67 FR 31212, May 9, 2002

DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-834]
 
Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Cold-Rolled Carbon Steel 
Flat Products From Germany

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

EFFECTIVE DATE: May 9, 2002.

FOR FURTHER INFORMATION CONTACT: Charles Rast at (202) 482-1324, Anya 
Naschak at (202) 482-6375, Shireen Pasha at (202) 482-0193, or Abdelali 
Elouaradia at (202) 482-1374, Antidumping and Countervailing Duty 
Enforcement Group III, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are to the provisions effective January 1, 
1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department of Commerce's (Department) 
regulations are to the regulations codified at 19 CFR part 351 (April 
2001).

Preliminary Determination

    We preliminarily determine that cold-rolled carbon steel flat 
products (cold-rolled steel) from Germany are being, or are likely to 
be, sold in the United States at less than fair value (LTFV), as 
provided in section 733(b) of the Act. The estimated margins of sales 
at LTFV are shown in the ``Suspension of Liquidation'' section of this 
notice.

Case History

    On October 18, 2001, the Department initiated antidumping duty 
investigations of imports of cold-rolled steel from Argentina, 
Australia, Belgium, Brazil, France, Germany, India, Japan, Korea, the 
Netherlands, New Zealand, the People's Republic of China, the Russian 
Federation, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and 
Venezuela. See Initiation of Antidumping Duty Investigations: Certain 
Cold-Rolled Carbon Steel Flat Products From Argentina, Australia, 
Belgium, Brazil, France, Germany, India, Japan, Korea, the Netherlands, 
New Zealand, the People's Republic of China, the Russian Federation, 
South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela, 
66 FR 54198, (October 26, 2001) (Initiation). Also on October 18, 2001, 
based on information provided in the petition, we found ``reasonable 
grounds to believe or suspect'' that sales of the foreign like products 
in the markets of Belgium, France, Germany, India, Japan, Korea, the 
Netherlands, Thailand, and Turkey were made at prices below their 
respective costs of production (COP) within the meaning of section 
773(b)(2)(A)(i) of the Act. Accordingly, the Department initiated 
country-wide cost investigations on sales of the foreign like products 
in these markets. Since the initiation of this investigation the 
following events have occurred.
    The Department set aside a period for all interested parties to 
raise issues regarding product coverage. From October 30, 2001 through 
November 8, 2001, National Steel Corporation, Bethlehem Steel 
Corporation, LTV Steel Company, Inc., United States Steel Corporation, 
Nucor Corporation (collectively petitioners), and Kern Liebers USA, 
Inc., filed comments proposing clarifications to the scope of these 
investigations. Also, from November to December 2001, the Department 
received numerous responses from interested parties aimed at clarifying 
the scope of the investigations.
    On November 13, 2001 the United States International Trade 
Commission (ITC) notified the Department of its affirmative preliminary 
injury determination in this case.
    The Department subsequently issued sections A through E of its 
antidumping questionnaire to Thyssen Krupp Stahl AG (TKS) on November 
16, 2001. The Department also issued corrected pages of the model 
matching criteria on November 26, 2001.
    On December 5, 2001, December 14, 2001, and February 8, 2002, TKS 
provided some information regarding certain home market downstream 
sales and home market sales of subject merchandise by two affiliated 
producers, and requested that the Department exempt it from reporting 
further information on these sales. On December 12, 2001 and December 
27, 2001 in response to TKS' requests, and on February 15, 2002 (in the 
Department's supplemental sections B and C questionnaire), the 
Department indicated in writing that TKS should fully report these home 
market sales.
    TKS and its affiliated companies Thyssen Krupp Stahl North America 
(TKSNA) and Thyssen Inc. (TINC) (collectively Thyssen) submitted their 
response to section A of the questionnaire on December 21, 2001. On 
January 14, 2002, we received responses to sections B through E of the 
questionnaire from Thyssen.
    Petitioners filed comments on Thyssen's section A questionnaire 
response on January 7, 2002. They filed comments on sections B through 
E of the questionnaire on January 28, 2002.
    The Department issued a supplemental questionnaire for section A to 
Thyssen on January 18, 2002. On

[[Page 31213]]

February 15, 2002, we issued supplemental questionnaires for sections B 
through E to Thyssen.
    Thyssen submitted its response to the supplemental section A 
questionnaire on February 8, 2002. We received Thyssen's response to 
the supplemental sections B through E questionnaires on March 19, 2002.
    Petitioners filed comments on Thyssen's supplemental section A 
questionnaire response on February 15, 2002, and February 22, 2002. 
Petitioners filed additional comments on Thyssen's questionnaire 
responses on March 28, 2002, April 1, 2002, April 5, 2002, and April 
12, 2002.
    The Department issued a second supplemental questionnaire to 
Thyssen for section A on February 28, 2002. Thyssen submitted its 
response on March 19, 2002. Thyssen filed additional comments on April 
10, 2002.
    On February 7, 2002, petitioners made a timely request for a fifty-
day postponement of the preliminary determination pursuant to Section 
733(c)(1)(A) of the Act. On February 14, 2002, we postponed the 
preliminary determination until no later than April 26, 2002. See 
Certain Cold Rolled Carbon Steel Flat Products From Argentina, 
Australia, Belgium, Brazil, France, Germany, India, Japan, Korea, the 
Netherlands, New Zealand, the People's Republic of China, the Russian 
Federation, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and 
Venezuela; Notice of Postponement of Preliminary Determinations in 
Antidumping Duty Investigations, 67 FR 8227 (February 22, 2002).

Period of Investigation

    The period of investigation (POI) is July 1, 2000, through June 30, 
2001. This period corresponds to the four most recent fiscal quarters 
prior to the filing of the petition (i.e., September 28, 2001), and is 
in accordance with Section 351.204(b)(1) of the Department's 
regulations.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to Section 735(a)(2) of the Act, on April 19, 2002, 
Thyssen requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination by sixty (60) days, and extend the provisional measures 
to not more than six months. In accordance with 19 CFR 351.210(b), 
because: (1) Our preliminary determination is affirmative, (2) Thyssen 
accounts for a significant proportion of exports of the subject 
merchandise, and (3) no compelling reasons for denial exist, we are 
granting the respondent's request and are postponing the final 
determination until no later than 135 days after the publication of 
this notice in the Federal Register. Suspension of liquidation will be 
extended accordingly.

Scope of Investigation

    For purposes of this investigation, the products covered are 
certain cold-rolled (cold-reduced) flat-rolled carbon-quality steel 
products. For a full description of the scope of this investigation, as 
well as a complete discussion of all scope exclusion requests submitted 
in the context of the on-going cold-rolled steel investigations, please 
see the ``Scope Appendix'' attached to the Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina, published concurrently with 
this preliminary determination.

Facts Available (FA)

    In accordance with Section 776(a) of the Act, we preliminarily 
determine that the use of partial ``facts available'' is warranted for 
purposes of calculating Thyssen's dumping margins. Section 776(a)(2)(A) 
of the Act provides that ``if any interested party or any other 
person--(A) withholds information that has been requested by the 
administering authority * * *, (B) fails to provide such information by 
the deadlines for the submission of the information or in the form and 
manner requested, subject to subsections (c)(1) and (e) of Section 782, 
(C) significantly impedes a proceeding under this title, or (D) 
provides such information but the information cannot be verified as 
provided in Section 782(i), the administering authority * * * shall, 
subject to Section 782(d), use the facts otherwise available in 
reaching the applicable determination under this title.''
    In addition, Section 776(b) of the Act provides that adverse 
inferences may be used in selecting the facts otherwise available when 
a party has failed to cooperate by not acting to the best of its 
ability to comply with requests for information. See also Statement of 
Administrative Action accompanying the URAA, H.R. Rep. No. 103-316, 
vol. 1, at 870 (1994) (SAA).
    Where the Department determines that a response to a request for 
information does not comply with the request, Section 782(d) of the Act 
provides that the Department will so inform the party submitting the 
response and will, to the extent practicable, provide that party the 
opportunity to remedy or explain the deficiency. If the party fails to 
remedy the deficiency within the applicable time limits, the Department 
may, subject to 782(e), disregard all or part of the original and 
subsequent responses, as appropriate. Section 782(e) provides that the 
Department ``shall not decline to consider information that is 
submitted by an interested party and is necessary to the determination 
but does not meet all the applicable requirements established by the 
administering authority'' if the information is timely, can be 
verified, is not so incomplete that it cannot be used, and if the 
interested party acted to the best of its ability in providing the 
information. Where all of these conditions are met, and the Department 
can use the information without undue difficulties, the statute 
requires it to do so.
    Thyssen has refused after repeated requests (in the original 
questionnaire, two subsequent letters, a supplemental questionnaire, 
and meetings with Department personnel) by the Department to report its 
downstream sales by affiliated resellers in the home market, even 
though Thyssen's sales to its affiliates fail the arm's-length test and 
the data supplied by Thyssen does not demonstrate that these downstream 
sales will not match to U.S. sales (see Sales Analysis Memorandum dated 
April 26, 2002 (Sales Analysis Memo)). For downstream sales by three of 
Thyssen's affiliated service centers, Thyssen only provided an 
abbreviated sales listing limited to customer code, consignee, order 
number, invoice number, material number, material code, width, 
quantity, value, and plant. The partial downstream sales information 
provided by Thyssen is not sufficient for the Department's model match 
or margin calculation purposes. Specifically, Thyssen has failed to 
provide any model match characteristics for any of its reported 
downstream sales, other than the ``width'' criterion, which is eighth 
in importance in the model match hierarchy out of fourteen total 
characteristics. The information provided by Thyssen regarding these 
sales indicates that the resales fall within certain width ranges as 
defined by the Department's model matching criteria. Because Thyssen 
also made sales in the United States within these same width ranges, 
the Department is unable to determine with certainty whether a 
substantial portion of Thyssen's downstream sales potentially match to 
U.S. sales sold in those widths. Further, Thyssen has provided no 
selling expense information whatsoever for its reported downstream 
sales. Therefore, the Department is unable to

[[Page 31214]]

determine with certainty the potential distortive effect of these 
unreported downstream sales on the normal values of home market sales.
    Similarly, for U.S. sales, Thyssen has reported only partial 
information for certain ``further processed'' U.S. sales made through 
one affiliate. Thyssen maintained that the Department should apply the 
special rule in Section 772(e) of the Act, thereby excusing Thyssen 
from reporting complete sales information for these further processed 
sales by a single affiliate. However, the information provided to the 
Department to date by Thyssen does not demonstrate that the value added 
in the United States is likely to ``exceed substantially the value of 
the subject merchandise,'' which the Department has determined to be a 
value added of ``at least 65 percent of the price charged to the first 
unaffiliated purchaser for the merchandise as sold in the United 
States'' (see 19 CFR 351.402(c)(2)). Therefore, Thyssen does not 
qualify for the special rule in Section 772(e) of the Act.
    Accordingly, the Department requested that Thyssen report all 
complete sales and further manufacturing information for all further 
manufactured sales made through this one affiliate. Thyssen provided 
purchase orders, production costs, shipment records, a narrative 
methodology for calculating the adjustments and expenses requested by 
the Department in its section C questionnaire for these further 
manufactured sales, but these sales were not included in their revised 
sales database. Thyssen also supplied a cross-reference to the numerous 
invoices needed for the Department to calculate these expenses for 
margin calculation purposes. However, Thyssen did not provide 
information on the further manufacturing process, financial statements, 
or balance sheets necessary for properly analyzing the information that 
was provided.
    Therefore, for purposes of the preliminary determination, the 
Department has determined that Thyssen has not provided all information 
necessary to this investigation. Consequently, the application of 
partial facts available is appropriate with respect to downstream sales 
by Thyssen's affiliated resellers in the home market, and to sales by 
one affiliated further processor in the U.S. market. Moreover, the 
pervasive level of deficiencies in Thyssen's questionnaire responses, 
as well as Thyssen's failure to provide adequate explanations for its 
claimed inability to provide requested information or in proffering 
reasonable alternative methodologies for reporting data it deemed too 
``burdensome'' to provide indicates that Thyssen has not acted to the 
best of its ability in responding to the Department's questionnaires. 
Therefore, the Department is applying an adverse inference, pursuant to 
Section 776(b).
    As facts available for the missing downstream sales, we have 
segregated the home market sales into width ranges and calculated the 
highest gross unit price (GRSUPRH) reported by control number (CONNUM) 
for sales in specific width ranges separately, where there are 
potential matches to Thyssen's U.S. sales. These width ranges 
correspond to a portion of the widths sold by Thyssen's affiliated 
service centers (see Thyssen's March 19, 2002 supplemental section B 
response). In addition, we have determined to apply the lowest or 
highest adjustments--whichever is adverse--for the CONNUMs defined 
above. The highest GRSUPRH and the adverse adjustments were applied to 
all sales within those width ranges and the revised amounts were used 
to calculate normal value (NV).
    For sales by one of Thyssen's affiliated U.S. resellers that 
Thyssen failed to report as discussed above, we have identified the 
highest non-aberrational margin for prime sales in the U.S. market and 
applied the resulting margin to all sales to the one U.S. affiliated 
reseller as a surrogate for the unreported further processed sales.

Product Comparisons

    Pursuant to Section 771(16) of the Act, all products produced by 
the respondent that are within the scope of the investigation, as 
specified in the scope section, and were sold in the comparison market 
during the POI, are considered to be foreign like products. We have 
relied on fourteen criteria, in descending order of importance, to 
match U.S. sales of subject merchandise to comparison-market sales of 
the foreign like product: whether hardened or not; whether painted with 
poly vinylidene floride, other paint, or not; carbon content level; 
quality; yield strength; thickness; thickness tolerance; width; whether 
mill, slit, deburred edged, or other edge; whether coiled or cut sheet; 
whether temper rolled or not temper rolled; whether stretch or tension 
leveled or not; whether annealed open coil, other annealed, or not 
annealed; and whether finished with bright, embossed/texturized, or 
matte surface. Where there were no sales of identical merchandise in 
the home market to compare to U.S. sales, we compared U.S. sales to the 
next most similar foreign like product, based on the characteristics 
and characteristic subcategories indicated in the Department's November 
16, 2001, questionnaire.

Fair Value Comparisons

    To determine whether sales of cold-rolled steel from Germany to the 
United States were made at less than fair value, we compared 
constructed export price (CEP) to the normal value (NV), as described 
in the ``Constructed Export Price'' and ``Normal Value'' sections of 
this notice, below. In accordance with Section 777A(d)(1)(A)(i) of the 
Act, we calculated weighted-average CEPs for comparison to weighted-
average NVs.

Date of Sale

    For its home market and U.S. sales, Thyssen reported the date of 
invoice as the date of sale, in keeping with the Department's stated 
preference for using the invoice date as the date of sale. Thyssen 
stated that the invoice date best reflects the date on which the 
material terms of sale are established and that price and/or quantity 
can and do change between order date and invoice date. However, 
petitioners have alleged that the sales documentation indicates that 
the order date appears to be the date when the material terms of sale 
are set for the majority of Thyssen's sales of cold-rolled steel. 
Consequently, on January 18, 2002, and February 15, 2002, the 
Department requested that Thyssen provide additional information 
concerning the nature and frequency of price and quantity changes 
occurring between the date of order and date of invoice. We also asked 
Thyssen to report order date for all home market and U.S. sales and to 
ensure that all sales with order or invoice dates within the POI are 
reported.
    On March 19, 2002, Thyssen reiterated that invoice date is the 
appropriate date of sale and stated that it is unable to gather the 
data within a reasonable period of time and that Thyssen did not 
maintain the appropriate order date information in the normal course of 
business in its computer system. Thyssen did not report order date for 
home market sales or U.S. sales. For purposes of the preliminary 
determination, the Department has decided to use Thyssen's reported 
invoice date as the date of sale for both home market and U.S. sales. 
We intend to fully examine this issue at verification, and we will 
incorporate our findings, as appropriate, in our analysis for the final 
determination. If we determine that order confirmation, or another date 
other than invoice date, is the appropriate date of sale, we may resort

[[Page 31215]]

to facts available for the final determination to the extent that this 
information has not been reported.

Constructed Export Price

    Thyssen reported as CEP transactions all sales of subject 
merchandise to TKSNA and TINC. TKSNA and TINC then resold the subject 
merchandise to affiliated and unaffiliated customers in the United 
States.
    We calculated CEP, in accordance with subsection 772(b) of the Act, 
for those sales made by TKSNA and TINC to unaffiliated purchasers in 
the United States. We based CEP on the packed, delivered, duty paid 
prices to unaffiliated purchasers in the United States. We made 
adjustments for discounts and rebates, where applicable. We also made 
deductions for freight charged to the customer and other movement 
expenses in accordance with Section 772(c)(2)(A) of the Act; these 
included, where appropriate, foreign inland freight, international 
freight, marine insurance, U.S. inland freight, U.S. warehousing, other 
U.S. transportation expenses, and U.S. duty. In accordance with Section 
772(d)(1) of the Act, we deducted those selling expenses associated 
with economic activities occurring in the United States, including 
direct selling expenses (credit and warranty expenses), inventory 
carrying costs, and indirect selling expenses. In accordance with 
Section 772(d)(2) of the Act, we deducted the cost of further 
manufacturing. For CEP sales, we also made an adjustment for profit in 
accordance with Section 772(d)(3) of the Act. As noted above, the 
Department has applied partial facts available for one U.S. processor 
that further processes material. For sales other than for the single 
affiliated further processor for which we applied partial facts 
available and adjusted the amounts reported, we made an adjustment for 
those sales in which material was sent to U.S. processors to be further 
processed based on the transaction-specific further-processing amounts 
reported by Thyssen. In addition, the entities TKSNA and TINC performed 
some further manufacturing of some of Thyssen's U.S. sales. For these 
sales, we deducted the cost of further processing in accordance with 
Section 772(d)(2) of the Act. In calculating the cost of further 
manufacturing for TKSNA and TINC, we relied upon the further 
manufacturing information provided by Thyssen.

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV 
(i.e., the aggregate volume of home market sales of the foreign like 
product was equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared the respondent's volume of home 
market sales of the foreign like product to the volume of U.S. sales of 
the subject merchandise, in accordance with Section 773(a)(1)(C) of the 
Act. As Thyssen's aggregate volume of home market sales of the foreign 
like product was greater than five percent of its aggregate volume of 
U.S. sales of the subject merchandise, we determined that the home 
market was viable. We have also made adjustments to NV for certain 
discounts and adjustments. For one home market discount, a trader 
discount, which Thyssen states is granted only to trading company/
service centers for sales through such companies, we have revised the 
application of this discount and applied it only to home market sales 
to trading companies/service centers (see Thyssen's March 19, 2002 
supplemental B-C response, at page 58; and see Sales Analysis Memo). 
For the interest rate used in calculating U.S. credit and U.S. 
inventory carrying cost expenses, we have revised this rate to 
represent the actual short-term borrowing rate incurred by Thyssen 
during the POI, without making an adjustment for interest income. In 
addition, we have reclassified Thyssen's claimed home market sales 
adjustment for inland freight, mill to company border, as a cost of 
production (see Sales Analysis Memo). Therefore, except as noted above, 
we have based NV on home market sales in the usual commercial 
quantities and in the ordinary course of trade.

Affiliated-Party Transactions and Arm's-Length Test

    To test whether sales to affiliated end-user customers are made at 
arm's length prices, we compare, on a model-specific basis, the prices 
of sales to affiliated customers with sales to unaffiliated customers 
net of all movement charges, billing adjustments, discounts, direct 
selling expenses, and packing. Where, for the tested models of foreign 
like product, prices to the affiliated party are on average 99.5 
percent or more of the price to unaffiliated parties, we determine that 
such sales are made at arm's-length prices. See 19 CFR 351.403(c); see 
also Antidumping Duties; Countervailing Duties Final Rule, 62 FR 27355 
(May 19, 1997).
    If these affiliated party sales satisfied the arm's-length test, we 
used them in our analysis. Merchandise sold to affiliated customers in 
the home market made at non-arm's-length prices were excluded from our 
analysis because we considered them to be outside the ordinary course 
of trade. See 19 CFR 351.102. Where the exclusion of such sales 
eliminated all sales of the most appropriate comparison product, we 
made a comparison to the next most similar model.

Cost of Production Analysis

    Based on our analysis of the cost allegations submitted by 
petitioners in the original petition, the Department found reasonable 
grounds to believe or suspect that German producers had made sales of 
cold-rolled steel in the home market at prices below the cost of 
producing the merchandise, in accordance with Section 773(b)(2)(A)(i) 
of the Act. As a result, the Department initiated an investigation to 
determine whether respondents made home market sales during the POI at 
prices below their cost of production (COP) within the meaning of 
Section 773(b) of the Act. We conducted the COP analysis described 
below.
    In accordance with Section 773(b)(3) of the Act, we calculated a 
weighted average COP based on the sum of Thyssen's cost of materials 
and fabrication for the foreign like product, plus an amount for home 
market selling, general and administrative expenses (SG&A), including 
interest expenses, and packing costs.
    In accordance with Sections 773(f) (2) and (3) of the Act, the 
major input rule, we have adjusted the reported value of slab inputs 
obtained from affiliated parties to reflect the higher of the 
affiliates cost of production, the transfer or the market price (see 
Section 351.407(b) of the Department's regulations). We have also 
revised the general and administrative (G&A) numerator to include the 
net loss on the sale of assets, wages and salaries, allocations for 
reserves and other miscellaneous expenses. We revised the financial 
expense rate calculation to include miscellaneous financial expenses, 
foreign exchange losses, and we have excluded other interest income and 
income from other securities from the numerator of the calculation. We 
revised Thyssen's total cost of manufacturing to include certain costs 
claimed as freight expense by Thyssen. Based on the Department's normal 
practice, we have calculated a G&A expense rate for Thyssen's U.S. 
further manufacturers as a percentage of the manufacturers conversion 
cost from their fiscal year end financial statements (see Sales 
Analysis Memo; and see Cost

[[Page 31216]]

Analysis Memorandum, dated April 26, 2002).
    We used the information except as noted above from Thyssen's 
section D questionnaire responses to calculate COP. We compared the 
weighted-average COP for Thyssen to home market sales prices of the 
foreign like product, as required under Section 773(b) of the Act. In 
determining whether to disregard home market sales made at prices less 
than the COP, we examined whether such sales were made: (1) In 
substantial quantities within an extended period of time, and (2) at 
prices which permitted the recovery of all costs within a reasonable 
period of time in accordance with Sections 773(b)(1)(A) and (B) of the 
Act. On a product-specific basis, we compared the COP to home market 
prices, less any applicable movement charges, billing adjustments, and 
discounts and rebates.
    Pursuant to Section 773(b)(2)(C)(i) of the Act, where less than 
twenty percent of Thyssen's sales of a given product were at prices 
less than the COP, we did not disregard any below-cost sales of that 
product because we determined that the below-cost sales were not made 
in substantial quantities. Where twenty percent or more of Thyssen's 
sales of a given product during the POI were at prices less than the 
COP, we determined such sales to have been made in substantial 
quantities, in accordance with Section 773(b)(2)(C)(i) of the Act, 
within an extended period of time. In such cases, because we compared 
prices to weighed average COPs for the POI, we also determined that 
such sales were not made at prices that would not permit recovery of 
all costs within a reasonable period of time, in accordance with 
Section 773(b)(2)(D) of the Act. Therefore, we disregarded those below-
cost sales.

Constructed Value

    In accordance with Section 773(e)(1) of the Tariff Act, we 
calculated CV, where applicable, based on the sum of respondent's cost 
of materials, fabrication, SG&A, including interest expenses, and 
profit. In accordance with Section 773(e)(2)(A) of the Tariff Act, we 
based SG&A and profit on the amounts incurred and realized by Thyssen 
in connection with the production and sale of the foreign like product 
in the ordinary course of trade for consumption in the foreign country. 
We used the CV data Thyssen supplied in its section D questionnaire 
responses, adjusted as noted in the COP Analysis section above.

Price-to-Price Comparisons

    We calculated NV for Thyssen based on prices of home market sales 
that passed the COP test and after applying partial facts available to 
GRSUPRH and sales adjustments as described above in the Facts Available 
section. We made adjustments for billing adjustments and discounts. We 
made deductions, where appropriate, for warehousing, foreign inland 
freight, freight adjustments, and inland insurance, pursuant to Section 
773(a)(6)(B) of the Act. In addition, we made adjustments for 
differences in physical characteristics of the merchandise pursuant to 
Section 773(a)(6)(C)(ii) of the Act, as well as for differences in 
circumstances of sale (COS) in accordance with Section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We made COS 
adjustments for imputed credit expenses and warranties. Finally, we 
deducted home market packing costs in accordance with Section 
773(a)(6)(A) and (B) of the Act. For additional adjustments made to NV, 
please see the Normal Value section above.

Price-to-CV Comparisons

    In accordance with Section 773(a)(4) of the Act, we based NV on CV 
if we were unable to find a home market match of identical or similar 
merchandise. We calculated CV based on the costs of materials and 
fabrication employed in producing the subject merchandise, SG&A, and 
profit. In accordance with Section 773(a)(2)(A) of the Act, we based 
SG&A expense and profit on the amounts incurred and realized by the 
respondent in connection with the production and sale of the foreign 
like product in the ordinary course of trade for consumption in 
Germany. For selling expenses, we used the weighted-average home market 
selling expenses. Where appropriate, we made adjustments to CV in 
accordance with Section 773(a)(8) of the Act. When we compared CV to 
CEP, we deducted from CV the weighted-average home market direct 
selling expenses.

Level of Trade

    In accordance with Section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the CEP transaction. The NV LOT is 
that of the starting-price sales in the comparison market or, when NV 
is based on CV, is that of the sales from which we derive selling, 
general and administrative (SG&A) expenses and profit. For CEP, it is 
the level of the constructed sale from the exporter to the importer
    To determine whether NV sales are at a different LOT than CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution. If the comparison market sales are at 
a different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make a LOT adjustment under Section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the differences in the levels between NV and 
CEP sales affect price comparability, we adjust NV under Section 
773(A)(7)(B) of the Act (the CEP offset provision) (see, e.g., Certain 
Carbon Steel Plate from South Africa, Final Determination of Sales at 
Less Than Fair Value, 62 FR 61731 (November 19, 1997).
    In the home market, Thyssen made sales to distributors and end-
users. The company claims three channels of distribution with respect 
to these sales: sales shipped from the mill to the customer (e.g., 
sales to automotive, other end-users, service centers); sales shipped 
from the mill to the warehouse for just in time delivery (e.g., sales 
to automotive customers only); sales made via e-commerce (e.g., sales 
to other end-users, sales to service centers). Thyssen claims four LOTs 
in the home market: (1) Sales to Thyssen's affiliated trading company/
service centers (i.e., the producing mills sell to service centers, 
which resell the merchandise in original form or following further 
processing); (2) sales to automotive customers (i.e., sales sold 
directly to automotive customers held in consignment warehouses until 
firm release); (3) sales to other end-user customers (i.e., sales 
shipped directly from the mill); (4) sales from affiliated service 
centers to their customers (i.e., sales of Thyssen merchandise through 
its affiliated service centers to unaffiliated customers).
    In the U.S. market, Thyssen reported sales made to its affiliated 
companies TKSNA and TINC, claiming three channels of distribution for 
these sales: (1) Sales from warehouse stock (i.e., sales shipped from 
inventory maintained in a district warehouse to unaffiliated U.S. 
distributor and end-user customers); (2) further manufactured sales 
from warehouse stock; and (3) produced to order sales from warehouse 
stock. Thyssen claims one LOT in the U.S.: CEP sales by TINC

[[Page 31217]]

and TKSNA to U.S. customers. Thyssen claims that CEP sales were made at 
a LOT more removed than the LOT of all home market sales. Thyssen 
requests that the Department grant a CEP offset on all CEP sales, as 
Thyssen's CEP sales cannot be compared to home market sales at the same 
LOT.
    In determining whether separate LOT actually existed in the home 
market, we first examined if Thyssen's sales involved different 
marketing stages (or their equivalent) and selling functions along the 
chain of distribution between Thyssen and its unaffiliated customers. 
Normally, stages of marketing focus on whether sales are to service 
centers or end-users, in some instances taking into account whether or 
not sales are made through intermediate parties. On this basis, it 
appears that Thyssen's sales shipped from the mill to automotive and 
other end-users as well as sales shipped from the mill to the warehouse 
for just-in-time delivery (to automotive customers) may be at a 
different stage of marketing than its sales shipped from the mill to 
affiliated customers for resale because the latter sales are made to an 
affiliated intermediary before being sold to the end consumer of the 
product. Sales made via e-commerce would also not be considered a 
different stage of marketing, as these sales are made to both end users 
and intermediary companies (both affiliated and unaffiliated). This 
would indicate that Thyssen has, at most, two home market LOTs.
    In further analyzing Thyssen's LOT claims in the home market, we 
reviewed available information on the record about the company's 
selling functions performed in the home market. Thyssen identified 27 
different selling functions (see Exhibit A-67 of Thyssen's December 21, 
2002, section A response) associated with its sales to affiliated and 
unaffiliated customers. We closely examined these functions and 
concluded that further processing does not appear to be a selling 
function relevant to the Department's LOT analysis. We also decided to 
combine several other functions because we found that they were not 
sufficiently different to warrant being treated as unique selling 
functions. Thus, we consolidated accounts receivable maintenance, order 
input, order processing, and payment processing and order evaluation 
and sale servicing into two single categories. As a result of our 
analysis, we concluded that Thyssen performed 22 separate selling 
functions in its home market, rather than 27.
    Next, we examined whether these selling functions are provided 
consistently to Thyssen's categories of customers in the home market, 
finding that the following two functions were provided to all customer 
categories: freight and delivery arrangements and warranty. Of the 
remaining 20 selling functions, we noted the following differences: 
small quantity deliveries were only provided for service center 
resales; just in time warehousing was only provided for automotive 
sales; technical advice, post sale technical assistance, customer 
contacts, customer entertainment, trade association participation, 
trade fairs, advertising, customer symposiums, sales solicitation new 
customers, research and development, unpaid invoice follow-up, and 
inventory maintenance are provided on a limited basis to trading 
companies and service centers; new product development through early 
vendor involvement, performance testing, strategic planning, and 
government regulation advice are not provided to trading companies and 
service centers. Thyssen indicates that sales to automotive customers 
are provided more intensive technical assistance and just-in-time 
warehousing services than are provided to any other of its customer 
categories. However, based on the information on the record, it does 
not appear that the services provided to automotive customers differ 
significantly from the services provided to Thyssen's affiliated 
service center resale customers.
    In conclusion, while Thyssen claimed differences in selling 
functions in connection with each level of trade, we find that the 
actual differences in selling functions between affiliated service 
center resales, automotive, and other end-user channels are relatively 
minor. Thus, we conclude, based on the information provided by Thyssen 
in its questionnaire responses, that Thyssen did not adequately support 
these claims. Therefore, we preliminarily determine that only two LOTs 
existed for Thyssen in the home market.
    In determining whether the single LOT in the U.S. market is at a 
less remote level of trade than the LOTs that exist in the home market, 
as Thyssen claims, we examined the selling functions performed by 
Thyssen for CEP sales. According to Thyssen, the following selling 
functions were provided for its CEP sales: limited performance testing, 
strategic planning, research and development, technical advice, 
customer contacts and customer entertainment, warranty and freight and 
delivery arrangements. We also noted that there were some selling 
functions performed by Thyssen that were provided to home market 
customers but not to its CEP sales (e.g., just-in-time warehousing, new 
product development, post-sale technical assistance, sales solicitation 
new customers, trade association participation, trade fairs, 
advertising, customer symposiums, inventory maintenance, unpaid invoice 
follow-up, and government regulation advice). Consequently, we 
preliminarily determine that Thyssen provided significantly different 
selling functions in the home market than those in the U.S. market for 
CEP sales.
    We next examined whether a LOT adjustment was appropriate when 
Thyssen's CEP sales are compared to the home market levels of trade. 
The Department makes this adjustment when it is demonstrated that a 
difference in LOTs affects price comparability. However, where the 
available data do not provide an appropriate basis upon which to 
determine a LOT adjustment, and where the NV is established at a LOT 
that is at a more advanced stage of distribution than the LOT of the 
CEP transactions, we adjust NV under Section 773(a)(7)(B) of the Act 
(the CEP offset provision). In the instant case, we were unable to 
quantify the LOT adjustment in accordance with Section 773(a)(7)(A) of 
the Act, as we found that none of the LOTs in the home market matched 
the LOT of the CEP transactions. Because of this, we were unable to 
calculate a LOT adjustment. Instead, because we determined that all of 
Thyssen's home market sales were made at levels of trade more advanced 
than the LOT of Thyssen's U.S. sales, we granted a CEP offset and 
applied this to comparisons between Thyssen's CEP sales and all home 
market sales.

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
exchange rates in effect on the dates of the U.S. sales, as certified 
by the Federal Reserve Bank, in accordance with Section 773A(a) of the 
Tariff Act.

Verification

    As provided in Section 782(i) of the Act, we intend to verify all 
information to be used in making our final determination.

All Others

    Pursuant to Sections 733(d)(1)(A)(ii) and 735(c)(5)(A) of the Act, 
the estimated all-others rate is equal to the estimated weighted-
average dumping margin established for Thyssen, the only exporter/
producer investigated.

[[Page 31218]]

Suspension of Liquidation

    In accordance with Section 733(d)(2) of the Act, the Department 
will direct the U.S. Customs Service to suspend liquidation of all 
entries of cold-rolled steel producers from Germany, that are entered, 
or withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register. We will instruct 
the U.S. Customs Service to require a cash deposit or posting of a bond 
equal to the estimated preliminary dumping margin indicated in the 
chart below. This suspension of liquidation will remain in effect until 
further notice. The weighted-average dumping margins in the preliminary 
determination are as follows:

------------------------------------------------------------------------
                                                        Weighted average
                Exporter/manufacturer                        margin
                                                          (percentage)
------------------------------------------------------------------------
Thyssen..............................................              14.52
All Others...........................................              14.52
------------------------------------------------------------------------

ITC Notification

    In accordance with Section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine, before the later of 120 days after the date of 
this preliminary determination or 45 days after our final 
determination, whether these imports are materially injuring, or 
threatening material injury to, the U.S. industry.

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the verification reports. Rebuttal 
briefs must be filed within five days after the deadline for submission 
of case briefs. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs, 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW, Washington, DC 20230. In the event that the Department 
receives requests for hearings from parties to several cold-rolled 
steel cases, the Department may schedule a single hearing to encompass 
all those cases. Parties should confirm by telephone the time, date, 
and place of the hearing 48 hours before the scheduled time. Interested 
parties, who wish to request a hearing, or participate if one is 
requested, must submit a written request within 30 days of the 
publication of this notice. Requests should specify the number of 
participants and provide a list of the issues to be discussed. Oral 
presentations will be limited to issues raised in the briefs.
    We will make our final determination no later than 135 days after 
the date of the publication of this preliminary determination.
    This determination is issued and published in accordance with 
Sections 733(f) and 777(i)(1) of the Act.

    Dated: April 26, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-11187 Filed 5-8-02; 8:45 am]
BILLING CODE 3510-DS-P