Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40449

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. 98–20020 Filed 7–28–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–401–806]

Notice of Final Determination of Sales

at Less Than Fair Value: Stainless

Steel Wire Rod From Sweden

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: July 29, 1998.

FOR FURTHER INFORMATION CONTACT:

Everett Kelly or Brian Smith, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

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

telephone: (202) 482–4194 or (202) 482–

1766, 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 Sweden 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

Since the preliminary determination

(i.e., Notice of Preliminary

Determination of Sales at Less Than

Fair Value: Stainless Steel Wire from

Sweden, 63 FR 10841 (March 5, 1998)),

the following events have occurred:

In February 1998, we requested

additional information from Fagersta

Stainless AB (‘‘Fagersta’’) concerning

grade specifications and corresponding

matching control numbers. In March

1998, we received responses to these

questionnaires, as well as supplemental

responses to Sections D and E of the

Department’s antidumping

questionnaire. Also, Fagersta submitted

revised sales and cost databases.

From March to May 1998, we

conducted verification of Fagersta’s

responses to the antidumping

questionnaire. In May 1998, we issued

our verification reports for Fagersta,

Fagersta’s home market affiliates AB

Sandvik Steel (‘‘Sandvik’’) and Avesta

Welding, and Fagersta’s U.S. affiliates

Sandvik Steel Company (‘‘SSUS’’),

Avesta Sheffield Inc. (‘‘ASI’’), Amstek

Metal (‘‘Amstek’’) and the Kanthal

Corporation.

Also in May 1998, AL Tech Specialty

Steel Corp., Carpenter Technology

Corp., Republic Engineered Steels,

Talley Metals Technology, Inc., and

United Steelworkers of America (‘‘the

petitioners’’) withdrew their request for

a hearing. The petitioners and Fagersta

submitted case briefs on June 2, 1998,

and rebuttal briefs on June 9, 1998. On

June 12 and 15, 1998, we held separate

meetings with Fagersta and the

petitioners, respectively, concerning the

level of trade issue raised in their case

briefs and rebuttal briefs.

On June 23, 1998, Fagersta requested

that certain alloy metal wire rod and

wire for electric resistance heating

material and heating elements be

excluded from the scope of the

investigation. On July 6, 1998, the

petitioners stated that they agreed that

the scope of this investigation should

exclude the products in question. On

July 8, 10 and 14, Fagersta provided

detailed scope descriptions and

clarifications for the products it

requested be excluded from the scope of

this investigation (see ‘‘Scope of

Investigation’’ section of this notice for

further details).

Scope of Investigation

For purposes of this investigation,

SSWR comprises products that are hotrolled 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 hotrolling 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 coldfinished 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

in diameter. Certain stainless steel

grades are excluded from the scope of

the investigation. SF20T and K-M35FL

are excluded. The following proprietary

grades of Kanthal AB are also excluded:

Kanthal A–1, Kanthal AF, Kanthal A,

Kanthal D, Kanthal DT, Alkrothal 14,

Alkrothal 720, and Nikrothal 40. The

chemical makeup for the excluded

grades is as follows:

SF20T

Carbon ....................... 0.05 max.

Manganese ................ 2.00 max.

Phosphorous ............. 0.05 max.

Sulfur ......................... 0.15 max.

Silicon ........................ 1.00 max.

Chromium .................. 19.00/21.00.

Molybdenum .............. 1.50/2.50.

Lead .......................... Added (0.10/0.30).

Tellurium .................... Added (0.03 min).

K–M35FL

Carbon ....................... 0.015 max.

Silicon ........................ 0.70/1.00.

Manganese ................ 0.40 max.

Phosphorous ............. 0.04 max.

Sulfur ......................... 0.03 max.

Nickel ......................... 0.30 max.

Chromium .................. 12.50/14.00.

Lead .......................... 0.10/0.30.

Aluminum .................. 0.20/0.35.

KANTHAL A–1

Carbon ....................... 0.08 max.

Silicon ........................ 0.70 max.

Manganese ................ 0.40 max.

Chromium .................. 20.50 min, 23.50

max.

Aluminum .................. 5.30 min, 6.30 max.

Iron ............................ Balance.

KANTHAL AF

Carbon ....................... 0.08 max.

Silicon ........................ 0.70 max.
40450 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

KANTHAL AF—Continued

Manganese ................ 0.40 max.

Chromium .................. 20.50 min, 23.50

max.

Aluminum .................. 4.80 min, 5.80 max.

Iron ............................ Balance.

KANTHAL A

Carbon ....................... 0.08 max.

Silicon ........................ 0.70 max.

Manganese ................ 0.50 max.

Chromium .................. 20.50 min, 23.50

max.

Aluminum .................. 4.80 min, 5.80 max.

Iron ............................ Balance.

KANTHAL D

Carbon ....................... 0.08 max.

Silicon ........................ 0.70 max.

Manganese ................ 0.50 max.

Chromium .................. 20.50 min, 23.50

max.

Aluminum .................. 4.30 min, 5.30 max.

Iron ............................ Balance.

KANTHAL DT

Carbon ....................... 0.08 max.

Silicon ........................ 0.70 max.

Manganese ................ 0.50 max.

Chromium .................. 20.50 min, 23.50

max.

Aluminum .................. 4.60 min, 5.60 max.

Iron ............................ Balance.

ALKROTHAL 14

Carbon ....................... 0.08 max.

Silicon ........................ 0.70 max.

Manganese ................ 0.50 max.

Chromium .................. 14.00 min, 16.00

max.

Aluminum .................. 3.80 min, 4.80 max.

Iron ............................ Balance.

ALKROTHAL 720

Carbon ....................... 0.08 max.

Silicon ........................ 0.70 max.

Manganese ................ 0.70 max.

Chromium .................. 12.00 min, 14.00

max.

Aluminum .................. 3.50 min, 4.50 max.

Iron ............................ Balance.

NIKROTHAL 40

Carbon ....................... 0.10 max.

Silicon ........................ 1.60 min, 2.50 max.

Manganese ................ 1.00 max.

Chromium .................. 18.00 min, 21.00

max.

Nickel ......................... 34.00 min, 37.00

max.

Iron ............................ Balance.

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 (‘‘POI’’)

The POI is July 1, 1996, through June

30, 1997.

Fair Value Comparisons

To determine whether sales of SSWR

from Sweden to the United States were

made at less than fair value, we

compared the export price (‘‘EP’’) or

constructed export price (‘‘CEP’’) to the

Normal Value (‘‘NV’’), as described in

the ‘‘Export Price and Constructed

Export Price’’ and ‘‘Normal Value’’

sections of this notice, below. In

accordance with section

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

calculated weighted-average EPs and

CEPs for comparison to weightedaverage NVs.

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. 1998). 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 this court

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 abovecost 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, and information

submitted in Fagersta’s response to the

Department’s February 26, 1998,

supplemental questionnaire. We have

implemented the Court’s decision in

this case, to the extent that the data on

the record permitted.

In instances where Fagersta has

reported a non-AISI grade (or an

internal grade code) for a product that

falls within a single AISI category, we

have used the actual AISI grade rather

than the non-AISI grade reported by

Fagersta for purposes of our analysis.

However, in instances where the

chemical content ranges of reported

non-AISI (or an internal grade code)

grades are outside the parameters of an

AISI grade, we used the grade code

reported by the respondents for analysis

purposes (see Comment 6). We made

changes to our concordance program

from the preliminary determination

which incorporated corrections

submitted to the Department in

Fagersta’s March 16, 1998, submission

with respect to Fagersta’s three most

similar grade comparisons (see

Calculation Memorandum for the Final

Determination for Fagersta Stainless AB

dated July 20, 1998 (‘‘Final Calculation

Memorandum’’)).

With respect to home market sales of

non-prime merchandise made by

Fagersta during the POI, we have

continued to exclude these sales from

our final analysis based on the limited

quantity of such sales in the home

market and the fact that no such sales

were made to the United States during

the POI, in accordance with our past

practice (see Final Determinations of

Sales at Less Than Fair Value: Certain

Hot-Rolled Carbon Steel Flat Products,

Certain Cold-Rolled Carbon Steel Flat
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40451

Products, Certain Corrosion-Resistant

Carbon Steel Flat Products, and Certain

Cut-to-Length Carbon Steel Plate from

Korea, 58 FR 37176, 37180 (July 9,

1993)).

Level of Trade

As discussed in the preliminary

determination, Fagersta claimed a level

of trade (‘‘LOT’’) adjustment on the

basis that it offers significantly different

services to its affiliated customers in the

home market, in comparison to its

services to unaffiliated customers in the

United States, and charges its affiliated

customers higher prices as a result. In

our preliminary determination, we

determined Fagersta’s U.S. sales and

home market sales to be at the same

LOT and no LOT adjustment under

section 773(a)(7)(A) of the Act was

consequently warranted.

For the final determination, we have

collapsed Fagersta and Sandvik.

Therefore, we have not used Fagersta’s

home market sales to Sandvik in our

analysis (see Comment 1 for further

discussion). With regard to Fagersta’s

home market sales to Sandvik’s whollyowned affiliate Gusab Stainless AB

(‘‘Gusab’’) and Fagersta’s home market

sales to its affiliate Avesta Welding, we

have continued to treat these Fagersta

home market sales as being at the same

LOT as its U.S. sales (see Comment 3).

Export Price and Constructed Export

Price

As discussed in the preliminary

determination of this proceeding,

Fagersta reported as EP transactions its

sales of subject merchandise sold to

unaffiliated U.S. customers prior to

importation through two affiliated

companies in the United States—ASI

and SSUS. Fagersta reported as CEP

transactions its sales of subject

merchandise sold to SSUS for its own

account and sales made by Amstek, the

product of which was sourced from

SSUS. SSUS and Amstek either resold

the subject merchandise to unaffiliated

customers or SSUS further

manufactured the wire rod into wire

products which are outside the scope of

this investigation.

During verification, we reviewed the

selling activities of Fagersta’s U.S.

affiliates. In particular, we paid close

attention to ASI’s and SSUS’ inventory

records and freight and U.S. customs

documentation, as well as

correspondence documentation between

Fagersta and its U.S. affiliates. Based on

our verification findings, we find that

EP is appropriate for all of Fagersta’s

sales to the United States through ASI

and for specific Fagersta sales through

SSUS reported as EP sales transactions

(see pages 15 and 17 of the May 11,

1998, Sales Verification Report of

Fagersta Stainless AB, page 12 of the

May 20, 1998, SSUS Verification Report,

and pages 8 and 9 of the May 22, 1998,

ASI Verification Report). With respect to

the EP sales mentioned above, we find

that the customary commercial channel

between Fagersta and its unaffiliated

customers is for Fagersta to ship the

merchandise directly to the unaffiliated

U.S. customers without having the

merchandise enter into the physical

inventory of the U.S. affiliates. We also

find that the U.S. affiliates’ activities are

limited to that of a ‘‘processor of salesrelated documentation’’ and a

‘‘communication link’’ with the

unaffiliated U.S. buyers. Accordingly,

for purposes of the final determination,

we treated certain SSUS sales and all of

ASI’s U.S. sales as EP transactions (see

Comment 4 for a further discussion of

SSUS’ EP sales).

We calculated EP and CEP, as

appropriate, in accordance with sections

772 (a), (b), (c), and (d) of the Act. For

those CEP sales that were further

manufactured from subject

merchandise, we deducted the costs of

further manufacturing to determine CEP

for such merchandise, in accordance

with section 772(d)(2) of the Act. We

calculated EP and CEP based on the

same methodology used in the

preliminary determination, with the

following exceptions: (1) we used the

March 16, 1998, U.S. and home market

sales listings; (2) we adjusted the U.S.

inventory carrying costs and indirect

selling expenses based on our

verification findings in Sweden; and (3)

we corrected a ministerial error in our

margin program where we had

overwritten the sales quantity for the

first record of each sale type and control

number combination (see Comment 10).

In addition, we made the following

company-specific adjustments to

Fagersta’s U.S. affiliates’ reported data:

A. Amstek

Based on verification findings, we

adjusted the direct selling expenses and

warranty expenses pertaining to

Amstek’s sales data, and we deleted an

invoice from Amstek’s sales listing (see

Comments 5 and 8 for further

discussion).

B. SSUS

We corrected the reported amounts

for discounts, freight, U.S. duty, U.S.

brokerage and handling, credit

expenses, inventory carrying costs and

warranty expenses based on our

verification findings (see Comment 8 for

further discussion). We calculated

international freight for SSUS’ EP sales

transactions based on transactionspecific expense data examined at

verification (see Comment 9 for further

discussion). We corrected for invoicespecific errors with respect to alloy

surcharges, sale dates, invoice dates,

discounts, duty and brokerage fees, and

inland freight warehouse transfer

expenses (see Final Calculation

Memorandum for further discussion).

C. ASI

We corrected ASI’s reported direct

selling expenses based on our

verification findings. We also corrected

invoice-specific information in ASI’s

sales listing with respect to quantities,

U.S. brokerage fees, international freight

expenses, and inland freight expenses

(see Final Calculation Memorandum).

Normal Value

After testing (1) home market

viability; (2) whether sales to affiliates

were at arm’s-length prices; and (3)

whether home market sales were at

below-cost prices, we calculated NV as

noted in the ‘‘Price to Price

Comparisons’’ and ‘‘Price to CV

Comparisons’’ sections of this notice

(see ‘‘Affiliated-Party Transactions and

Arm’s Length Test’’ section below and

Comment 2 for further discussion).

1. Home Market Viability

In order to determine whether there is

a sufficient volume of sales in the home

market to serve as a viable basis for

calculating NV (i.e., the aggregate

volume of home market sales of the

foreign like product is equal to or

greater than five percent of the aggregate

volume of U.S. sales), we compared the

respondent’s volume of home market

sales of the foreign like product to the

volume of U.S. sales of the subject

merchandise, in accordance with

section 773(a)(1)(B) of the Act. Because

the respondent’s aggregate volume of

home market sales of the foreign like

product was greater than five percent of

its aggregate volume of U.S. sales for the

subject merchandise, we determined

that the home market was viable for the

respondent.

2. Affiliated-Party Transactions and

Arm’s-Length Test

We have not used Fagersta’s home

market sales to Sandvik in our analysis,

because we find that Fagersta and

Sandvik meet the criteria for collapsing

affiliated companies (see Comment 1 for

further discussion). With respect to

Fagersta’s home market sales to Avesta

Sheffield’s (‘‘Avesta’’) affiliate and

Gusab (a wholly-owned affiliate of

Sandvik), we do not find that Fagersta

and Avesta or Gusab meet the criteria
40452 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

for collapsing affiliated companies.

Therefore, we have applied the arm’slength test to these sales by comparing

them to sales of identical merchandise

from Fagersta to its unaffiliated home

market customers. If these affiliated

party sales satisfied the arm’s-length

test, we used them in our analysis (see

Comments 1 and 2 for further

discussion).

3. Cost of Production Analysis

As discussed in the preliminary

determination, we conducted an

investigation to determine whether

Fagersta made sales of the foreign like

product in the home market during the

POI at prices below their cost of

production (‘‘COP’’) within the meaning

of section 773(b)(1) of the Act. We

calculated COP based on the same

methodology used in the preliminary

determination on a model-specific basis,

except where we modified the margin

calculation program to correct for

certain adjustments and updated cost

data based on verification findings (see

Final Calculation Memorandum).

For COP, we used Fagersta’s revised

SSWR COP data (utilizing the cost file

based on billet COP incurred by its

affiliated suppliers, Sandvik Steel and

Avesta Sheffield, rather than the cost

file based on billet transfer price) and

SSUS’s revised further manufacturing

COP data, as submitted to the

Department on March 16, and April 29,

1998, respectively. Based on our

verification findings, we made the

following adjustments to Fagersta’s COP

(see Final Calculation Memorandum):

1. We recalculated Sandvik Steel’s

selling, general, and administrative

(‘‘SG&A’’) expense rate using companywide expenses and cost of sales (‘‘COS’’)

figures reported in Sandvik Steel’s 1996

financial statements (see Comment 13

for a detailed discussion of

adjustments).

2. We adjusted the G&A expense rate

for Avesta Sheffield based on the

company-wide expenses and COS

figures reported in Avesta Sheffield’s

audited 1996 financial statements.

3. We adjusted Fagersta’s G&A

expense rate to correct an error in the

company’s computation.

4. We adjusted Fagersta’s submitted

actual variable overhead and fixed

overhead to reflect the difference

between the packing materials costs

deducted in Fagersta’s computation of

its fabrication cost variance rate, and the

packing materials costs submitted by the

company during the Department’s sales

verification.

5. We adjusted SSUS’s further

manufacturing materials cost to reflect

the unreconciled difference between the

submitted materials cost and the

materials cost reported in SSUS’s

normal accounting records.

6. We adjusted Fagersta’s reported

materials costs for SSWR such that the

value of billets purchased from one of

the company’s affiliated suppliers,

Avesta Sheffield, reflected the transfer

price of the major input.

Pursuant to section 773(b)(2)(C),

where less than 20 percent of the

respondent’s sales of a given product

were made at prices below the COP, we

did not disregard any below-cost sales

of that product because we determined

that the below-cost sales were not made

in ‘‘substantial quantities.’’ Where 20

percent or more of the respondent’s

sales of a given product were made at

prices below the COP, we disregarded

the below-cost sales because such sales

were found to be made within an

extended period of time in ‘‘substantial

quantities’’ in accordance with sections

773(b)(2)(B) and (C) of the Act, and

because the below cost sales of the

product were at prices which would not

permit recovery of all costs within a

reasonable period of time, in accordance

with section 773(b)(2)(D) of the Act.

Where all contemporaneous sales of a

specific product were made at prices

below the COP, we calculated NV based

on CV, in accordance with section

773(a)(4) and (e) of the Act.

We found that, for certain grades of

SSWR, more than 20 percent of

Fagersta’s home market sales within an

extended period of time were at prices

less than COP. Further, the prices did

not provide for the recovery of costs

within a reasonable period of time. We

therefore excluded these sales and used

the remaining above-cost sales as the

basis for determining NV if such sales

existed, in accordance with section

773(b)(1). For those U.S. sales of SSWR

for which there were no comparable

(above-cost) home market sales in the

ordinary course of trade, we compared

export prices or constructed export

prices to CV in accordance with section

773(a)(4) of the Act.

D. Calculation of CV

In accordance with section 773(e)(1)

of the Act, we calculated CV based on

the sum of Fagersta’s cost of materials,

fabrication, SG&A, interest, and U.S.

packing costs. Where appropriate, we

calculated CV based on the

methodology described above in the

calculation of COP and added an

amount for profit. In accordance with

sections 773(e)(2)(A) of the Act, we

based SG&A and profit on the amounts

incurred and realized by the respondent

in connection with the production and

sale of the foreign like product in the

ordinary course of trade for

consumption in the foreign country. For

selling expenses, we used the weightedaverage home market selling expenses.

Price-to-Price Comparisons

For price-to-price comparisons, we

calculated NV based on the same

methodology used in the preliminary

determination, with the following

exceptions: based on verification, we

corrected Fagersta’s home market

warranty expenses, inventory carrying

costs, credit expenses and indirect

selling expenses (see Final Calculation

Memorandum for further discussion).

Price-to-CV Comparisons

For price-to-CV comparisons, we

made adjustments to CV in accordance

with section 773(a)(8) of the Act. Where

we compared CV to EP, we made a

circumstance-of-sale adjustment by

deducting from CV the weightedaverage home market direct selling

expenses and adding the weightedaverage U.S. product-specific direct

selling expenses in accordance with

section 773(a)(6)(C)(iii) of the Act and

19 C.F.R. 351.410. Where we compared

CV to CEP, we deducted from CV the

weighted-average home market direct

selling expenses.

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.

Verification

As provided in section 782(i) of the

Act, we verified the information

submitted by the respondent for use in

our final determination. We used

standard verification procedures,

including examination of relevant

accounting and production records and

original source documents provided by

the respondent.

Interested Party Comments

Sales Issues

Comment 1: Collapsing Fagersta,

Sandvik and Kanthal AB.

Fagersta contends that the Sandvik

Group (which includes Kanthal AB

(‘‘Kanthal’’), Gusab, and AB Sandvik

Steel (‘‘Sandvik’’)) fulfills the

Department’s collapsing test based on

19 C.F.R. 351.401(f). Fagersta states that

it is affiliated with its billet producer

and supplier, Sandvik, because Sandvik

owns 50 percent of Fagersta. Fagersta

also claims that Sandvik is a producer

of similar or identical products and, as
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40453

such, would not require substantial

retooling in order to restructure

manufacturing priorities. Respondent

makes this claim based on the fact that

Sandvik is a 100 percent owner of

Kanthal, a subsidiary which has a

tolling arrangement with Sandvik to

process billets produced and supplied

by Sandvik into the subject

merchandise. Fagersta also states that,

while Sandvik used the majority of the

subject merchandise it purchased from

Fagersta during the POI for internal

consumption, Sandvik did export a

small quantity of the subject

merchandise during the POI (as reported

to the Department), and has the capacity

to continue exporting subject

merchandise to the U.S. market in the

future without substantial retooling.

Fagersta states that Kanthal also sold the

subject merchandise in the U.S. market

during the POI. Finally, Fagersta states

that there are interlocking directors

between it and Sandvik which further

contribute to the significant potential for

the manipulation of price or production.

Fagersta contends that, because it and

Sandvik should be collapsed, the major

input rule would not apply in this case.

Consequently, the Department should

disregard the billet transfer prices

between Sandvik and Fagersta and

compute COP and CV based on

Sandvik’s billet production costs. In

support of its position, Fagersta cites to

Final Results of Antidumping Duty

Administrative Review: Certain ColdRolled and Corrosion-Resistant Carbon

Steel Flat Products from Korea, 62 FR

18404 (April 15, 1997); Final

Determination of Sales at Less Than

Fair Value: Collated Roofing Nails from

Taiwan, 62 FR 51427, 51436 (October 1,

1997) (Nails from Taiwan); Preliminary

Results of Antidumping Duty Changed

Circumstances Review: Certain Fresh

Cut Flowers from Colombia, 63 FR

25447, 25448 (May 8, 1998) (Flowers

from Colombia); and Final Results of

Antidumping Duty Administrative

Review: Polyvinyl Alcohol from Taiwan,

63 FR 32810 (June 16, 1998) (PVA from

Taiwan).

The petitioners point to the same

determinations in support of their

contention that the Department should

not collapse Fagersta and Sandvik

because Fagersta has not demonstrated

that Sandvik (the billet producer) has

equipment within its facilities that

could transform the billets into the

subject merchandise, precisely as

Fagersta does in its facilities without

substantial retooling to restructure

manufacturing priorities. Specifically,

the petitioners maintain that Sandvik

must enter into a tolling arrangement

with an off-site company because it does

not have the on-site capability to

produce the subject merchandise.

Consequently, the petitioners argue that

the Department must find that Sandvik’s

facilities would have to be substantially

retooled to restructure manufacturing

priorities for subject merchandise. The

petitioners further maintain that

previous Department collapsing

determinations indicate that the

Department examines the facilities of

the company it is considering

collapsing, not the facilities of a

separate company involved in a

contractual tolling arrangement. In

addition, the petitioners contend that

there is no evidence on the record of

this case which demonstrates that

Sandvik and Fagersta are divisions of

the same company. Moreover, the

petitioners contend that Fagersta has

failed to establish that its transactions

with Sandvik are part of an integrated

system directed solely at Sandvik’s

discretion. Finally, the petitioners

contend that Fagersta has failed to

provide evidence which demonstrates

the extent to which managerial

employees or board members of Sandvik

sit on the board of directors of Fagersta

or whether their business operations are

intertwined, such as through shared

sales information, involvement in

production and pricing decisions, the

sharing of facilities or employees, or

significant transactions between the two

entities. The petitioners also cite to

Final Results of Antidumping Duty

Administrative Review: Certain Forged

Steel Crankshafts from the United

Kingdom, 61 FR 54613, 54614 (October

21, 1996) (Crankshafts from the U.K.) in

support of their argument.

DOC Position

We agree with Fagersta that Fagersta,

Sandvik and Kanthal should be

collapsed.

However, for the reasons explained

below, we disagree that Fagersta and

Avesta should be collapsed or that

Fagersta and Gusab should be collapsed.

For the preliminary determination, the

Department did not collapse Fagersta,

Sandvik, Kanthal, Avesta and Gusab.

However, since the preliminary

determination, we have reexamined the

collapsing issue, taking into account the

arguments advanced by the parties, as

well as our own analysis and

verification findings, with respect to the

information on the record that is

relevant to this issue. As a result of our

reexamination, we now agree with

Fagersta that Fagersta and its affiliates

Sandvik and Kanthal should be

collapsed. However, as we also explain,

we disagree that Fagersta and its other

affiliates, Avesta and Gusab, should be

collapsed, as they do not meet the

criteria for collapsing.

Pursuant to 19 C.F.R. 351.401(f), the

Department will collapse producers and

treat them as a single entity where (1)

those producers are affiliated, (2) the

producers have production facilities for

producing similar or identical products

that would not require substantial

retooling of either facility in order to

restructure manufacturing priorities,

and (3) there is a significant potential

for manipulation of price or production.

In determining whether a significant

potential for manipulation exists, the

Department will consider (1) the level of

common ownership, (2) the extent to

which managerial employees or board

members of one firm sit on the board of

directors of an affiliated firm, and (3)

whether the operations of the affiliated

firms are intertwined. (See Gray

Portland Cement and Clinker From

Mexico: Final Results of Antidumping

Duty Administrative Review, 63 FR

12764, 12774 (March 16, 1998) and

Nails From Taiwan, 62 FR at 51436.)

Based on a totality of the circumstances,

the Department will collapse affiliated

producers and treat them as a single

entity where the criteria of 19 C.F.R.

351.401(f) are met.

We find that Fagersta, Sandvik and

Kanthal satisfy the first criterion in that

they are affiliated with each other.

Under section 771(33)(E) of the Act,

persons are deemed to be affiliated

where any person directly or indirectly

owns, controls, or holds with power to

vote, five percent or more of the

outstanding voting stock or shares of

any organization and such organization.

In this instance, Sandvik and Avesta are

50 percent owners of the joint venture

respondent, Fagersta, which makes

them both affiliates of Fagersta. In

addition, Kanthal is a wholly-owned

affiliate of Sandvik. See also 19 C.F.R.

351.102. Fagersta and Kanthal are also

affiliated based on section 771(33)(F) of

the Act, which provides that persons

directly or indirectly under common

control of any person are affiliates. In

this case, Sandvik owns 50 percent of

Fagersta and 100 percent of Kanthal so

that these two entities would be under

the common control of Sandvik.

Second, pursuant to 19 C.F.R.

351.401(h), we find that Sandvik is also

a producer of the subject merchandise

through its tolling arrangement with its

wholly-owned subsidiary, Kanthal.

Sandvik produces billets which are

processed into SSWR by Kanthal for

Sandvik.

Under this tolling arrangement,

Sandvik retains title to the billets at all

times and simply pays Kanthal a

processing fee. Even though Kanthal
40454 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

may not be located on the same

premises as Sandvik, this fact, contrary

to the petitioners’ contentions, does not

make Sandvik any less a producer of the

subject merchandise than if the subject

merchandise were produced on its

premises (see PVA from Taiwan, 63 FR

32810, 32813 (June 16, 1998); Notice of

Final Determination of Sales at Less

Than Fair Value: Static Random Access

Memory Semiconductors From Taiwan,

63 FR 8909, 8916 (February 23, 1998)).

Thus, Sandvik is in fact a producer of

merchandise that is identical or similar

to that produced by Fagersta, and no

retooling is required. In addition, we

find that Kanthal is a producer of the

subject merchandise in its own right

and has the equipment in its facilities to

produce subject merchandise that is

identical or similar to that produced by

Fagersta. Accordingly, we find the

second collapsing criterion to have been

met in that Sandvik, Kanthal and

Fagersta are affiliated parties, each of

which is a producer of identical or

similar subject merchandise.

Finally, we also find that the

operations of Sandvik, Fagersta and

Kanthal are so intertwined that there

exists a significant potential for

manipulation of price or production if

these affiliated producers were not

collapsed. See 19 C.F.R. 351.401(f)(2). In

particular, the level of common

ownership is substantial as Sandvik

owns 50 percent of Fagersta and 100

percent of Kanthal. Additionally, 50

percent of the management positions on

Fagersta’s board of directors are

occupied by Sandvik officials (see

Exhibit 4 of the Fagersta Sales

Verification Report of Fagersta Stainless

AB and Exhibit A–2 of May 19, 1998,

Cost Verification Report of AB Sandvik

Steel), and Fagersta is required to

purchase only from Sandvik the billets

that it processes into SSWR for sale to

Sandvik. Further, Sandvik, Kanthal, and

Fagersta also share information

concerning sales, production, and

pricing (see page 13 of volume 1A of

Fagersta’s February 2, 1998,

supplemental questionnaire response).

On the other hand, while we find that

Fagersta is affiliated with Avesta and

Gusab for the same reasons that it is

affiliated with Sandvik, we find that

neither Avesta nor Gusab is a producer

of the subject merchandise. In

particular, no evidence has been placed

on the record indicating that either

Avesta or Gusab produces the subject

merchandise at its own facility or could

produce the merchandise without

substantially retooling their facilities, or

that either may be considered a

producer by way of a tolling

arrangement like Sandvik. Therefore,

despite their affiliation with Fagersta,

we have not collapsed either Avesta or

Gusab with Fagersta under 19 C.F.R.

351.401(f).

In this instance, based on a totality of

the circumstances, Fagersta, Sandvik

and Sandvik’s wholly-owned subsidiary

Kanthal meet the criteria for purposes of

being collapsed and treated as a single

entity. In this respect, it is not

necessary, as the petitioners appear to

suggest in referring to Crankshafts from

the United Kingdom, that Fagersta and

Sandvik be divisions of the same

company for collapsing purposes.

Because we have collapsed Fagersta,

Sandvik and Kanthal, we find that the

major input rule does not apply in this

instance and have used Sandvik’s billet

costs as the basis for COP. In the case

of Avesta, since we have not collapsed

Fagersta and Avesta, we find that the

major input rule under section 773(f)(2)

and (3) of the Act does apply and have

therefore used the higher of the transfer

price or billet cost (no information on

the market value of billets was

available) as the basis for calculating

COP and CV for the subject

merchandise.

Comment 2: Home Market Affiliated

Sales Transactions.

Fagersta contends that, in this case,

the Department’s arms-length test fails

to capture the basic distinction between

its market-price SSWR sales to

unaffiliated parties and affiliated parties

because for its affiliated sales, Fagersta

negotiates the processing fee with its

affiliated parties (i.e., Sandvik Group)

for converting Sandvik billet into SSWR

for delivery to Sandvik’s wire mills.

Therefore, Fagersta maintains that this

special arrangement within the Sandvik

Group in the home market, including

Fagersta’s role as strictly a processor of

billet into SSWR, should compel the

Department to treat Fagersta’s home

market affiliated sales as outside the

ordinary course of trade. Fagersta cites

to the Final Results of Antidumping

Duty Administrative Review: Gray

Portland Cement and Clinker from

Mexico, 63 FR 12764, 12770 (March 16,

1998) and 19 C.F.R. 351.403(c) in

support of its argument. Alternatively,

Fagersta argues that the Department

should adjust the prices of its home

market affiliated party sales to reduce

the distortion created by Sandvik’s

presence at both the billet and wire

stage by making a level of trade

adjustment or exclude these sales from

its analysis because the major input rule

does not apply in this case.

The petitioners contend that if

Fagersta’s home market affiliated sales

pass the Department’s arm’s-length test,

the Department must use these sales in

the final determination because Fagersta

has provided no basis for excluding

such sales. The petitioners maintain that

the Department should find Fagersta’s

arguments that it is a division of the

same company as its suppliers, or that

it meets the criteria for being collapsed

with its suppliers, are completely

unsupported by evidence in the record

of this case and should be rejected by

the Department.

DOC Position

We agree in part with Fagersta. We

have not used Fagersta’s home market

sales to Sandvik because we find that

Fagersta and Sandvik meet the criteria

for collapsing affiliated producers (see

Comment 1 above). Therefore, we find

that the arm’s-length test does not apply

with respect to Fagersta’s home market

sales of subject merchandise made to

Sandvik. Regarding Fagersta’s home

market sales to Gusab and Avesta

Welding, we find that neither Fagersta

and Avesta Welding nor Fagersta and

Gusab meet the criteria for collapsing

affiliated companies (see Comment 1

above). Moreover, we do not find that

these sales were made outside the

ordinary course of trade. We find that

Fagersta’s sales to its affiliated end

users, Avesta Welding and Gusab, were

similar in nature to the home market

sales made to its unaffiliated customers.

However, in attempting to apply the

arm’s-length test to the sales to Avesta’s

affiliate, we find no sales of identical

merchandise made to Fagersta’s

unaffiliated home market customers to

match. Moreover, we do not find that

Fagersta made any U.S. sales of

merchandise that was identical to the

merchandise sold to Avesta’s home

market affiliate. Therefore, we have not

used these sales in our analysis (see

Final Determination of Sales at Less

Than Fair Value: Certain Cold-Rolled

Carbon Steel Flat Products from

Argentina, 58 FR 37062 (July 9, 1993)).

In applying the arm’s-length test to

Fagersta’s sales to Gusab, we do find

sales of identical merchandise to match

to sales Fagersta made to unaffiliated

customers. Therefore, we have used

these sales in our analysis if they passed

the arm’s-length test.

Comment 3: Level of Trade.

Fagersta claims that it has provided

evidence that its sales within the

Sandvik Group occur at a different

marketing stage, involving substantially

different selling functions, than its sales

to unaffiliated home market and U.S.

customers. In addition, Fagersta claims

that it has demonstrated that it provides

premium services during the integrated

sales and marketing process for

affiliated customers which its
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40455

unaffiliated home market and U.S.

customers either do not receive, or

receive to a lesser extent. Therefore,

Fagersta contends that because a

substantial difference in selling

activities and price comparability exists

between the home market Sandvik

Group transactions and unaffiliated

home market or U.S. sales, the

Department must recognize that there is

a difference in marketing stages and

grant it a LOT adjustment. Fagersta cites

to Final Results of Antidumping Duty

Administrative Review: Certain

Stainless Wire Rods from France, 61 FR

47874, 47880 (September 11, 1996)

(Wire Rods from France) in support of

its argument.

The petitioners contend that the

Department should not grant Fagersta a

LOT adjustment or CEP offset because

Fagersta has not demonstrated in this

case that its home market sales are at a

different LOT than its U.S. sales.

Specifically, the petitioners state that

Fagersta has failed to demonstrate that

its sales to unaffiliated and affiliated

customers in the home market were not

made through the same channel of

distribution and to the same category of

customer. With regard to the premium

services Fagersta claims it provides its

affiliated customers, the petitioners

maintain that the documentation on the

record does not support a finding that

substantive differences exist between

services provided for sales to affiliated

and unaffiliated customers. Moreover,

the petitioners argue that Fagersta has

not demonstrated that the difference in

selling functions and activities between

its affiliated home market customers

and U.S. customers establishes a

difference in marketing stages.

Therefore, the petitioners maintain that

Fagersta has not demonstrated that there

is difference in selling functions as a

result of different selling activities

associated with home market and U.S.

sales. Finally, the petitioners contend

that Fagersta has failed to correlate any

LOT difference with a pattern of

consistent price differences between

sales at different LOT in the home

market.

DOC Position

We agree with the petitioners. A LOT

adjustment can increase or decrease

normal value (see Statement of

Administrative Action (‘‘SAA’’), H. Doc.

No. 316, Vol. 1, 103d Cong., 2d Sess.

829 (1994)). The SAA directs the

Department to ‘‘require evidence from

the foreign producers that the functions

performed by the sellers at the same

level of trade in the U.S. and foreign

markets are similar, and that different

selling activities are actually performed

at the allegedly different levels of

trade.’’ Id. See also Final Results of

Antidumping Duty Administrative

Review: Certain Cold-Rolled Carbon

Steel Flat Products from the

Netherlands, 63 FR 13204, 13206

(March 18, 1998). Thus, to properly

establish the LOT of the relevant sales,

the Department specifically requests

LOT information in every antidumping

proceeding, regardless of whether a

respondent sells solely to one nominal

customer category, such as end-users.

Moreover, consistent with that

approach, we note that of necessity, the

burden is on a respondent to

demonstrate that its categorizations of

LOT are correct. The respondent must

do so by demonstrating that selling

functions for sales at allegedly the same

level are substantially the same, and

that selling functions for sales at

allegedly different LOTs are

substantially different.

As a matter of policy, the Department

does not permit a respondent to submit

data selectively to support its own

conclusions with regard to LOT.

Specifically, Fagersta stated in its

questionnaire response that its home

market sales were made through one

channel of distribution to essentially

one customer category (i.e., direct sales

from the mill to the end user).

Moreover, Fagersta’s description in its

response of its customer categories and

channel of distribution in the U.S.

market for its EP sales was almost

identical to its description of those

factors in the home market (see pages

A–14 and A–15 of the October 24, 1997,

Fagersta Questionnaire Response).

Subsequently, Fagersta filed a

supplemental questionnaire response

where it reversed its claim that there

was no basis for a LOT adjustment (see

page nine of the February 2, 1998,

Supplemental Questionnaire Response).

In its supplemental response, Fagersta

claimed that its home market sales to

Gusab occur at a different marketing

stage than its home market sales to

unaffiliated customers. Specifically,

Fagersta stated its sales to Gusab begin

with the acquisition of billet from

Sandvik and Fagersta’s SSWR price to

Gusab is pegged to Sandvik’s billet

price. For its sales to unaffiliated

customers, Fagersta stated that the sale

begins with the sale of rod by Fagersta

without any reference or linkage to the

price of the billet and without any

involvement by the billet supplier

(either Gusab’s parent or Avesta

Sheffield) in the transaction (see

verification exhibit 15J of the May 11,

1998, Fagersta Sales Verification

Report).

In addressing Fagersta’s argument that

the Department should take into

account the sale of billets from Sandvik

to Fagersta as a distinct marketing stage

for purposes of a LOT adjustment for

Fagersta’s sales of SSWR back to the

affiliated Sandvik Group, we note that

the statute is only concerned with

possible differences in the level of trade

between the NV and the EP or CEP of

the subject merchandise. See section

773(a)(7)(A) of the Act. Billets are raw

material inputs used in the production

of the SSWR, the subject merchandise.

Billets are not included in the scope of

subject merchandise and, therefore, are

not subject merchandise. Accordingly,

the stage of the production process

where Sandvik sells billets to Fagersta

for further processing into SSWR is not

relevant for purposes of determining

whether sales of the subject

merchandise in the home market and

U.S. market are at different LOTs.

Moreover, Fagersta has failed to show

why the billet price setting practice with

Sandvik translates into different selling

functions with respect to Gusab and

Fagersta’s unaffiliated customers.

Notwithstanding Fagersta’s LOT

claims, it is the Department’s

responsibility, not Fagersta’s, to

determine LOTs. If a respondent claims

that different LOTs exist, it has the

burden of demonstrating that. We make

no presumption as to the number of

LOTs in a market. Rather, the

respondent must provide information

which satisfactorily demonstrates what

LOTs exist. In this case, Fagersta has

failed to meet its burden of proof of

demonstrating that there are in fact two

separate LOTs.

To make a proper determination as to

whether home market sales are at a

different LOT than U.S. sales, the

Department examines whether the home

market sales are at different stages in the

marketing process than the U.S. sales.

We review and compare the distribution

systems in the home market and U.S.

export markets, including selling

functions, class of customer, and the

extent and level of selling expenses for

each claimed LOT. An analysis of the

chain of distribution and of selling

functions substantiates or invalidates

claimed LOTs based on customer

classifications. Different LOTs

necessarily involve differences in

selling functions of the subject

merchandise, but differences in selling

functions, even substantial ones, are not

alone sufficient to establish a difference

in the LOT. Different LOTs are

characterized by purchasers at different

places in the chain of distribution and

sellers performing qualitatively or
40456 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

quantitatively different functions in

selling to them.

When we compare U.S. sales to home

market sales at a different LOT, we

make a LOT adjustment if the difference

in LOT affects price comparability. We

determine any effect on price

comparability by examining sales at

different LOTs in a single market, the

home market. To quantify the price

differences, we calculate the difference

in the average of the net prices of the

same models sold at different LOTs. We

use the average difference in net prices

to adjust the NV when it is based on a

LOT different from that of the export

sale. If there is a pattern of no price

differences, then the difference in LOT

does not have a price effect, and no

adjustment is necessary.

As stated above, the Department

begins its LOT analysis with an

examination of the different distribution

systems or channels of trade. Normally,

transactions at different LOTs occur at

different points in the distribution

system, which are reflected in the

commercial designation of customer

categories, such as end-user or

distributor, and selling functions that

support such commercial designations.

In this case, Fagersta sold to end-users

in both the U.S. and home markets. It

is undisputed that these transactions

constitute sales through the same

channel of trade. This indicates that

distinct LOTs do not exist in this

situation.

Further, an analysis of selling

functions supports this conclusion. We

conducted a comprehensive

examination of the available

information on selling functions

provided by Fagersta in this case. The

Department requested information on

selling functions in the original

questionnaire and supplemental

questionnaire and examined the data

with respect to selected sales at

verification.

With respect to Fagersta’s home

market sales to its affiliate Sandvik, we

find that Fagersta and Sandvik should

be collapsed in this case. Therefore, we

find Fagersta’s argument that a LOT

adjustment with respect to home market

sales made to Sandvik is moot as we

excluded those sales from our analysis.

With respect to Fagersta’s home market

sales to its affiliates Gusab and Avesta

Welding, based upon our analysis of the

information submitted on the record, we

do not find that the selling functions

performed by Fagersta with respect to

these affiliated customers and its sales

to unaffiliated home market customers

to be meaningfully different.

Specifically, Fagersta has repeatedly

claimed that it provides premium

services to its affiliated customers,

Gusab and Avesta Welding, but not to

its unaffiliated customers. However, we

find that the vast majority of the selling

functions were identical. Thus, the

critical element in establishing different

LOTs is the degree to which these

selling functions are performed with

respect to the different customers. In

this instance, we do not find the

evidence concerning the alleged

differences in the degree to which

selling functions are performed with

respect to affiliated and unaffiliated

customers establishes different LOTs.

Fagersta maintains that although it

provides technical cooperation and

warranty services to both its affiliated

and unaffiliated customers, the services

Fagersta provides to its affiliated

customers are more substantial in that it

provides only its affiliated customers

with (1) mandatory reservation of

production capacity to ensure priority

production and delivery; (2) intensive

technical cooperation; (3) access to

proprietary information; (4) networked

data exchange; (5) specialized product

applications; (6) just-in-time delivery;

and (7) billet rebates. Fagersta has

attempted to emphasize these alleged

differences noted above by providing

documents from meetings Fagersta held

with respect to affiliated and

unaffiliated customers (see verification

exhibits 27A through 27D of the

Fagersta Sales Verification Report).

However, in reviewing these verification

exhibits, we do not find that they

establish that the services and assistance

provided to Fagersta’s affiliated

customers are significantly different

from the services and assistance

provided to Fagersta’s unaffiliated U.S.

customers. Specifically, the following

agenda items were discussed in both

meetings for affiliated and unaffiliated

customers: product quality issues,

production issues and problems,

production testing analysis, and

customer disputes (see exhibits 27A

through 27D of the Fagersta Sales

Verification Report). With respect to the

agenda items not mentioned in meetings

held on unaffiliated customers but

mentioned in meetings held on

affiliated customers (i.e., employee

exchange programs, joint marketing

discussions, coordination of billet

production and delivery with rod

processing and delivery within the

Sandvik Group), these agenda items

would necessarily be topics of

discussion between affiliated producers

of the subject merchandise or between

affiliated parties which used the subject

merchandise for their own accounts.

Thus, we find that the agenda items

where Fagersta discussed its affiliated

and unaffiliated customers are similar

for both customer categories (see

exhibits 27A through 27D of the

Fagersta Sales Verification Report).

Although the minutes of meetings held

for affiliated customers are more

detailed than the minutes of meetings

held for unaffiliated customers, we find

that the agenda items discussed in

meetings for both customer types

indicate a central focus on Fagersta

ensuring the quality of the merchandise

and Fagersta’s ability to deliver the

product to the customer’s specifications.

As such, we do not find that there is a

significant difference in the degree to

which Fagersta performs selling

functions between its affiliated home

market and unaffiliated U.S. customers.

Thus, we disagree with Fagersta that a

distinct marketing stage exists for its

sales to affiliated home market

customers, and further find that there is

no substantial difference in selling

functions between affiliated and

unaffiliated customers in the home and

U.S. markets.

Section 773(a)(7)(B) of the Act states

that a CEP ‘‘offset’’ may be made when

two conditions exist: (1) normal value is

established at a level of trade which

constitutes a more advanced stage of

distribution than the level of trade of the

CEP; and (2) the data available do not

provide an appropriate basis for a level

of trade adjustment. In this case, since

we have found no difference in the LOT

of the sales in question, for the reasons

noted above, we do not find that a CEP

offset adjustment is warranted.

Comment 4: SSUS’ EP Transactions.

The petitioners argue that the

Department must treat SSUS’s EP sales

as CEP sales because the Department

found at verification that the reported

EP sales were also warehoused at SSUS,

and that the verification report reflects

that finding. Moreover, the petitioners

contend that because these sales were

introduced into SSUS’ physical

inventory, SSUS would have necessarily

incurred inland freight charges for these

sales which makes SSUS more than a

mere processor of sales documentation.

Based on the Department’s criteria for

classifying sales as EP, the petitioners

urge the Department to treat these EP

sales as CEP sales.

Fagersta maintains that the

verification report is in error in that

SSUS’ EP sales did not enter its physical

inventory, although they did enter its

financial accounts since SSUS took title

to the merchandise. Moreover, Fagersta

maintains that verification exhibits

containing bills of lading, freight bills,

sales invoices and shipping orders for

the sales in question demonstrate that
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40457

these sales were shipped directly to the

customer and did not enter physical

inventory in the United States.

Therefore, since these sales did not

incur a warehouse expense, Fagersta

argues that the Department should

continue to treat these sales as EP since

they meet the criteria for classifying

sales as EP.

DOC Position:

We agree with Fagersta. For the EP

sales in question, we find no evidence

that these sales entered into the physical

inventory, as opposed to the financial

inventory, of SSUS, prior to sale. We

find that the freight and delivery

documentation for selected EP sales

examined at verification indicates that

the subject merchandise was shipped

directly from Sweden to the U.S.

customer’s requested delivery location.

The petitioners’ contention that the

Department’s verification report states

that the EP sales transactions in

question entered the physical inventory

of SSUS is incorrect. Based on the

examined freight and delivery

documentation at verification, we

conclude that the inventory journal

records both merchandise that was

physically located at SSUS’ warehouse

as well as merchandise which did not

enter SSUS’ warehouse but to which

SSUS had title. For the sales in

question, we also find, based on the

information examined at verification,

that the sales followed customary

commercial channels between the

parties involved and that the function of

SSUS was limited to that of a ‘‘processor

of sales-related documentation’’ and a

‘‘communication link’’ with the

unrelated customer (see Final

Determinations of Sales at Less Than

Fair Value: Brake Drums and Brake

Rotors from the People’s Republic of

China, 62 FR 9160, 9171 (February 28,

1997)). Therefore, we treated the sales in

question as EP sales.

Comment 5: Exclusion or Inclusion of

Certain ASI Sales.

The petitioners contend that, based on

verification, the Department should

remove three sales from the U.S. sales

listing (i.e., ASI invoice nos. 119548,

122141, and 124740) because these sales

were outside the POI. In addition, the

petitioners contend that the Department

should include one sale, determined at

verification to be included both in the

U.S. sales listing as well as the

exclusion worksheet, if that sale was

inside the POI (i.e., ASI invoice number

115936).

Fagersta contends that for the three

sales in question, although the ASI

invoice date was outside the POI, the

Fagersta invoice date was inside the

POI. Therefore, Fagersta maintains that

these three sales were correctly

included in its U.S. sales listing and that

the Department should use these sales

in the final determination. For the other

sale in question, Fagersta contends that

the sale consisted of two shipments

from it, one of which originated from a

Fagersta invoice with an invoice date

prior to the POI. Therefore, Fagersta

maintains that it correctly included in

the U.S. sales listing the ASI sale in

which the Fagersta invoice date was in

the POI and correctly excluded the ASI

sale in which the Fagersta invoice date

was prior to the POI. Therefore, Fagersta

argues that based on the verification

findings, it is unnecessary for the

Department to make revisions to the

U.S. sales listing for these sales.

DOC Position

We disagree with the petitioners’

argument to exclude the three sales from

Fagersta’s U.S. sales listing. Fagersta

reported its U.S. sales transactions

through its U.S. affiliate ASI as EP sales

because Fagersta determines the terms

of sale (see pages 15 and 17 of the

Fagersta verification report and pages 8

and 9 of the ASI Verification Report).

For its reported EP sales transactions,

Fagersta used as the date of sale the date

of its sales invoice to the U.S.

unaffiliated customer. The Fagersta

invoice is also sent to ASI which also

issues a sales invoice to the U.S.

unaffiliated customer with the same

terms of sale specified on the Fagersta

sales invoice. However, in a few cases,

the ASI sales invoice included

merchandise covered by more than one

Fagersta sales invoice. For the three

sales mentioned by the petitioners, the

sales have an ASI invoice date outside

the POI as noted in the invoice issued

by ASI. However, we determined that

they were properly included in the U.S.

sales listing because they correspond to

Fagersta invoice dates, which are within

the POI. (Fagersta, which shipped the

merchandise directly to the U.S.

customer, reported all of its sales to the

Department based on whether its

invoice dates, not ASI’s invoice dates,

were within the POI). We did not note

any discrepancies or inconsistencies

with Fagersta’s sales database as far as

its quantity and value reconciliation

(see Fagersta Sales Verification Report

at page 9). Furthermore, verification of

the ASI sales listing showed that these

three sales observations were manually

added to the database in order to be

reconciled with Fagersta’s reported

quantity and value (see ASI Verification

Report at page 7).

We reviewed documentation

concerning the other sale, which was

included both in ASI’s sales listing and

its exclusion worksheet (see Exhibit 8 of

the ASI Verification Report). At

verification, we noted that the sale in

question was invoiced by ASI as one

sale, but that it actually consisted of

merchandise covered by two Fagersta

invoices. Of these two Fagersta invoices,

one has a date prior to the POI, and

therefore, was properly excluded by ASI

from the U.S. sales listing. The other

Fagersta invoice has a date during the

POI and, therefore, was properly

included by ASI in the U.S. sales listing

(see ASI Verification Report at page 7).

Comment 6: Model Matching.

The petitioners contend that the

Department should not rely on

Fagersta’s own internal grade

designations for products that would

otherwise fit within a standard AISI

grade simply because Fagersta has

added small amounts of chemicals that

are not otherwise specified as being

included in the standard AISI grade

designation. Therefore, the petitioners

urge the Department to ensure that all

internal product codes designated by

Fagersta in its questionnaire responses

correspond to a standard AISI grade

code for matching purposes. Otherwise,

the petitioners allege that the

methodology of relying on internal

grade designations for products that are

only sold in the home market

impermissibly allows Fagersta to

exclude certain high-priced sales in the

home market from the model match

process simply by giving these internal

grade designations a special model

match code that would never allow it to

be compared to a U.S. sale with a

different code. Finally, the petitioners

contend that Fagersta has incorrectly

applied the model matching

methodology devised by the Department

by classifying several grades in two or

more very similar AISI grades. For the

final determination, the petitioners

request that the Department collapse all

AISI/AWS grades into their simplest

three-digit configuration based on the

suggestions contained in their case brief.

Fagersta contends that it has grouped

its internal grades into bona fide AISI/

AWS norms where possible, and

reported proprietary internal grades

only where its internal grade did not fall

within the chemical specifications of

any recognized AISI/AWS standard, in

accordance with the Department’s

instructions. Fagersta further contends

that the Department thoroughly tested

the accuracy and consistency of its

internal grade to AISI/AWS assignment

at verification and found no

discrepancies. Alternatively, Fagersta

states that if the Department were to

accept the petitioners’ proposed
40458 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

alternative to collapse all AISI/AWS

grades that begin with the same three

numbers for purposes of grouping its

internal grades, the Department would

be departing from its own instructions.

Moreover, Fagersta maintains that the

petitioners’ application of their

proposed alternative contained in their

case brief is inconsistent as it pertains

to grouping Fagersta’s internal grades.

Finally, Fagersta states that although it

does not object to collapsing all AISI/

AWS grades into their simplest threedigit configuration, it would object if the

Department does not undertake this

collapsing across the board to all AISI/

AWS grades.

DOC Position

We agree with Fagersta. We examined

at verification the method Fagersta used

to assign standard AISI/AWS grades to

its internal grades based on the

chemical specifications of the internal

grade. We find that Fagersta consistently

applied its grade assignment

methodology in accordance with the

Department’s instructions contained in

our questionnaire. Therefore, we do not

agree with the petitioners that Fagersta

classified several grades in two or more

very similar AISI grades. Finally, we do

not agree with the petitioners that we

should collapse all AISI/AWS grades

into their simplest three-digit

configuration since this alternative

would collapse unique AISI/AWS

grades which differ principally because

of a slight, though not insignificant,

difference in certain chemicals which

define the AISI/AWS grade.

Comment 7: SSUS Interest Rate.

Fagersta contends that the Department

incorrectly calculated the short-term

interest rate derived from verification

exhibits and must correct this

typographical error if it intends to use

the short-term interest rate based on

SSUS’ POI short-term borrowings for

purposes of SSUS’ credit expenses and

inventory carrying costs.

The petitioners contend that the

Department should only use an interest

rate which is based on short-term loans

and should use the interest rate as

discussed in the verification report to

calculate credit expenses and inventory

carrying costs.

DOC Position

We agree with Fagersta. Whenever

possible the Department uses short-term

interest rates based on actual loan

agreements (see Policy Bulletin 98–2:

Imputed Credit Expenses and Interest

Rates (February 23. 1998)). SSUS’s

short-term loan agreements included in

verification exhibit 26 reflect the only

short-term loans entered into during the

POI. Therefore, the Department

calculated the short-term interest rate

based on actual SSUS POI short-term

loan agreements contained in

verification exhibit 26 for purposes of

determining SSUS credit expenses and

inventory carrying costs. Specifically,

we used the interest rate noted in

Fagersta’s post-verification May 28,

1998, submission and not the interest

rate noted in our verification report

which was in error (see Final

Calculation Memorandum for further

details).

Comment 8: Corrections to Certain

SSUS and Amstek Expenses and

Corrections to Dates of Sale for Certain

SSUS Sales.

The petitioners contend that the

Department should revise SSUS’ early

payment discounts, duty and brokerage

and handling expenses and inland

freight warehouse transfers for all sales

and the dates of sale for certain sales

transactions based on the verification

findings. In addition, the petitioners

contend that the Department should

revise Amstek warranty expenses based

on the verification findings.

Fagersta states that the Department

should correct for the clerical errors

identified by Fagersta or otherwise

found by the Department based on the

verification findings.

DOC Position

For the reasons stated above, we agree

with both parties and have revised the

above mentioned company-specific

discounts and expenses based on our

verification findings for purposes of the

final determination.

Comment 9: SSUS’ International

Freight Expense.

The petitioners contend that Fagersta

should have reported the actual

international freight expense incurred

for certain transactions rather than an

average international freight expense.

The petitioners maintain that this error

is so egregious that the Department

should use facts available to calculate

this expense for those transactions

affected by the error. For facts available,

the petitioners urge the Department to

use the highest calculated international

freight expense for all sales rather than

their revised calculations.

Fagersta contends that the

Department’s verification demonstrated

that for the sales in question, it had

incorrectly reported an average freight

expense when it should have reported

the transaction-specific expense for

these sales based on its claim that these

sales should be treated as EP

transactions instead of as CEP

transactions. Fagersta also contends that

it provided the Department the

transaction-specific freight expenses for

these sales at verification which were

examined by Department officials.

Therefore, Fagersta maintains that the

error in question is minor in nature and

that the Department should use the

transaction-specific expenses and not

resort to adverse facts available for its

claimed EP sales transactions for

purposes of the final determination.

DOC Position

We agree with Fagersta. We examined

the correct expense data for the sales in

question at verification. Since we have

treated these sales as EP transactions,

we find that Fagersta erred in reporting

an average POI international freight

expense for its EP sales transactions

when it should have reported the

average expense for its CEP sales

transactions only. Therefore, we used

the actual freight expenses for the EP

sales transactions, based on our

verification findings.

Comment 10: Quantity Variable Used

in Margin Program.

Fagersta claims that in its preliminary

margin calculation program, the

Department overstated the total U.S.

quantity and value figures by using the

same quantity variable to derive

weighted-average U.S. prices, selling

expenses, packing expenses,

commissions and exchange rates as it

did to determine the total U.S. sales

quantity and U.S. sales value for

purposes of calculating the dumping

margin. To correct this error, Fagersta

urges the Department to use the

appropriate variable to derive the U.S.

sales quantity and value.

The petitioners did not comment on

this issue.

DOC Position

We agree with Fagersta and made the

appropriate change in the final

calculation margin program (see Final

Calculation Memorandum).

Cost Issues

Comment 11: Calculation of CV Profit.

Fagersta claims that in the margin

program for the preliminary

determination, the Department erred in

its calculation of CV profit by using an

improper denominator. According to

Fagersta, the Department calculated the

amount of CV profit by: (1) Calculating

a profit rate by dividing the total profit

earned on home market sales by the

company’s production costs inclusive of

only manufacturing costs, G&A and

interest expenses, and (2) applying this

profit rate to the sum of manufacturing

costs, selling, G&A and interest

expenses to derive the amount of profit.

Thus, Fagersta contends that the profit
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40459

rate was not calculated and applied on

a consistent basis, resulting in an

overstatement of the profit included in

CV.

The petitioners argue that the

methodology used by the Department to

calculate CV profit was proper and in

accordance with its established practice.

DOC Position

We disagree with Fagersta that we

incorrectly calculated CV profit. In our

preliminary margin program, we

calculated CV profit in the following

manner: (1) We calculated the total

profit earned on home market sales and

divided the profit by total production

costs, inclusive of only manufacturing

costs, G&A and interest expenses to

derive a profit rate; (2) we then

multiplied the calculated profit rate by

the sum of manufacturing costs, G&A

and interest expenses. Contrary to the

Fagersta’s claim, we did not include

selling expenses in our calculation of

CV profit. Thus, we calculated and

applied the profit rate on a consistent

basis. Accordingly, we did not make any

changes in the final margin program

with respect to calculation of CV profit.

Comment 12: Sandvik’s Reported

General Expenses.

The petitioners contend that in

calculating the cost of the billets that

Fagersta purchased from its affiliated

supplier, Sandvik Steel, the Department

should make the adjustments to

Sandvik’s submitted general expenses

that it identified in its verification

report. That is, according to petitioners,

Sandvik’s general expenses should be

derived on a company-wide basis using

the company’s 1996 audited financial

statement. Moreover, petitioners note

that the Department should adjust the

component of the general expenses

representing Sandvik Holding

Company’s general and administrative

(‘‘G&A’’) expense to reflect costs that the

Department found to be inappropriately

excluded from billet production costs.

Fagersta argues that the Department

should accept the general expenses

reported in Sandvik’s normal internal

accounting system at the product line

level, rather than computing a companywide rate. Alternatively, Fagersta

contends that if the Department uses a

company-wide rate, it must exclude

research and development expenses and

selling expenses incurred by product

lines that are unrelated to the subject

merchandise.

In addition, Fagersta disputes the

petitioners’ assertion that the

Department determined Sandvik

Holding Company’s G&A rate to be

incorrect. According to Fagersta, the

Department simply noted that insurance

expenses paid to a subsidiary and a

write-down of internal receivables were

both excluded from the G&A

computation. Fagersta argues that these

items were properly excluded from

Sandvik Holding’s G&A rate because

both are inter-company expenses that

are eliminated in the consolidated

financial statements of Sandvik AB.

DOC Position

We disagree with Fagersta’s

contention that the Department should

accept Sandvik’s reported general

expense rate computation. Our normal

methodology for allocating general

expenses to individual products is to

calculate a rate by dividing the

company’s general expenses by its total

COS, as reported in the respondent’s

audited financial statements (see the

Department’s standard Section D

questionnaire at page D–17). This

method recognizes that general

expenses are costs that relate to the

company’s overall operations, rather

than to the operations of a division

within the company or to a single

product line (see Final Determinations

of Sales at Less Than Fair Value:

Certain Hot-Rolled Carbon Steel Flat

Products, Certain Cold-Rolled Carbon

Steel Flat Products, and Certain

Corrosion-Resistant Carbon Steel Flat

Products From Japan, 58 FR 37154,

37166 (July 9, 1993). The approach is

intended to recognize the general nature

of these expenses and the fact that many

of these expenses are incurred in

supporting a range of the overall

company’s various operations. This

approach is consistent with Generally

Accepted Accounting Principles

(‘‘GAAP’’) treatment of such costs as

period expenses.

In its submission, Sandvik deviated

from the Department’s normal

methodology and calculated its general

expenses using an internal accounting

methodology, under which the company

charged some general expenses directly

to specific product lines, while

allocating other such expenses across

product lines. When a respondent

abandons a normal Department

methodology in favor of an alternative

one, it is incumbent upon the

respondent to satisfy a higher threshold

for proving the reasonableness and

accuracy of its chosen approach. In this

case, however, Sandvik did not provide

any documentation or support for the

methodology underlying the allocation

of its general expenses among different

divisions and product lines within the

company. In addition, Sandvik did not

clearly differentiate between general

expenses incurred directly at a productline level and those amounts incurred at

the higher, divisional and parent

company levels. Although during

verification Sandvik Steel presented

data showing that, for managerial

reporting purposes, the company

followed the multi-tiered allocation of

general expenses reported for COP and

CV, the company did not demonstrate

whether this system more accurately

captured general expenses of the subject

merchandise than under the

Department’s normal, company-wide

calculation method. Specifically,

Sandvik failed to demonstrate that

expenses it allocated to both subject and

non-subject merchandise were, indeed,

the expenses incurred for those

particular products. Further, Sandvik

presented no evidence as to the

reasonableness of its internal accounting

system. In effect, at verification,

Sandvik documented how its general

expenses were spread throughout the

company, but provided no

documentation to support the resulting

accuracy or validity of such reporting.

Because Sandvik failed to adequately

demonstrate that only those general

expenses (including R&D and selling

expenses) that were completely

unrelated to subject merchandise were

excluded from its submitted general

expense rate calculation, the

Department recomputed Sandvik’s

general expense rate on a company-wide

basis, in accordance with its normal

methodology.

We further disagree with Fagersta’s

assertion that the insurance expenses

that Sandvik Holding Company paid to

a subsidiary and the write-down of

internal receivables should be excluded

from the calculation of the Sandvik

Holding Company component of

Sandvik’s general expense rate.

Fagersta’s justification that both are

internal items that are eliminated in

Sandvik AB’s consolidation is

irrelevant. The Department does not

compute general expenses at the

consolidated level. The fact that these

expenses are related to transactions with

affiliated parties does not negate the fact

that they are expenses incurred by

Sandvik Holding Company. Therefore,

we computed the Sandvik Holding

Company component of Sandvik’s

general expense rate, inclusive of the

insurance expenses and the write-down

of internal receivables.

Comment 13: Adjustments to Avesta

Cost Data.

The petitioners contend that because

the Department did not conduct a fullscale verification of Avesta’s COP data,

it must make the same adjustments to

Avesta’s SSWR billet COP data as it

intends to make to Sandvik’s SSWR
40460 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

billet COP data based on verification at

Sandvik.

Fagersta argues that the Department

should not make any adjustments to

Avesta’s general expenses or

manufacturing costs to correspond to

adjustments to Sandvik’s reported

SSWR billet production costs simply

because the Department did not conduct

a complete cost verification of Avesta.

Fagersta maintains that Avesta reported

its costs in accordance with its books

and records and that the Department did

not note any significant errors in

Avesta’s cost submission during

verification.

DOC Position

We disagree with the petitioners’

assertion that we must make the same

numerical adjustments to Avesta’s

SSWR billet COP data as we make to

Sandvik’s SSWR billet COP data. We

note, however, that we intend to apply

consistent methodologies to both

companies. In this regard, the only

adjustment to Sandvik’s SSWR billet

COP made by the Department relates to

Sandvik’s general expense rate. The

Department tested Avesta’s submitted

general expense rate during verification

and adjusted the rate to reflect Avesta’s

company-wide general expenses in a

manner consistent with our treatment of

Sandvik’s general expenses.

Comment 14: Standard Material Cost

Discrepancy.

The petitioners state that Sandvik’s

reported billet costs incorrectly reflect

the company’s 1995, rather than 1996,

standard costs. The petitioners contend

that the Department should adjust

Sandvik’s submitted SSWR billet COP

to account for the difference between

1995 and 1996 standard costs.

Fagersta claims that the Department

did not identify any errors in Sandvik’s

standard costs or actual manufacturing

costs for producing billets. Further,

Fagersta claims the 1995 versus 1996

standard cost discrepancy necessitates

no adjustment to Fagersta’s reported

costs because Fagersta reported its

actual manufacturing costs in

accordance with its normal books and

records. Fagersta asserts that such a

standard cost discrepancy adjustment

would overstate costs by using

standards that are not reflected in the

audited financial statements and would

ignore a corresponding offset for the

increase in the favorable material cost

variance.

DOC Position

We disagree with the petitioners’

assertion that the Department should

adjust Sandvik’s submitted SSWR billet

COP to account for the difference

between the 1995 and 1996 standard

costs. At the Department’s request,

Fagersta submitted its SSWR production

costs under two different scenarios, one

based on the transfer price of billets

purchased from affiliated suppliers and

the other based on the cost of producing

these billets. The issue addressed above

by the petitioners and the respondent,

as raised in the Department’s cost

verification report, regards the accuracy

of the Fagersta SSWR product specific

material (billet) cost, based on billet

transfer price. Because it involves

Fagersta’s standard costs used in its

normal accounting system to record

purchases of billets, it does not have an

impact on any margin calculations that

are based on the billet suppliers’ cost of

production. Rather, it only has an

impact on Fagersta’s SSWR production

costs based on the billet transfer price.

Additionally, because Fagersta’s error

was in failing to revise its 1995 standard

costs to reflect its computed 1996

standard costs for billets purchased

from Sandvik, it should only have an

impact on Fagersta material costs for

SSWR made with billets purchased from

Sandvik. Because the Department is

collapsing Fagersta and Sandvik, the

major input rule should not be used to

value the billets purchased from

Sandvik. Rather, Fagersta’s usage of

Sandvik sourced billets should be based

on Sandvik’s billet COP. Therefore,

there is no need to adjust Fagersta’s

submitted costs based on billet transfer

prices to reflect the difference between

the 1995 and 1996 standard cost of the

billets purchased from Sandvik.

Comment 15: Revisions to SSUS’ G&A

and Interest Expenses.

The petitioners contend that the

Department should increase both SSUS’

reported G&A expense rate and financial

expense rate applied in determining

further manufacturing costs, based on

the errors presented by SSUS officials at

verification.

Fagersta contends that verification

findings reflect a difference in rounding

methodology used by SSUS and by the

Department. Therefore, Fagersta

maintains that the errors the petitioners

propose be made have so small an effect

on the final margin that the Department

need not make any changes in this

regard in its final determination.

DOC Position

We disagree with the petitioners’

claim that we should increase both

SSUS’s reported G&A expense rate and

financial expense rate. However, as we

indicated at page 44 of our May 19,

1998, verification report, Fagersta

corrected the SSUS G&A rate in the

revised further manufacturing cost file

submitted on April 29, 1998, and there

is no need to adjust the financial

expense. The Department determined

that the Sandvik financial expense

factor, rather than the SSUS factor,

should be applied to SSUS further

manufacturing costs. The financial

expense requires no adjustment to

reflect Sandvik’s factor because it would

have no impact on the reported costs.

Continuation of Suspension of

Liquidation

In accordance with section 733(d)(1)

and 735(c)(4)(B) of the Act, we are

directing the Customs Service to

continue to suspend liquidation of all

entries of subject merchandise from

Sweden, that is entered, or withdrawn

from warehouse, for consumption on or

after March 5, 1998 (the date of

publication of the preliminary

determination 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.

The weighted-average dumping margins

are as follows:

Exporter/manufacturer

Weightedaverage

margin percentage

Fagersta Stainless AB .............. 5.71

All Others .................................. 5.71

Pursuant to section 735(c)(5)(A) of the

Act, the Department has excluded all

zero and de minimis weighted-average

dumping margins from the calculation

of the ‘‘All Others’’ rate.

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.
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40461

This determination is issued and

published in accordance with sections

735(d) and 777(i)(1) of the Act.

Dated: July 20, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 98–20021 Filed 7–28–98; 8:45 am]

BILLING CODE 3510–DS–D

DEPARTMENT OF COMMERCE

INTERNATIONAL TRADE

ADMINISTRATION

[A–583–828]

Notice of Final Determination of Sales

at Less Than Fair Value: Stainless

Steel Wire Rod from Taiwan

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: July 29, 1998.

FOR FURTHER INFORMATION CONTACT:

Laurel LaCivita or Alexander Amdur,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, NW, Washington,

DC 20230; telephone: (202) 482–4740 or

(202) 482–5346, 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 Taiwan 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 Taiwan, 63 FR 10836 (March 5,

1998) (Notice of Preliminary

Determination). Since the preliminary

determination, the following events

have occurred:

On March 12, 1998, we received a

submission from Yieh Hsing Enterprise

Corporation, Ltd. (Yieh Hsing) alleging

that the Department made ministerial

errors in the preliminary determination.

In response to Yieh Hsing’s ministerial

error allegations, we issued an amended

preliminary determination on March 30,

1998. See Notice of Amended

Preliminary Determination of Sales at

Less Than Fair Value: Stainless Steel

Wire Rod From Taiwan, 63 FR 16972

(April 7, 1998).

In March 1998, we issued

supplemental questionnaires to and

received responses from the

respondents in this case, Walsin Cartech

Specialty Steel Corporation (Walsin)

and Yieh Hsing (hereinafter

‘‘respondents’’).

In March, April, and May 1998, we

verified the sales and cost questionnaire

responses of these two respondents. In

June 1998, Yieh Hsing submitted

revised sales databases at the

Department’s request.

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 the

respondents submitted case briefs on

June 8 and 10, 1998, and rebuttal briefs

on June 16 and 17, 1998. We held a

public hearing on June 18, 1998.

Scope of Investigation

For purposes of this investigation,

SSWR comprises products that are hotrolled 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 hotrolling, 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 coldfinished 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.

Manganese ................ 2.00 max.

Phosphorous ............. 0.05 max.

Sulfur ......................... 0.15 max.

Silicon ........................ 1.00 max.

Chromium .................. 19.00/21.00.

Molybdenum .............. 1.50/2.50.

Lead .......................... Added (0.10/0.30).

Tellurium .................... Added (0.03 min.)

K–M35FL

Carbon ....................... 0.015 max.

Nickel ......................... 0.30 max.

Silicon ........................ 0.70/1.00.

Manganese ................ 0.40 max.

Phosphorous ............. 0.04 max.

Sulfur ......................... 0.03 max.

Chromium .................. 12.50/14.00.

Lead .......................... 0.10/0.30.

Aluminum .................. 0.20/0.35.

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 Taiwan to the United States were

made at less than fair value, we

compared the Export Price (EP) and/or

Constructed Export Price (CEP) to the

Normal Value (NV). Our calculations

followed the methodologies described

in the preliminary determination,

except as noted below and in companyspecific analysis memoranda dated July

20, 1998.

On January 8, 1998, the Court of

Appeals for the Federal Circuit issued a

decision in CEMEX v. United States,

1998 WL 3626 (Fed Cir.). 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