[Federal Register Volume 66, Number 86 (Thursday, May 3, 2001)]
[Notices]
[Pages 22146-22151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10846]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-421-807]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value; Certain Hot-Rolled Carbon Steel Flat Products From the 
Netherlands

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

EFFECTIVE DATE: May 3, 2001.

FOR FURTHER INFORMATION CONTACT: Melissa Blackledge, Stephanie Arthur, 
or Robert James at (202) 482-3518, (202) 482-6312, or (202) 482-0649, 
respectively; Antidumping and Countervailing Duty Enforcement Group 
III, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230.

The Applicable Statute and Regulations:

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Tariff Act) 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department of Commerce (the 
Department) regulations are to the regulations at 19 CFR part 351 
(April 2000).

Preliminary Determination

    We preliminarily determine that certain hot-rolled carbon steel 
flat products (hot-rolled steel) from the Netherlands are being sold, 
or are likely to be sold, in the United States at less than fair value 
(LTFV), as provided in section 733 of the Tariff Act. The estimated 
margins of sales at LTFV are shown in the ``Suspension of Liquidation'' 
section of this notice.

Case History

    On December 4, 2000 the Department initiated antidumping 
investigations of hot-rolled steel from Argentina, India, Indonesia, 
Kazakhstan, the Netherlands, the People's Republic of China, Romania, 
South Africa, Taiwan, Thailand, and Ukraine. See Initiation of 
Antidumping Duty Investigation: Certain Hot-Rolled Carbon Steel Flat 
Products from Argentina, India, Indonesia, Kazakhstan, the Netherlands, 
the People's Republic of China, Romania, South Africa, Taiwan, 
Thailand, and Ukraine, 65 FR 77568 (December 12, 2000). Since the 
initiation of these investigations the following events have occurred.
    In its initiation notice the Department set aside a period for all 
interested parties to raise issues regarding product coverage. See 65 
FR 77568. We received comments regarding product coverage as follows: 
from Duracell Global Business Management Group on December 11, 2000; 
from Energizer on December 15, 2000; from Bouffard Metal Goods Inc. and 
Truelove & MacLean, Inc. on December 18, 2000; from the Corus Group 
plc., which includes Corus Steel USA (CSUSA) and Corus Staal BV (Corus 
Staal), and Thomas Steel Strip on December 26, 2000; and from Rayovac 
Corporation on March 12, 2001.
    On December 22, 2000, the Department issued a letter to interested 
parties in all of the concurrent HR products antidumping 
investigations, providing an opportunity to comment on the Department's 
proposed model matching characteristics and hierarchy. Comments were 
submitted by: petitioners (January 5, 2001); Corus Staal and CSUSA 
(January 3, 2001); Iscor Limited (Iscor), respondent in the South 
Africa investigation (January 3, 2001); and Zaporizhstal, respondent in 
the Ukraine investigation (January 3, 2001). Petitioners agreed with 
the Department's proposed characteristics and hierarchy of 
characteristics. Corus Staal and CSUSA suggested adding a product 
characteristic to distinguish prime merchandise from non-prime 
merchandise. Neither Iscor nor Zaporizhstal proposed any changes to 
either the list of product characteristics proposed by the Department 
or the hierarchy of those product characteristics but, rather, provided 
information relating to its own products that was not relevant in the 
context of determining what information to include in the Department's 
questionnaires. For purposes of the questionnaires subsequently issued 
by the Department to the respondents, no changes were made to the 
product characteristics or the hierarchy of those characteristics from 
those originally proposed by the Department in its letter dated 
December 22, 2000. With respect to Corus Staal's and CSUSA's request, 
the additional product characteristic suggested to distinguish prime 
from non-prime merchandise is unnecessary. The Department already asks 
respondents to distinguish prime from non-prime merchandise in field 
number 2.2 ``Prime vs. Secondary Merchandise.'' See the Department's 
Antidumping Duty Questionnaire, at B-7 and C-7. These fields are used 
in the model-match program to prevent matches of prime merchandise to 
non-prime merchandise.
    On December 28, 2000, the United States International Trade 
Commission (ITC) notified the Department that it preliminarily 
determined that there is a reasonable indication that an industry in 
the United States is materially injured by the reason of imports of the 
subject merchandise from Argentina, India, Indonesia, Kazakhstan, the 
Netherlands, the People's Republic of China, Romania, South Africa, 
Taiwan, Thailand, and Ukraine. See Hot-Rolled Steel Products from 
Argentina, India, Indonesia, Kazakhstan, the Netherlands, the People's 
Republic of China, Romania, South Africa, Taiwan, Thailand, and 
Ukraine, 66 FR 805 (January 4, 2001).
    On January 4, 2001 the Department issued an antidumping 
questionnaire to the Corus Group plc., the sole producer of subject 
hot-rolled steel in the Netherlands. We requested that Corus Staal and 
CSUSA respond to section A (general information, corporate structure, 
sales practices, and merchandise produced), section B (home market or 
third-country sales), section C (U.S. sales), section D (cost of 
production/constructed value), and, if applicable, section E (cost of 
further

[[Page 22147]]

manufacture or assembly performed in the United States).
    Respondent submitted its initial response to section A of the 
Department's questionnaire on February 1, 2001. We received Corus 
Staal's and CSUSA's sections B through E responses on February 26, 
2001. Petitioners filed comments regarding all portions of respondent's 
questionnaire response on March 6, 2001. We issued the following 
supplemental questionnaires to respondent: (i) Section A on February 
27, 2001, (ii) sections B and C on March 13, 2001, and (iii) sections D 
and E on March 14, 2001. Respondent filed a response to our section A 
and sections B through E supplemental questionnaires on March 16, 2001 
and April 4, 2001, respectively. In addition, pursuant to the 
Department's preliminary determination that Corus Staal and CSUSA are 
affiliated with Galvpro LP (Galvpro), on March 16, 2001 respondent 
filed a section E response reporting the cost of U.S. further 
manufacturing incurred by Galvpro. See Memorandum to Joseph A. 
Spetrini; Affiliation Issue Regarding Galvpro LP and Laura Metaal 
Holding, February 27, 2001 (Affiliation Memorandum); see also Letter 
from Robert M. James to the Corus Group, February 27, 2001. The 
``Affiliation'' section of this notice provides further information 
regarding our preliminary determination with respect to affiliation 
issues.

Period of Investigation

    The period of investigation (POI) is October 1, 1999 through 
September 30, 2000. This period corresponds to the four most recent 
fiscal quarters prior to the month of the filing of the petition (i.e., 
December 2000), and is in accordance with our regulations. See 19 CFR 
351.204(b)(1).

Scope of Investigation

    For purposes of this investigation, the products covered are 
certain hot-rolled carbon steel flat products of a rectangular shape, 
of a width of 0.5 inch or greater, neither clad, plated, nor coated 
with metal and whether or not painted, varnished, or coated with 
plastics or other non-metallic substances, in coils (whether or not in 
successively superimposed layers), regardless of thickness, and in 
straight lengths of a thickness of less than 4.75 mm and of a width 
measuring at least 10 times the thickness. Universal mill plate (i.e., 
flat-rolled products rolled on four faces or in a closed box pass, of a 
width exceeding 150 mm, but not exceeding 1250 mm, and of a thickness 
of not less than 4.0 mm, not in coils and without patterns in relief) 
of a thickness not less than 4.0 mm is not included within the scope of 
this investigation. Specifically included within the scope of this 
investigation are vacuum degassed, fully stabilized (commonly referred 
to as interstitial-free (IF)) steels, high strength low alloy (HSLA) 
steels, and the substrate for motor lamination steels. If steels are 
recognized as low carbon steels with micro-alloying levels of elements 
such as titanium or niobium (also commonly referred to as columbium), 
or both, added to stabilize carbon and nitrogen elements. HSLA steels 
are recognized as steels with micro-alloying levels of elements such as 
chromium, copper, niobium, vanadium, and molybdenum. The substrate for 
motor lamination steels contains micro-alloying levels of elements such 
as silicon and aluminum.
    Steel products to be included in the scope of this investigation, 
regardless of definitions in the Harmonized Tariff Schedule of the 
United States (HTS), are products in which: (i) Iron predominates, by 
weight, over each of the other contained elements; (ii) the carbon 
content is 2 percent or less, by weight; and (iii) none of the elements 
listed below exceeds the quantity, by weight, respectively indicated:

    1.80 percent of manganese, or
    2.25 percent of silicon, or
    1.00 percent of copper, or
    0.50 percent of aluminum, or
    1.25 percent of chromium, or
    0.30 percent of cobalt, or
    0.40 percent of lead, or
    1.25 percent of nickel, or
    0.30 percent of tungsten, or
    0.10 percent of molybdenum, or
    0.10 percent of niobium, or
    0.15 percent of vanadium, or
    0.15 percent of zirconium.

    All products that meet the physical and chemical description 
provided above are within the scope of this investigation unless 
otherwise excluded. The following products, by way of example, are 
outside or specifically excluded from the scope of this investigation:

    <bullet> Alloy hot-rolled steel products in which at least one of 
the chemical elements exceeds those listed above (including, e.g., ASTM 
specifications A543, A387, A514, A517, A506).
    <bullet> Society of Automotive Engineers (SAE)/American Iron and 
Steel Institute (AISI) grades of series 2300 and higher.
    <bullet> Ball bearings steels, as defined in the HTS.
    <bullet> Tool steels, as defined in the HTS.
    <bullet> Silico-manganese (as defined in the HTS) or silicon 
electrical steel with a silicon level exceeding 2.25 percent.
    <bullet> ASTM specifications A710 and A736.
    <bullet> USS Abrasion-resistant steels (USS AR 400, USS AR 500).
    <bullet> All products (proprietary or otherwise) based on an alloy 
ASTM specification (sample specifications: ASTM A506, A507).
    <bullet> Non-rectangular shapes, not in coils, which are the result 
of having been processed by cutting or stamping and which have assumed 
the character of articles or products classified outside chapter 72 of 
the HTS.

    The merchandise subject to this investigation is classified in the 
HTS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 
7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 
7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 
7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 
7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 
7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 
7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 
7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 
7211.19.75.60, and 7211.19.75.90. Certain hot-rolled flat-rolled carbon 
steel flat products covered by this investigation, including: vacuum 
degassed fully stabilized; high strength low alloy; and the substrate 
for motor lamination steel may also enter under the following tariff 
numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 
7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 
7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 
7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise 
may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 
7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTS 
subheadings are provided for convenience and U.S. Customs purposes, the 
written description of the merchandise under investigation is 
dispositive.

Affiliation

    In its initiation notice, the Department identified as a respondent 
in this investigation the Corus Group plc. See 65 FR 77573. As 
indicated in respondent's February 1, 2001 questionnaire response at 
pages A-7 and A-8, the Corus Group plc. wholly owns Koninklijke 
Hoogovens NV (KHNV) which, in turn, wholly owns

[[Page 22148]]

Corus Staal. CSUSA is a U.S. subsidiary of KHNV and acts as an agent 
for Corus Staal's U.S. sales. CSUSA argues in its January 18, 2001 
submission that Galvpro should not be considered an affiliated party 
under section 771(33) of the Tariff Act because neither Corus Staal nor 
CSUSA has any direct or indirect ownership of Galvpro\1\. In addition, 
Corus Staal claims in its February 1, 2001 questionnaire response that 
it also considers sales made to Laura Metaal Trading BV (Laura Metaal) 
to be unaffiliated transactions because KHNV (Corus Staal's parent and 
a minority shareholder in Laura Metaal) is not in a position to 
exercise or assert control over Laura Metaal or its subsidiaries.
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    \1\ Galvpro is a limited partnership, with ownership held by 
Weirton Coatings LLC, the Galvpro management, and Corus Group plc. 
(through Corus Coatings LLC). Galvpro was formed to construct and 
operate a manufacturing facility for the treatment of cold-rolled 
steel to produce galvanized steel products. See Respondent's January 
18, 2001 submission at page 2.
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    However, as explained below, the Department has preliminarily 
determined that Corus Staal, CSUSA, Laura Metaal, and Galvpro are 
affiliated parties within the meaning of section 771(33)(F) of the 
Tariff Act because they are all under the common control of the Corus 
Group plc. See Affiliation Memorandum. Section 771(33)(F) of the Tariff 
Act defines affiliated parties to include ``[t]wo or more persons 
directly or indirectly controlling, controlled by, or under the common 
control with, any person.'' Control, in turn, is defined by section 
771(33) as one person being ``legally or operationally in a position to 
exercise restraint or direction over the other.'' In determining 
whether control exists, the Department considers corporate or family 
groupings, franchise or joint venture agreements, debt financing, and 
close supplier relationships. See 19 CFR 351.102(b).
    Galvpro is a joint venture of Corus Coatings USA, Inc., a wholly-
owned subsidiary of the Corus Group plc., and Weirton Coatings LLC, a 
subsidiary of Weirton Steel Corporation (Weirton). The Corus Group plc. 
(through Corus Coatings USA) has a substantial equity interest in 
Galvpro. See Respondent's February 1, 2001 response at page A-10; see 
also Respondent's January 18, 2001 letter to the Department at page 3. 
In previous cases the Department has determined that control exists 
when one party is in a position to influence the pricing and production 
decisions of the affiliated entity. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination; Stainless Steel Sheet and Strip in Coils From 
Germany, 64 FR 30710, 30721-24 (June 8, 1999). The record in this 
investigation indicates that the Corus Group plc. is indeed in a 
position to influence pricing and production decisions of Galvpro. See 
Affiliation Memorandum at pages 2 and 3 for more detailed information 
regarding this issue. In addition, a review of the record reveals other 
indicia of control, including debt financing of Galvpro by the Corus 
Group plc.. See Affiliation Memorandum at page 3; see also Petitioners' 
January 26, 2001 submission at Exhibit 2. Finally, the significant 
equity in Galvpro by the Corus Group plc. (through Corus Coatings USA) 
is clear evidence of the ability of Corus Group plc. to exert influence 
over Galvpro's production, pricing, or cost of the subject merchandise 
or foreign like product.
    The record also indicates that the Corus Group plc. has the ability 
to exert control over Laura Metaal. Laura Metaal consumes subject 
merchandise through its manufacturing operations and acts as a reseller 
through its service center.\2\ See Respondent's February 1, 2001 
response at page A-3. The Corus Group plc. wholly owns KHNV, which in 
turn has a minority shareholder interest in Laura Metaal. In addition, 
KHNV nominated one of the four voting members on Laura Metaal's Board 
of Directors, and nominated one of two non-voting advisors to the 
Board, affording the Corus Group plc. substantial influence over Laura 
Metaal and the company's operations. See Respondent's February 1, 2001 
response at page A-3.
    As indicated above, the Corus Group plc. has the potential ability 
to exercise direction and restraint over Galvpro's and Laura Metaal's 
production and pricing. The Corus Group plc. has a substantial equity 
interest in both Galvpro and Laura Metaal and plays a substantial role 
in their operations and management. The Corus Group plc. is in a 
position, legally and operationally, to exercise direction and 
restraint over both Galvpro and Laura Metaal, within the meaning of 
section 771(33)(F) of the Tariff Act, as amended by the URAA. Because 
Corus Staal and CSUSA are wholly-owned subsidiaries of the Corus Group 
plc, Corus Group plc also is in a position legally and operationally to 
exercise direction and restraint over Corus Staal and CSUSA, within the 
meaning of section 771(33)(F) of the Act. As a result, we preliminarily 
find that both Galvpro and Laura Metaal are affiliated with Corus Staal 
and CSUSA, within the meaning of section 771(33)(F) of the Tariff Act 
because these four companies are all under the common control of the 
Corus Group plc. For a more detailed discussion of our preliminary 
affiliation determination, please refer to the Affiliation Memorandum.

Product Comparisons

    Pursuant to section 771(16) of the Tariff Act, all products 
produced by the respondent that are within the scope of the 
investigation, above, and were sold in the comparison market during the 
POI, are considered to be foreign like products. We have relied on the 
following eleven criteria to match U.S. sales of subject merchandise to 
comparison-market sales of the foreign like product: whether or not 
painted, quality, carbon content level, yield strength, thickness, 
width, whether coil or cut sheet, whether or not temper rolled, whether 
or not pickled, whether mill or trimmed edge, and whether the steel is 
rolled with or without patterns in relief. Where there were no sales of 
identical merchandise in the home market to compare to U.S. sales, we 
compared U.S. sales to the next most similar foreign like product on 
the basis of the characteristics and reporting instructions listed in 
the Department's January 4, 2001 questionnaire.

Fair Value Comparisons

    To determine whether sales of hot-rolled steel from the Netherlands 
were made in the United States at less than fair value, we compared 
constructed export price (CEP) to normal value (NV), as described in 
the ``Constructed Export Price'' and ``Normal Value'' sections of this 
notice. In accordance with section 777A(d)(1)(A)(i) of the Tariff Act, 
we calculated weighted-average CEPs for comparison to weighted-average 
NVs.

Constructed Export Price

    Corus Staal reported as export price (EP) transactions certain 
sales of subject merchandise sold to unaffiliated U.S. customers prior 
to importation. Corus Staal reported as CEP transactions its sales of 
subject merchandise sold through the Rafferty-Brown Companies, two 
affiliated steel service centers which further manufacture flat-rolled 
steel products. In addition, in accordance with our preliminary 
affiliation determination, Corus Staal reported as CEP transactions 
sales made through Galvpro.
    We have preliminarily determined with respect to Corus Staal's 
reported EP sales that such transactions are properly classified as CEP 
transactions. Having reviewed the evidence on the record of this 
investigation regarding respondent's reported EP sales, we conclude 
that sales between the foreign producer (i.e., Corus Staal) and the 
U.S.

[[Page 22149]]

customer were made ``in the United States'' by CSUSA on behalf of Corus 
Staal within the meaning of section 772(b) of the Tariff Act, and 
therefore, should be treated as CEP transactions. Specifically, 
although Corus Staal initially reaches the agreement with the U.S. 
customer on the estimated overall volume and pricing of merchandise, 
CSUSA provides the final written confirmation of the agreement, setting 
forth the agreed prices and quantities, to the U.S. customer. See 
Respondent's February 1, 2001 response at page A-56. The description 
provided by Corus Staal regarding the sales process for its alleged EP 
transactions indicates that, for these sales, the merchandise was 
``sold (or agreed to be sold)'' in the United States. Therefore, we 
have preliminarily decided to treat Corus Staal's reported EP sales as 
CEP transactions. This is consistent with the Federal Circuit's 
decision in AK Steel Corporation et. al. v. United States, 226 F.3d 
1361 (Fed. Cir. 2000) (AK Steel). See also Polyvinyl Alcohol from 
Japan: Preliminary Results of Antidumping Duty Administrative Review, 
66 FR 11140 (February 22, 2001), where the Department preliminarily 
determined that, pursuant to AK Steel, sales through a U.S. affiliate 
were made ``in the United States'' and were therefore classifiable as 
CEP transactions. For a more detailed discussion of this issue, please 
refer to our Preliminary Analysis Memorandum, dated April 23, 2001.
    We calculated CEP in accordance with subsection 772(b) of the 
Tariff Act. We based CEP on the packed, delivered, duty paid or 
delivered prices to unaffiliated purchasers in the United States. We 
made adjustments for price-billing errors and early payment discounts, 
where applicable. We also made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Tariff Act; these included, 
where appropriate, foreign inland freight, marine insurance, foreign 
brokerage and handling, international freight, U.S. customs duties, 
U.S. inland freight, U.S. inland insurance, and U.S. warehousing 
expenses. In accordance with section 772(d)(1) of the Tariff Act, we 
deducted those selling expenses associated with economic activities 
occurring in the United States, including direct selling expenses 
(credit costs and warranty expenses), and indirect selling expenses, 
including inventory carrying costs. We also made an adjustment for 
profit in accordance with section 772(d)(3) of the Tariff Act.
    With respect to subject merchandise to which value was added in the 
United States by the Rafferty Brown Companies and Galvpro prior to sale 
to unaffiliated customers, we deducted the cost of further 
manufacturing in accordance with section 772(d)(2) of the Tariff Act.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Tariff Act, to 
the extent practicable, we determine NV based on sales in the 
comparison market at the same level of trade (LOT) as the EP or CEP 
transaction. The NV LOT is that of the starting price sales in the 
comparison market or, when NV is based on CV, that of the sales from 
which we derive selling, general and administrative (SG&A) expenses and 
profit. For EP the U.S. LOT is also the level of the starting price 
sale, which is usually from the exporter to the importer. For CEP it is 
the level of the constructed sale from the exporter to the importer.\3\
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    \3\ The U.S. Court of International Trade (CIT) has held that 
the Department's practice of determining levels of trade for CEP 
transactions after CEP deductions is an impermissible interpretation 
of section 772(d) of the Tariff Act. See Borden, Inc. v. United 
States, 4 F. Supp. 2d 1221, 1241-42 (CIT 1998) (Borden); see also 
Micron Technology v. United States, 40 F. Supp. 2d. 481 
(1999)(Micron). The U.S. Court of Appeals for the Federal Circuit 
(CAFC), however, has reversed the CIT's holdings in both Micron and 
Borden on the level of trade issue. The CAFC held that the statute 
unambiguously requires Commerce to deduct the selling expenses set 
forth in section 772(d) from the CEP starting price prior to 
performing its LOT analysis. See Micron Technology Inc. v. United 
States, Court Nos. 00-1058-1060 (Fed. Cir. March 7, 2001); see also 
Borden, Inc. v. United States, Court Nos. 99-1575-1576 (Fed. Circ. 
March 12, 2001)(unpublished opinion). Consequently, the Department 
will continue to adjust the CEP, pursuant to section 772(d) of the 
Tariff Act, prior to performing the LOT analysis, as articulated by 
the Department's regulations at 19 CFR 351.412.
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    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Tariff Act. Finally, for CEP sales, if the NV level 
is more remote from the factory than the CEP level and there is no 
basis for determining whether the differences in the levels between NV 
and CEP affect price comparability, we adjust NV under section 
773(A)(7)(B) of the Tariff Act (the CEP offset provision). See, e.g., 
Certain Carbon Steel Plate from South Africa, Final Determination of 
Sales at Less Than Fair Value, 62 FR 61731 (November 19, 1997).
    In implementing these principles in this investigation, we obtained 
information from Corus Staal and CSUSA about the marketing stages 
involved in its reported U.S. and home market sales, including a 
description of the selling activities performed by Corus Staal and 
CSUSA for each channel of distribution. In identifying LOTs for U.S. 
CEP sales we considered the selling functions reflected in the starting 
price after any adjustments under section 772(D) of the Tariff Act.
    In the home market, Corus Staal reported two channels of 
distribution (sales by Corus Staal and sales through its affiliated 
service centers) and three customer categories (end users, steel 
service centers, and trading companies). For both channels of 
distribution in the home market, Corus Staal performed similar selling 
functions, including strategic and economic planning, advertising, 
freight and delivery arrangements, technical/warranty services, and 
sales logistics support. The remaining selling activities did not 
differ significantly by channel of distribution. See Corus Staal's 
February 1, 2001 response at Exhibit A-8. Because channels of 
distribution do not qualify as separate levels of trade when the 
selling functions performed for each channel are sufficiently similar, 
we have determined that one LOT exists for Corus Staal's home market 
sales.
    In the United States CSUSA reported two channels of distribution 
for sales of subject merchandise during the POI (EP sales made directly 
from CSUSA to U.S. customers and CEP sales made through affiliated 
service centers). For EP sales, CSUSA reported two customer categories 
(end users and steel service centers). See CSUSA's February 26, 2001 
response at pages C-13 through C-15. As explained in the ``Constructed 
Export Price'' section of our notice, we have preliminary determined 
that all of Corus Staal's reported EP transactions are properly 
classified as CEP sales. In CEP situations we do not determine the U.S. 
LOT on the basis of the CEP starting price. Rather, as described above, 
we determine the U.S. LOT on the basis of the CEP starting price minus 
the expenses and profit deducted pursuant to section 772(d) of the Act.
    Corus Staal and CSUSA claimed that sales made through its second 
channel of distribution in the home market (i.e., those through 
affiliated service centers) constituted a different LOT from its 
alleged EP sales. Corus Staal and CSUSA therefore requested a LOT 
adjustment to the extent that price comparisons were made between U.S. 
EP sales and those through home market affiliated service centers. As 
there are no

[[Page 22150]]

EP transactions in the United States, it is not necessary to address 
respondent's request for a LOT adjustment with respect to EP sales.
    With regard to its CEP sales, respondent claims that a CEP offset 
for sales made through two affiliated parties, Rafferty-Brown Steel 
Company of Connecticut (RBC) and Rafferty-Brown Steel Company of North 
Carolina (RBN) (collectively, the Rafferty-Brown Companies) is 
appropriate because the RBC and RBN sales are made at a point in the 
distribution process that is less advanced than Corus Staal's home 
market sales. In analyzing respondent's request for a CEP offset, we 
reviewed information respondent provided in section A of its response 
regarding selling activities performed and services offered in the U.S. 
and foreign market. We found there to be few differences in the selling 
functions performed by Corus Staal on sales to its affiliated U.S. 
importers and those performed for sales in the home market. For 
example, on sales to both home market customers and to affiliated U.S. 
importers, Corus Staal provided similar freight and delivery services 
and technical/warranty assistance. See Respondent's February 1, 2001 
response at pages A-19 through A-46. The Department has preliminarily 
determined that the record does not support Corus Staal's claim that 
home market sales are at a different, more advanced LOT than the 
adjusted CEP sales. Accordingly, no CEP offset adjustment to NV is 
warranted. For a more detailed discussion regarding the basis for our 
LOT determination, refer to our Preliminary Determination Analysis 
Memorandum for the Corus Group plc., dated April 23, 2001.

Normal Value

Home Market Viability

    In order to determine whether there was 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 was equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared Corus Staal's volume of home market 
sales of the foreign like product to the volume of U.S. sales of the 
subject merchandise, in accordance with section 773(a)(1)(C) of the 
Tariff Act. As Corus Staal'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 of the subject merchandise, we determined that the 
home market was viable. Therefore, we have based NV on home market 
sales in the usual commercial quantities and in the ordinary course of 
trade.

Affiliated-Party Transactions and Arm's-Length Test

    Corus Staal's sales to affiliated home market customers for 
consumption which were not made at arm's-length prices were excluded 
from our analysis because we considered them to be outside the ordinary 
course of trade.\4\ See 19 CFR 351.102(b). To test whether these sales 
were made at arm's-length prices, we compared on a model-specific basis 
the prices of sales to affiliated and unaffiliated customers net of all 
movement charges, direct selling expenses, and packing. Where, for the 
tested models of subject merchandise, prices to the affiliated party 
were on average 99.5 percent or more of the price to the unaffiliated 
parties, we determined that sales made to the affiliated party were at 
arm's length. See 19 CFR 351.403(c). In instances where no price ratio 
could be calculated for an affiliated customer because identical 
merchandise was not sold to unaffiliated customers, we were unable to 
determine that these sales were made at arm's-length prices and, 
therefore, excluded them from our LTFV analysis. See, e.g., Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9, 
1993); see also Notice of Preliminary Determination of Sales at Less 
Than Fair Value and Postponement of Final Determination: Emulsion 
Styrene-Butadiene Rubber from Brazil, 63 FR 59509, 59512 (November 4, 
1998). Where the exclusion of such sales eliminated all sales of the 
most appropriate comparison product, we made a comparison to the next 
most similar model.
---------------------------------------------------------------------------

    \4\ On March 6, 2001 Corus Staal requested that it not be 
required to report downstream home market sales made through Feijen 
Staal service (Feijen), claiming that the cut-to-length sheet sold 
by this form would have a low likelihood of matching to U.S. sales 
of coiled material. The Department informed Corus Staal on March 8, 
2001 that it would not be required to report Feijen's downstream 
sales based on Corus Staal's claims, on the record, with respect to 
the nature of the products sold by Feijen. The Department will 
accordingly include in its calculation of normal value sales to 
Feijen from Corus Staal, provided these transactions pass our arm's-
length test. Corus Staal also requested an exemption from reporting 
downstream sales made by Vlietjonge BV (Vlietjonge), an affiliated 
party involved in the processing and sale of flat products. See 
Corus Staal's April 4, 2001 supplemental response at page A-4. Corus 
Staal again claimed that the cut-to-length merchandise sold by 
Vlietjonge would not likely match to U.S. sales of coiled material. 
The Department granted Corus Staal's request on April 6, 2001.
---------------------------------------------------------------------------

Cost of Production Analysis

    Based on allegations contained in the petition, and in accordance 
with section 773(b)(2)(A)(i) of the Tariff Act, we found reasonable 
grounds to believe or suspect that sales of hot-rolled steel produced 
in the Netherlands were made at prices below the cost of production 
(COP). As a result, the Department has initiated investigations to 
determine whether Corus Staal made home market sales during the POI at 
prices below its respective COP, within the meaning of section 773(b) 
of the Tariff Act. We conducted the COP analysis described below.
A. Calculation of COP
    In accordance with section 773(b)(3) of the Tariff Act, we 
calculated COP based on the sum of Corus Staal's cost of materials and 
fabrication for the foreign like product, plus an amount for home 
market SG&A expenses, interest expenses, and packing costs. We relied 
on the home market sales and COP information provided by Corus Staal in 
its original and supplemental responses. Where appropriate, we made 
certain adjustments to Corus Staal's reported COP. See Memorandum to 
the File, ``Analysis of Cost-of-Production Data of Corus Group plc.,'' 
April 23, 2001, on file in room B-099 of the Main Commerce building.
B. Test of Home-Market Sales Prices
    We compared the adjusted weighted-average COP for Corus Staal to 
the home market sales of the foreign like product, as required under 
section 773(b) of the Tariff Act, in order to determine whether these 
sales had been made at prices below the COP within an extended period 
of time (i.e., a period of one year) in substantial quantities and 
whether such prices were sufficient to permit the recovery of all costs 
within a reasonable period of time. In accordance with section 
773(b)(2)(C)(i) of the Tariff Act, we determined that sales made below 
the COP were made in substantial quantities if the volume of such sales 
represented 20 percent or more of the volume of sales under 
consideration for the determination of normal value.
    On a model-specific basis, we compared the revised COP to the home 
market prices, less any applicable movement charges and other direct 
and indirect selling expenses.
C. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than 
20 percent of a respondent's sales of a given product were at prices 
less than the COP, we did not disregard any below-cost sales of

[[Page 22151]]

that product because we determined that the below-cost sales were not 
made in ``substantial quantities.'' Where 20 percent or more of a 
respondent's sales of a given product during the POI were at prices 
less than the COP, we determined such sales to have been made in 
``substantial quantities'' within an extended period of time in 
accordance with section 773(b)(2)(B) or the Tariff Act. In such cases, 
because we compared prices to POI-average costs, we also determined 
that such sales were not made at prices which would permit recovery of 
all costs within a reasonable period of time, in accordance with 
section 773(b)(2)(D) of the Tariff Act. Therefore, we disregarded the 
below-cost sales.
    We found that for certain models of hot-rolled steel, more than 20 
percent of the home-market sales by Corus Staal were made within an 
extended period of time at prices less than the COP. Further, the 
prices did not provide for the recovery of costs within a reasonable 
period of time. We therefore disregarded these below-cost sales and 
used the remaining sales as the basis for determining NV, in accordance 
with section 773(b)(1) of the Tariff Act. For those U.S. sales of hot-
rolled steel for which there were no comparable home market sales in 
the ordinary course of trade, we compared EP to constructed value (CV) 
in accordance with section 773(a)(4) of the Tariff Act. See Price-to-CV 
Comparisons, below.
D. Calculation of Constructed Value
    In accordance with section 773(e)(1) of the Tariff Act, we 
calculated CV based on the sum of Corus Staal's cost of materials, 
fabrication, SG&A, interest, U.S. packing costs, and an amount for 
profit. We made adjustments similar to those described above for COP. 
In accordance with section 773(e)(2)(A) of the Tariff Act, we based 
SG&A and profit on the amounts incurred and realized by Corus Staal in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade for consumption in the home market. For 
selling expenses we used the weighted-average home market selling 
expenses.

Price-to-Price Comparisons

    We calculated NV based on the FOB or delivered prices to 
unaffiliated customers. We made deductions, where appropriate, from the 
starting price for billing adjustments, early payment discounts, and 
inland freight. Where appropriate, we made adjustments for differences 
in the physical characteristics of the merchandise in accordance with 
section 773(a)(6)(C)(ii) of the Tariff Act. In addition, we made 
adjustments under section 773(a)(6)(C)(iii) of the Tariff Act for 
differences in circumstances of sale for imputed credit expenses 
(offset by interest revenue) and warranties. Finally, we deducted home 
market packing costs and added U.S. packing costs in accordance with 
section 773(a)(6)(A) and (B) of the Tariff Act.

Price-to-CV Comparisons

    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Tariff Act. We deducted from 
CV the weighted-average home market direct selling expenses and added 
the weighted-average U.S. product-specific direct selling expenses in 
accordance with section 773(a)(6)(C)(iii) of the Tariff Act.

Currency Conversions

    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(a) of the 
Tariff Act.

Verification

    Pursuant to section 782(i) of the Tariff Act, we intend to verify 
all information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Tariff Act, we are 
directing the Customs Service to suspend liquidation of all entries of 
hot-rolled steel from the Netherlands that are entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
this notice in the Federal Register. We will instruct the Customs 
Service to require a cash deposit or the posting of a bond equal to the 
weighted-average amount by which the NV exceeds the CEP, as indicated 
in the chart below. These suspension-of-liquidation instructions will 
remain in effect until further notice. The weighted-average dumping 
margins are as follows:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/manufacturer                        margin
                                                              percentage
------------------------------------------------------------------------
Corus Staal BV.............................................         2.44
All Others.................................................         2.44
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Tariff Act, we have 
notified the ITC of our determination. If our final antidumping 
determination is affirmative, the ITC will determine whether these 
imports are materially injuring, or threaten material injury to, the 
U.S. industry. The deadline for that ITC determination would be the 
later of 120 days after the date of this preliminary determination or 
45 days after the date of our final determinations.

Public Comment

    Case briefs or other written comments in at least six copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than later than fifty days after the date of publication of this 
notice, and rebuttal briefs, limited to issues raised in case briefs, 
no later than fifty-five days after the date of publication of this 
preliminary determination. A list of authorities used and an executive 
summary of issues should accompany any briefs submitted to the 
Department. Such summary should be limited to five pages total, 
including footnotes. In accordance with section 774 of the Tariff Act, 
we will hold a public hearing, if requested, to afford interested 
parties an opportunity to comment on arguments raised in case or 
rebuttal briefs. Tentatively, any hearing will be held fifty-seven days 
after publication of this notice, time and room to be determined, at 
the U.S. Department of Commerce, 14th Street and Constitution Avenue, 
NW., Washington, DC 20230. Parties should confirm by telephone the 
time, date, and place of the hearing 48 hours before the scheduled 
time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the case and 
rebuttal briefs. We intend to make our final determination no later 
than 75 days after the date of this preliminary determination.
    This determination is published pursuant to sections 733(f) and 
777(i)(1) of the Tariff Act. Since January 20, 2001, Bernard T. Carreau 
is fulfilling the duties of the Assistant Secretary for Import 
Administration.

    Dated: April 23, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary, Import Administration.
[FR Doc. 01-10846 Filed 5-2-01; 8:45 am]
BILLING CODE 3510-DS-P