursuant to section 773(b), the Department may
disregard sales made below cost of production ("COP") for determining NV
whenever such sales have been made (1) within an extended period of time in
substantial quantities, and (2) at prices which do not permit the recovery of
all costs within a reasonable amount of time. In calculating COP, the
Department must include "an amount for selling, general, and administrative
expenses based on actual data pertaining to production and sales of the foreign
like product by the exporter in question." Section 773(b)(3)(B). For the final
results, we disallowed certain non-production-related income offsets to
Shinho's G&A costs.

As we stated in Certain Cut-To-Length Carbon-Quality Steel Plate Products from
Korea; Notice of Final Determination of Sales at Less Than Fair Value, 64 FR
73196, 73209 (December 29, 1999), "In analyzing whether to include an item in
G&A, the Department considers the nature of the activity and whether the
activity is significant enough to be treated separately from the respondent's
other business activities." When determining whether it is appropriate to
include or exclude a particular item from the G&A calculation, the Department
reviews the nature of the G&A activity and the relationship between this
activity and the general operations of the company. See, e.g., Dynamic Random
Access Memory Semiconductors of One Megabit and Above From Taiwan; Notice of
Final Determination of Sales at Less Than Fair Value, 64 FR 56308, 56323
(October 19, 1999). (36)


Evidence on the record (37) indicates that Shinho's gain on investment by
equity method, gain on disposal of investment assets, and liability exemption
gain are investment-related gains which do not relate to the general operations
of the company. As stated above, the Department's past practice is to disallow
gains unrelated to general operations of the company to offset G&A expenses.
However, we agree with Shinho that because we disallowed these income items,
any expenses corresponding to these income categories should likewise be
excluded. In reviewing the information regarding G&A expenses provided by
Shinho, we have identified the following non-operating expenses as
corresponding to the three excluded non-operating income categories: "loss on
disposal of marketable securities" and "loss on valuation of investment
assets." Accordingly, we have excluded these expenses on the basis that they
are not related to the general operations of Shinho.

With regard to gains on redemption of bad debt, as noted in Comment 10, we
consider bad debt expenses to be properly reported as indirect selling
expenses, not G&A expenses, and have included them as such in Shinho's COP.
There is relatively little information on the record as to what these
redemption gains are related to or how they are calculated. Shinho did note, in
its January 26, 2001 rebuttal brief (at 11), that the reported bad debt
expenses were "not limited to actual expenses incurred for bad debt during the
POR (which may, in fact, be related to sales in prior periods) but included, in
larger part, {an} allowance for estimated bad debt." Shinho further noted (at
15) that "the allowance portion of the bad debt expense is, by its very nature,
an estimate of future period receivables." 

Therefore, the limited information on the record regarding these redemption
gains indicates that these gains were corrections to, or reversals of, write-
offs of receivables in prior years. In other words, each period Shinho
estimates the value of uncollectible sales or receivables, presumably based on
prior years' experience, and records that estimate as bad debt expense in that
period. It also writes off certain outstanding receivables by making
appropriate adjustments to its allowance account. If Shinho subsequently
receives payment for a receivable written off as bad debt in a prior period, it
records the difference as a gain in the subsequent period (i.e., the period in
which the payment is received). The essential point here, however, is that,
presumably, Shinho's recorded bad debt expense in any given period is the best
estimate available of the actual expense for that period. There is no reason to
believe the actual bad debt expense will be any higher or lower than the
estimated expense and, therefore, this estimate should not be lowered due to a
correction or adjustment to previous years' write-offs. Thus, for the final
results we have not used the reported gains on redemption of bad debt to offset
either the bad debt indirect selling expense or the G&A expenses.

Comment 12: Arm's-Length Test Should be Rerun for Certain of SeAH's Sales

Respondent's Arguments: SeAH asserts that the Department performed the arm's-
length test for sales to its affiliate, Haiduk Steel Industrial Co., Ltd.
("HSI"), based on customer code rather than by customer, as is the Department's
practice. Specifically, SeAH argues that nine (38) distinct customer codes
should be collapsed into one customer code for purposes of the arm's-length
test because they represent one customer, HSI. SeAH contends that despite
spelling differences in English translations of the name, they are all part of
HSI. Moreover, these customers are distinguished based solely on customer
category (i.e., end-user or distributor), location, or both. In Certain
Corrosion-Resistant Carbon Steel Flat Products From Japan: Final Results of
Antidumping Duty Administrative Review 65 FR 8935, 8945 (February, 23, 2000)
("Certain Carbon Steel Flat Products"), the Department collapsed "those
customer codes which represent division or delivery points into a single
customer, because it is the Department's practice to analyze sales on a
customer-specific basis." SeAH asserts that the situation is the same in the
instant case and thus, the Department should rerun its arm's-length test
accordingly.

Domestic Interested Parties' Comments: The domestic interested parties
provided no arguments on this issue. 

Department's Position: We agree with the respondents. There is sufficient
evidence on the record to indicate that these nine customer codes do, in fact,
represent a single customer. Accordingly, we are considering these nine
customer codes to represent a single customer, HSI, for purposes of the arm's-
length test. We have made the appropriate changes in the margin calculations
for SeAH. 

Comment 13: CEP Offset for Shinho and SeAH

Respondents' Arguments: Shinho and SeAH argue that the Department was wrong in
not granting them a CEP offset in the Preliminary Results because the selling
functions for home market sales, they contend, are more advanced than those for
U.S. sales. Specifically, Shinho and SeAH performed certain selling functions
for their home market sales that their U.S. affiliates, Shinho America ("SA")
and Pusan Pipe America ("PPA"), respectively, performed in the U.S. market for
their U.S. sales. According to Shinho and SeAH, these selling functions
include, the extension of credit, price negotiation, invoicing, home market
research, and the arranging of freight. 

Shinho and SeAH explain that the Department made the comparison of selling
functions in the two markets after CEP deductions were made on the U.S. side
for those activities performed in the United States. Because the selling
functions associated with their U.S. sales are performed in the U.S. by their
U.S. affiliates, Shinho and SeAH reason that once CEP deductions are removed
from the comparison, the selling functions performed by Shinho and SeAH in the
home market are clearly greater than any remaining on the U.S. side. Thus,
Shinho and SeAH conclude, the home market is at a more advanced level of trade
("LOT") than the U.S. market. Shinho and SeAH cite to Industrial Nitrocellulose
from the United Kingdom; Notice of Final Results of Antidumping Duty
Administrative Review 65 FR 6151 (February 8, 2000) in which the Department
granted a CEP offset when selling functions for the home market were found to
be more advanced than those for the U.S. market. Moreover, they note that in
Stainless Steel Pipe From Korea; Preliminary Results of Antidumping Duty
Administrative Review 64 FR 72645, 72647 (December 28, 1999), the Department
granted SeAH a CEP offset based on "identical facts and identical functions."
Therefore, these respondents conclude, a CEP offset is likewise warranted in
the instant review.


Domestic Interested Parties' Arguments: The domestic interested parties state
that the Department should reject the respondents' request for a CEP offset for
two reasons. First, the domestic interested parties argue, Shinho and SeAH
wrongly assume that the Department must exclude the activities of their U.S.
affiliates in evaluating whether sales in the home market are made at a more
advanced LOT than those made in the United States. The domestic interested
parties contend that this methodology was rejected by the CIT in Borden, (39)
in which the Court stated that LOT must be evaluated prior to the deduction of
indirect selling expenses.

Second, the domestic interested parties argue that substantial differences in
selling functions, while required, are not necessarily sufficient to establish
different levels of trade. The domestic interested parties cite to the
preliminary results of Korean Pipe IV, (40) where the Department found Shinho's
selling functions to be at a single stage of marketing in the home market and
in the U.S. market and "not substantially dissimilar." The domestic interested
parties note that Shinho did not contest that finding in the briefing stage of
that review. Likewise, the domestic interested parties continue, the Department
did not grant a CEP offset to SeAH in Korean Pipe IV. Neither Shinho nor SeAH,
the domestic interested parties contend, has presented data in the instant
review demonstrating that their selling activities in the two markets have
changed in any significant way since previous reviews. Thus, the domestic
interested parties urge the Department to continue to reject these respondents'
request for a CEP offset.

Department's Position: We are not granting a CEP offset in these final results
to either Shinho or SeAH. As explained in the Preliminary LOT Analysis, (41)
"{w}hile the starting price for CEP is that of a sale to an unaffiliated buyer,
this construction of the export price results in a price that would have been
charged if the importer had not been affiliated. Thus, for both EP and CEP, the
relevant transaction for LOT is the sale from the exporter to the first U.S.
purchaser, whether or not affiliated." (42) We, therefore, disagree with the
domestic interested parties' contention that the CEP expenses should not be
deducted before analyzing differences in LOT.

We also disagree, however, with Shinho and SeAH's contention that, based on
this level of comparison, there are differences in the LOTs of the two markets
which would merit a CEP offset. As set forth in section 351.412(f) of the
Department's regulations, a CEP offset will be granted where (1) normal value
is compared to CEP sales, (2) normal value is determined at a more advanced LOT
than the LOT of the CEP, and (3) despite the fact that the party has cooperated
to the best of its ability, the data available do not provide an appropriate
basis to determine whether the difference in LOT affects price comparability.
We do not find that Shinho or SeAH performed more advanced selling functions
for sales in the home market than for their sales to their U.S. affiliates and,
therefore, these respondents have not met criterion 2 (above) for CEP offset
eligibility. (43) 

Furthermore, the domestic interested parties are correct in stating that
substantial selling differences, while required, are not necessarily sufficient
to establish different levels of trade. We agree with the domestic interested
parties that neither Shinho nor SeAH has presented evidence showing significant
changes in selling functions performed in the instant review as compared with
the prior review. With respect to the CEP offset granted in Stainless Steel
Pipe, we recognize that in that proceeding, the Department granted a CEP offset
to the respondent SeAH. However, the facts in this case, which involves
different subject merchandise and potentially different selling functions from
those in Stainless Steel Pipe, show that both Shinho and SeAH had similar LOTs
for their respective home and U.S. affiliate sales. Accordingly, we have not
granted a CEP offset to either of these respondents. 



III. RECOMMENDATION

Based on our analysis of the comments received, we recommend adopting all of
the above positions and adjusting all related margin calculations accordingly.
If these recommendations are accepted, we will publish the final determination
in the Federal Register.


AGREE ___________    DISAGREE ___________

_____________________________________


Bernard T. Carreau, fulfilling the duties of 
Assistant Secretary for Import Administration


_____________________________________
(Date) 

__________________________________________________________________________
footnotes:

1. In a letter dated January 5, 2001, HDP informed the Department that its
corporate name would change to Hyundai Steel Company effective February 1,
2001. On February 27, 2001, the Department initiated a changed circumstances
review to determine whether entries naming "Hyundai Hysco" as manufacturer or
exporter should receive the cash deposit rate currently applied to HDP. Certain
Circular Welded Non-Alloy Steel Pipe from the Republic of Korea; Initiation of
Changed Circumstances Antidumping Duty Administrative Review, 66 FR 12460
(February 27, 2001). Pending a final determination in that changed
circumstances review, we will continue to refer to the respondent in the
instant review as HDP. 

2. See Memorandum to File Regarding Matching Criteria for Certain Circular
Welded Non-alloy Steel Pipe from the Republic of Korea (June 24, 1994)
("Matching Criteria Memo") attached to the questionnaire at Appendix VI. 

3. Final Results of Antidumping Duty Administrative Review; Certain Welded
ASTM A-312 Stainless Steel Pipe from the Republic of Korea, 64 FR 30071 (May
10, 2000) in the accompanying Issues and Decision Memorandum (April 26, 2000)
at Comment 4. 

4. We note that in the course of this review, there appears to be some
confusion among parties regarding the terms "grade" and "specification." For
the purposes of explaining in this decision memo the department's position on
matching criteria, we use the term "grade" to refer to general pipe type, i.e.,
ordinary, structural and conduit. The term "specification" refers to particular
pipe model, e.g., A53AS, SPPD, UL6. The term "standard" refers to national
classification system, e.g., ASTM, KS, JIS. 

5. See e.g., Exhibit 3 of the January 26, 2001 SeAH/Shinho Rebuttal Brief. 

6. Other steel cases where the Department has matched by individual
specification include, e.g., Certain Cut-to-Length Carbon Steel from Finland;
Final Results of Antidumping Duty Administrative Review, 62 FR 18468, 18469
(April 15, 1997); Notice of Final Determination of Sales at Less Than Fair
Value; Certain Cut-to-Length Carbon-Quality Steel Plate Products from Korea, 64
FR 73196, 73200 (December 29, 1999). 

7. Circular Welded Non-Alloy Steel Pipe From the Republic of Korea; Final
Results of Antidumping Duty Administrative Review, 63 FR 32833 (June 16, 1998)
("Korean Pipe IV"). 

8. Helmerich & Payne, Inc. v. United States, 24 F. Supp. 2d 304, 312-313 (CIT
1998) ("Helmerich") and American Silicon Technologies v. United States, CIT
Slip Op. 99-34 (April 9, 1999) at 8-9 ("American Silicon"). 

9. See 19 CFR 351.212 and the preamble to that section of Antidumping Duties;
Countervailing Duties; Final Rule, 62 FR 27296, 27314-15 (May 19, 1997) ("Final
Regulations"). 

10. Final Regulations, 62 FR at 27314. 

11. Id. 

12. Manganese Metal From the People's Republic of China; Final Results of
Antidumping Administrative Review, 66 FR 15076 (March 15, 2001). 

13. Mn Metal IV, 66 FR at Comment 26. 

14. Id. 

15. In discussing the problem of tying sales to entries in CEP situations, the
preamble appears to contemplate CEP situations in which merchandise is entered
into the United States and subsequently sold from inventory to unaffiliated
purchasers. The Department observed that reviewing sales of the merchandise
entered during the POR for CEP sales would be inappropriate because, "in the
case of CEP sales, the delay between importation and resale to an unaffiliated
customer means that merchandise entered during the review period often is
different from the merchandise sold during that period." Final Regulations, 62
FR at 27314. In the present case, the merchandise is sold by the U.S.
affiliate, and then manufactured in Korea and shipped directly to the customer,
eliminating the problem of tying which can develop when the sales occur after
importation. 

16. Id. 

17. 19 CFR 351.414(e)(2). 

18. Circular Welded Non-Alloy Steel Pipe From the Republic of Korea; Final
Results of Antidumping Duty Administrative Review and Partial Termination of
Administrative Review, 62 FR 55574, 55581 (October, 27 1997) ("Korean Pipe I"). 

19. See HDP Supplemental Questionnaire Response at 25 (June 28, 2000). 

20. HDP cites to several cases where the Court of International Trade (CIT)
held that the conditions of sale are the relevant factors in determining
whether sales are within the ordinary course of trade, not whether such sales
are ordinarily made. See Mantex, Inc. v. United States, 841 F. Supp. 1290, 1306
(CIT 1993); Cemex, S.A. v. United States, 19 CIT 587, 590 (1995). 

21. HDP cites to Murate Mfg. Co. v. United States, 820 F. Supp 603, 607 (CIT
1993) and to Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat
Products from Korea, 62 FR 18404, 18463 as saying that in determining whether
sales are within the ordinary course of trade, the Department typically
examines several factors, none of which are dispositive. 

22. Laclede Steel Co. v. United States, 18 CIT 965, 968 (CIT 1994). 

23. See Memorandum to Bernard T. Carreau from Richard W. Moreland, "Analysis
of Overrun Sales for Hyundai Pipe Co., Ltd," (April 5, 2001). 

24. See Final Results Calculation Memorandum for HDP (April 5, 2001) (Final
Calc Memo) for the actual changes made to the calculation program. 

25. See Final Calc Memo for the actual changes made to the calculation program. 

26. See Final Calc Memo for the actual changes made to the calculation program. 

27. Shinho  B-D Questionnaire Responses at B-21 (March 24, 2000), SeAH  B-D
Questionnaire Responses at B-29 (March 24, 2000). 

28. See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From France, Germany, Italy, Japan, Romania, Sweden, and the United
Kingdom; Final Results of Antidumping Duty Administrative Reviews, 64 FR 35590,
35607 (July 1, 1999). 

29. See, e.g., Bicycles From the People's Republic of China; Final
Determination of Sales at Less Than Fair Value, 61 FR 19026, 19041 (April 30,
1996). 

30. Sheet, at 30674. 

31. Shinho  B-D Questionnaire Responses at Exhibit A-19 (March 24, 2000),
SeAH Supplemental Questionnaire Responses at Exhibit A-28 (June 30, 2000). 

32. Sheet, supra note 30. 

33. The equity method is used to adjust the carrying amount of an investment
in which the owner holds between 20 and 50 percent ownership. 

34. Gains on disposal of investment assets occur when an investor sells an
investment at higher than the carrying amount of the investment at the time of
sale. These pertain to investments not accounted for using the equity method. 

35. In its rebuttal brief, Shinho indicates that "gain on redemption of bad
debt" is a receipt of payment on pre-POR receivables that have already been
written off as bad debt. Shinho also indicates that "liability exemption gain"
is a reduction to reported POR interest expense due to an early repayment of
bank loans during the POR. 

36. See also, Final Determination of Sales at Less Than Fair Value: Oil
Country Tubular Goods from Korea, 60 FR 33561, 33567 (June 28, 1995), where the
Department stated that its practice is to not include investment-related gains,
losses, and expenses in the calculation of G&A expenses. 

37. See e.g., Shinho Section B-D Questionnaire Responses at Exhibit D-17
(March 24, 2000). 

38. See Memorandum to File from Sibel Oyman "SeAH's Customer Codes" (March 5,
2001). 

39. Borden, Inc. v. United States ("Borden"), 4 F. Supp. 2d 1221, 1240-41 (CIT
1998). The domestic interested parties also cite to various other CIT decisions
which, they claim, affirm Borden with regard to this issue. 

40. Circular Welded Non-Alloy Steel Pipe from the Republic of Korea;
Preliminary Results of Antidumping Administrative Review, 62 FR 64559, 64562
(December 8, 1997). 

41. See Memorandum from Team to John Brinkmann, "Preliminary Level of Trade
Analysis" (November 29, 2000). 

42. The Court of International Trade has held that the Department's practice
of determining levels of trade for CEP transactions after CEP deductions is an
impermissible interpretation of section 772(d) of the Act. See Borden, Inc. v.
United States, 4 F.Supp.2d 1221 (1998); and Micron Technology, Inc. v. United
States, 40 F.Supp.2d 481 (1999). The U.S. Court of Appeals for the Federal
Circuit, however, has reversed the Court of International Trade's holdings in
both Micron and Borden on the level of trade issue. The Federal Circuit held
that the statute unambiguously requires Commerce to deduct the selling expenses
set forth in section 772(d) from the CEP starting price prior to performing its
LOT analysis. See Micron Technology, Inc. v. United States, Court Nos. 00-1058,-
1060 (Fed. Cir. March 7, 2001); see also Borden, Inc. v. United States, Court
Nos. 99-1575,-1576 (Fed. Cir. March 12, 2001) (unpublished opinion).
Consequently, the Department will continue to adjust the CEP, pursuant to
section 772(d), prior to performing the LOT analysis, as articulated by the
Department's regulations at 351.412. 

43. For a detailed comparison of the LOTs of the respondents' home market and
U.S. sales, see Memorandum to Susan H. Kuhbach "Final LOT Memorandum for SeAH
Steel Corp. and Shinho Steel Co., Ltd." (April 5, 2001).