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[Federal Register Volume 62, Number 190 (Wednesday, October 1, 1997)]
[Notices]
[Pages 51584-51587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26043]

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DEPARTMENT OF COMMERCE

International Trade Administration
[A-307-813]

Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Steel Wire Rod From 
Venezuela

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

EFFECTIVE DATE: October 1, 1997.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Daniel Manzoni, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-4136 or (202) 482-1121, 
respectively.

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``the Act''), are references 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's 
regulations are references to the provisions codified at 19 CFR part 
353 (April, 1997). Although the Department's new regulations, codified 
at 19 CFR 351 (62 FR 27296, May 19, 1997), do not govern this 
investigation, citations to those regulations are provided, where 
appropriate, to explain current Departmental practice.

Preliminary Determination

    We preliminarily determine that steel wire rod (``SWR'') from 
Venezuela is being, or is likely to be, sold in the United States at 
less than fair value (``LTFV''), as provided in section 733 of the Act. 
The estimated margins are shown in the ``Suspension of Liquidation'' 
section of this notice.

Case History

    Since the initiation of this investigation on March 18, 1997 (see 
Notice of Initiation of Antidumping Duty Investigations: Steel Wire Rod 
from Canada, Germany, Trinidad and Tobago, and Venezuela, 62 FR 13854, 
(March 24, 1997), (``Notice of Initiation''), the following events have 
occurred:
    On April 14, 1997, the United States International Trade Commission 
(``ITC'') notified the Department of Commerce (``the Department'') of 
its affirmative preliminary injury determination in this case.
    On April 21, 1997, the Department issued the antidumping duty 
questionnaire to CVG Siderurgica Del Orinoco C.A. (``Sidor''), the sole 
exporter of the subject merchandise from Venezuela. The questionnaire 
is divided into four sections: Section A requests general information 
concerning Sidor's company corporate structure and business practices, 
the merchandise under investigation that it sells, and the sales of the 
merchandise in all of its markets. Sections B and C request home market 
sales listings and U.S. sales listings, respectively. Section D 
requests information on the cost of production (``COP'') of the foreign 
like product and the constructed value (``CV'') of the subject 
merchandise.
    During April and May 1997, the Department received interested party 
comments regarding modifications to the product characteristic 
reporting requirements. On May 22, 1997, the Department issued revised 
product characteristic reporting instructions.
    Sidor submitted its questionnaire responses in May and June, 1997. 
The Department issued supplemental requests for information in June, 
July, and August, 1997, and received the supplemental responses to 
these requests in July, August, and September, 1997. Petitioners in 
this investigation (Connecticut Steel Group, Co-Steel Raritan, GS 
Industries, Inc., Keystone Steel & Wire Co., North Star Steel Texas, 
Inc., and Northwestern Steel & Wire Co.) filed comments on Sidor's 
questionnaire responses in May, June, July, August, and September, 
1997.
    On July 3, 1997, petitioners made a timely request that the 
Department postpone the preliminary determination in this investigation 
and the companion investigations of SWR from Canada, Trinidad and 
Tobago, and Germany to September 24, 1997. We did so on July 14, 1997, 
in accordance with section 733(c)(1) of the Act (see Notice of 
Postponement of Preliminary Determinations: Steel Wire Rod from Canada, 
Germany, Trinidad and Tobago, and Venezuela (62 FR 38257, July 17, 1997 
)).

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2)(A) of the Act and section 
353.20(b)(1) of the Department's interim regulations, on September 10, 
1997, Sidor requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the publication of 
this notice in the Federal Register. In accordance with section 
735(a)(2)(A) of the Act, because our preliminary determination is 
affirmative, the respondent accounting for all of the exports of the 
subject merchandise has requested postponement, and no compelling 
reasons for denial exist, we are postponing the final determination. 
Suspension of liquidation will be extended accordingly (see Preliminary 
Determination of Sales at Less than Fair Value and Postponement of 
Final Determinations: Open-End Spun Rayon Singles Yarn From Austria, 62 
FR 14399, 14400 (March 26, 1997); see also Final Determination of Sales 
at Less Than Fair Value: Certain Pasta from Italy, 61 FR 30326 (June 
14, 1996)).

Scope of Investigation

    The products covered by this investigation are certain hot-rolled 
carbon steel and alloy steel products, in coils, of approximately round 
cross section, between 5.00 mm (0.20 inch) and 19.0 mm (0.75 inch), 
inclusive, in solid cross-sectional diameter. Specifically excluded are 
steel products possessing the above noted physical characteristics and 
meeting the Harmonized Tariff Schedule of the United States (HTSUS) 
definitions for (a) stainless steel; (b) tool steel; (c) high nickel 
steel; (d) ball bearing steel; (e) free machining steel that contains 
by weight 0.03 percent or more of lead, 0.05 percent or more of 
bismuth, 0.08 percent or more of sulfur, more than 0.4

[[Page 51585]]

percent of phosphorus, more than 0.05 percent of selenium, and/or more 
than 0.01 percent of tellurium; or (f) concrete reinforcing bars and 
rods.
    The following products are also excluded from the scope of this 
investigation:
    Coiled products 5.50 mm or less in true diameter with an average 
partial decarburization per coil of no more than 70 microns in depth, 
no inclusions greater than 20 microns, containing by weight the 
following: carbon greater than or equal to 0.68 percent; aluminum less 
than or equal to 0.005 percent; phosphorous plus sulfur less than or 
equal to 0.040 percent; maximum combined copper, nickel and chromium 
content of 0.13 percent; and nitrogen less than or equal to 0.006 
percent. This product is commonly referred to as ``Tire Cord Wire 
Rod.''
    Coiled products 7.9 to 18 mm in diameter, with a partial 
decarburization of 75 microns or less in depth and seams no more than 
75 microns in depth; containing 0.48 to 0.73 percent carbon by weight. 
This product is commonly referred to as ``Valve Spring Quality Wire 
Rod.''
    The products under investigation are currently classifiable under 
subheadings 7213.91.3000, 7213.91.4500, 7213.91.6000, 7213.99.0030, 
7213.99.0090, 7227.20.0000, and 7227.90.6050 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
our written description of the scope of this investigation is 
dispositive.
    North American Wire Products Corporation (NAW), an importer of the 
subject merchandise from Germany, has requested that the Department 
exclude steel wire rod used to manufacture pipe wrapping wire from the 
scope of the antidumping and countervailing duty investigations. 
Petitioners have not agreed to this scope exclusion. For purposes of 
the preliminary determination, we have not excluded steel wire rod for 
manufacturing pipe wrapping wire from the scope. However, we will 
consider this issue further in our final determination.

Period of Investigation

    The period of investigation (``POI'') is January 1, 1996, through 
December 31, 1996.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by Sidor, covered by the description in the Scope of 
Investigation section, above, and sold in the home market during the 
POI, to be foreign-like products for purposes of determining 
appropriate product comparisons to U.S. sales. 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 on the basis of the characteristics listed in the antidumping 
duty questionnaire and the May 22, 1997, reporting instructions. 
Consistent with our practice (see, e.g., Final Results of Antidumping 
Duty Administrative Review: Cold-rolled Carbon Steel Flat Products from 
the Netherlands, 61 FR 48465, (September 13, 1996)), we compared prime 
merchandise sold in the United States to prime merchandise sold in the 
home market, and secondary merchandise to secondary merchandise.

Fair Value Comparisons

    To determine whether sales of steel wire rod by Sidor to the United 
States were made at less than fair value, we compared the Export Price 
(``EP) to the normal value (``NV''), as described in the ``Export 
Price'' and ``Normal Value'' sections of this notice below. In 
accordance with section 777A(d)(1)(A)(i), we calculated weighted-
average EPs for comparison to weighted-average NVs.
    Venezuela experienced significant inflation during the POI, as 
measured by the consumer price index published by the Central Bank of 
Venezuela. Accordingly, to avoid the distortions caused by the effects 
of inflation on prices, we calculated EPs and NVs on a monthly average 
basis, rather than on a POI average basis.

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 EP or constructed export price 
(``CEP''). The NV LOT is that of the starting-price sales in the 
comparison market or, when NV is based on constructed value (``CV''), 
that of the sales from which we derive selling, general and 
administrative (``SG&A'') expenses and profit. For EP, the U.S. LOT is 
also the level of the starting-price sale, which is usually from 
exporter to importer. 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 EP (or 
CEP), we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. 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 an LOT adjustment under section 
773(a)(7)(A) of the Act. See Certain Welded Carbon Steel Standard Pipes 
and Tubes From India: Preliminary Results of New Shipper Antidumping 
Duty Administrative Review, 62 FR 23760, 23761 (May 1, 1997).
    Sidor did not claim a LOT adjustment. To evaluate whether such an 
adjustment was necessary, we examined Sidor's distribution system, 
including selling functions, classes of customers, and selling 
expenses. Sidor sold to only one class of customer in each market. We 
found that selling functions, which included sales administration, 
billing, warranties, and in some cases arranging freight services, are 
sufficiently similar in the U.S. and the home market to consider them 
as constituting the same level of trade in the two markets. 
Accordingly, all comparisons are at the same level of trade and an 
adjustment pursuant to section 773(a)(7)(A) is not warranted.

Export Price

    We based our starting price on EP, in accordance with subsections 
772(a) and (c) of the Act, because the subject merchandise was sold 
directly to the first unaffiliated purchaser in the United States prior 
to importation and CEP was not otherwise warranted based on the facts 
on the record.
    We calculated EP based on packed, FOB factory prices to the first 
unaffiliated customer in the United States. We made no deductions from 
the gross unit price.

Normal Value

    In order to determine whether there is 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 
is greater than five percent of the aggregate volume of U.S. sales), we 
compared Sidor'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. Since Sidor'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 for the 
subject merchandise, we determined that the home market was viable for 
Sidor. Therefore, we have based NV on home market sales provided they 
were not disregarded pursuant to the cost test under section 773(b) of 
the Act.

[[Page 51586]]

Cost of Production Analysis

    Pursuant to an allegation made by the petitioners, we initiated a 
cost of production investigation in our Notice of Initiation (62 FR 
13854 March 24, 1997). Before making any fair value comparisons, we 
conducted the COP analysis described below.
A. Calculation of COP
    We calculated the COP based on the sum of respondent's cost of 
materials and fabrication for the foreign like product, plus amounts 
for home market general expenses and packing costs in accordance with 
section 773(b)(3) of the Act. We recalculated Sidor's interest expense, 
as discussed in the September 16, 1997, Memorandum to Chris Marsh, 
Director, Office of Accounting, from Paul McEnrue. As noted above, we 
determined that the Venezuelan economy experienced significant 
inflation during the POI. Therefore, in order to avoid the distortive 
effect of inflation on our comparison of costs and prices, we requested 
that Sidor submit monthly COP figures based on the current production 
costs incurred during each month of the POI. We indexed Sidor's monthly 
COP amounts, adjusted as discussed above, in order to compute an annual 
weighted-average COP for the POI.
B. Test of Home Market Prices
    We used Sidor's submitted POI weighted-average COPs, as adjusted 
(see above). We compared the weighted-average COP figures to home 
market sales 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 below the COP, we examined whether (1) within an 
extended period of time, such sales were made in substantial 
quantities, and (2) such sales were made at prices which permitted the 
recovery of all costs within a reasonable period of time. On a product-
specific basis, we compared the inflation-adjusted COP to the home 
market prices, less any applicable movement charges, and direct and 
indirect selling expenses.
C. Results of COP Test
    Pursuant to section 773(b)(2)(C), where less than 20 percent of 
Sidor'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 20 percent or more of a respondent'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'' 
within an extended period of time in accordance with section 
773(b)(2)(B) of the Act. Where we determined that such sales were also 
not made at prices which would permit recovery of all costs within a 
reasonable period of time and, in accordance with section 773(b)(2)(D) 
of the Act, we disregarded the below-cost sales. Where all comparison 
sales of a specific product were at prices below the COP, we 
disregarded all such sales of that product, and calculated NV based on 
CV.
D. Calculation of CV
    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of the respondent's cost of materials, fabrication, 
SG&A, U.S. packing costs, interest expenses and profit. As noted above, 
we recalculated Sidor's interest expenses. In accordance with section 
773(e)(2)(A) of the Act, we based SG&A 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 the foreign country. For selling expenses, 
we used the actual weighted-average home market direct and indirect 
selling expenses (as indexed for inflation).

Comparison of the U.S. Price to NV

    We compared U.S. prices to home market prices or to CV, as 
appropriate. We made adjustments for inland freight, interest revenue, 
and late payment fees. In addition, we made circumstance-of-sale 
adjustments for credit, warranties, and bank fees, where appropriate. 
We re-allocated home market and U.S. warranty expenses on a value basis 
rather than the quantity basis Sidor reported. Where we compared CV to 
EPs, we deducted from CV the home market direct selling expenses and 
added the weighted-average U.S. direct selling expenses.
    We also made adjustments, where appropriate, for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act.

Currency Conversions

    The Department's normal source for exchange rates--the Federal 
Reserve Bank--does not provide certified exchange rates for Venezuela. 
Therefore, we converted Venezuelan bolivares into U.S. dollars as 
follows: For the period from January 1, 1996, through April 21, 1996, 
we used the official exchange rate from the Central Bank of Venezuela 
because the Dow Jones Business Information Services rates (an alternate 
source often relied upon by the Department) reflected the implicit 
(parallel) exchange rate in Venezuela for Brady bonds (i.e., foreign 
currency--denominated government bonds trading on the secondary 
market). After April 21, 1996, Venezuela had a unified, market exchange 
rate that applied to all trade transactions. Therefore, for the period 
after April 21, 1996, we used the Dow Jones rates.

Verification

    As provided in section 782(i) of the Act, we will verify the 
information used in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all imports of subject 
merchandise 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 Customs Service to require a 
cash deposit or the posting of a bond equal to the weighted-average 
amount by which the NV exceeds the export price, as indicated in the 
chart below. These suspension of liquidation instructions will remain 
in effect until further notice. The weighted-average dumping margins 
are as follows:

------------------------------------------------------------------------
                                                             Weighted-  
                  Exporter/manufacturer                   average margin
                                                            percentage  
------------------------------------------------------------------------
CVG Siderurgica Del Orinoco C.A. (``Sidor'')............           51.21
All Others..............................................           51.21
------------------------------------------------------------------------

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 threaten material 
injury to, the U.S. industry.

Public Comment

    Case briefs or other written comments in at least six copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than January 5, 1998, and rebuttal briefs, no later than January 
12, 1998. A list of authorities used and an executive summary of issues 
should accompany any briefs submitted to the Department. Such summary 
should be limited to five pages total, including footnotes. In 
accordance with section 774 of the Act, we will hold a public hearing, 
if requested, to

[[Page 51587]]

afford interested parties an opportunity to comment on arguments raised 
in case or rebuttal briefs. Tentatively, the hearing will be held on 
January 14, at 2:00 p.m. in Room 1412 at the U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230. 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 to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within ten days of the publication of this notice. Requests 
should contain: (1) The party's name, address, and telephone number; 
(2) the number of participants; and (3) a list of the issues to be 
discussed. Oral presentations will be limited to issues raised in the 
briefs. If this investigation proceeds normally, we will make our final 
determination by 135 days after the publication of this notice in the 
Federal Register.
    This determination is published pursuant to sections 733(f) and 
777(i) of the Act.

    Dated: September 24, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-26043 Filed 9-30-97; 8:45 am]
BILLING CODE 3510-DS-P
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