Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices 61787

longer prevents the suppression or

undercutting of domestic prices of

merchandise manufactured in the United

States, the provisions of subsection (I) shall

apply.

[FR Doc. 97–30395 Filed 11–18–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–821–808]

Notice of Final Determination of Sales

at Less Than Fair Value: Certain Cutto-Length Carbon Steel Plate from the

Russian Federation

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 19, 1997.

FOR FURTHER INFORMATION CONTACT:

Nithya Nagarajan at (202) 482–1324 or

Eugenia Chu at (202) 482–3964, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, N.W., Washington, D.C. 20230.

Applicable Statute: Unless otherwise

indicated, all citations to the statute are

references to the provisions effective

January 1, 1995, the effective date of the

amendments made to the Tariff Act of

1930 (the Act) by the Uruguay Round

Agreements Act (URAA). In addition,

unless otherwise indicated, all citations

to the Department’s regulations are to 19

C.F.R. part 353 (1997).

Final Determination: We determine

that certain cut-to-length steel plate

(CTL plate) from the Russian Federation

is being, or is likely to be, sold in the

United States at less than fair value

(LTFV), as provided in section 735 of

the Act.

Case History

Since the preliminary determination

in this investigation (Preliminary

Determination of Sales at Less Than

Fair Value: Certain Cut-to-Length

Carbon Steel Plate From the Russian

Federation, 62 FR 31967 (June 11,

1997)), the following events have

occurred:

In June 1997, we verified the

Severstal’s questionnaire responses. On

July 23, 1997, the Department issued its

report on verification findings.

Petitioners and Respondent, Severstal,

submitted case briefs on July 31, 1997,

and rebuttal briefs on August 5, 1997. A

public hearing was not requested nor

held.

On August 8, 1997, the Department

provided interested parties the

opportunity to submit additional

publicly-available information (PAI)

from surrogate countries to value certain

factors of production. The Department

received responses on August 15, 1997,

and comments on August 22, 1997.

Scope of Investigation

The products covered by this

investigation are hot-rolled iron and

non-alloy steel universal mill plates

(i.e., flat-rolled products rolled on four

faces or in a closed box pass, of a width

exceeding 150 mm but not exceeding

1250 mm and of a thickness of not less

than 4 mm, not in coils and without

patterns in relief), of rectangular shape,

neither clad, plated nor coated with

metal, whether or not painted,

varnished, or coated with plastics or

other nonmetallic substances; and

certain iron and non-alloy steel flatrolled products not in coils, of

rectangular shape, hot-rolled, neither

clad, plated, nor coated with metal,

whether or not painted, varnished, or

coated with plastics or other

nonmetallic substances, 4.75 mm or

more in thickness and of a width which

exceeds 150 mm and measures at least

twice the thickness. Included as subject

merchandise in this petition are flatrolled products of nonrectangular crosssection where such cross-section is

achieved subsequent to the rolling

process (i.e., products which have been

‘‘worked after rolling’’)—for example,

products which have been bevelled or

rounded at the edges. This merchandise

is currently classified in the

Harmonized Tariff Schedule of the

United States (HTS) under item

numbers 7208.40.3030, 7208.40.3060,

7208.51.0030, 7208.51.0045,

7208.51.0060, 7208.52.0000,

7208.53.0000, 7208.90.0000,

7210.70.3000, 7210.90.9000,

7211.13.0000, 7211.14.0030,

7211.14.0045, 7211.90.0000,

7212.40.1000, 7212.40.5000,

7212.50.0000. Excluded from the subject

merchandise within the scope of the

petition is grade X–70 plate. Although

the HTS subheadings are provided for

convenience and customs purposes, our

written description of the scope of this

investigation is dispositive. See

memorandum on Scope of

Investigations on Carbon Steel Plate,

from Joseph Spetrini to Robert S.

LaRussa (October 24, 1997).

Period of Investigation (POI)

The POI is April 1, 1996 through

September 30, 1996.

Separate Rates

Severstal has requested a separate,

company-specific rate. The claimed

ownership structure of Severstal during

the POI is that of a publicly owned joint

stock company, where the state owned

20% of the shares.

To establish whether a firm is

sufficiently independent from

government control to be entitled to a

separate rate, the Department analyzes

each exporting entity under a test

arising out of the Final Determination of

Sales at Less Than Fair Value: Sparklers

from the People’s Republic of China, 56

FR 20588 (May 6, 1991) (Sparklers) and

amplified in Final Determination of

Sales at Less Than Fair Value: Silicon

Carbide from the People’s Republic of

China, 59 FR 22585 (May 2, 1994)

(Silicon Carbide). Under the separate

rates criteria, the Department assigns

separate rates in nonmarket economy

cases only if a respondent can

demonstrate the absence of both de jure

and de facto governmental control over

export activities.

1. Absence of De Jure Control

An individual company may be

considered for a separate rate if it meets

the following de jure criteria: (1) an

absence of restrictive stipulations

associated with an individual exporter’s

business and export licenses; (2) any

legislative enactments decentralizing

control of companies; and (3) any other

formal measures by the government

decentralizing control of companies.

Severstal has placed on the

administrative record a number of

documents demonstrating absence of de

jure control. These documents include

laws, regulations, and provisions

enacted by the government of the

Russian Federation, describing the

deregulation of Russian enterprises as

well as the deregulation of the Russian

export trade (except for a list of

products that may be subject to

government export constraints which

Severstal claims, and the Department

verified, do not include subject

merchandise). Specifically, Severstal

provided English translations of the

laws and regulations governing their

enterprises. These laws and regulations

authorized Severstal to make its own

operational and managerial decisions

during the POI. See Separate Rates

Memorandum, dated June 3, 1997.

2. Absence of De Facto Control

The Department typically considers

four factors in evaluating whether each

respondent is subject to de facto

governmental control of its export

functions: (1) whether the export prices

(‘‘EP’’) are set by or subject to the

approval of a governmental authority;

(2) whether the respondent has

authority to negotiate and sign contracts

and other agreements; (3) whether the
61788 Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices

respondent has autonomy from the

government in making decisions

regarding the selection of management;

and (4) whether the respondent retains

the proceeds of its export sales and

makes independent decisions regarding

disposition of profits or financing of

losses.

Severstal asserted, and we verified,

the following: (1) it establishes its own

EPs; (2) it negotiates contracts without

guidance from any governmental

entities or organizations; (3) it selects its

own management; and (4) it retains the

proceeds of its export sales, uses profits

according to its business needs, and has

the authority to sell its assets and to

obtain loans. In addition, Severstal’s

questionnaire responses indicate that

company-specific pricing during the

POI does not suggest coordination

among exporters. During verification

proceedings, Department officials

viewed such evidence as sales

documents, company correspondence,

and bank statements. This information

supports a finding that, during the POI,

there was a de facto absence of

governmental control of export

functions. In addition, we determined

that Severstal had autonomy from the

government in making decisions

regarding the selection of management

during the POI. Therefore, we have

concluded that Severstal is entitled to a

separate rate. See Separate Rates

Memorandum, dated June 3, 1997.

The Russia-Wide Rate

U.S. import statistics indicate that the

total quantity and value of U.S. imports

of certain carbon steel plate from the

Russian Federation is greater than the

total quantity and value of steel plate

reported by all Russian companies that

submitted responses. Given this

discrepancy, we conclude that not all

exporters of Russian carbon steel plate

responded to our questionnaire.

Accordingly, we are applying a single

antidumping deposit rate—the Russiawide rate—to all exporters in the

Russian Federation (other than

Severstal), based on our presumption

that those respondents who failed to

respond constitute a single enterprise

and are under common control by the

Russian Federation government. See,

e.g., Final Determination of Sales at Less

Than Fair Value: Bicycles from the

People’s Republic of China, 61 FR 19026

(April 30, 1996).

This Russia-wide antidumping rate is

based on adverse facts available. Section

776(a)(2) of the Act provides that ‘‘if an

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, if the Department finds

that an interested party ‘‘has failed to

cooperate by not acting to the best of its

ability to comply with a request for

information,’’ the Department may use

information that is adverse to the

interests of that party as the facts

otherwise available. The statute also

provides that such an adverse inference

may be based on secondary information,

including the information drawn from

the petition.

As discussed above, all Russian

exporters that do not qualify for a

separate rate are treated as a single

enterprise. Because some exporters of

the single enterprise failed to respond to

the Department’s requests for

information, that single enterprise is

considered to be uncooperative. In such

situations, the Department generally

selects as total facts available either the

higher of the average of the margin from

the petition or the highest rate

calculated for a respondent in the

proceeding. See, e.g., Notice of Final

Determination of Sales at Less Than

Fair Value: Persulfates From the

People’s Republic of China, 96 FR 27222

(May 19, 1997). In the present case, the

average margin in the petition is higher

than the one calculated rate.

Accordingly, the Department has based

the Russia-wide rate on information in

the petition. In this case, the average

petition rate is 185.00 percent.

Section 776(c) of the Act provides that

where the Department relies on

‘‘secondary information,’’ the

Department shall, to the extent

practicable, corroborate that information

from independent sources reasonable at

the Department’s disposal. The

Statement of Administrative Action

(SAA), accompanying the URAA (H.

Doc. 316, Vol. 1, 103d Cong., 2d Sess.

870 (1996)), clarifies that the petition is

‘‘secondary information’’ and that

‘‘corroborate’’ means to determine that

the information used has probative

value. See SAA at 870.

In accordance with section 776(c) of

the Act, we corroborated the margins in

the petition to the extent practicable.

The information contained in the

petition shows that petitioners

calculated export price based on two

methods: (1) the import values declared

to the U.S. Customs Service; and (2) an

average export price derived from actual

U.S. selling prices known to petitioners.

We compared the starting prices used by

petitioner less the importer mark-ups

against prices derived from U.S. import

statistics and found that the two sets of

prices were consistent. We also

compared the movement charges used

in the petition with the surrogate values

used by the Department in its margin

calculations and found them to be

consistent.

The information in the petition with

respect to the normal value (NV) is

based on factors of production used by

the petitioner in the production of steel

plate. Petitioner submitted usage

amounts for materials, labor and energy,

adjusted for known differences in

production efficiencies. To account for

differences between the production

processes of petitioners and potential

respondents, Petitioner submitted three

cost models in the petition: (1) Basic

Oxygen Furnace (BOF) Cost Model; (2)

Open-Hearth Furnace Cost Model; and

(3) Weighted Average Normal Value of

the BOF and Open-Hearth methods.

The margins in the petition, which

ranged from 139.97 to 230.38 percent,

were obtained by Petitioners by

comparing the normal values to the

export price developed from customs

values and to export prices developed

from actual U.S. price quotes. For each

method, petitioners submitted estimated

dumping margins for the BOF method,

the open-hearth method and a weightedaverage of the two. See Corroboration

Memorandum, dated June 3, 1997.

Fair Value Comparisons

To determine whether the sale of

certain carbon steel plate from the

Russian Federation sold to the United

States by the Russian exporters

receiving separate rates were made at

less than fair value, we compared the EP

to the NV, as specified in the ‘‘Export

Price’’ and ‘‘Normal Value’’ sections of

this notice.

Export Price

For Severstal, we calculated EP in

accordance with section 772(a) of the

Act, because the subject merchandise

was sold directly to the first unaffiliated

purchaser in the United States prior to

importation and constructed export

price (CEP) methodology was not

otherwise indicated. In accordance with

section 777A(d)(1)(A)(i) of the Act, we

compared POI-wide weighted-average

EPs to the factors of production.
Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices 61789

We corrected Severstal’s data for

errors and minor omissions found at

verification and submitted to the

Department. We calculated EP in

accordance with our preliminary

calculations, except that we: (1)

corrected for the errors found at

verification as submitted by Severstal on

July 18, 1997, and (2) corrected input

freight factors for limestone and

ferroalloy purchases based on findings

from verification, see Comments below.

Normal Value

Section 773(c) of the Act requires the

Department to value the factors of

production, to the extent possible, in

one or more market economy countries

that are at a level of economic

development comparable to that of the

non-market economy country and that

are significant producers of comparable

merchandise.

In our preliminary determination, we

selected Brazil as our surrogate country.

Brazil is an appropriate country for the

reasons set forth in our preliminary

determination. See the January 27, 1997

memorandum from the Office of Policy

discussing our selection of surrogate

countries for Russia (Policy Memo).

Since we find no compelling reason to

change this selection, we have

continued to base FMV on the values of

the factors of production as valued in

Brazil.

Factors of Production

We calculated NV based on factors of

production cited in the preliminary

determination, making adjustments for

specific verification findings. See Final

Determination Calculation

Memorandum, dated October 24, 1997.

To calculate NV, we multiplied the

verified amounts for the factors of

production by the appropriate surrogate

value for the different inputs. We have

used the same surrogate sources as in

the preliminary determination with the

exception of overhead, SG&A, and

profit. For the final determination we

based the percentages for overhead,

SG&A and profit on the detailed public

version of Companhia Siderurgica de

Tubarao’s (CST) and Usinas

Siderurgicas de Minas Gerais’

(Usiminas) financial statements that

were placed on the record of this

investigation by Severstal. See Comment

3, below.

Verification

As provided in section 782(i) of the

Act, we verified the information

submitted by Severstal for use in our

final determination. We used standard

verification procedures, including

examination of relevant accounting and

production records and original source

documents provided by Severstal.

Comment 1: Input Freight Factors for

Limestone and Ferroalloy Purchases.

Petitioners claim that Severstal falsely

reported no transportation costs

incurred in connection with its

purchases of limestone and ferroalloys

for use as raw material inputs.

Petitioners state that at verification the

Department determined that one of

Severstal’s two limestone suppliers is

located near Severstal’s Cherepovets

facility, and the other is located a fair

distance away. Additionally, Petitioners

assert that Severstal has numerous

suppliers of ferroalloys located at

varying distances from Severstal’s

facility. Petitioners argue that the failure

to report these facts was not an

‘‘inadvertent’’ error and the information

does not constitute a ‘‘minor’’

correction. Therefore, Petitioners argue

that the Department should treat

Severstal’s withholding of this

information as a failure to provide

requested information in a timely

fashion and an impediment to this

proceeding. Petitioners rely on Titanium

Sponge from the Russian Federation;

Notice of Final Results of Antidumping

Duty Administrative Review, 61 FR

58525 (Nov. 15, 1996) (Titanium Sponge

from Russia) to argue that the

Department may not accept this new

information at verification, stating that

‘‘the Department accepts new

information at verification only when

(1) the need for that information was not

evident previously, (2) the information

makes minor corrections to information

already on the record, or (3) the

information corroborates, supports, or

clarifies information already on the

record.’’ Furthermore, Petitioners argue

that, because Severstal did not act to the

best of its ability in responding to the

Department’s requests, the Department

should apply adverse facts available by

calculating freight for both limestone

and ferroalloys as originating from the

most distant suppliers of each input.

Severstal argues that the use of ‘‘facts

available’’ is not appropriate in this

situation as Severstal, who has never

before been involved in a U.S.

antidumping proceeding and has never

before faced data-gathering demands of

such intensity, submitted a massive

amount of data, the overwhelming bulk

of which was verified. Severstal argues

that in the limited amount of time to

prepare its responses it focused on the

major inputs. Furthermore, Severstal

asserts, because one of the major sources

of limestone is located in the immediate

vicinity of Severstal’s steel mill, it is not

surprising that it overlooked the more

distant source in preparing its response.

Additionally, Severstal argues that it is

the Department’s standard to accept

such corrected data.

Department Position

We agree with Petitioner that the

Department must resort to facts

available to calculate freight for

ferroalloys. Section 776(b) of the Act

provides that adverse inferences may be

used if a party has failed to cooperate

by not acting to the best of its ability to

comply with requests for information.

Severstal reported no transportation

costs for its purchase of ferroalloys

despite the fact that none of the

suppliers of ferroalloys are located in

the vicinity of Severstal’s steel mill.

Therefore, for the final determination,

we have used the greatest reported

distance to calculate freight for

ferroalloys as adverse facts available.

However, based on the fact that a

major source of limestone is located in

the immediate vicinity of Severstal’s

steel mill, we agree with Severstal that

the other source was a mere oversight

and constitutes an inadvertent error.

Therefore, we did not use the greatest

distance to calculate freight for

limestone. Instead, we have used, as

adverse facts available, a simple average

of the two verified distances to calculate

transportation costs incurred with

Severstal’s purchase of limestone.

The submission of these corrections is

not the same as the submission of data,

rejected by the Department in Titanium

Sponge from Russia, where a party

claimed a by-product deduction at

verification. Severstal’s information,

contrary to Petitioners’ assertions,

constitutes a minor correction to the

information placed on the record by

Severstal and it has a negligible impact

on the weighted-average margin

calculation. Therefore, we have

accepted this information. However, as

stated above, we have used facts

available to calculate freight for both

limestone and ferroalloys in the final

determination because Severstal failed

to provide the requested information in

timely fashion.

Comment 2: Non-Metallic Waste at

the BOF and Recycled Materials at the

Open Hearth Furnace.

Petitioners argue that the information

first submitted at verification that

allegedly corrects ‘‘minor errors’’ in

Severstal’s reported non-metallic waste

offset at the basic oxygen furnace (BOF)

and recycled materials offset for the

open hearth furnaces should be rejected

because it does not correct clerical or

minor errors in Severstal’s original

submission and it is untimely, unclear,

and incorrect. In addition, Petitioners

argue that Severstal’s corrected
61790 Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices

information changes the reported

volume of recycled materials at the open

hearth.

Severstal does not insist that the offset

for non-metallic waste at the BOF be

adopted because Severstal has come to

the conclusion that it erred in including

this information in its correction letter

provided to the verifiers. Severstal has

since determined that the non-metallic

waste amounts reported in its BOF

ledger are not included as offsets by the

company when calculating its cost of

production of products for which that

shop is utilized. However, Severstal

argues that the Department should make

the requested correction for the offset

for recycled materials at the open hearth

furnace. Severstal explains that it

simply made an error when manually

preparing the database for submission,

which it corrected in its June 16, 1997

letter of verification corrections.

Severstal argues that it is the

Department’s well-established practice

to accept the correction of such errors,

especially in a case where the

overwhelming volume of submitted data

was verified as accurate.

Department Position

We agree with Petitioners that the

new information claiming an offset for

non-metallic waste at BOF should be

rejected since the non-metallic waste

amounts are not included as offsets by

Severstal. Therefore, we did not make

an adjustment in calculating normal

value.

Based on the results of verification,

we agree with Severstal regarding the

correction of the recycled materials at

the open hearth. The revision corrects

an error that arose from the manual

extraction of data from the open hearth’s

records which we verified (see

Verification Report, dated July 23,

1997). We have corrected for this error

in the final determination.

Comment 3: Factory Overhead, SG&A,

and Profit.

Petitioners claim that the

Department’s preliminary results did

not include all factory overhead costs

and that a dumping margin cannot

accurately be calculated without the

inclusion of non-depreciation overhead

costs. Although Petitioners have not

been able to find this information, they

provided one integrated producer’s

financial statement (Pohang Iron & Steel

Co., Ltd. (‘‘POSCO’’)) which provides a

detailed list of the types of expenses

incurred as manufacturing costs.

Petitioners urge the Department to

either use the percentages from

POSCO’s financial statement as facts

available to approximate the proper

amount of factory overhead costs, or use

its resources to find this additional

information.

Severstal argues that the Department

should reject Petitioners’ proposal to

use factory overhead values obtained

from the financial reports of a steel

company in Korea. Respondents

contend that Korea is not an appropriate

surrogate country for Russia, and it was

never considered by the Department or

the parties in this (or any other)

investigation as a potential surrogate.

Severstal cites Antifriction Bearings

(Other Than Tapered Roller Bearings)

and Parts Thereof from France, et al.;

Final Results of Antidumping Duty

Administrative Reviews, 57 FR 28360

(June 24, 1992) (Antifriction Bearings)

where the Department refused to use a

surrogate overhead rate from another

country because it was not among the

surrogate countries cited for that review.

Additionally, Severstal claims that to

stray from Brazil to Korea would violate

the Department’s preference for

consistency in the calculation of factor

values, which is referenced through its

reliance on data in a single surrogate

country if possible. See Final

Determination of Sales at Less Than

Fair Value: Certain Carbon Steel ButtWeld Pipe Fittings from the People’s

Republic of China, 57 FR 21058 (May

18, 1992) (Carbon Steel Butt-Weld Pipe

Fittings). Severstal further argues that

while only depreciation is identified in

the financial reports of the Brazilian

steel producers whose financial

information the Department used in the

Preliminary Results, the Department

merely accepted Petitioners’ own

proposal in using this data as the basis

for calculating the factory overhead

ratio.

Furthermore, Severstal argues that the

Department incorrectly utilized the data

from surrogate country steel producers’

financial statements for periods outside

the period of investigation (POI).

Severstal argues that, consistent with

the Department’s prior practice, the

Department should use financial data

contemporaneous with the POI.

Severstal cites several cases where the

Department has noted its policy to use

contemporaneous surrogate values.

Severstal also provided the 1996

financial statements of the surrogate

country companies and provided

recalculated ratios. Severstal

additionally alleges that the Department

made two clerical errors in calculating

the SG&A and profit ratios. Severstal

states that, when calculating the SG&A

factor, the Department incorrectly

included profit sharing expenses.

Severstal states that these expenses do

not represent actual expenses incurred

by the companies but, rather, reflect the

value of profits shared with employees

and management, dividend

distributions to employees, and annual

taxes on net income. Additionally,

Severstal states that the Department

made a mathematical error in

calculating the average profit ratio.

Severstal requests that, if the

Department chose not to utilize the

contemporaneous data, the Department

should at least utilize the correct ratio

of 25.56 percent as opposed to the 26.65

value utilized in the preliminary

determination.

Department Position

We agree with Petitioner that our

preliminary results did not include all

factory overhead costs; however, we

disagree with Petitioner’s suggestion to

use the data from a Korean steel

producer’s financial statement to

calculate a factory overhead ratio. It is

the Department’s preference to use a

single surrogate country as the source of

data in an NME investigation. See

Carbon Steel Butt-Weld Pipe Fittings.

Furthermore, it is the Department’s

practice to only use data of those

countries listed as potential surrogates

identified in the Policy Memo. See

Antifriction Bearings. Korea was never

identified as a potential surrogate for the

Russian economy. Therefore, we have

continued to use Brazilian data for the

final determination.

We agree with Severstal that the

Department should use financial data

contemporaneous with the POI. Based

on the submitted information and the

Department’s own research, we agree

with Severstal that the financial data

from the 1996 income statements of the

two Brazilian companies used in the

preliminary determination, CST and

Usiminas, are the most appropriate

surrogate information available to

calculate the percentages for overhead,

SG&A, and profit for our final

determination.

In contrast to our preliminary

determination, for this final

determination, in order to ensure that

all costs are properly accounted for, in

accordance with our practice we revised

the overhead ratio to include employee

profit sharing. Despite the manner in

which labor costs are packaged (i.e.,

either through straight salary, profit

sharing, etc.), total labor costs remain

the same to the employer. This includes

all profit sharing expenses. See

Porcelain-on-Steel Cookware from

Mexico: Notice of Final Results of

Antidumping Duty Administrative

Review, 62 FR 25908 (May 12, 1997),

where the Department determined that

profit sharing expense relates to the

compensation of direct labor. Labor is
Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices 61791

captured in the cost of manufacturing

which is part of the cost of sales. Thus,

we have included profit sharing in

overhead. However, if a company broke

out profit sharing between employees

and management, as CST has done, we

included management profit sharing in

the SG&A calculation and employee

profit sharing in the overhead

calculation. See Final Determination

Calculation Memorandum, dated

October 24, 1997.

Consistent with prior Department

practice, we have continued to include

social contributions in SG&A for the

final determination. See Final

Determination Calculation

Memorandum, dated October 24, 1997;

see also Notice of Preliminary

Determination of Sales at Less Than

Fair Value and Postponement of Final

Determinations: Certain Hot-Rolled

Carbon Steel Flat Products, Certain

Cold-Rolled Carbon Steel Flat Products,

Certain Corrosion-Resistant Carbon

Steel Flat Products, and Certain Cut-toLength Carbon Steel Plate From Brazil,

58 FR 7080 (February 4, 1993).

Comment 4: Energy.

In our preliminary determination, we

used a ‘‘theoretical fuel’’ ratio submitted

by Severstal to derive values for various

energy inputs. Petitioners allege that

this approach is flawed for several

reasons, particularly with respect to

inputs of energy gases. First, Petitioners

assert that the Department used

numbers that represent the amount of

energy or fuel theoretically necessary to

create the energy instead of the energy

generated (caloric output) by the

particular type of fuel. Petitioners argue

that the calculations should be based on

caloric yield because the heat

requirements of the steelmaking process

demand a certain caloric yield

regardless of the amount of energy that

may have been used to create the fuel

before it was purchased by the steel

producer. Second, Petitioners argue that

it is not clear what Respondents’

reported figures represent because

Severstal did not provide a citation or

supporting documentation for its table.

Third, Petitioners claim that the table

used by the Department is flawed

because the ratios representing the

energy needed to create each fuel are the

same as the ratios representing the

energy yield of the resulting product. In

other words, Petitioners conclude it

appears as though every fuel listed has

exactly the same energy efficiency.

Severstal agrees that the Department

may use the ‘‘theoretical fuel’’ ratios to

derive the values for energy sources.

Furthermore, Severstal claims that,

because the ‘‘theoretical fuel’’ data in

the first table to which Petitioners object

was based on a scientific study and

made available for the Department at

verification, there is no reason to doubt

its accuracy. However, Severstal does

not object to the proposal to use the

second table (showing the quantity of

energy (in calories) generated by each

type of fuel) to convert to an equivalent

consumption value in terms of natural

gas usage.

Department Position

Based on our findings at verification,

all gas input factors are reported in

cubic meters needed to produce one ton

of plate. Usage rates were adjusted to

account for yields and waste. In

obtaining surrogate value information,

we were able to find values for natural

gas in cubic meters based on Brazilian

import statistics, but were unable to

obtain surrogate values for other input

energy sources on the same basis.

Therefore, in order to ensure that the

value of energy was consistent across all

energy sources in calculating normal

value, we chose to convert the other

energy sources into natural gas

equivalents.

In response to Petitioners’ argument

that the Department should use the

caloric output of fuels to determine the

value of these fuels, we have used factor

inputs as reported on a caloric output

basis. We simply converted the

surrogate value for natural gas into other

gas equivalents using public conversion

rates. Therefore, we have continued to

use the methodology from our

preliminary determination as this

methodology is an accurate means of

valuing energy usage.

Comment 5: Reported Factor Usage

Data.

Petitioners allege that the production

factor data submitted by Severstal are

distorted in that they report the same

factors of production for multiple

CONNUMs. Petitioners claim that

Severstal did not submit its factor usage

data at the CONNUM-specific level of

detail requested by the Department and

that Severstal reported the same factor

input values for multiple CONNUMs.

Petitioners are primarily concerned with

Severstal’s failure to distinguish the

different costs. Petitioners argue that the

Department should adjust Severstal’s

submitted factor usage data to account

for differences in production costs.

Petitioners argue that in the past, the

Department has adjusted information to

correct for data which did not conform

to the level of specificity required and

cite Certain Cold-Rolled and CorrosionResistant Carbon Steel Flat Products

from Korea, 62 FR 18404 (April 15,

1997) (Carbon Steel Flat Products from

Korea) as an example where the

Department adjusted the respondent’s

reported costs because its reporting

method did not account for certain

differences in physical characteristics.

Petitioners argue that some products

cost more to produce and that the

Department should assign certain

products the highest total calculated

cost for any Severstal product.

Severstal argues that it explained the

calculations to the Department and the

data was verified. Severstal asserts that

it does not maintain its books in the

normal course of business according to

the product definitions established by

the Department in creating CONNUMs,

and that it submitted its factor data on

the basis of the company books and

records. Severstal claims that it reported

its costs to the degree of specificity

allowed by its records, and that in

situations where a respondent reported

its costs in as much detail as its normal

accounting system would allow, the

Department has repeatedly held that

‘‘adjustment’’ of the reported data

would be inappropriate. Severstal

further argues that Carbon Steel Flat

Products from Korea does not support

Petitioners’ point. In that case, Severstal

argues, the Department adjusted the

respondents’s cost data only where the

respondent had weight-averaged cost

data for all products that contained

certain product characteristics. For costs

associated with other physical

characteristics, Severstal contends, the

Department concluded that the

respondent reported costs in as much

detail as its accounting system allowed

and that any costs associated with other

physical characteristics were captured

and allocated to all products. Severstal

references several other cases to support

this interpretation.

Finally, Severstal argues that if the

Department were to inflate the reported

factors for one of the products sold, it

must somehow compensate by reducing

the factors for other subject merchandise

because the total quantity of factors

consumed in the production of the

subject merchandise shipped to the

United states is fixed and verified.

Severstal alleges that any other response

by the Department would not be an

‘‘adjustment,’’ but would rather

constitute a punitive inflation of

Severstal’s reported factors.

Department Position

We agree with Severstal. The

Department has in the past, as

Petitioners correctly point out, adjusted

information to correct for data which

did not appropriately account for

physical characteristics. However, even

in cases where a company has been

unable to provide information at the
61792 Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices

level of detail requested by the

Department, we still accepted the

reported costs where we were satisfied

that these costs nonetheless reasonably

reflected the actual costs of producing

the subject merchandise during the POI.

For the same reasons outlined in

Carbon Steel Flat Products from Korea

and in Final Results of Antidumping

Administrative Review: Certain

Corrosion-Resistant Carbon Steel Flat

Products and Certain Cut-to-Length

Carbon Steel Plate from Canada, 61 FR

13815 (March 28, 1996), we agree with

Severstal that its reported costs were

reasonable. In these cases, we

concluded that the respondent’s

methodology was reasonable given the

nature of its cost accounting system, its

verified inability to determine specific

costs, and the conservative method in

which the costs were reported.

In this case, Severstal has reported

product-specific costs from its normal

cost accounting system, which we

verified reasonably reflect the actual

usage of materials to produce the

merchandise under investigation.

Furthermore, given the nature of

Severstal’s cost accounting system, our

verification findings confirmed

Severstal’s inability to determine

specific costs. The instant situation is

very different from that in Carbon Steel

Flat Products from Korea where we

determined that the respondent did not

appropriately account for two

characteristics where the respondent

derived a general weighted-average cost

and applied it to all merchandise that

contained the two certain physical

characteristics. This weight-averaged

cost was contrary to the respondent’s

normal cost accounting system, resulted

in a distortion of the cost of

manufacturing, and differentiations

were lost through averaging. For these

reasons we calculated adjustment

factors in that case. However, this

clearly is not the case here.

In regards to the other physical

characteristics in Carbon Steel Flat

Products from Korea, the Department

found that costs were captured and

allocated to all products because the

respondent reported costs in as much

detail as its normal accounting system

provided, as Severstal has in this case.

Furthermore, Severstal submitted its

factor usage ratios as recorded in the

company books and records. As stated

above, based on our findings at

verification, we have determined that

Severstal’s reported costs reflect the

actual costs as recorded in its normal

accounting system and reasonably

reflect the cost of producing the

merchandise. Therefore, we did not

make any adjustments in this final

determination.

Comment 6: Indirect Materials and

Energy in Factory Overhead.

Petitioners argue that the Department

should utilize the value of U.S. exports

to Brazil for certain energy and indirect

materials which were not valued for the

preliminary determination. Petitioners

provided the Department with publicly

available information taken from U.S.

Census statistics for exports to Brazil for

1996 and claim that in the absence of

alternative data, the Department should

use data on U.S. exports of certain

indirect inputs to Brazil to determine

the appropriate surrogate value.

Severstal states that because these

materials and types of energy are not

directly related to the production of the

merchandise under investigation, the

Department properly treated these

inputs as overhead expenses. Severstal

cited several cases including Notice of

Preliminary Determinations of Sales at

Less Than Fair Value and Postponement

of Final Determinations: Brake Drums

and Brake Rotors From the People’s

Republic of China, 61 FR 53190 (Oct.

10, 1996) (Brake Drums and Rotors from

the PRC); Sulfanilic Acid From the

People’s Republic of China; Final

Results of Antidumping Duty

Administrative Review, 61 FR 53711

(Oct. 15, 1996) (Sulfanilic Acid from the

PRC); and Porcelain-on-Steel Cooking

Ware From the People’s Republic of

China; Preliminary Results of

Antidumping Duty Administrative

Review, 62 FR 4979 (Feb. 3, 1997)

(Porcelain-on-Steel Cooking Ware from

the PRC), as cases where the Department

stated that its general policy is not to

calculate surrogate values of indirect

inputs separately, but instead is to

include these inputs as part of the

overhead expenses.

Department Position

We agree with Severstal that these

inputs are not materials directly

incorporated in the production of steel

and thus are not part of materials

consumed. Therefore, consistent with

our preliminary determination, we have

treated these inputs as part of factory

overhead in the final determination.

Comment 7: Critical Circumstances.

Severstal alleges that the Department

acted unlawfully in finding critical

circumstances in the preliminary

determination. They base their

argument on the fact that the 1994

URAA added a new element to the

critical circumstances analysis that the

importer ‘‘knew or should have known’’

that ‘‘there was likely to be material

injury by reason of’’ the LTFV sales of

the subject merchandise. Severstal states

that because the ITC preliminarily

found only a threat of material injury

rather than actual injury, the

Department may not impute that the

importers had knowledge that these

sales would cause material injury to a

U.S. domestic industry. Severstal alleges

that the Department’s preliminary

decision is unlawful and contrary to its

determination in Notice of Final

Determination of Sales at Less Than

Fair Value: Brake Drums and Brake

Rotors from the People’s Republic of

China, 62 FR 9162 (Feb. 28. 1997)

(Brake Drums and Rotors) where the

Department stated that ‘‘when the ITC

has preliminarily found no reasonable

indication that a U.S. industry is

experiencing present material injury by

reason of the dumped subject

merchandise, but only a threat of such

injury, the Department has determined

that it is not reasonable to conclude that

an importer knew or should have

known that its imports would cause

material injury * * *.’’

Severstal further argues that the

Department’s reliance on the increase in

the volume of imports and the

magnitude of the margins is not only

contrary to the Department’s previous

practice but also redundant because

these factors are also reviewed when

determining whether there has been

massive imports during a short period of

time and whether the importer had

knowledge of LTFV sales. Therefore,

Respondents asset, the Department has

collapsed the first prong of its analysis

of the issue with the second and third

prongs of the analysis to incorrectly

conclude that critical circumstances

existed in the preliminary

determination.

Petitioners rebut Severstal’s argument

that the Department improperly found

critical circumstances for the

preliminary determination. Petitioners

note that it is a well established practice

for the Department to impute knowledge

of material injury based on dumping

margins of greater than 25 percent.

Petitioners argue that the

Department’s negative finding in Brake

Drums and Rotors from the PRC-Final

does not preclude it from making an

affirmative finding in the current case

because (1) the SAA and the URAA are

silent as to how the Department is to

make a finding of importer knowledge

of material injury and, (2) it is within

the Department’s discretion to select a

reasonable and administrable approach.

Petitioners also argue that an ITC threat

determination does not mean that an

importer of Russian CTL plate cannot

have known that there was likely to be

material injury by reason of dumped

imports during the critical
Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices 61793

circumstances period. Petitioners argue

that the basis for an affirmative threat

determination by the ITC is ‘‘whether

further dumped or subsidized imports

are imminent and whether material

injury by reason of imports would occur

unless an order is issued or a

suspension agreement is accepted’.

Department Position

We agree with Petitioner and continue

to find critical circumstances in the

final determination.

Section 735(a)(3) of the Act provides

that if the final determination is

affirmative, then that determination

shall also contain a finding of whether:

(A)(i) there is a history of dumping and

material injury by reason of dumped

imports in the United States or

elsewhere of the subject merchandise, or

(ii) the person by whom, or for whose

account, the merchandise was imported

knew or should have known that the

exporter was selling the subject

merchandise at less than its fair value

and that there would be material injury

by reason of such sales, and (B) there

have been massive imports of the

subject merchandise over a relatively

short period.

Because there is no history of

dumping and material injury by reason

of dumped imports for cut-to-length

steel plate, we conducted our analysis

under section 735(a)(3)(A)(ii) of the Act

(importer knowledge of dumping and

material injury).

1. Importer Knowledge of Dumping

In determining whether an importer

knew or should have known that the

exporter was selling the plate at less

than fair value, the Department

normally considers margins of 15

percent or more sufficient to impute

knowledge of dumping for constructed

export price (CEP) sales, and margins of

25 percent or more for export price (EP)

sales. See, e.g., Preliminary Critical

Circumstances Determination: Honey

from the People’s Republic of China

(PRC), 60 FR 29824 (June 6, 1995)

(Honey). Since the company-specific

margins for EP sales in our preliminary

determination for CTL plate are greater

than 25 percent for Severstal, we have

imputed knowledge of dumping.

2. Massive Imports

To determine whether imports were

massive over a relatively short time

period, the Department typically

compares the import volume of the

subject merchandise for the three

months immediately preceding and

following the initiation of the

proceeding. See 19 C.F.R. 353.16(g).

Pursuant to 19 C.F.R. 353.16(f)(2), the

Department will consider an increase of

15 percent or more in the imports of the

subject merchandise over the relevant

period to be massive. As noted, because

imports of the subject merchandise

increased 145 percent during the

relevant period, we have determined

that imports have been massive.

3. Importer Knowledge of Material

Injury

The statute and the Statement of

Administrative Action which

accompanies the Uruguay Round

Agreements Act (SAA) are silent as to

how we are to make a finding that there

was knowledge that there would be

material injury. Therefore, Congress has

left the method of implementing this

provision to the Department’s

discretion.

In determining whether an importer

knew or should have known that there

would be material injury by reason of

dumped imports, we normally will look

to the preliminary injury determination

of the ITC. If the ITC finds a reasonable

indication of present material injury to

the relevant U.S. industry, we will

determine that a reasonable basis exists

to impute importer knowledge that there

would be material injury by reason of

dumped imports during the critical

circumstances period—the 90-day

period beginning with the initiation of

the investigation (see 19 C.F.R.

353.16(g)). If the ITC preliminarily finds

threat of material injury, we would

normally not find knowledge of injury.

However, in this case, the magnitude of

the margins and increase in imports are

so great that we have concluded that the

importer knew or should have known

that these sales of subject merchandise

to the U.S. would cause material injury.

In this case, imports of Russian plate

increased 145 percent in the three

months following the initiation of the

investigation when compared to the

three months immediately preceding

initiation, or almost ten times the level

of increase needed to find ‘‘massive

imports’’ during the same period (see

below). Furthermore, we preliminarily

determined that margins of 53.81

percent exist for Severstal. Based on the

ITC’s preliminary determination of

threat of injury, the massive increase in

imports noted above, and the high

preliminary margins, we have

determined that the importer knew or

should have known that there would be

material injury by means of sales of the

subject merchandise at less than fair

value.

In response to Severstal’s allegation,

we did not collapse the first prong of

our analysis with the second and third

prongs. Importer knowledge of sales at

less than fair value, importer knowledge

of injury, and massive imports are the

three separate criteria considered in

determining whether critical

circumstances exist. However, some of

the factors we examine to determine

whether each of these criteria are met

may be relevant to more than one of the

criteria. For example, the magnitude of

the margins is relevant to the importer’s

knowledge of sales at less than fair

value and the increase in import

volumes is likewise relevant to the

massive imports criterion. However,

both of these factors are also relevant to

the knowledge of injury criterion. If the

margins and the increase in imports are

very large, it is reasonable for us to

assume that the importer knew that

such an increase in imports at such low

prices would injure the U.S. domestic

industry.

In response to Severstal’s argument

regarding Brake Drums and Rotors, the

Department, in deciding the issue of

importer knowledge of material injury

in Brake Drums and Rotors was faced

with very different facts and

circumstances. In that case, the

company specific margins were all

under 15% for Rotors, except for one

company with a margin of 16.35%.

Moreover, for that one company, the

increase of its imports to the U.S. was

under 15%. Thus, the circumstances in

Brake Drums and Rotors, where the ITC

finding of threat of injury was coupled

with comparatively minimal companyspecific margins and absence of massive

imports, are very different from those in

the present investigation.

Thus, because we have determined in

this case that the importer knew or

should have known that Russian

exporters were selling the subject

merchandise at less than its fair value

and that there would be material injury

by reason of such sales, and because

there have been massive imports of the

subject merchandise over a relatively

short time period, we have determined

that critical circumstances exist for

Severstal.

4. Unexamined Respondents/RussiaWide Entity

As stated above, in a nonmarket

economy case, the Department

presumes that those respondents who

failed to respond to the Department’s

questionnaire constitute a single

enterprise and are under common

control by the Russian government.

Therefore, for companies subject to the

Russia-wide rate (i.e., companies which

did not respond to the Department’s

questionnaire), as facts available, we are

imputing knowledge based on the

Russia-wide rate.
61794 Federal Register / Vol. 62, No. 223 / Wednesday, November 19, 1997 / Notices

As noted above, we have determined,

based on facts available, that importers

knew or should have known that there

would be material injury to the U.S. cutto-length steel plate industry based on

the ITC’s preliminary determination of a

reasonable indication of present

material injury. In the absence of

shipment data for the Russia-wide

entity, we have determined based on

facts available and making the adverse

inference permitted under section

776(b) of the Act, that because this

entity did not provide an adequate

response to our questionnaire, there

were massive imports of subject

merchandise. We further note that the

record indicates a post-filing surge in

U.S. cut-to-length steel plate imports

from Russia which is not accounted for

by the cooperating respondent,

Severstal. Finally, the Russia-wide

margin of 185 percent exceeds the 25

percent threshold for imputing a

knowledge of dumping to the importers

of the merchandise. Therefore, for the

Russia-wide entity, critical

circumstances exist with respect to

imports of subject merchandise.

Therefore, we find that critical

circumstances exist for cut-to-length

carbon steel plate sales by all Russian

exporters.

Continuation of Suspension of

Liquidation

On October 24, 1997, the Department

signed a suspension agreement with the

Ministry of Foreign Economic Relations

and Trade of the Russian Federation

(the Agreement). Therefore, we will

instruct Customs to terminate the

suspension of liquidation of all entries

of cut-to-length carbon steel plate from

the Russian Federation. Any cash

deposits of entries of cut-to-length

carbon steel plate from the Russian

Federation shall be refunded and any

bonds shall be released.

On October 14, 1997, we received a

request from Petitioners requesting that

we continue the investigation. We

received a separate request from the

United Steelworkers of America, an

interested party under section 771(9)(D)

of the Act, on October 14, 1997.

Pursuant to these requests, we have

continued and completed the

investigation in accordance with section

734(g) of the Act. We have found the

following margins of dumping:

Manufacturer/producer/exporter

Weight-average margin percentage

Severstal ................................... 53.81

Russia-Wide Rate ..................... 185.00

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the ITC of our

determination. As our final

determination is affirmative, the ITC

will determine, within 45 days, whether

these imports are causing material

injury, or threat of material injury, to an

industry in the United States. If the

ITC’s injury determination is negative,

the Agreement will have no force or

effect, and the investigation shall be

terminated. See section 734(f)(3)(A) of

the Act. If, on the other hand, the

Commission’s determination is

affirmative, the Agreement shall remain

in force but the Department shall not

issue an antidumping duty order so long

as (1) the Agreement remains in force,

(2) the Agreement continues to meet the

requirements of subsection (d) and (1) of

the Act, and the parties to the

Agreement carry out their obligations

under the Agreement in accordance

with its terms. See section 734(f)(3)(B)

of the Act.

This determination is published

pursuant to section 735(d) of the Act.

Dated: October 24, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–30396 Filed 11–18–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–570–822]

Certain Helical Spring Lock Washers

From the People’s Republic of China;

Final Results of Antidumping Duty

Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

SUMMARY: The Department of Commerce

(the Department) published the

preliminary results of the administrative

review of the antidumping duty order

on certain helical spring lock washers

(HSLWs) from the People’s Republic of

China (PRC) in the Federal Register on

July 11, 1997 (62 FR 37192). This review

covers sales of this merchandise to the

United States during the period October

1, 1995 through September 30, 1996. We

gave interested parties an opportunity to

comment on our preliminary results.

Based upon analysis of the comments

received, we changed the results from

those presented in the preliminary

results of the review.

EFFECTIVE DATE: November 19, 1997.

FOR FURTHER INFORMATION CONTACT:

Tamara Underwood or Maureen

Flannery, Import Administration,

International Trade Administration,

U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone:

(202) 482–4733.

Background

The Department published the

preliminary results of this review of the

antidumping duty order on HSLWs from

the PRC in the Federal Register on July

11, 1997 (62 FR 37192). On August 11,

1997, petitioner, Shakeproof Industrial

Products Division of Illinois Tool Works

(SIP), and respondent, Zhejiang Wanxin

Group, Co., Ltd. (ZWG), submitted

comments on the Department’s

preliminary results. On August 18,

1997, petitioner and respondent

submitted rebuttal comments. The

Department rejected respondent’s

August 11, 1997 submission because it

contained new information. Respondent

resubmitted comments on August 22,

1997. We held a hearing on September

22, 1997. On October 28, 1997, the

Department placed new information on

the record and gave interested parties an

opportunity to comment pursuant to 19

U.S.C. section 1677m(g). The

respondent submitted comments on

October 31, 1997. The Department has

now completed this review in

accordance with section 751 of the

Tariff Act of 1930, as amended (the Act).

Applicable Statute and Regulations

Unless otherwise stated, all citations

to the statute are references to the

provisions effective January 1, 1995, the

effective date of the amendments made

to the Act by the Uruguay Round of

Agreements Act. In addition, unless

otherwise stated, all citations to the

Department’s regulations are references

to the regulations as codified at 19 CFR

Part 353 (1996).

Scope of Review

The products covered by this review

are HSLWs of carbon steel, of carbon

alloy steel, or of stainless steel, heattreated or non-heat-treated, plated or

non-plated, with ends that are off-line.

HSLWs are designed to: (1) function as

a spring to compensate for developed

looseness between the component parts

of a fastened assembly; (2) distribute the

load over the larger area for screws or

bolts; and (3) provide a hardened

bearing surface. The scope does not

include internal or external tooth

washers, nor does it include spring lock

washers made of other metals, such as

copper.