[Federal Register Volume 63, Number 145 (Wednesday, July 29, 1998)]
[Notices]
[Pages 40391-40404]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20016]


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

DEPARTMENT OF COMMERCE

International Trade Administration
[A-469-807]


Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Wire Rod From Spain

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

EFFECTIVE DATE: July 29, 1998.

FOR FURTHER INFORMATION CONTACT: Howard Smith or Irene Darzenta, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230; telephone: (202) 482-5193 or (202) 482-6320, 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 
to the regulations at 19 CFR part 351, 62 FR 27296 (May 19, 1997).

Final Determination

    We determine that stainless steel wire rod (SSWR) from Spain is 
being sold in the United States at less than fair value (LTFV), as 
provided in section 735 of the Act. The estimated margins are shown in 
the ``Suspension of Liquidation'' section of this notice.

Case History

    The preliminary determination in this investigation was issued on 
February 25, 1998. See Notice of Preliminary Determination of Sales at 
Less Than Fair Value and Postponement of Final Determination: Stainless 
Steel Wire Rod from Spain, 63 FR 10849 (March 5, 1998) (Notice of 
Preliminary Determination). Since the preliminary determination, the 
following events have occurred:

[[Page 40392]]

    On March 6, 1998 the respondent in this investigation, Roldan, S.A. 
(Roldan), alleged that the Department of Commerce (the Department) made 
a ministerial error in calculating the margin for the preliminary 
determination. While we agreed with Roldan's allegation, in accordance 
with sections 351.224(e) and 351.224(g) of the Department's 
regulations, we did not amend our preliminary determination because the 
ministerial error was not significant. However, we have corrected this 
error in the final determination. For further discussion of the 
ministerial error, see the Memorandum from Howard Smith to Holly Kuga 
dated March 6, 1998.
    In March 1998, we issued supplemental questionnaires to Roldan and 
received responses to those questionnaires. Roldan submitted corrected 
sales and cost databases in April 1998.
    We verified Roldan's questionnaire responses in April and May 1998. 
At verification, Roldan identified various errors in its sales and cost 
databases, including incorrect payment dates for a significant number 
of U.S. sales and incorrect production quantities for all models listed 
in the cost databases. We requested that Roldan correct the erroneous 
U.S. payment dates and production quantities, and submit revised U.S. 
sales and cost databases. In response to our request, Roldan submitted 
revised cost data on May 8, 1998, and revised U.S. sales data on June 
12, 1998. The revised U.S. sales database included updated U.S. credit 
expenses based on the corrected payment dates.
    The petitioners (i.e., AL Tech Specialty Steel Corp., Carpenter 
Technology Corp., Republic Engineered Steels, Talley Metals Technology, 
Inc., and the United Steel Workers of America, AFL-CIO/CLC) and Roldan 
submitted case briefs on June 11, 1998, and rebuttal briefs on June 18, 
1998. At the request of all parties, the public hearing scheduled for 
June 19, 1998, was canceled.

Scope of Investigation

    For purposes of this investigation, SSWR comprises products that 
are hot-rolled or hot-rolled annealed and/or pickled and/or descaled 
rounds, squares, octagons, hexagons or other shapes, in coils, that may 
also be coated with a lubricant containing copper, lime or oxalate. 
SSWR is made of alloy steels containing, by weight, 1.2 percent or less 
of carbon and 10.5 percent or more of chromium, with or without other 
elements. These products are manufactured only by hot-rolling or hot-
rolling, annealing, and/or pickling and/or descaling, are normally sold 
in coiled form, and are of solid cross-section. The majority of SSWR 
sold in the United States is round in cross-sectional shape, annealed 
and pickled, and later cold-finished into stainless steel wire or 
small-diameter bar.
    The most common size for such products is 5.5 millimeters or 0.217 
inches in diameter, which represents the smallest size that normally is 
produced on a rolling mill and is the size that most wire-drawing 
machines are set up to draw. The range of SSWR sizes normally sold in 
the United States is between 0.20 inches and 1.312 inches diameter. Two 
stainless steel grades, SF20T and K-M35FL, are excluded from the scope 
of the investigation. The chemical makeup for the excluded grades is as 
follows:

                                                                        
                                                                        
                                                                        
                                 SF20T                                  
------------------------------------------------------------------------
Carbon             0.05 max           Chromium          19.00/21.00     
Manganese          2.00 max           Molybdenum        1.50/2.50       
Phosphorous        0.05 max           Lead added        (0.10/0.30)     
Sulfur             0.15 max           Tellurium         added (0.03 min)
Silicon            1.00 max                                             
------------------------------------------------------------------------
                                 K-M35FL                                
------------------------------------------------------------------------
Carbon             0.015 max          Nickel            0.30 max        
Silicon            0.70/1.00          Chromium          12.50/14.00     
Manganese          0.40 max           Lead              0.10/0.30       
Phosphorous        0.04 max           Aluminum          0.20/0.35       
Sulfur             0.03 max                                             
                                                                        

    The products under investigation are currently classifiable under 
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0030, 7221.00.0045, and 
7221.00.0075 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and customs purposes, the written description of the scope of this 
investigation is dispositive.

Period of Investigation

    The period of investigation (POI) is July 1, 1996, through June 30, 
1997.

Fair Value Comparisons

    To determine whether sales of SSWR from Spain to the United States 
were made at less than fair value, we compared the Constructed Export 
Price (CEP) to the Normal Value (NV) as defined in sections 772(b) and 
773(a) of the Act, respectively. We calculated CEP and NV following the 
general methodologies described in the preliminary determination. 
However, as noted in the ``Constructed Export Price'' and ``Normal 
Value'' sections below, we adjusted certain reported data based on our 
findings at verification and our positions discussed in the 
``Interested Party Comments'' section of this notice. For further 
discussion, see the Calculation Memorandum from Howard Smith to Irene 
Darzenta dated July 20, 1998 (Calculation Memorandum).

Product Comparisons

    We performed product comparisons based on the same characteristics 
and in the same general manner as that outlined in the preliminary 
determination. See Comment 3 in the ``Interested Party Comments'' 
section of this notice.
    As in the preliminary determination, in instances where Roldan has 
reported a non-AISI grade (or an internal grade code) for a product 
that falls within an AISI category, we have used the actual AISI grade 
in our analysis rather than the non-AISI grade reported by Roldan. In 
instances where the chemical content ranges of a reported non-AISI 
grade (or an internal grade code) are outside the parameters of an AISI 
grade, we have used the non-AISI (or internal) grade code reported by 
Roldan in our analysis. However, in instances in which an internal 
grade matches all the specified

[[Page 40393]]

chemical content tolerance ranges of an AISI grade, but the internal 
grade also contains amounts of chemicals that are not otherwise 
specified as being included in the standard AISI designation, we have 
used the corresponding AISI grade rather than the internal grade.

Use of Constructed Value

    On January 8, 1998, the Court of Appeals for the Federal Circuit 
issued a decision in CEMEX v. United States, 133 F.3d 897 (Fed Cir.) 
(Cemex). In that case, based on the pre-URAA version of the Act, the 
Court discussed the appropriateness of using constructed value (CV) as 
the basis for foreign market value when the Department finds home 
market sales to be outside the ``ordinary course of trade.'' This issue 
was not raised by any party in this proceeding. However, the URAA 
amended the definition of sales outside the ``ordinary course of 
trade'' to include sales below cost. See Section 771(15) of the Act. 
Consequently, the Department has reconsidered its practice in 
accordance with the Cemex decision and has determined that it would be 
inappropriate to resort directly to CV, in lieu of foreign market 
sales, as the basis for NV if the Department finds foreign market sales 
of merchandise identical or most similar to that sold in the United 
States to be outside the ``ordinary course of trade.'' Instead, the 
Department will use sales of similar merchandise, if such sales exist. 
The Department will use CV as the basis for NV only when there are no 
above-cost sales that are otherwise suitable for comparison. Therefore, 
in this proceeding, when making comparisons in accordance with section 
771(16) of the Act, we considered all products sold in the home market, 
as described in the ``Scope of Investigation'' section of this notice, 
above, that were in the ordinary course of trade for purposes of 
determining appropriate product comparisons to U.S. sales. Where there 
were no sales of identical merchandise in the home market made in the 
ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade, based on the characteristics listed in 
Sections B and C of our antidumping questionnaire. We have implemented 
the Court's decision in this case, to the extent that the data on the 
record permitted.

Level of Trade

    In the preliminary determination we found that Roldan's home market 
sales were at a different and more advanced level of trade than its 
U.S. sales; however, the information on the record did not permit us to 
quantify a level of trade (LOT) adjustment based on a pattern of 
consistent price differences and, thus, we were unable to grant a LOT 
adjustment. Because we reclassified Roldan's U.S. sales as CEP 
transactions we granted Roldan a CEP offset in accordance with section 
773(a)(7)(B) of the Act. Our findings at verification continue to 
support our preliminary level of trade analysis. Moreover, we have 
continued to treat Roldan's U.S. sales as CEP transactions (see Comment 
1 in the ``Interested Party Comments'' section of this notice). 
Therefore, in the final determination, we have also granted Roldan a 
CEP offset.

Facts Available

    At verification, we found that Roldan failed to report certain U.S. 
sales that were made by its affiliated U.S. sales agent during the POI. 
In accordance with section 776 (b) of the Act, we have used adverse 
facts available with regard to these sales in reaching our final 
determination. For further discussion, see Comment 2 in the 
``Interested Party Comments'' section of this notice.

Constructed Export Price

    In the preliminary determination, we treated Roldan U.S. sales as 
CEP transactions even though Roldan reported all of its U.S. sales as 
export price (EP) transactions. In this final determination, we have 
continued to treat Roldan's U.S. sales as CEP transactions and, thus, 
we followed the methodology described in the preliminary determination 
to adjust CEP in accordance with section 772(b) of the Act. However, we 
revised the following U.S. sales data based on our verification 
findings: (1) the gross unit price for six observations; (2) the 
quantity for one observation; (3) the shipment date and credit expense 
for one observation; (4) the discount for one observation; (5) the U.S. 
inland freight for one observation; and (6) the indirect selling 
expenses incurred in both the home and U.S. markets for all U.S. 
observations (see the Sales Verification Report from Howard Smith to 
Holly Kuga, dated June 4, 1998, at pages 2, 3, 18, 24, 29 and 36 (Sales 
Verification Report)).

Normal Value

    As noted in the preliminary determination, we determined that 
Roldan's sales in the home market serve as a viable basis for 
calculating NV. In performing the price-to-price comparisons described 
in the ``Fair Value Comparisons'' section of this notice, we followed 
the methodology described in the preliminary determination in adjusting 
NV in accordance with sections 773(a)(6) and 773(a)(7) of the Act. 
However, we revised the following home market sales data based on our 
verification findings: (1) the gross unit price for one observation; 
(2) the further processing code for one observation; and (3) the 
indirect selling expenses incurred in the home market for all home 
market observations (see the Sales Verification Report at pages 13, 14, 
and 21).
    In addition, consistent with our finding in the preliminary 
determination, we have excluded from our analysis Roldan's home market 
sales to an affiliated consumer of SSWR because we determined that 
those sales were not made at arm's-length prices and, thus, were 
outside the ordinary course of trade. Furthermore, we found that for 
certain models of SSWR, more than 20 percent of Roldan's home market 
sales made within an extended period of time were sold at prices that 
were less than the cost of production (COP), and that these prices did 
not provide for the recovery of costs within a reasonable period of 
time. Thus, in accordance with section 773 (b)(1) of the Act, we 
disregarded the below-cost sales and used the remaining above cost 
sales as the basis for determining NV. For further discussion of the 
arm's-length and sales-below-cost test used in our analysis, see Notice 
of Preliminary Determination, at pages 13-16.

Calculation of COP

    We calculated the weighted-average COP, which was used in our 
sales-below-cost test, in accordance with section 773(b)(3) of the Act. 
Specifically, we calculated the weighted-average COP for each model by 
adding together Roldan's cost of materials and fabrication for the 
foreign like product, plus amounts for home market selling, general and 
administrative expenses and packing costs. We have relied on Roldan's 
reported COP except in the following specific instances where the 
reported amount was not appropriately quantified or valued:
    (1) We disallowed Roldan's claimed startup adjustment (see Comment 
6 in the ``Interested Party Comments'' section of this notice and the 
Concurrence Memorandum from Peter Scholl and Howard Smith to Holly 
Kuga, dated July 20, 1998 (Concurrence Memorandum)).
    (2) We increased reported COP by the amount of the inventory write-
down that Roldan excluded from COP (see

[[Page 40394]]

Comment 7 in the ``Interested Party Comments'' section of this notice).
    (3) We increased reported COP by the amount of the productive 
assets that were written off during the POI (see Comment 8 in the 
``Interested Party Comments'' section of this notice).
    For further discussion of the above adjustments, see the 
Calculation Memorandum.

Currency Conversion

    As in the preliminary determination, we made currency conversions 
into U.S. dollars based on the exchange rates in effect on the dates of 
the U.S. sales as certified by the Federal Reserve Bank in accordance 
with Section 773A of the Act.

Interested Party Comments

Comment 1: Classifying U.S. Sales as EP or CEP Sales

    In the preliminary determination, the Department reclassified all 
of Roldan's U.S. sales as CEP sales because it found that Roldan's 
affiliated U.S. sales entity, Acerinox, U.S.A., performed a variety of 
significant selling functions in connection with Roldan's U.S. sales, 
including negotiating sales terms with U.S. customers, reporting to 
Roldan concerning market conditions, and identifying U.S. customers. 
Roldan argues its U.S. sales should be classified as EP sales in the 
final determination because the Department verified that Acerinox, 
U.S.A. did not perform the selling functions attributed to it in the 
preliminary determination but merely communicated Roldan's sales terms 
to U.S. customers, provided Roldan with information about market 
events, such as potential antidumping complaints, and coordinated with 
U.S. freight forwarders to move SSWR through U.S. customs and to 
transport it to the U.S. customer. Roldan maintains these services are 
ancillary to its U.S. sales and demonstrate that Acerinox, U.S.A. is 
simply a ``processor of sales-related documentation'' and a 
``communication link'' with the U.S. customer. Furthermore, Roldan 
claims Acerinox, U.S.A. did not provide some of the services which the 
Department considers to be indicative of a U.S. affiliate's substantial 
involvement in the sales process. Specifically, Roldan notes that 
Acerinox, U.S.A. did not evaluate U.S. customers' credit, negotiate 
sales terms without Roldan's approval and, except for two unusual 
sales, take title to the merchandise and invoice the U.S. customer. 
Roldan, citing Certain Cut-to-Length Carbon Steel Plate From Germany: 
Final Results of Antidumping Duty Administrative Review, 62 FR 18,390 
(April 15, 1997), and Extruded Rubber Thread From Malaysia: Final 
Results of Antidumping Duty Administrative Review, 63 FR 12,752, 12,759 
(March 16, 1998), notes that the Department has classified U.S. sales 
as CEP transactions where the U.S. affiliate performed the 
aforementioned sales activities. Moreover, Roldan claims that in other 
antidumping cases the Department found U.S. affiliates that performed 
more services than Acerinox, U.S.A. performed to be ``processors of 
sales-related documentation'' and ``communication links.'' In support 
of this claim, Roldan cites Certain Cold-Rolled and Corrosion-Resistant 
Carbon Steel Flat Products From Korea: Final Results of Antidumping 
Duty Administrative Reviews, 62 FR 18,404 (April 15, 1997), where, 
according to Roldan, the U.S. affiliate paid antidumping and 
countervailing duty cash deposits, extended credit to U.S. customers, 
processed warranty claims, and developed projects. Finally, Roldan 
notes that in the Notice of Final Determination of Sales at Less Than 
Fair Value: Stainless Steel Bar From Spain, 59 FR 66,931, 66,932 
(December 28, 1994) (Stainless Steel Bar), the Department determined 
that Roldan's U.S. sales were properly classified as purchase price 
sales (now called EP sales) because ``the subject merchandise was sold 
to unrelated purchasers in the United States before importation and 
exporter sales price methodology (currently CEP methodology) was not 
otherwise indicated.'' According to Roldan, EP treatment, which should 
be determined using the same criteria as that applicable to the former 
purchase price treatment, is appropriate in the instant investigation 
because its U.S. sales process has not changed.
    Furthermore, Roldan objects to the methodology the Department 
currently employs to determine whether an affiliated U.S. sales 
entity's activities are limited to that of a ``processor of sales-
related documentation'' and a ``communication link.'' According to 
Roldan, the Department has unlawfully changed its long-standing 
analysis of this issue and now finds that unless the record 
demonstrates that the U.S. affiliate's involvement in making the sale 
is incidental or ancillary, the U.S. affiliate is more than a 
``processor of sales-related documentation'' and a ``communication 
link'' and, thus, CEP treatment is appropriate. In support of this 
assertion, Roldan cites Certain Cold-Rolled and Corrosion-Resistant 
Carbon Steel Flat Products From Korea: Final Results of Antidumping 
Duty Administrative Reviews, 63 FR 13170 (March 18, 1998) (Steel From 
Korea), in which, Roldan argues, the Department found the U.S. 
affiliates' role to be more than ancillary to the sales process and 
reclassified respondents' U.S. sales as CEP sales. Roldan argues that 
the Department's current analysis of this issue will make it impossible 
for a foreign manufacturer with a U.S. affiliate to classify its U.S. 
sales as EP sales because today's business practices often do not 
provide evidence of the extent of an affiliate's involvement in making 
a sale (e.g., communication between foreign manufacturers and their 
U.S. affiliates is often over the telephone). Nevertheless, using the 
``new'' analysis that the Department applied in Steel From Korea, 
Roldan maintains its U.S. sales remain EP sales. According to Roldan, 
the record in the instant investigation shows that Acerinox, U.S.A. 
performed fewer and less significant functions than those performed by 
the U.S. affiliates of the respondents whose sales were reclassified as 
CEP sales in Steel From Korea. Roldan also maintains its U.S. sales 
should be classified as EP sales under the Department's ``new'' 
analysis because Acerinox, U.S.A. incurred less indirect selling 
expenses than Roldan incurred in selling the subject merchandise.
    Petitioners claim that the record in this investigation shows that 
Acerinox, U.S.A. is involved in every aspect of the sales process for 
Roldan's sales of SSWR in the United States and, thus, the Department 
correctly reclassified Roldan's U.S. sales as CEP sales for the 
preliminary determination and should continue to do so in the final 
determination. According to petitioners, the Department verified that 
Acerinox, U.S.A. (1) is contacted by U.S. customers inquiring about 
purchasing Roldan's SSWR; (2) contacted U.S. customers that it has not 
dealt with for some time; (3) accepted orders of less than 60 metric 
tons from U.S. customers without obtaining Roldan's approval of the 
sales terms; (4) handled returns of U.S. sales of Roldan's SSWR; and 
(5) inventoried Roldan's SSWR in the United States. Petitioners also 
note that Roldan identified Acerinox, U.S.A. as the selling agent for 
all of its U.S. sales of SSWR in its response to the Department's 
antidumping questionnaire. Regarding Acerinox, U.S.A.'s role in those 
sales, petitioners maintain that Roldan reported that Acerinox, U.S.A. 
contacts U.S. customers, accepts the customers' orders, collects the 
customers' payments, pays U.S. import duties on Roldan's SSWR and 
arranges for the

[[Page 40395]]

transportation of SSWR from the port of entry to the U.S. customer. 
Furthermore, petitioners assert there is no evidence on the record 
supporting Roldan's claim that it approved the terms of its U.S. sales 
of SSWR or indicating that Roldan had any direct dealings with 
unaffiliated U.S. purchasers of its SSWR. Petitioners claim that the 
sales in question are CEP sales because Acerinox, U.S.A. handled all of 
the dealings with U.S. customers and in doing so, it acted as more than 
a ``processor of sales related documentation'' or a ``communications 
link'' (see Steel From Korea at page 13183).
    Additionally, petitioners argue that if the Department continues to 
treat Roldan's U.S. sales as CEP sales, it must reduce U.S. price by 
the amount of the sales commission Roldan paid Acerinox, U.S.A. because 
(1) this amount exceeds the selling expenses incurred by Acerinox, 
U.S.A.; and (2) as Roldan has admitted on the record of this 
investigation, the commission payments are at arm's-length. Petitioners 
note that the Department's practice of not making any adjustment for 
commission expense if it is unable to determine that the commission was 
paid at arm's-length does not apply to the instant investigation.
    DOC Position: We agree with petitioners, in part, and have 
continued to treat Roldan's U.S. sales as CEP sales in the final 
determination.
    Section 772(b) of the Act defines CEP as ``the price at which the 
subject merchandise is first sold (or agreed to be sold) in the United 
States before or after the date of importation by or for the account of 
the producer or exporter of such merchandise or by a seller affiliated 
with the producer or exporter, to a purchaser not affiliated with the 
producer or exporter, as adjusted'' (emphasis added). Section 772(a) of 
the Act defines EP as ``the price at which the subject merchandise is 
first sold (or agreed to be sold) before the date of importation by the 
producer or exporter of the subject merchandise outside of the United 
States to an unaffiliated purchaser in the United States, or to an 
unaffiliated purchaser for exportation to the United States, as 
adjusted.'' When sales are made prior to importation through an 
affiliated or unaffiliated U.S. sales agent to an unaffiliated customer 
in the United States, our practice is to examine several criteria in 
order to determine whether the sales are EP sales. Those criteria are: 
(1) whether the merchandise was shipped directly from the manufacturer 
to the unaffiliated U.S. customer; (2) whether this was the customary 
commercial channel between the parties involved; and (3) whether the 
function of the U.S. selling agent was limited to that of a ``processor 
of sales-related documentation'' and a ``communications link'' with the 
unaffiliated U.S. buyer. Where all three criteria are met, indicating 
that the activities of the U.S. selling agent are ancillary to the 
sale, the Department has regarded the routine selling functions of the 
exporter as merely having been relocated geographically from the 
country of exportation to the United States where the sales agent 
performs them, and has determined the sales to be EP sales. Where one 
or more of these conditions is not met, indicating that the U.S. sales 
agent is substantially involved in the U.S. sales process, the 
Department has classified the sales in question as CEP sales. See, 
e.g., Steel From Korea, and Viscose Rayon Staple Fiber from Finland: 
Final Results of Antidumping Duty Administrative Review, 63 FR 32820 
(June 16, 1998).
    In the instant investigation, the sales in question were made prior 
to importation through Roldan's affiliated U.S. sales agent, Acerinox, 
U.S.A., to unaffiliated customers in the United States. The fact that 
the subject merchandise was shipped directly from Roldan to the 
unaffiliated U.S. customers and that this was the customary commercial 
channel between these parties is not disputed. The issue is whether 
Acerinox, U.S.A.'s role in the sales process was incidental or 
ancillary to the sale (i.e., limited to that of a ``processor of sales-
related documentation'' and a ``communications link'').
    We have determined that the extent and nature of Acerinox, U.S.A.'s 
involvement in selling Roldan's SSWR indicates that the subject 
merchandise sales occurred in the United States and, thus, are CEP 
transactions. The record shows that during the POI, the sales process 
for Roldan's U.S. sales of SSWR typically included the following 
events:<SUP>1</SUP>
---------------------------------------------------------------------------

    \1\ See the Sales Verification Report at page 33.
---------------------------------------------------------------------------

    (1) On occasion, Acerinox, U.S.A. will contact U.S. customers that 
it has not dealt with for some time. Otherwise, U.S. customers contact 
Acerinox, U.S.A. to inquire about purchasing Roldan's SSWR. Acerinox, 
U.S.A. does not actively market Roldan's SSWR in the United States 
because Roldan's product is well-known among the relatively small 
number of customers in the marketplace.
    (2) Acerinox, U.S.A. may accept the customer's order, if it is a 
small order, without contacting Acerinox, S.A.<SUP>2</SUP> in Spain to 
determine if Roldan will accept the sales terms. Acerinox, U.S.A. 
accepts small orders based on its past dealings with Roldan, its 
knowledge of Roldan's requirements, and the parameters Roldan sets 
regarding sales terms. For inquiries regarding significant purchases 
(generally more than three containers or 60 metric tons), Acerinox, 
U.S.A. will contact Acerinox, S.A. to determine the sales terms that 
Roldan will accept. Roldan will then specify an acceptable price, and 
any acceptable deviations from this price depending on the quantity the 
customer requires, the price the customer desires, and/or the 
historical relationship with the customer making the inquiry. In 
setting the price, Acerinox, U.S.A. may provide its opinion as to 
whether Roldan can obtain a more favorable price from the customer.
---------------------------------------------------------------------------

    \2\ Acerinox, S.A., the parent company of Roldan and Acerinox, 
U.S.A., provides a number of services in connection with Roldan's 
U.S. sales of SSWR including serving as a communication link between 
Roldan and Acerinox, U.S.A. (e.g., directs customers' technical 
questions to the appropriate Roldan personnel). Roldan pays 
Acerinox, S.A. a fee for these services.
---------------------------------------------------------------------------

    (3) After an order is accepted, Acerinox, U.S.A. transmits the 
order through Acerinox, S.A. to Roldan.
    (4) After Roldan has produced the order, Acerinox, S.A. arranges 
transportation of the subject merchandise to the United States.
    (5) Acerinox, U.S.A. coordinates with U.S. freight forwarders to 
move the subject merchandise through U.S. Customs and to transport it 
to U.S. customers.
    (6) Acerinox, S.A. invoices U.S. customers in Roldan's name.
    (7) U.S. customers remit payment to Acerinox, U.S.A., which 
subsequently transfers the payment to Roldan by wire.
    Thus, the record shows that Acerinox, U.S.A. was involved in every 
aspect of the sales process except for arranging for shipment of SSWR 
to the United States and invoicing U.S. customers. Moreover, Acerinox, 
U.S.A.'s involvement in the sales process was extensive when compared 
to that of Roldan or Acerinox, S.A. Accordingly, the preponderance of 
selling functions incurred to sell Roldan's SSWR to U.S. customers 
occurred in the United States.
    Furthermore, Acerinox, U.S.A.'s role in negotiating the terms of 
certain U.S. sales is not indicative of the ancillary role normally 
played by a ``processor of sales-related documentation'' and a 
``communications link.'' Specifically, Acerinox, U.S.A.'s authority to 
negotiate and accept sales terms for small orders of SSWR without 
Roldan's specific

[[Page 40396]]

approval of the orders, as well as its authority to initiate contact 
with U.S. customers that it has not dealt with for some time, 
contradicts Roldan's claim that Acerinox, U.S.A. was simply a 
``processor of sales-related documentation'' and a ``communications 
link.'' In addition, there is no documentary evidence supporting 
Roldan's claim that it approved the sales terms for all large orders 
(e.g., evidence of price acceptance or rejection by Roldan); nor is 
there any evidence of direct contacts or agreements between Roldan and 
the ultimate U.S. purchasers of the subject merchandise. The absence of 
such evidence and Acerinox, U.S.A.'s admitted role in negotiating the 
terms of small orders, calls into question Roldan's claim that 
Acerinox, U.S.A. was simply a ``communication link'' in the sales 
negotiation process. Moreover, Acerinox, U.S.A.'s extensive involvement 
in the U.S. sales process, its authority to negotiate and accept sales 
terms in certain situations and the fact that it initiated contact with 
U.S. customers on occasion, distinguishes the instant case from the 
cases Roldan cited to support EP treatment of its sales. Therefore, we 
have determined that Roldan's U.S. sales were made in the United States 
and, in accordance Section 772(b) of the Act, we have classified these 
sales as CEP sales for the final determination.
    However, we disagree with petitioners' argument that the Department 
must reduce Roldan's CEP sales by the amount of the sales commission 
Roldan paid Acerinox, U.S.A. in connection with its U.S. sales of SSWR. 
Section 772(d) of the Act provides that CEP shall be reduced by selling 
expenses ``incurred by or for the account of the producer or exporter, 
or the affiliated seller in the United States, in selling the subject 
merchandise.'' Section 351.402(e) of the Departments regulations states 
that ``where a person affiliated with the exporter or producer incurs 
any of the expenses deducted from constructed export price under 
section 772(d) of the Act and is reimbursed for such expenses by the 
exporter, producer or other affiliate, the Secretary normally will make 
an adjustment based on the actual cost to the affiliated person.'' In 
the instant investigation, Acerinox, U.S.A. incurred selling expenses 
that are deducted from CEP under section 772 (d) of the Act, and Roldan 
reimbursed Acerinox, U.S.A. for these expenses through the commission. 
Therefore, in accordance with section 351.402(e) of the Department's 
regulations, for the final determination we adjusted Roldan's CEP sales 
by Acerinox, U.S.A.'s actual selling expenses, revised based on 
verification findings.

Comment 2: Unreported U.S. Sales

    At verification, the Department found that Roldan's U.S. affiliate, 
Acerinox, U.S.A., purchased shipments of Roldan's SSWR that were 
rejected by U.S. customers, held the rejected SSWR in inventory, and 
then resold the rejected SSWR to other unaffiliated customers in the 
United States. However, Roldan failed to report Acerinox, U.S.A.'s 
sales of SSWR during the POI. At verification, Roldan stated that it 
did not report these sales because they were not made in the ordinary 
course of trade. Petitioners maintain Roldan should have reported these 
sales because the antidumping provisions allow sales outside the 
ordinary course of trade to be excluded from reported home market or 
third country sales, but not from U.S. sales. Petitioners also note 
that although the original sales of SSWR were canceled, the subsequent 
resales of SSWR by Acerinox, U.S.A. should have been reported because 
they were not canceled. In addition, petitioners contend that the 
information on the unreported sales that Roldan provided at 
verification constitutes factual information that must be submitted no 
later than seven days before verification. Thus, petitioners argue, 
this information was untimely and should not be used by the Department 
in the final determination. Petitioners, cite the Final Determination 
of Sales at Less Than Fair Value: Certain Stainless Steel Wire Rods 
From France 58 FR 68,865, 68,869 (December 29, 1993) (Wire Rods From 
France), in support of their view that the Department should assign a 
margin to the unreported sales equal to the greater of the average 
margins alleged in the petition, or the highest non-aberrant margin 
calculated from Roldan's data.
    Roldan claims it properly excluded Acerinox, U.S.A.'s resales of 
rejected SSWR from reported sales. Specifically, Roldan argues that it 
should not have reported the sales in question because the original 
U.S. customers canceled the sales and the Department's antidumping 
questionnaire clearly instructs respondents not to report canceled U.S. 
sales. Even if the Department should ignore the instructions in its 
antidumping questionnaire, Roldan maintains it properly excluded these 
sales from reported sales because they were sold in a completely 
different manner from the rest of its U.S. sales and, thus, were 
outside the ordinary course of trade. In particular, Roldan states that 
its U.S. customers typically order SSWR prior to its production and 
importation and that the SSWR is shipped directly to the customer, 
whereas Acerinox, U.S.A. resold SSWR to customers after the material 
had been produced, shipped to the original customer in the United 
States, and then re-shipped to Acerinox, U.S.A. or Acerinox, U.S.A.'s 
customer. In addition, Roldan notes that Acerinox, U.S.A. informed its 
customers that they were purchasing rejected material and the 
Department has excluded U.S. sales of defective merchandise from its 
antidumping analysis in past cases such as the Final Determination of 
Sales at Less Than Fair Value: Coated Groundwood Paper From Finland, 56 
FR 56,363, 56,371 (November 4, 1991).
    According to Roldan, the antidumping statute, legislative history, 
and the Department's past practice support a finding that these sales 
are outside the ordinary course of trade. Roldan states that in 
addition to certain sales below the COP and certain sales between 
affiliated parties, the Statement of Administrative Action (SAA) allows 
the Department to ``consider other types of sales or transactions to be 
outside the ordinary course of trade when such sales or transactions 
have characteristics that are not ordinary as compared to sales or 
transactions made in the same market.'' While conceding that the 
ordinary course of trade requirement has historically been applied to 
home market or third country sales, Roldan, citing Ipsco Inc. versus 
United States, 714 F. Supp 1211, 1217 (Ct. Int'l Trade 1989) (Ipsco), 
notes that the Department may disregard certain U.S. sales if ``the 
inclusion of [such] sales, which are clearly atypical, would undermine 
the fairness of the comparison of foreign and U.S. sales.'' Roldan also 
notes that in Ipsco, the Court recognized the Department's practice of 
excluding sales that are not representative of the seller's behavior 
and sales whose volume is so low that they would have an insignificant 
effect on the margin. Roldan notes that the resales of rejected SSWR 
constituted such a small percentage of Acerinox, U.S.A.'s sales that 
they cannot be considered representative of Acerinox, U.S.A.'s 
behavior. Thus, for the reasons outlined above, Roldan asserts that 
Acerinox, U.S.A.''s resales of SSWR are outside the ordinary course of 
trade and should not have been reported to the Department.
    However, if the Department determines that this small quantity of 
sales should have been reported, Roldan requests that the Department 
use the actual verified sales data that was provided at verification. 
Roldan claims

[[Page 40397]]

petitioners' argument that the Department should assign a margin to 
these sales using adverse inferences fails because such inferences are 
only appropriate when an interested party fails to cooperate by not 
acting to the best of its ability to reply to a request for information 
from the administering authority or the Commission. Roldan argues that 
petitioners misapplied the Department's ruling in Wire Rods From France 
to the instant investigation because, unlike Wire Rods From France, 
wherein the respondents failed to report all sales transactions in a 
timely manner, Roldan did not report the sales in question because the 
Department's antidumping questionnaire specifically instructed Roldan 
to report sales net of returns. Moreover, Roldan claims that it 
presented information concerning the unreported sales on its own 
initiative as part of the completeness test conducted at verification 
and that it has fully cooperated with the Department's requests for 
additional information regarding these sales. Thus, Roldan maintains 
there is no basis for the Department to use adverse facts available to 
determine the margin for these unreported sales.
    DOC Position:  We agree with petitioners. Section 772(b) of the Act 
defines CEP as the ``price at which the subject merchandise is first 
sold (or agreed to be sold) in the United States before or after the 
date of importation by * * * a seller affiliated with the producer or 
exporter to a purchaser not affiliated with the producer or exporter * 
* *'' Thus, in the antidumping questionnaire issued in this 
investigation, the Department instructed Roldan to ``prepare a single 
response which includes the information for all affiliates. The 
questionnaire goes on to state that the respondent should ``include 
information concerning affiliates which sold the products under 
investigation during the period of investigation (``POI'') in the 
comparison market or the United States market or both. Combine the 
sales and cost of these affiliates with your sales and cost in the same 
computer data file(s) and submit a single combined narrative 
response.'' See the Department's antidumping questionnaire dated 
September 19, 1997 at page G-6. Roldan failed to comply with the 
Department's instructions even though its U.S. affiliate, Acerinox, 
U.S.A., sold subject merchandise to unaffiliated purchasers during the 
POI. The fact that Acerinox, U.S.A. purchased subject merchandise from 
Roldan after Roldan's original U.S. customer rejected the shipment and 
canceled the sale does not change the fact that Acerinox, U.S.A. 
subsequently resold that merchandise to other unaffiliated U.S. 
customers during the POI. Those resales were not canceled and should 
have been reported to the Department.
    In addition, the ordinary course of trade provision does not apply 
to U.S. transactions (see Notice of Final Determination of Sales at 
Less Than Fair Value: Static Random Access Memory Semiconductors From 
Taiwan, 63 FR 8909, 8931 (Comment 22) (February 23, 1998)). As the U.S. 
Court of International Trade (CIT) noted in American Permac, Inc., et 
al., versus The United States, 783 F. Supp. 1421, 1423 (CIT 1992) 
(American Permac), ``regular exclusion of sales not in the ordinary 
course of trade only occurs on the home-market side of the price 
comparison.'' The court went on to state that ``whether sales are in or 
out of the ordinary course of trade is not the determinative factor on 
the U.S. sales side of the equation. Fairness, distortion, 
representativeness are the issues to be examined. The goal is to 
include the sales but to utilize whatever methodology is needed to 
ensure a fair comparison.'' 783 F. Supp. 1421, 1424. While the 
Department may at times exclude certain U.S. sales in order to ensure a 
fair comparison (as noted in Ipsco), in the instant investigation there 
is no need to exclude the sales at issue because, based on the record 
evidence (including our examination of sales documentation), we cannot 
conclude that these sales are in any way unrepresentative or would 
otherwise improperly distort our calculations. We also note that prior 
to the submission of its case brief, Roldan never requested exclusion 
of the sales at issue or exoneration of the reporting requirement with 
respect to these sales. It was not until after the Department had 
discovered the unreported sales at verification (see the Sales 
Verification Report at page 12) that Roldan raised the issue of 
excluding the unreported sales. Therefore, based on the foregoing, we 
conclude that such sales should have been reported to the Department.
    As indicated above, Roldan states that if the Department decides 
that the sales at issue should have been reported, it should use the 
actual verified sales data that was provided at verification. However, 
at verification the only information that the Department requested, and 
that Roldan provided with regard to Acerinox, U.S.A.'s resales of 
subject merchandise, was the quantity and gross unit price of each 
sale. The Department requested this information to determine the 
magnitude of the unreported sales in comparison to the reported U.S. 
sales. The Department did not request, and Roldan did not provide, the 
data required to adjust the gross unit price of the unreported sales in 
accordance with section 772(c) of the Act (e.g., information on freight 
and other selling expenses). Moreover, even if Roldan had provided this 
information at verification, it is unlikely that the Department would 
have considered the information timely and accepted it (see 19 CFR 
351.301(b)(1) and 351.302(d)).
    Section 776 (a) of the Act provides that when necessary information 
is not available on the record, the administering authority shall * * * 
``use the facts otherwise available in reaching the applicable 
determination under this title.'' Section 776 (b) of the Act states 
that ``if the administering authority or the Commission (as the case 
may be) 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 from the administering authority or the Commission, the 
administering authority or the Commission (as the case may be), in 
reaching the applicable determination under this title, may use an 
inference that is adverse to the interests of that party in selecting 
from among the facts otherwise available.''
    For this final determination, the Department finds that Roldan 
failed to act to the best of its ability to comply with the 
Department's requests for information regarding sales of subject 
merchandise by Acerinox, U.S.A. In its response to section C of the 
Department's antidumping questionnaire, Roldan stated that it did not 
incur inventory carrying costs in the United States because Acerinox, 
U.S.A. ``does not take possession of, or warehouse, the subject 
merchandise.'' However, because Acerinox U.S.A.'s 1996 balance sheet 
reported an inventory balance, in a supplemental questionnaire, the 
Department specifically asked Roldan whether Acerinox, U.S.A. sold 
subject merchandise from inventory during the POI. In its January 16, 
1998 response to the Department's supplemental questionnaire, Roldan 
stated that ``Acerinox, U.S.A. does not keep inventory of Roldan SSWR, 
nor generally speaking, of any of Roldan's products. * * * The 
inventory balance that appears in the 1996 Acerinox, U.S.A. annual 
report relates to non-subject merchandise.'' However, at verification, 
the Department found substantial documentation evidencing Acerinox, 
U.S.A.'s sales of Roldan's SSWR from inventory during the POI. The fact 
that this documentation was readily available and company officials

[[Page 40398]]

had knowledge of these sales, as evidenced by their responses to 
questioning at verification, yet Roldan failed to identify and report 
these sales even when the Department specifically requested that it do 
so, indicates that Roldan did not act to the best of its ability to 
comply with the Department's request for information. Consequently, for 
the final determination we have based the margin for all unreported 
U.S. sales on adverse facts available. As adverse facts available 
(AFA), we have selected a sufficiently adverse margin from the fair 
value comparisons which were performed for Roldan's reported sales. The 
selected AFA margin is sufficiently adverse so as to effectuate the 
statutory purposes of the adverse facts available rule to induce 
respondents to provide the Department with complete and accurate 
information in a timely manner. See the SAA at page 870. We also sought 
a margin that is indicative of Roldan's customary selling practices and 
is rationally related to the transactions to which the AFA are being 
applied. To that end, we selected a margin for sales of a product that 
involved a substantial commercial quantity and fell within the 
mainstream of Roldan's transactions based on quantity. Finally, we 
found nothing on the record to indicate that the sales of the product 
we selected were not transacted in a normal manner. For details 
regarding the methodology used to calculate the AFA margin, see the 
Calculation Memorandum, dated July 20, 1998.

Comment 3: Diameter as a Model Match Criterion

    Roldan contends that the diameter of SSWR should not be one of the 
model-match criteria used in the instant investigation because it has 
no appreciable affect on Roldan's production costs and no affect on the 
price Roldan charges its U.S. customers. Roldan notes that the 
Agreement on Implementation of Article VI of the General Agreement on 
Tariffs and Trade 1994, and section 351.411 of the Department's 
regulations, require that in making a fair comparison between EP and 
NV, due allowance shall be made for differences which affect price 
comparability, including differences in physical characteristics. 
According to Roldan, this requirement implies that physical 
characteristics that do not affect price should not be used in matching 
products for price comparison purposes. Roldan maintains that the 
Department examined numerous sales invoices at verification and found 
that Roldan charged the same price for different diameters of SSWR with 
the same AISI grade that were sold to the same customer under the same 
invoice. Moreover, Roldan notes that it placed evidence on the record 
of this proceeding showing that U.S. companies, including one 
petitioner, sell different diameters of the same AISI grade of SSWR at 
the same price. Therefore, Roldan contends, that price is based on AISI 
grade and the seller's historical commercial relationship with the 
customer, not the diameter of the product. In addition, Roldan 
maintains there is no cost basis for using diameter as a model match 
criterion because diameter has no affect on its cost of producing SSWR. 
Roldan claims it demonstrated at verification that smaller diameter 
SSWR, which requires more passes through the rolling mill than larger 
diameter SSWR, can have costs similar to larger diameter SSWR because 
of the quantities produced and the order of production. Finally, Roldan 
argues that in the instant investigation, matching products for price 
comparison purposes using the product's diameter has artificially 
created a dumping margin because this methodology gives greater 
significance to a product category with a large U.S. and relatively 
small home market sales volume. Roldan claims this matching 
methodology, together with the additional weight given to dumping 
margins of products with a large U.S. sales volume, has created a 
dumping margin where none exists. Thus, Roldan contends there is 
overwhelming evidence on the record of this investigation showing that 
diameter should not be used as a model-match criterion. According to 
Roldan, AISI grade is the only appropriate model-match criterion.
    While petitioners are not in complete agreement with the model-
matching methodology the Department is using in the instant 
investigation <SUP>3</SUP>, petitioners argue that Roldan's suggestion 
that the Department use AISI grade as the only model-matching criterion 
is unjustified, flawed, and untimely. Specifically, petitioners claim 
Roldan's assertion that it demonstrated at verification that diameter 
has ``no appreciable effect'' on its cost of producing SSWR misstates 
the Department's verification findings. Petitioners maintain the 
Department actually found that Roldan does not distinguish between the 
cost of different diameters of SSWR in its cost accounting records. 
Therefore, petitioners contend that Roldan's records prevented the 
Department from verifying Roldan's claim that the actual costs incurred 
to produce different diameters of SSWR is the same. Furthermore, 
petitioners argue that if production costs for different diameters of 
SSWR were the same, and price is not based on diameter, the use of 
diameter as a model-matching criterion should not distort the dumping 
margin as Roldan suggested. Petitioners also maintain that using AISI 
grade as the sole model-matching criterion increases the potential for 
manipulation of model matches and impairs the Department's ability to 
select, where necessary, the most similar model, because the Department 
would not have additional information on the record describing the 
product's physical characteristics. Finally, petitioners state that 
Roldan first asserted that diameter has no ``appreciable'' effect on 
production costs more than four months after the antidumping 
questionnaire was issued, which was well after the Department had 
considered the parties' views on model-matching and decided on its 
model-matching methodology. Thus, according to petitioners, Roldan's 
argument is untimely. For the above reasons, petitioners urge the 
Department to use the product matching criteria identified in the 
antidumping questionnaire in the final determination.
---------------------------------------------------------------------------

    \3\ During the course of the instant investigation, petitioners 
requested that the Department include actual chemical content of the 
steel, rather than AISI grade, as one of the model-matching 
criteria. For further discussion, see the December 18, 1997 Decision 
Memorandum to Holly Kuga from The Team, Subject: Whether to 
Reconsider the Department's Model Match Methodology for This 
Product.
---------------------------------------------------------------------------

    DOC Position:  We agree with petitioners and have continued to use 
diameter as a model-matching criterion in the final determination. In 
determining whether a class or kind of foreign merchandise is being, or 
is likely to be, sold in the United States at less than its fair value, 
the Department compares the price of subject merchandise sold in the 
United States with the price of the ``foreign like product'' sold in 
the foreign market. Section 771(16) of the Act defines ``foreign like 
product'' as: ``merchandise in the first of the following categories in 
respect of which a determination for the purposes of subtitle B of this 
title can be satisfactorily made:
    (A) The subject merchandise and other merchandise which is 
identical in physical characteristics with, and was produced in the 
same country by the same person as, that merchandise.
    (B) Merchandise--
    (i) produced in the same country and by the same person as the 
merchandise which is the subject of the investigation,
    (ii) like that merchandise in component material or materials and 
in the purposes for which used, and

[[Page 40399]]

    (iii) approximately equal in commercial value to that merchandise.
    (C) Merchandise--
    (i) produced in the same country and by the same person and of the 
same general class or kind as the merchandise which is the subject of 
the investigation,
(ii) like that merchandise in the purposes for which used, and
    (iii) which the administering authority determines may reasonably 
be compared with that merchandise.''
    In making fair value comparisons, the Department identifies the 
``foreign like product'' by comparing the physical characteristics of 
subject merchandise with the physical characteristics of merchandise 
sold in the foreign market. So as not to unreasonably distort 
comparisons involving similar merchandise, the Department does not 
compare subject merchandise sold in the United States to merchandise 
sold in the foreign market where the cost of the merchandise differs 
from the cost of subject merchandise by more than 20 percent (see 
Policy Bulletin 92.2).
    In the instant investigation, after soliciting comments from 
interested parties, the Department determined that diameter should be 
one of the characteristics (i.e., one of the matching criteria) used to 
make product comparisons. Although Roldan argues that diameter is an 
inappropriate characteristic for purposes of model matching, it has not 
placed substantial evidence on the record showing that the Department's 
decision to use diameter as a matching criterion is unreasonable. As 
noted by the CIT in Toyo Umpanki Co., Ltd. v. United States, 848 F. 
Supp. 178, 185 (CIT 1994) (Toyo), the Department has ``broad discretion 
in choosing a methodology to carry out its statutory mandate'' under 
section 771(16) of the Act which governs model matching. Regarding that 
methodology, the CIT noted in Toyo, that ``even if another alternative 
is more reasonable, Commerce has acted within its authority if its 
decision is reasonable.'' Roldan's argument that the Department's 
matching methodology distorted the dumping margin by comparing a 
product category with a large U.S. and relatively small home market 
sales volume, seems to argue indirectly for the need for a price 
adjustment under section 773(a)(6)(C)(i) of the Act, which respondent 
has not claimed, rather than a need to alter the Department's matching 
criteria. Furthermore, Roldan's argument that diameter has no affect on 
sales price is questionable because at verification, the Department 
found instances where Roldan sold different diameters of the same AISI 
grade of SSWR to the same home market customer under the same invoice 
but at different prices (see the Sales Verification Report from at 
pages 16-17). Although the Department found at verification that Roldan 
records the same cost for different diameters of a particular grade of 
SSWR, this fact alone is insufficient to show that the Department acted 
unreasonably in selecting the model-matching criteria and that its 
selection distorts the dumping margin. Roldan has not demonstrated that 
diameter is not a factor in pricing SSWR. Moreover, it is more 
reasonable to conclude that if the cost and price of different 
diameters of the same AISI grade of SSWR are the same, as Roldan 
claims, using diameter as a matching criterion should not distort the 
dumping margin. Therefore, we have continued to use diameter as a model 
matching criterion in the final determination.

Comment 4: Identifying the Appropriate Interest Rate for the U.S. 
Credit Expense Calculation

    At verification, the Department found that Roldan calculated its 
U.S. credit expenses using the weighted-average interest rate on short-
term peseta-denominated loans that were obtained to finance U.S. dollar 
receivables. The Department also found that Roldan did not have any 
outstanding U.S. dollar-denominated loans during the POI. Petitioners 
note that the Department's antidumping questionnaire instructs 
respondents to calculate U.S. credit expenses using a published U.S. 
commercial bank short-term prime lending rate if they had not borrowed 
U.S. dollars. Thus, for the final determination, petitioners urge the 
Department to recalculate Roldan's U.S. credit expenses using the U.S. 
prime interest rate for the POI. Based on data from the Chicago Federal 
Reserve Bank, petitioners identify this rate as 8.317 percent.
    Contrary to the Department's verification findings, Roldan 
maintains that the evidence on the record of this investigation shows 
it calculated U.S. credit expenses using the weighted-average interest 
rate on short-term U.S. dollar-denominated loans. Specifically, Roldan 
identifies sales verification exhibit 19a, which contains bank 
documentation showing the amount of U.S. dollars borrowed and the 
peseta equivalent to this amount. To support its claim, Roldan notes 
that it must borrow to pay expenses incurred in U.S. dollars and repay 
the U.S. dollar-denominated loans using pesetas because it does not 
have a U.S. dollar bank account. Roldan maintains the Department should 
accept the reported U.S. credit expenses for the final determination 
because Roldan used the proper interest rate to calculate those credit 
expenses.
    DOC Position: We agree with Roldan and have accepted the interest 
rate Roldan used to calculate the reported U.S. credit expenses for the 
final determination. During the POI, Roldan financed U.S. dollar 
receivables by obtaining short-term bank loans. Because Roldan did not 
have a U.S. dollar bank account, the bank converted the amount of the 
U.S. dollar loans into pesetas and deposited the pesetas into Roldan's 
bank account. Because Roldan actually received pesetas and not U.S. 
dollars, the Department identified the loans as peseta-denominated 
loans in its verification report and questioned whether it was 
appropriate to calculate U.S. credit expenses using the weighted-
average interest rate on these loans. However, upon further examination 
of the verification exhibits related to these loans, we have determined 
that the loans are dollar-denominated. <SUP>4</SUP> We reached this 
determination because the bank documentation examined at verification 
shows that (1) the amount borrowed and the related interest charges 
were originally stated in U.S. dollars; and (2) Roldan repaid the loans 
using U.S. dollar receipts that were wired directly from the United 
States to Roldan's bank in Spain, which loaned Roldan the monies in 
question, and then applied to the outstanding loan balances at the same 
bank. The fact that the amount borrowed and the related interest 
charges were converted into pesetas in order for Roldan to deposit the 
funds into, and repay the interest expense from, its bank account, does 
not change the fact that Roldan originally borrowed dollars, repaid the 
loans in dollars, and paid dollar-based interest charges on the loans. 
Thus, we have accepted the short-term interest rate Roldan used to 
calculate U.S. credit expenses for the final determination.
---------------------------------------------------------------------------

    \4\ See the Sales Verification Report at verification exhibit 
19a.
---------------------------------------------------------------------------

Comment 5: Using Estimates to Determine Home Market Indirect Selling 
Expenses

    Petitioners urge the Department to reject Roldan's adjustment for 
home market indirect selling expenses because, petitioners aver, at 
verification, Roldan failed to provide information to support the 
estimated allocation percentages used in calculating the adjustment.
    Roldan contends the Department should accept the estimated 
allocation percentages used to calculate the home

[[Page 40400]]

market indirect selling expense adjustment because they are reasonable, 
and the company does not keep records in the normal course of business 
that would allow it to determine the actual percentages that it 
estimated. Roldan holds that its estimates are based on its significant 
commercial experience and knowledge of its selling expenses and, thus, 
are reasonable. In addition, Roldan asserts that its home market 
indirect selling expenses were ``substantially verified'' and that the 
results of the sales and cost verifications demonstrate that Roldan has 
provided complete and accurate information to the Department throughout 
the investigation. Therefore, Roldan maintains the Department has no 
reason to believe the estimates are unreasonable. Furthermore, Roldan 
states that the Department cannot require a respondent to support 
information in its responses with documentation which it does not 
maintain. Roldan cites Olympic Adhesives, Inc. v. United States, 899 F. 
2d 1565, 1573 (Fed. Cir. 1990), arguing that in this case, the Court 
ruled that failure to provide information that does not exist does not 
warrant the use of best information available. Roldan also notes that 
its accounting system was not designed to supply information that may 
be required by the Department in antidumping duty investigations. 
Therefore, Roldan urges the Department to accept its claimed home 
market indirect selling expenses.
    DOC Position: We agree with Roldan and have accepted its use of 
estimates in calculating the adjustment for home market indirect 
selling expenses in the final determination. At verification, we were 
able to reconcile selected expense and cost of sales figures from 
Roldan's calculation of the home market indirect selling expense 
adjustment to its financial records (see the Sales Verification Report 
at page 21). However, we noted that in calculating the home market 
indirect selling expense adjustment, Roldan classified a portion of 
employee costs and general expenses as indirect selling expenses based 
on estimated allocation percentages. We found no evidence at 
verification that Roldan maintained records in the normal course of 
business that would allow it to classify a portion of these expenses as 
indirect selling expenses based on actual figures rather than 
estimates. Moreover, the overall results of verification and the 
insignificant amount of the reported home market indirect selling 
expense adjustment suggest that Roldan did not overstate the 
adjustment. Therefore, it is reasonable to presume that Roldan made 
these estimates in good faith and that they may be relied upon.

Comment 6: Adjusting Costs for Startup Operations

    In the instant investigation, Roldan claimed an adjustment to 
production costs for expenses incurred in ``starting up'' its 
refurbished rolling mill and pickling facility. Based on its startup 
claims, Roldan submitted two COP and CV databases. In the first 
database, submitted as part of Roldan's initial questionnaire response, 
the Company reported COP and CV that was adjusted for startup costs 
based on the methodology Roldan used in its normal books and records to 
account for startup costs. In response to our supplemental 
questionnaire, Roldan submitted a second COP and CV data file with a 
revised adjustment for start-up costs based on the methodology 
described in section 773(f)(1)(C) of the Act. Petitioners urge the 
Department to reject both of Roldan's claimed startup adjustments 
because Roldan (1) incorrectly identified the startup period; (2) 
failed to amortize startup costs; and (3) failed to separately report 
the actual POI costs and the startup adjustment. First, petitioners 
note that Roldan's accounting and production records do not support the 
claimed startup period. Specifically, petitioners note that in its 
normal accounting records, Roldan adjusted costs to account for what it 
considered to be the excess startup costs of the rolling mill by 
replacing the unit production costs incurred from September through 
December 1996, with the unit costs incurred during the previous eight 
months of that year (Roldan reported the excess amount of September 
through December production costs over the costs for the previous eight 
months as non-operating expenses in its 1996 financial statement). 
Thus, petitioners maintain that Roldan's books and records show the 
startup period ended on December 31, 1996. However, petitioners point 
out that Roldan did not use this startup period to calculate the 
adjustment, despite the statutory requirement in section 773(f)(1)(A) 
of the Act that production costs be calculated based on the records of 
the exporter or producer of the merchandise. Moreover, petitioners 
claim that the startup period used in Roldan's accounting records is 
supported by the startup provisions in section 773 of the Act. 
Petitioners note that section 773(f)(1)(C) of the Act defines the end 
of the startup period as ``the point at which the level of commercial 
production that is characteristic of the merchandise, producer, or 
industry concerned is achieved.'' According to petitioners, this means 
that Roldan's startup period ended when it achieved the average level 
of production that it normally experienced before refurbishing its 
facilities. Petitioners maintain that the rolling mill production data 
that Roldan placed on the record in this investigation shows that this 
average level was achieved at a point which confirms the startup period 
used in Roldan's books and records. Therefore, petitioners maintain 
that the record supports a startup period other than the one used to 
calculate the reported startup adjustment. Second, petitioners state 
that Roldan failed to amortize excess startup costs over a period 
subsequent to the startup period in accordance with the SAA's 
interpretation of section 773(f)(1)(C)(iii) of the Act. Finally, 
petitioners note that in calculating the startup adjustment that was 
based on the methodology in section 773(f)(1)(C) of the Act, Roldan 
accounted for the startup adjustment by replacing actual POI unit costs 
incurred during the startup period with actual unit costs incurred 
immediately after the startup period ended. According to petitioners, 
Roldan should have reported actual unit costs incurred during the POI, 
in accordance with the instructions in section D of the Department's 
questionnaire, and separately reported the startup adjustment. Because 
of the above deficiencies, petitioners ask the Department to reject 
Roldan's claimed startup adjustment.
    Roldan believes the Department erred in disallowing its startup 
adjustment in the preliminary determination because, according to 
Roldan, it satisfied the statutory conditions under which the 
Department must make an adjustment for startup costs. Roldan claims it 
satisfied the first statutory condition, which requires a producer to 
be using a new production facility or producing a new product that 
requires substantial additional investment, because during the POI it 
replaced nearly all of the equipment in its rolling mill and modified 
much of the remaining old equipment so it would work in the new mill. 
Roldan notes that under section 351.407(d)(1)(i) of the Department's 
regulations, a producer is considered to be using new production 
facilities when it has replaced nearly all of the production machinery 
in its facility. Roldan also notes that it placed substantial evidence 
on the record, which the Department verified, showing that it 
extensively refurbished its mill. Roldan also claims it placed 
substantial evidence on the record showing that it

[[Page 40401]]

satisfied the second statutory condition for a startup adjustment, 
which requires that production levels be limited by technical factors 
associated with the initial phase of commercial production. 
Accordingly, Roldan concludes that a startup adjustment is required in 
the instant investigation. Furthermore, Roldan notes that it placed 
evidence on the record, including the installation contract with the 
company that refurbished the rolling mill, which shows that it used the 
proper startup period in calculating the startup adjustment. Roldan 
adds that its rolling mill has not yet reached optimum capacity.
    Roldan disagrees with petitioners' rationale for rejecting the 
reported startup adjustment. Specifically, Roldan holds that the 
startup period used to calculate the adjustment does not have to be the 
same as that used in a company's accounting records in order for the 
Department to accept the claimed startup adjustment. Roldan notes that 
section 773(f)(1)(A) of the Act states that ``costs shall normally be 
calculated based on the records of the exporter or producer of the 
merchandise * * * '' According to Roldan, the startup provisions were 
included in the Act to allow an exception to the requirement that 
reported costs reflect the producer's normal records. Roldan states 
that this exception recognizes the fact that producers may incur 
unusually high costs when starting a new production facility. 
Furthermore, Roldan disputes petitioners' claim that the startup period 
ended when Roldan achieved the average level of production that it 
normally experienced before refurbishing its facilities. Roldan notes 
that under section 773(f)(1)(C)(iii) of the Act, ``the startup period 
ends at the point at which the level of commercial production that is 
characteristic of the merchandise, producer, or industry concerned is 
achieved.'' Because the mill refurbishment increased production 
capabilities, Roldan argues that pre-refurbishment production levels 
cannot be compared to post-refurbishment production levels in order to 
determine the point at which Roldan achieved commercial production 
levels indicative of the end of startup. Roldan asserts that one must 
compare its post-refurbishment production levels with production levels 
characteristic of the SSWR industry using the same type of rolling mill 
as Roldan in order to determine when Roldan's startup period ended. 
Roldan contends that the best indicator of this ``industry standard'' 
for commercial production is the arm's-length, pre-petition 
installation contract for the new mill which identified the quantity of 
SSWR to be rolled in a specified number of consecutive runs in order to 
reach commercial production levels. Thus, Roldan claims it 
appropriately determined that its startup period ended when it reached 
the commercial production levels specified in the installation 
contract. Consequently, Roldan urges the Department to accept its 
claimed adjustment for startup costs.
    DOC Position: We have disallowed Roldan's claimed adjustment for 
startup costs because the company did not demonstrate its eligibility 
for such an adjustment. Specifically, Roldan failed to show that the 
renovation of the company's rolling and pickling mills was, indeed, the 
equivalent of a ``new production facility'' within the meaning of 
section 773(f)(1)(C) of the Act.
    Section 773(f)(1)(C) of the Act directs the Department to provide 
for an adjustment to the actual costs incurred during the period of 
investigation or review where such costs are affected by the startup 
operations of the producer. The statute provides, however, that the 
adjustment is required only for those startup operations where (1) a 
producer is using new production facilities or producing a new product 
that requires substantial additional investment, and (2) production 
levels are limited by technical factors associated with the initial 
phase of commercial production. At the most basic level, the statutory 
condition surrounding ``new production facilities'' is certainly meant 
to include those startup operations that involve entirely new 
production facilities. See, for example, Notice of Final Determination 
of Sales at Less Than Fair Value: Static Random Access Memory 
Semiconductors from Taiwan, 63 FR 8909, 8930 (February 23, 1998) (where 
the Department granted a startup adjustment for the subject merchandise 
manufactured using a brand new semiconductor fabrication line installed 
by the respondent during the POI). Yet, as made clear by the SAA at 
page 836, the term ``new production facilities'' may also include 
startup operations involving ``the substantially complete retooling of 
an existing plant.'' Here, the phrase ``substantially complete 
retooling'' is said to involve ``the replacement of nearly all 
production machinery or the equivalent rebuilding of existing 
machinery.''
    There are any number of instances in which producers may choose to 
retool, refurbish, or expand their existing operations. These may range 
from changing a worn machine part to the replacement of all existing 
plant assets. Moreover, in most of these instances, normal production 
levels are disrupted as a consequence of the operations. Yet, in 
establishing a high threshold for operations involving the 
``substantially complete retooling'' of a facility, the SAA, in effect, 
limits the situations in which retooling satisfies the conditions for a 
startup adjustment by equating such operations to those involving an 
entirely new facility. That is, in order for an existing facility to be 
considered a new production facility within the meaning of section 
773(f)(1)(C) of the Act, the SAA provides that it must be retooled to 
the extent that it becomes a brand new facility in virtually all 
respects. Indeed, the ``replacement of nearly all production machinery 
or the equivalent rebuilding of existing machinery'' would result in 
nothing less than an essentially new facility. Thus, the SAA makes 
clear that, in analyzing these situations, an adjustment for startup 
costs is warranted only in those circumstances wherein the renovations 
result in a near new facility.
    In the instant case, Roldan claimed that the investment it made in 
refurbishing the company's rolling and pickling mills met the statutory 
definition of ``new production facilities.'' In its questionnaire 
responses and at verification, Roldan demonstrated that it had, in 
fact, committed a significant amount of investment capital as part of 
the renovation project. In addition, at the verification, Roldan 
officials provided documentation supporting the purchase and 
installation of new production machinery. Roldan officials maintained 
that the new equipment replaced virtually all of the equipment from the 
old rolling and pickling mills. Indeed, Roldan provided a plant diagram 
as evidence of this claim. In verifying Roldan's claim for a startup 
adjustment, however, we found data from the company's normal accounting 
records that contradicted Roldan's claim that it had replaced or 
rebuilt nearly all of the previously existing production machinery as 
part of the renovation project. Portions of this information are 
proprietary in nature and are therefore discussed in detail in a 
separate memorandum. See the Concurrence Memorandum. In general, 
however, while Roldan claims to have replaced or rebuilt the production 
machinery from its old rolling and pickling mills, the company's 
accounting records do not support the contention that the company 
disposed of these assets or otherwise removed them from service. In the 
absence of a showing by Roldan that the old production equipment was,

[[Page 40402]]

in fact, scrapped or otherwise disposed of, we have no basis from which 
to conclude that the renovation project resulted in the replacement of 
nearly all of the previously existing equipment or the equivalent 
rebuilding of such equipment.
    The SAA at page 838 provides that the burden of demonstrating 
entitlement to a startup adjustment rests with the party making the 
claim. Here, Roldan failed to demonstrate that the renovated rolling 
and pickling mills constituted ``new production facilities'' within the 
meaning of section 773(f)(1)(C) of the Act. Because Roldan has not 
shown that it meets the first part of the statutory requirement for a 
startup cost adjustment, consistent with our past practice, we have not 
addressed issues surrounding whether the company's production levels 
were limited during the POI by technical factors associated with the 
initial phases of commercial production. See Notice of Final Results of 
Sales at Less Than Fair Value: Collated Roofing Nails from Korea, 62 FR 
51,420, 51, 426 (October 1, 1997) (where the Department did not address 
technical factors associated with respondents' claimed startup 
operations because the operations did not constitute a new production 
facility within the meaning of the statute). Similarly, we have not 
addressed the startup period claimed by Roldan as part of its request 
for a startup adjustment.

Comment 7: Including Inventory Write-Downs in COP and CV

    As a result of Roldan's 1996 startup of the refurbished rolling 
mill and pickling facility, the year-end inventory values, as recorded 
in Roldan's inventory account, were in excess of market value. Thus, in 
accordance with Spanish generally accepted accounting principles 
(GAAP), Roldan wrote the book value of its finished goods inventory 
down to market value at the end of 1996. Roldan calculated COP and CV 
by reducing SSWR production costs by the portion of the inventory 
write-down allocated to SSWR.
    Petitioners urge the Department not only to disallow this 
reduction, but also to add the inventory write-down to COP and CV. 
According to petitioners, reducing production costs by the inventory 
write-down (1) understates actual production costs; (2) obviates any 
finding of sales below cost by reducing actual costs to sales value; 
and (3) double counts the adjustment for startup costs. Petitioners, 
citing the SAA at 835 and the instructions in section D of the 
Department's antidumping questionnaire, note that the Department 
requires respondents to report the actual costs incurred in producing 
and selling the product under investigation. Petitioners maintain that 
the inventory value of SSWR before the write-down reflects the actual 
costs incurred to produce SSWR and, thus, Roldan should not have 
reduced reported costs by the write-down. Moreover, petitioners claim 
that writing down inventory values to market value shows that Roldan's 
sales prices are below cost. However, petitioners state that the 
Department would not find sales to be below cost if Roldan were allowed 
to report production costs that were reduced by the inventory write-
down. Furthermore, petitioners note that Roldan already reduced 
reported costs under the provision for startup operations in section 
773(f)(1)(C) of the Act. Thus, petitioners argue, that reducing 
reported costs by an inventory write-down necessitated by startup 
operations, double counts the startup adjustment and understates actual 
production costs. Rather than subtracting the write-down from reported 
costs, petitioners contend the write-down should be added to COP and 
CV. Petitioners note that the SAA at 834 states that ``Commerce 
normally will calculate costs on the basis of records kept by the 
exporter or producer of the merchandise provided such records are kept 
in accordance with generally accepted accounting principles of the 
exporting (or producing) country and reasonably reflect the costs 
associated with the production and sale of the merchandise.'' According 
to petitioners, Roldan recognized and recorded the inventory write-down 
as an expense in its accounting records. Petitioners also note that 
this write-down was recognized during the POI and recorded in Roldan's 
financial statements in accordance with Spanish GAAP. Therefore, 
petitioners request that the Department increase COP and CV by the 
amount of the inventory write-down.
    Roldan holds that its inventory write-down should not be added to 
COP or CV because the write-down did not reflect actual costs but was 
merely an accounting entry that resulted from its conservative 
allocation of startup expenses. Furthermore, Roldan contests 
petitioners' claim that its inventory write-down constitutes 
recognition that its sales are below cost because, according to Roldan, 
the record in this investigation shows that its sales are above cost. 
Accordingly, Roldan requests that the Department exclude the inventory 
write-down from COP and CV in the final determination.
    DOC Position: We agree with both petitioners and Roldan in part. 
The finished goods inventory write-down should not be added to 
production costs in calculating COP or CV because it is not a cost of 
production. Roldan records the cost of manufacturing finished products 
in its finished goods inventory account. At the end of 1996, the cost 
of finished products recorded in Roldan's inventory account exceeded 
the market value of those products. In accordance with Spanish GAAP, 
Roldan reduced the value of its finished goods inventory to market 
value in order to recognize the fact that the future revenue-producing 
ability of the inventory was no longer as great as its cost. Roldan 
recorded this reduction in future revenue-producing ability as a loss 
in its 1996 profit and loss statement. Although Roldan had not realized 
this loss, the conservative nature of accounting requires the loss to 
be recognized when the value of inventory exceeds market value, rather 
than in the period in which the inventory is sold. Thus, Roldan's 
inventory write-down is an accounting provision, not an actual 
production cost. In Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof From France, Germany, Italy, Japan, 
Singapore, and the United Kingdom: Final Results of Antidumping Duty 
Administrative Reviews, 62 FR 2081, 2117 (January 15, 1997) (AFBs), the 
respondents recognized inventory write-downs similar to Roldan's and 
the Department excluded the respondents' inventory write-downs from COP 
and CV, noting:
    The inventory write-down these respondents reported are not actual 
costs but are a provisional reduction in inventory value in 
anticipation of a lower resale value * * * {The write-downs} are not 
realized expenses but simply a contingent reduction in how much revenue 
the companies expect to make from the sale of the merchandise. Since 
these particular inventory write-downs are not a realized expense, and 
are not reflected in their accounting of costs of goods in inventory, 
we have not included them in the calculation of COP and CV.
    Therefore, in the final determination, consistent with our approach 
in AFBs, we did not add Roldan's inventory write-down to production 
costs, as suggested by petitioners.
    For similar reasons, in the final determination, we also disallowed 
Roldan's reduction of reported production costs by the inventory write-
down. Roldan's inventory write-down is an adjustment to inventory 
value, and, ultimately, cost of goods sold, not production costs. As 
noted above,

[[Page 40403]]

Roldan's inventory write-down reflects a decline in the future revenue-
producing ability of the inventory, not a reduction in production 
costs. Thus, reducing production costs by the inventory write-down 
would understate the actual costs incurred to produce SSWR.

Comment 8: Including Write-Offs of Idle Assets in COP and CV

    During the POI, Roldan permanently ceased using its melt shop. In 
its accounting records, Roldan wrote off the melt shop assets and its 
inventory of spare parts for the shop, but excluded the write-offs from 
COP and CV because they claimed they were extraordinary costs that did 
not relate to SSWR production. Petitioners maintain the melt shop 
assets related to SSWR production and, thus, in accordance with 
Department policy, the write-offs associated with these assets should 
be included in COP and CV. To support their position, petitioners argue 
that the Department, in Certain Hot-Rolled Lead Bismuth and Carbon 
Steel Products From the United Kingdom: Final Results of Antidumping 
Duty Administrative Review, 63 FR 18,879, 18,882 (April 16, 1998) 
(Bismuth), included the closure costs associated with productive assets 
in the reported general and administrative (G&A) expenses. Moreover, 
petitioners argue that recognizing these write-offs for purposes of the 
antidumping investigation is consistent with Roldan's recognition of 
the write-offs in its accounting records.
    Roldan argues that the write-offs of its melt shop assets and 
related spare parts should be excluded from reported costs because the 
write-offs are merely accounting adjustments which expense the value of 
the assets, but do not record actual production costs. According to 
Roldan, it could not claim these write-offs as production costs because 
the assets were no longer used in production. Even if the write-offs 
were included in SSWR production costs, Roldan claims the effect on 
costs would be minimal because the assets were only used during a small 
portion of the POI and they were primarily used to produce merchandise 
not subject to this investigation. Roldan also maintains that 
petitioners' reliance on Bismuth is misplaced because Roldan did not 
incur any costs in closing its melt shop. Therefore, Roldan urges the 
Department to exclude the write-offs from COP and CV in the final 
determination.
    DOC Position: We agree with petitioners and have included Roldan's 
write-offs of permanently idled assets and related spare parts in COP 
and CV in accordance with our past practice (see Notice of Final 
Results of Antidumping Duty Administrative Review: Extruded Rubber 
Thread From Malaysia, 61 FR 54,767, 54,772 (October 22, 1996) (Extruded 
Rubber Thread). In Extruded Rubber Thread, the Department stated :
    There is nothing unusual about a company's writing off 
manufacturing plants or equipment. Accordingly, we do not consider 
write-offs to be a type of extraordinary expense that we exclude from 
the cost of producing subject merchandise. The Department has in the 
past included similar equipment write-offs in the calculation of COP 
and CV.
    Consistent with our past practice, we have also included the write-
off of spare parts in COP and CV in the final determination. See Final 
Determination of Sales at Less Than Fair Value; Color Picture Tubes 
From Singapore, 52 FR 44,190, 44,196 (November 18, 1987), wherein the 
Department included write-offs of obsolete parts in the COP noting that 
``obsolete parts are expenses incurred in normal operations which must 
be absorbed by current production.''
    Roldan's inventory of spare parts for the permanently idled assets 
became obsolete when the assets were written off. Because these parts 
were related to production and their cost was expensed during the POI 
in Roldan's audited profit and loss statement, it is appropriate to 
include the cost of these spare parts in COP and CV.

Comment 9: Reducing General and Administrative Expenses by Foreign 
Exchange Gains

    At verification, the Department found that Roldan's 1996 foreign 
currency exchange gains related solely to accounts receivable. 
According to petitioners, in the Notice of Final Determination of Sales 
at Less Than Fair Value: Certain Pasta From Italy, 62 FR 30,326, 
30,359-60 (June 4, 1996), the Department stated that it does not 
include foreign currency exchange gains and loses in COP and CV when 
those gains and losses relate to accounts receivable. Therefore, 
petitioners contend that in the final determination the Department 
should exclude such foreign currency exchange gains from Roldan's G&A 
expenses.
    Roldan asserts that petitioners' request is unnecessary because the 
record shows it did not include foreign currency exchange gains related 
to accounts receivable in its reported G&A expenses.
    DOC Position: We agree with Roldan. The Department found no 
evidence at verification that Roldan reduced its reported G&A expenses 
by foreign currency exchange gains related to accounts receivable. 
Therefore, we have not increased reported G&A expenses by Roldan's 
foreign currency exchange gains as requested by petitioners.

Comment 10: Including the Parent Company's General Expenses in Reported 
Costs

    Petitioners contend that the reported G&A expenses should have 
included an amount for the administrative services Roldan's parent 
company, Acerinox, S.A., performed on behalf of Roldan.
    Roldan maintains it paid for all the services that Acerinox, S.A. 
performed on its behalf and included these payments in its reported 
general expenses. Thus, Roldan argues it would be inappropriate to 
increase reported G&A expenses by a portion of Acerinox, S.A.'s G&A 
expenses.
    DOC Position: We agree with Roldan. The Department found evidence 
at verification that Roldan paid Acerinox, S.A. for the administrative 
services it performed on Roldan's behalf and included these payments in 
the reported G&A expenses (see the Cost Verification Report from Howard 
Smith and Peter Scholl to Holly Kuga, dated June 4, 1998, at page 41). 
Therefore, we did not include in addition, a portion of Acerinox, 
S.A.'s expenses in the reported G&A expenses.

Comment 11: Corrections Found at Verification

    Petitioners state that the Department should revise Roldan's 
reported data in order to correct the errors which were discovered at 
verification. Roldan did not comment on this topic.

DOC Position: We agree with petitioners and have corrected the errors 
found at verification. For a list of these corrections, see the 
``Constructed Export Price'' and ``Normal Value'' sections of this 
notice.

Continuation of Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to continue to suspend liquidation of all entries of 
SSWR from Spain that are entered, or withdrawn from warehouse, for 
consumption, on or after the date of publication of this notice in the 
Federal Register. The Customs Service shall continue to require a cash 
deposit or posting of a bond equal to the estimated amount by which the 
normal value exceeds the U.S. price as shown below. These suspension of 
liquidation instructions will remain in effect until further notice.

[[Page 40404]]

The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
                   Exporter/manufacturer                        margin  
                                                              percentage
------------------------------------------------------------------------
Roldan, S.A................................................         4.72
All Others.................................................         4.72
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (ITC) of our determination. As our final 
determination is affirmative, the ITC will, within 45 days, determine 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry. If the ITC determines that material 
injury, or threat of material injury does not exist, the proceeding 
will be terminated and all securities posted will be refunded or 
canceled. If the ITC determines that such injury does exist, the 
Department will issue an antidumping duty order directing Customs 
officials to assess antidumping duties on all imports of the subject 
merchandise entered for consumption on or after the effective date of 
the suspension of liquidation.
    This determination is published pursuant to section 777(i) of the 
Act.

    Dated: July 20, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-20016 Filed 7-28-98; 8:45 am]
BILLING CODE 3510-DS-P