66 FR 2879, January 12, 2001
                                                        A-485-803
                                                        Admin Review 98-99
                                                        Public Document
                                                        AD/CVD3:FBaker

MEMORANDUM TO: Troy Cribb
               Assistant Secretary
                 For Import Administration

FROM:          Joseph Spetrini
               Deputy Assistant Secretary
               Enforcement Group III

SUBJECT: Issues and Decision Memo for the Administrative Review 
         of Cut-to-Length Carbon Steel Plate from Romania - 
         August 1, 1998 through July 31, 1999; Final Results

Summary

We have analyzed the comments and rebuttals of interested parties in the
1998-99 administrative review of the antidumping duty order covering cut-
to-length carbon steel plate from Romania. As a result of our analysis, we
have made changes, including corrections of certain inadvertent
programming and clerical errors, in the margin calculations. We recommend
that you approve the positions we have developed in the Discussion of the
Issues section of this memorandum for these final results of review. Below
is the complete list of issues in this administrative review for which we
received comments and rebuttals by parties:

1. Rescinding the Review
2. Barter Transactions
3. Factor Valuation
4. Overhead
5. Use of Inflator
6. Application of Inflator to Labor Costs
7. Circumstance-of-Sale Adjustments
8. Facts Available
9. Ministerial Errors

Background

On September 7, 2000 the Department of Commerce (the Department)
published the preliminary results of administrative review of the
antidumping duty order on cut-to-length carbon steel plate from Romania.
See Certain Cut-to-Length Carbon Steel Plate from Romania; Preliminary
Results of Antidumping Duty Administrative Review and Final Partial
Recision of Review, 65 FR 54208 (September 7, 2000) (Preliminary Results).
The period of review (POR) is August 1, 1998 through July 31, 1999. There
are two respondents in this review, Metalexportimport, S.A. (MEI)
(exporter of the subject merchandise) and S.C. Sidex, S.A. (Sidex)
(manufacturer of the subject merchandise). We invited parties to comment
on our preliminary results of review. On October 10, 2000 MEI and Sidex,
and petitioners (Bethlehem Steel Corporation and U.S. Steel Group, a unit
of USX Corporation), filed case briefs. These parties filed rebuttal
briefs on October 17, 2000.

Discussion of the Issues

Comment 1. Rescinding the Review

Petitioners argue the Department should rescind the review because the
record contains no evidence that there were any entries for consumption
during the POR. They argue that under the antidumping statute antidumping
duties are levied only against entries for consumption. See 19 USC 
1673b(d)(2). Thus, in the absence of such entries, there is nothing
against which to assess antidumping duties, and the review is, therefore,
moot. In order for a consumption entry to have occurred, petitioners
argue, all the forms and formalities necessary to enter the merchandise
into the commerce of the United States must have been completed. They base
this argument on 19 CFR  141.0a(f)(2000) which states, "'Entered for
consumption' means that an entry summary for consumption {form 7501} has
been filed with Customs in proper form, with estimated duties attached." 

Petitioners argue that the two Customs forms that respondents have
submitted for the record, CF 3461 (titled "Entry/Immediate Delivery") and
CF 7501 (the entry summary form), do not establish that there was a
consumption entry. With respect to the CF 3461, petitioners state that it
shows only that there was an "entry," not a consumption entry.
Furthermore, under Customs regulations, an entry summary and estimated
duties may be filed up to ten business days after the CF 3461. With
respect to the CF 7501, petitioners argue that respondents have failed to
show that it was filed during the POR. Indeed, the CF 7501 on the record
shows that the "entry summary date" is blank. Unless the entry summary
date is a date that occurs during the POR, petitioners argue, the entry is
outside the POR because under Customs regulations it is the entry summary
date, and not the date of entry of the subject merchandise that indicates
when an entry has entered for consumption. Thus, petitioners argue, the
Department cannot conclude that any merchandise was entered for
consumption during the POR. 

Furthermore, petitioners argue that the U.S. import statistics
respondents submitted also fail to establish that a consumption entry
occurred. That import data are based on Customs Service IM 146, and is
titled, "Imports for Consumption." Petitioners argue that import
statistics are known to be incorrect on occasion. Additionally,
petitioners state, respondents have not shown that the phrase "Imports for
Consumption" as used in these data has the same meaning as "Entered for
Consumption."

Respondents argue that there was an entry for consumption during the POR.
They base this argument on their understanding that Customs regulations
provide for two methods of making a consumption entry. The first method
involves two steps. Step one is for the importer to file a CF 3461 to make
an entry for consumption. See 19 CFR  142.3(a)(1). Step two is for the
importer to complete the entry for consumption by filing with Customs the
declared value, classification, and rate of duty applicable to the
merchandise. This step the importer does within ten working days of the
first step by filing a CF 7501. See 19 USC  1484(a)(1)(B); see also 19
CFR  141.0a(b) and 142.12(b). The second method of making a consumption
entry is for the importer to file a CF 7501 within five days of the date
on which the vessel carrying the merchandise arrives in the United States.
Under this method, the CF 7501 serves as both the entry for consumption
and the entry summary. See 19 CFR  142.12(a).

Respondents state that in this review they used the first method to make
their consumption entry, and that the CF 3461 they placed on the record
confirms that there was a consumption entry during the POR. See
respondent's March 21, 2000 submission at exhibit 2. They cite to two
fields on the CF 3461. The first is field #3, which shows that the "entry
type code/name" is "consumption." The second is field #28 which shows that
the "delivery authorized" date is July 29, 1999, and thus within the POR.
Respondents argue that July 29, 1999 is the entry date because 19 CFR 
141.68(a)(1) states the following:

(a) When entry documentation is filed without entry summary. When the
entry documentation is filed in proper form without an entry summary, the
"time of entry" shall be:

(1) The time the appropriate Customs officer authorizes the release of
the merchandise or any part of the merchandise covered by the entry
documentation...

Respondents also argue that, contrary to petitioners' argument, the IM
146 data on the record do establish that there was a consumption entry
during the POR. They cite the U.S. International Trade Commission's
descriptions of the data fields for the IM 146 reports. "Imports for
Consumption" are defined as merchandise that has physically cleared
Customs, either entering consumption channels immediately or entering
after withdrawal from bonded warehouse.

Respondents argue further that the definition of entry cited by
petitioners found at 19 CFR 

 141.0a(f) refers to the first method of making a consumption entry, and
addresses when the entry for consumption is completed, not when it is
made. They state that the petitioners' statement that an "entry is entered
for consumption only once all of the forms and formalities necessary to
entry the merchandise into the commerce of the United States have been
completed" is true with respect to completion of the process, but that the
completion date does not reflect the date of the entry for consumption
(i.e., when it is made).

Further, respondents state that the entry summary date is irrelevant in
establishing when the shipment entered for consumption. While the CF 7501
is required to complete the entry process, an entry for consumption is
made when the CF 3461 consumption entry is filed and dated at the time the
merchandise is released by Customs. Respondents argue that the Court of
International Trade (CIT) has held the same position. In Torrington Co. v.
United States the CIT held that "[t]he Customs laws of the U.S. ... define
entry as the process of filing documentation with Customs to determine
whether the subject merchandise would be released from Customs' custody
and, if so, what duties are made" (emphasis added). See Torrington Co. v.
United States, 818 F. Supp. 1563, 1563 (CIT 1993). The CIT made no mention
of the entry summary date.

Department's Position: We agree with respondents that the review should
not be rescinded. First, we agree with respondents that the Customs forms
they placed on the record do establish that there was an entry for
consumption during the POR. The CF 3461 that respondents placed on the
record indicates that the entry release date for this shipment was July
29, 1999. See respondent's March 21, 2000 submission at exhibit 2.
Therefore, based on 19 CFR  141.68(a)(1) (cited above), we determine that
July 29, 1999 is the date on which this shipment entered for consumption.
Because July 29, 1999 is a date within the POR, we find that there was an
entry for consumption during the POR. Therefore, contrary to petitioner's
argument, it does not matter that the "entry summary date" on the CF 7501
is blank or that the CF 7501 may not have been filed until after the end
of the POR because the entry was made on July 29, 1999 at the time of
filing of the CF 3461. 

Second, we find no compelling reason to discount the IM 146 data
respondents placed on the record. While petitioners are correct that
import statistics have been known to be incorrect on occasion, petitioners
have presented no evidence that such is the case here. Furthermore, we
find no reason to question that the term "Imports for Consumption" refers
to entries for consumption.

Therefore, for both of these reasons, we find that there was a
consumption entry during the POR, and that Customs will have an entry
against which to assess any antidumping duty liabilities. Thus, we have
not rescinded this administrative review.

Comment 2. Barter Transactions

Petitioners argue that the Department erred in using the respondents'
barter transactions in calculating normal value (NV). The barter
transactions are transactions for which Sidex exchanged a fixed amount of
steel for a fixed amount of an input from a foreign market-economy
supplier, and for which the two parties fixed a dollar amount for the
goods. The Department used this agreed dollar amount as the value of the
inputs in the preliminary results. Petitioners argue that using the agreed
price was incorrect for three reasons. First, they argue that it was
inconsistent with the Department's regulations. Section 351.408(c)(1)
(2000) of the Department's regulations states, "The Secretary normally
will use publicly available information to value factors. However, where a
factor is purchased from a market economy supplier and paid for in a
market economy currency, the Secretary normally will use the price paid to
the market economy supplier" (emphasis added). Because respondents did not
pay for the barter transactions in U.S. currency, petitioners argue, using
them was inconsistent with the regulations. Furthermore, because the
transactions were not paid for in currency at all, it is not even clear
that the transactions fit the definition of a "purchase" as required by
the regulation.

Second, petitioners argue that the Department should exclude the barter
transactions because it is impossible to quantify specifically the dollar
value of the items exchanged. This is so because no dollars were ever
exchanged. Thus, petitioners argue, it would make no difference to
respondents whether the "negotiated price" was three cents per ton of
steel and one cent per ton of raw material, or three million dollars per
ton of steel and one million dollars per ton of raw material. In either
case respondents would exchange one ton of steel for three tons of raw
material. The "prices" respondents reported to the Department are,
therefore, illusionary.

Third, petitioners argue that the documentation respondents put on the
record to substantiate their description of the barter transactions does
not match the transaction data reported by Sidex. Specifically, the sales
contract at exhibit D-2 of its February 18, 2000 submission contains a
different sales quantity than that contained in a listing of barter
transactions in exhibit 2 of its April 11, 2000 submission. Given this
major discrepancy, petitioners argue, the true details of the barter
transactions reported by Sidex are called into question.

Respondents argue that the Department acted properly in using the barter
transactions in the calculation of NV. They state that nowhere in the
antidumping laws or in the Department's regulations are there any
restrictions on the use of barter transactions for purposes of
constructing NV. Moreover, they cite two cases in which the Department
addressed the use of barter transactions. The first is Notice of Final
Determination of Sales at Less Than Fair Value: Certain Preserved
Mushrooms from Indonesia, 63 FR 72268, 72280 (December 31, 1998)
(Mushrooms from Indonesia). In Mushrooms from Indonesia, although the
Department rejected the use of the barter transactions on grounds
unrelated to the fact that they were barter transactions, it disagreed
with petitioners contention that the barter transactions were "not actual
sales or purchases." The second case is Certain Carbon Steel Products from
Brazil: Preliminary Affirmative Countervailing Duty Determinations, 49 FR
5157, 5161 (February 10, 1984) (Carbon Steel From Brazil). In Carbon Steel
from Brazil, the Department used barter transactions because the companies
involved acted in accordance with normal commercial considerations.

Respondents also cite the May 19, 1997 Final Rule as another instance in
which the Department had the opportunity to reject barter transactions,
but did not. See Final Rule, 62 FR 27296, 27366 (May 19, 1997). There a
commentator argued that if the Department uses the prices paid by NME
producers, it should ensure that those prices are free of any distorting
effects attributable to, inter alia, barter transactions. The Department
did not adopt the suggestions put forward by that party, and instead
reiterated the increased accuracy of using market economy prices. 

With respect to petitioners' argument that the negotiated prices are
illusionary, respondents argue that the barter prices negotiated between
Sidex and its suppliers are as real as prices actually paid in currency
because they are registered for accounting and tax purposes. Furthermore,
respondents argue that the Department's prior treatment of barter
transactions shows that what the Department is concerned with is whether
the barter transactions are arms-length transactions and constitute normal
commercial practice. Here, all of the respondents' barter partners are
unaffiliated, and there is nothing on the record to suggest that the
transactions are not arms-length.

Department's Position: We agree with petitioners that we should not use
the barter transactions in our calculations in this case. First, we agree
with petitioners that there is a contradiction between the sales quantity
indicated in the sales contract Sidex provided in its February 18, 2000
submission (exhibit D-2) and the sales quantity given in the listing in
exhibit 2 of its April 11, 2000 submission. (This issue was not addressed
by respondents in their rebuttal brief.) Because of this discrepancy we
cannot be certain that Sidex has provided the Department with a complete
explanation of its barter transaction process.

More importantly, we have determined that using barter transactions in
this NME antidumping proceeding violates the Department's policy of not
using exports from NMEs to value inputs. This policy is a logical
outgrowth of our general policy of not using prices and costs in NME
cases. See Preliminary Results, 65 FR at 54210. We apply this policy, for
instance, when using U.N. Commodity Trade Statistics (UNCTS) to value
inputs. When so doing we remove from the calculations all exports from NME
countries. See e.g., Tapered Roller Bearings and Parts Thereof, Finished
or Unfinished, from Romania; Final Results of Antidumping Duty
Administrative Review, 62 FR 37194, 37195 (July 11, 1997); see also
September 7, 2000 analysis memorandum at 3. Similarly, where, as in the
case of the barter transactions at issue here, an export from an NME is an
integral part of the barter transaction (even a transaction with a market-
economy currency and with a market-economy supplier), we determine that we
cannot use the barter transaction under our NME methodology because part
of the transaction is based on a product whose costs were not determined
by market forces. Therefore, in these final results of review we have
removed the barter transactions from the calculations.

Comment 3. Factor Valuation

Respondents argue that some of the Indonesian surrogate values the
Department used in the preliminary results were aberrational, and
therefore should not be used in the final results. They argue that using
aberrational data violates a previous Departmental statement that
"aberrational surrogate input values should be disregarded." See Final
Rule, 62 FR at 27366. Moreover, in other cases the Department has rejected
input values that, when compared to the value of those inputs from other
countries, were aberrational. See Notice of Final Determination of Sales
at Less Than Fair Value: Certain Cased Pencils from the People's Republic
of China, 59 FR 55625, 55630 (November 8, 1994) (Pencils from China). See
also Notice of Final Determination of Sales at Less Than Fair Value:
Certain Partial Extension Steel Drawer Slides with Rollers from the
People's Republic of China, 60 FR 54472, 54475-54476 (October 24, 1995).

Respondents point to five examples of aberrational data. First, in the
preliminary results the Department used a surrogate price of $54.42/MT to
value limestone and total lime. In contrast, the U.S. and Indian values
for total lime were $6.00/MT and $17.50/MT, respectively. Similarly,
European Union (EU) import and export data reflect a price of less than
$14.50/MT. Respondents argue that for the final results the Department
should rely on data from either the United States, India, or the EU.

Second, in the preliminary results the Department used a surrogate value
of $172.78/MT for iron scrap. In contrast, U.S. and EU data for scrap show
prices of $119/MT and $105/MT, respectively. Similarly, American Metal
Market data suggest a price well less than $100/MT. Respondents argue that
in the final results the Department should use U.S. data or other data to
value iron scrap.

Third, in the preliminary results the Department used a value of
$60.24/MT to value iron pellets. In contrast, U.S. and Indian import data
show values of $36/MT and $40/MT, respectively. Similarly, EU export data
show a value of $38.86/MT. Furthermore, Sidex purchased iron ore pellets
from Russia for a price between $30 and $35/MT. Therefore, for purposes of
the final results, respondents argue, the Department should use either
U.S., EU, or Indian data to value pellets.

Fourth, in the preliminary results the Department used a surrogate value
of $793.95/MT for ferrosilicon. Respondents state that this high value is
inconsistent with world prices. Respondents argue the Department should
use Egyptian data for the final results, since these data show a price of
$396.90/MT to value ferrosilicon.

Fifth, in the preliminary results the Department used a surrogate value
of $6,600/MT for woody plant branches. Respondents state that in the final
results the Department should use either U.S. import data or other sources
to value woody plant branches.

Petitioners argue that the Indonesian import values are not aberrational.
Petitioners argue that under the Department's regulations, the Department
"normally will value all factors {of production} in a single surrogate
country." See 19 CFR  351.408(c)(2) (2000). Therefore, the petitioners
argue, to follow the approach advocated by respondents, the Department
would have to violate its own clear policy preference. The petitioners
state that there is no reason to do so here. First, the basic premise that
the UNCTS data are "aberrational" is flawed. These data are from an
objective and widely-used international source and are entitled to a
presumption of accuracy. Furthermore, these data reflect the actual
experience of a market-economy country at a comparable level of
development to Romania. Petitioners argue that it is poor policy, and
inconsistent with the congressionally-mandated surrogate value method, for
the Department to reject actual data from the surrogate country
originating from objective and trusted sources simply because the data are
not identical to or consistent with the data for other countries. 

Second, several of the jurisdictions from which respondents offer data
(e.g., the United States and the EU) are not remotely at a level of
economic development comparable to Romania. The Department is required by
statute, however, to utilize "prices or costs of factors of production in
one or more market economy countries that are - (A) at a level of economic
development comparable to the nonmarket economy country." See 19 USC 
1677b(c)(4) (1995). By imposing this requirement, petitioners argue,
Congress understood that conditions in economies at varying levels of
economic development could create significant differences in costs and
prices for factors of production. Cost and risk of financing, currency
risk, economies of scale from larger orders, better-established trade
channels, and many other considerations may all contribute to differences
in the price paid for a factor of production.

Third, even assuming that some data may be "aberrational," it is
impossible to determine which figure is "aberrational" when choosing
between only two data points. Thus, petitioners argue, the Department
should reject respondents' contention that Egyptian prices for
ferrosilicon "are more consistent with world prices" because respondents
have offered no support, besides the Egyptian prices, as to the "world
price" for ferrosilicon.

Fourth, petitioners argue that respondents' figures obscure the
variations in prices for the same product. For example, the data that
respondents previously submitted for the record indicates that prices for
limestone from various sources varied significantly, including $298.91/MT
for U.S. imports from Mexico, $1,603.77/MT for U.S. imports from France,
$8.08/MT for EU imports from Croatia, $332.17/MT for EU imports from
Egypt, and $73.25/MT for Indian imports from the United States. The
petitioners argue that similarly wide prices ranges are on the record in
the data submitted by respondents for valuation of iron scrap and iron
pellets. Given this range of prices, the petitioners state, there is no
basis for determining whether a given price is "too high," "too low," or
otherwise "aberrant."

Department's Position: We agree with the petitioners that the Indonesian
import data are not aberrational. The record of this review contains
factor value data from various sources. These sources include Eurostat,
Monthly Statistics of the Foreign Trade of India, Egypt's Central Agency
for Public Mobilization and Statistics, Indonesia Foreign Trade
Statistics, UNCTS, and U.S. IM-146 data. As petitioners have pointed out,
these sources demonstrate a wider range of values for limestone, iron
scrap, and iron pellets than that presented by respondents in their case
brief. Furthermore, comparison of U.N. ferrosilicon import data to only
one other country (in this case Egypt) does not give us a basis to
determine that the U.N. data are aberrational. Nor can we make a
determination that data are aberrational in the complete absence from the
record of any purportedly "non-aberrational" data as respondents want us
to do in the case of woody plant branches. While the value utilized in the
preliminary results for woody plant branches may appear high, there is no
evidence on the record that it is aberrational for Indonesia. Moreover, as
petitioners have also pointed out, many of the comparisons respondents
adduced are with countries at a much higher level of economic development
than either Romania or Indonesia (e.g., United States and EU). While the
Department has in the past considered such countries in making this type
of determination (e.g. Pencils from China, 59 FR at 55630), it does attach
greater weight to countries of the same level of economic development as
the surrogate country. Doing so is consistent with the statutory mandate
that input factors are to be valued using prices or costs from market-
economy countries that are at a level of economic development comparable
to the nonmarket economy country. See section 773(c)(4) of the Act.

Because we find the respondent's argument insufficient to demonstrate
that the Indonesian import data are aberrational, we will not abandon our
standard NME method of valuing all factors in a single surrogate country
(see 19 CFR  351.408(c)(2) (1999)) and of using a surrogate country of
the same level of economic development as the non-market economy country
(see section 773(c)(4) of the Act). Therefore, in these final results we
have continued to value all factors using Indonesian surrogate values.

Comment 4. Overhead

Respondents argue that the Department erred in its calculation of the
overhead ratio (calculated from the financial statement of the Indonesian
steel company P.T. Krakatau (Krakatau)) by including two line items in the
total overhead expense that are either not overhead expenses or that
double-counted expenses. The first is "professional services and worn-out
inventory." Respondents argue that these expenses do not appear to be
related to production, and therefore the Department should exclude them in
the final results. The second is "spare parts and auxiliary materials."
Respondents argue that auxiliary material is not a proper item for
overhead, but is instead a type of raw material. Under the Indonesian
system, respondents argue, materials such as polyethylene bags and
sulfuric acid (which Sidex reported) would be classified as auxiliary
materials. Therefore, respondents argue, unless there is evidence that the
"auxiliary materials" on Krakatau's financial statement are not of the
sort that Sidex already reported, the Department should exclude "spare
parts and auxiliary materials" from the calculation in the final results.

Petitioners argue that the Department properly included the line items at
issue in the calculation of the overhead ratio. With respect to
"professional services and exclusion for worn-out inventory," petitioners
argue that Krakatau is in the better position to know how these costs
should be classified, and that respondents have not provided any support
for their assertion that these items "do not appear to be related to
production." Moreover, with respect to the first element of the line item
(i.e. "professional services"), petitioners argue that it is certainly
possible for manufacturers to engage "professional services" which are
related to production. With respect to the second element of the line item
(i.e., "exclusion for worn-out inventory"), petitioners argue that
expenses associated with inventory clearly relate to production, and the
write-down of worn out inventory is properly included in overhead.

With respect to "spare parts and auxiliary materials," petitioners argue
that respondents have provided evidence neither for their assertion that
auxiliary materials are more properly described as a type of raw material,
nor for the implicit claim that Krakatau's accountants and auditors do not
know how properly to classify items on Krakatau's financial statements.
Petitioners argue that the respondents' only support for their presumption
of Krakatau's ignorance about its own business is a vague, unexplained,
and unsupported reference to "the Indonesian system." Furthermore,
petitioners argue that respondent's proposed solution is disproportionate
to the supposed error because the respondents are asking the Department to
reject the entire "spare parts and auxiliary materials" item, although
their arguments relate only to the "auxiliary materials" item. 

Department's Position: We agree with petitioners. In the absence of
additional information on the record about the Indonesian accounting
system, we find respondents' claims about that system to be
unsubstantiated. Moreover, respondents have cited no record evidence that
Krakatau misclassified any of its expenses. Therefore in these final
results we have made no changes to our calculation of overhead.

Comment 5. Use of Inflators

Respondents argue that the Department erred in its method of inflating
the 1998 Indonesian import data to 1999 values because it used the
consumer price index (CPI) of Indonesia. They argue that the use of this
inflator is improper for several reasons. First, Indonesian import data
are reported in U.S. dollars, not Indonesian rupiah. Therefore, any rise
in the CPI in Indonesia is a reflection of inflation in Indonesia and the
devaluation of the rupiah. These factors do not impact dollar-denominated
imports. 

Second, Krakatau (the Indonesian steel company whose financial statement
the Department used to calculate surrogate selling, general, and
administrative expenses (SG&A) for Sidex) had a significant foreign-
exchange loss due, in part, to devaluation of the rupiah vis--vis the
dollar. This, in turn, caused a higher surrogate SG&A. Therefore,
respondents argue, applying an inflator to imports punishes the
respondents twice because it applies to the raw material costs the effect
of inflation that is already reflected in SG&A.

Furthermore, respondents point out that the Department faced this same
issue in Notice of Final Determination of Sales at Less Than Fair Value:
Creatine Monohydrate from the People's Republic of China; 64 FR 71104,
71109 (December 20, 1999) (Monohydrate from China). In Monohydrate from
China, the Department determined that it acted improperly in the
preliminary determination in adjusting the Indonesian import data using
the Indonesia wholesale price index (WPI). Therefore, in the final
determination it adjusted the Indonesia import data using the U.S. WPI
because the Indonesian import data were reported in U.S. dollars.

Moreover, respondents argue that if the Department determines to apply an
inflator, it would be improper to base it on the entire calendar year 1999
because the U.S. sale was in July 1999. Therefore, the inflator should
adjust only for the inflation that occurred between January 1999 and July
1999.

Petitioners agree with respondents that the inflator should be based on
the inflation rate in the currency in which the values are denominated,
but disagree that the inflator should be based on the U.S. WPI, as
advocated by respondents. Doing so, petitioners state, assumes that the
UNCTS reflect costs denominated in U.S. dollars when incurred. Petitioners
assert that many, if not most, of these values were actually denominated
in local currencies, and simply converted to U.S. dollar amounts at
prevailing exchange rates for reporting purposes by the United Nations or
the contributing country. That the Indonesian UNCTS values are reported in
U.S. dollars is irrelevant because all UNCTS data for all countries are
reported in U.S. dollars. Petitioners argue that the Department should
convert the UNCTS import data back into the local currency, apply the
inflator appropriate to that currency, and then convert the data back into
U.S. dollars.

Department's Position: We agree with both parties that our use of an
inflator was inappropriate, but have determined that our error consisted
not of using the wrong inflator, but in using an inflator at all for data
from 1998. Our policy is to not inflate data where the data is from a
period that overlaps the POR. See Sulfanilic Acid from the People's
Republic of China; Final Results of Antidumping Duty Administrative
Review, 65 FR 13366 (March 13, 2000) and accompanying decision memorandum
at comment 15. In another antidumping proceeding covering the period
December 1, 1993 through May 31, 1994, we stated "Our practice is not to
inflate values when the time period of the value - in this case 1993 -
overlaps with any part of the POI - in this case December 1993." See
Notice of Final Determination of Sales at Less Than Fair Value:
Ferrovanadium and Nitrided Vanadium From the Russian Federation, 60 FR
27957, 27963 (May 26, 1995). Here, the Indonesian import data are from
1998, and our POR begins with August 1998. Monohydrate from China (cited
by respondents) is inapposite because in that proceeding the data was from
two-and-a-half years prior to the start of the POR, rather than
overlapping the POR. See Monohydrate from China, 64 at 71110. Therefore,
in these final results of review we have removed the inflator in
calculating surrogate values for data from 1998. 

Comment 6. Application of Inflator to Labor Costs

Respondents argue that the Department erred by applying to the labor
costs an inflator based on Indonesian inflation. (The labor rate the
Department used in the preliminary results was a regression-based Romanian
rate of $1.10/hour published on its web cite at
www.ia.ita.doc.gov/wages/98wages/gdp00web.htm.) The respondents argue that
this was an error because the Indonesian inflation rate has nothing to do
with the Romanian wage rate. The respondents also argue that the
$1.10/hour rate (without adjustment) has been used in all recent Romanian
antidumping cases. See e.g., Notice of Final Determination of Sales at
Less Than Fair Value: Certain Small Diameter Carbon and Alloy Seamless
Standard, Line, and Pressure Pipe from Romania, 65 FR 39125 (June 23,
2000).

Petitioners argue the Department properly inflated the labor costs. They
argue that since the Romanian wage rates that the Department used are
based upon 1998 values, and the sale took place in mid-1999, it was
appropriate and necessary for the Department to inflate this figure.
Furthermore, the petitioners argue that it would be inappropriate to base
the inflator on the Romanian inflation rate since Romania, as an NME,
"does not operate on market principles of cost or pricing structures." See
section 771(18)(A) of the Act (19 USC  1677(18)(A)(1995)). Thus, the
petitioners state, since the Department is specifically instructed by
statute to value factors of production in NME countries using prices or
costs in a surrogate country, the Department correctly used the Indonesian
inflation rate as the surrogate inflator for the Romanian wage rate.

Department's Position: As stated in the Department's position to the
previous comment, our policy is not to apply an inflator when the data are
from a period that covers part of the POR. Here, the Romanian labor rate
is from 1998, and our POR begins in August 1998. Therefore, in these final
results we have removed the inflator from the calculation of labor costs. 

Comment 7. Circumstance-of-Sale Adjustments

Comment 7a: Petitioners argue that the Department erred in its
calculation of net U.S. price by not deducting from gross U.S. price a fee
that MEI (the Romanian exporter) deducts from the revenue it transmits to
Sidex (the Romanian manufacturer) following payment by the U.S. customer.
The payment from the U.S. customer and the fee retained by MEI are both in
U.S. dollars. Petitioners argue that this fee should be deducted from
gross U.S. price so that the net U.S. price is the actual amount received
by Sidex for its U.S. sales.

Respondents argue that the Department should not deduct the fee from the
calculation of net U.S. price. First, respondents argue that the
antidumping rate ultimately assigned as a result of this review belongs to
MEI, and not Sidex. Therefore, it is irrelevant how much money Sidex
receives from MEI. Second, respondents argue that in literally scores of
NME cases the Department consistently ignores commissions or other
transactions between companies.

Department's Position: We agree with respondents that the fee retained by
MEI should not be deducted from gross U.S. price. The relevant price for
our antidumping calculations is the price from the Romanian exporter to
the first unaffiliated U.S. customer. The value of the remittance from the
exporter to the producer is irrelevant to our calculations. Therefore, no
adjustment is appropriate.

Comment 7b: Petitioners argue that the Department erred in its
calculation of net U.S. price by failing to deduct from the gross U.S.
price a bank charge which was paid to a market economy bank in a market
economy currency.

Respondents argue that a Western bank operating in Romania (such as the
one at issue here) is not considered a "market economy" bank. Furthermore,
they argue that it is not the Department's policy to make circumstance-of-
sale adjustments in NME cases, and should not do so here.

Department's Position: We agree with respondent that the bank charge
should not be deducted from U.S. price. The bank charge at issue is a
selling expense because it is an expense incurred incidental to delivering
the merchandise to the customer. We have accounted for selling expenses in
the calculation of SG&A included in NV. See appendix VIII(a) of the
September 7, 2000 preliminary results analysis memorandum. To make an
additional adjustment for the bank charge would be to double-count selling
expenses. Furthermore, as respondents have pointed out, in other NME cases
it has been our practice not to make adjustments for circumstance-of-sale
expenses. See e.g., Tapered Roller Bearings and Parts Thereof from the
People's Republic of China; Preliminary Results of Antidumping
Administrative Review and Intent to Revoke Antidumping Duty Order in Part,
61 FR 40610, 40613 (August 5, 1996). Therefore, in these final results, as
in the preliminary results, we have not made a deduction for the bank
charge. 

Comment 8. Facts Available

Petitioners argue that the Department should use facts available for two
inputs allegedly used in the production of the subject merchandise, but
which respondents did not report on their factors listing. The two factors
at issue are factors mentioned on the U.S. sales contract as inputs in the
subject merchandise. Because respondents withheld information on these
inputs, petitioners argue, the Department should apply a facts available
value for them in calculating the respondents' NV.

Respondents argue that petitioners' comments on this issue are not timely
as respondents filed their section D response over nine months earlier,
and in the ensuing time petitioners never once raised the issue.
Furthermore, the purpose of the case brief was to raise issue surrounding
the Department's preliminary results, and this issue does not arise from
the Department's preliminary results. More importantly, respondents argue
that the two inputs at issue are contained in the scrap iron input which
they did report.

Department's Position: Respondents are correct that petitioners never
raised this issue prior to submitting their case brief, but there is no
requirement that comments need be submitted prior to the case brief. The
case brief may contain all arguments the submitter believes relevant to
the final results. See 19 CFR  351.309 (c)(2). Nevertheless, our research
indicates that, as respondents have argued, the two inputs may be
contained in steel scrap (steel being an alloy of iron). We have included
in the final results analysis memorandum (dated January 5, 2001) pages
from our source which provided this information. Therefore, we have
accepted respondent's explanation that these elements are contained in the
scrap iron input, and have not applied facts available for these factors
in these final results.

Comment 9. Ministerial Errors

Comment 9a: Petitioners argue that the Department erred by failing to
include in respondent's input costs the commissions paid on purchases from
market-economy suppliers. 

Department's Position: We agree, and have corrected this error in these
final results of review.

Comment 9b: Petitioners argue that the Department made clerical errors in
its calculation of the values for methane gas and electricity. First, it
argues that the Department erred in its calculation of both of these
inputs by understating the values by a factor of one thousand. Second,
with respect to methane gas, it argues that the Department failed to
perform each of the constituent elements of the calculation necessary to
determine the total value of the methane gas. Third, with respect to
electricity, it argues that the Department incorrectly used the exchange
rate of the date of the U.S. sale, rather than the exchange rate of the
year (1994) of the surrogate value. It states that the Department should
use the 1994 exchange rate, and then apply an inflator to adjust for
inflation that occurred between 1994 and 1999.

Respondents argue that although the Department's calculations may have
contained errors, the petitioners' proposed calculation method is also
flawed because it includes the use of inflators. They argue that the use
of an inflator based on the Indonesian CPI for dollar-denominated factors
is improper. Furthermore, they argue that in a May 19, 2000 submission
they submitted 1997 data for electricity and 1998 data for methane gas,
and that in the final results the Department should use these data rather
than the 1994 data it used in the preliminary results.

Department's Position: We agree with respondents that the calculations
should be based on the 1997 and 1998 data for electricity and methane gas,
respectively, because the data are more recent than the 1994 data used in
the preliminary results and are already on the record. We have done so in
these final results. Our calculations are shown in the final results
analysis memorandum dated January 5, 2001.

Comment 9c: Petitioners argue that the Department erred by failing to
include the cost of freight charges when valuing iron ore fines using
market-economy purchases from Brazil.

Department's Position: We agree, and have corrected this error in these
final results of review.

Comment 9d: Petitioners argue that the Department erred in its
calculation of labor by not including all of the labor hours that
respondents reported in the exhibits of its section D response.

Respondents argues that it correctly reported its labor hours on its
factors listing.

Department's Position: We agree with petitioners. By comparing the labor
hours Sidex reported in exhibit D-14 of Sidex's December 10, 1999 section
D response with the labor hours reported in its factors listing in Sidex's
April 11, 2000 submission (exhibit 2), we determine that the factors
listing we used in the preliminary results calculations did not include
all of the labor hours. In these final results we have included all of the
labor hours reported in the section D response in exhibit 14.

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 results of review and the final weighted-average dumping margins for
all reviewed firms in the Federal Register.

AGREE ______

DISAGREE ___

_________________________

Troy Cribb
Assistant Secretary 
  for Import Administration

_________________________
(date)