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[Federal Register Volume 66, Number 249 (Friday, December 28, 2001)]
[Notices]
[Pages 67190-67197]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31980]

[[Page 67190]]

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-831]

Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Structural Steel Beams 
From Germany

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

ACTION: Notice of preliminary determination of sales at less than fair 
value

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SUMMARY: We preliminarily determine that structural steel beams from 
Germany are being, or are likely to be, sold in the United States at 
less than fair value, as provided in section 733(b) of the Tariff Act 
of 1930, as amended.
    Interested parties are invited to comment on this preliminary 
determination. Because we are postponing the final determination, we 
will make our final determination not later than 135 days after the 
date of publication of this preliminary determination in the Federal 
Register.

EFFECTIVE DATE: December 28, 2001.

FOR FURTHER INFORMATION CONTACT: Thomas Schauer or Edythe Artman, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-0410 or (202) 482-3931, 
respectively.

SUPPLEMENTARY INFORMATION:

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. In addition, unless 
otherwise indicated, all citations to the Department of Commerce 
(``Department's'') regulations are to the regulations at 19 CFR part 
351 (April 2001).

Background

    Since the initiation of this investigation (Initiation of 
Antidumping Duty Investigations: Structural Steel Beams From the 
People's Republic of China, Germany, Italy, Luxembourg, Russia, South 
Africa, Spain, and Taiwan, 66 FR 33048 (June 20, 2001) (Initiation 
Notice)), the following events have occurred.
    On July 9, 2001, the United States International Trade Commission 
(``ITC'') preliminarily determined that there is a reasonable 
indication that imports of structural steel beams from Germany are 
materially injuring the United States industry (see ITC Investigation 
Nos. 731-TA-935-942 (Publication No. 3438)).
    On July 26, 2001, we selected the two largest producers/exporters 
of structural steel beams from Germany as the mandatory respondents in 
this proceeding. For further discussion, see Memorandum to Susan H. 
Kuhbach, Senior Director Office 1, from The Team Re: Respondent 
Selection dated July 26, 2001. We subsequently issued the antidumping 
questionnaire to Stahlwerk Thuringen GmbH (``SWT'') and Salzgitter AG 
(``Salzgitter'') on July 26, 2001.
    During the period August through November 2001, the Department 
received responses to sections A, B, C and D of the Department's 
original and supplemental questionnaires from SWT. The Department did 
not receive any responses from Salzgitter.
    On September 25, 2001, pursuant to 19 CFR 351.205(e), the 
petitioners made a timely request to postpone the preliminary 
determination. We granted this request on October 2, 2001, and 
postponed the preliminary determination until no later than November 
30, 2001. (See Notice of Postponement of Preliminary Determinations of 
Sales at Less Than Fair Value: Structural Steel Beams from the People's 
Republic of China, Germany, Italy, Luxembourg, Russia, South Africa, 
Spain and Taiwan, 66 FR 51639 (October 10, 2001).) On October 30, 2001, 
the petitioners made another timely request to postpone the preliminary 
determination for an additional 19 days. We granted this request on 
October 31, 2001, and postponed the preliminary determination until no 
later than December 19, 2001. (See Notice of Postponement of 
Preliminary Antidumping Duty Determinations: Structural Steel Beams 
from the People's Republic of China, Germany, Italy, Luxembourg, 
Russia, South Africa, Spain and Taiwan, 66 FR 56078 (November 6, 
2001).)

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on November 21, 2001, SWT 
requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the date of the 
publication of the preliminary determination in the Federal Register 
and extend the provisional measures to not more than six months. In 
accordance with 19 CFR 351.210(b), because (1) our preliminary 
determination is affirmative, (2) SWT accounts for a significant 
proportion of exports of the subject merchandise, and (3) no compelling 
reasons for denial exist, we are granting the respondent's request and 
are postponing the final determination until no later than 135 days 
after the publication of this notice in the Federal Register. 
Suspension of liquidation will be extended accordingly.

Scope of Investigation

    The scope of these investigations covers doubly-symmetric shapes, 
whether hot- or cold-rolled, drawn, extruded, formed or finished, 
having at least one dimension of at least 80 mm (3.2 inches or more), 
whether of carbon or alloy (other than stainless) steel, and whether or 
not drilled, punched, notched, painted, coated, or clad. These 
structural steel beams include, but are not limited to, wide-flange 
beams (``W'' shapes), bearing piles (``HP'' shapes), standard beams 
(``S'' or ``I'' shapes), and M-shapes. All the products that meet the 
physical and metallurgical descriptions provided above are within the 
scope of these investigations unless otherwise excluded. The following 
products are outside and/or specifically excluded from the scope of 
these investigations: (1) structural steel beams greater than 400 
pounds per linear foot, (2) structural steel beams that have a web or 
section height (also known as depth) over 40 inches, and (3) structural 
steel beams that have additional weldments, connectors or attachments 
to I-sections, H-sections, or pilings; however, if the only additional 
weldment, connector or attachment on the beam is a shipping brace 
attached to maintain stability during transportation, the beam is not 
removed from the scope definition by reason of such additional 
weldment, connector or attachment.
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (``HTSUS'') at 
subheadings 7216.32.0000, 7216.33.0030, 7216.33.0060, 7216.33.0090, 
7216.50.0000, 7216.61.0000, 7216.69.0000, 7216.91.0000, 7216.99.0000, 
7228.70.3040, and 7228.70.6000. Although the HTSUS subheadings are 
provided for convenience and customs purposes, the written description 
of the merchandise under investigation is dispositive.

[[Page 67191]]

Scope Comments

    In accordance with the preamble to our regulations (see Antidumping 
Duties; Countervailing Duties, 62 FR 27296, 27323 (May 19, 1997)), we 
set aside a period of time for parties to raise issues regarding 
product coverage and encouraged all parties to submit comments within 
20 calendar days of publication of the Initiation Notice (see 66 FR 
33048-33049). Interested parties submitted such comments by July 10, 
2001. Additional comments were subsequently submitted by interested 
parties.
    Pursuant to the Department's solicitation of scope comments in the 
Initiation Notice, interested parties in this and the concurrent 
structural steel beams investigations request that the following 
products be excluded from the scope of the investigations: (1) beams of 
grade A913/65 and (2) forklift mast profiles.
    With respect to the scope-exclusion requests for the A913/65 beam 
and forklift mast profiles, the interested parties rely upon 19 CFR 
351.225(k)(2) and reason that, in general, these products differ from 
the structural steel beams covered by the scope of the investigations 
in terms of physical characteristics, ultimate uses, purchaser 
expectations, channels of trade, manner of advertising and display and/
or price. They also argue that these products are not produced by the 
petitioners.
    In considering whether these products should be included within the 
scope of the investigations, we analyzed the arguments submitted by all 
of the interested parties in the context of the criteria enumerated in 
the court decision Diversified Products Corp. v. United States, 572 F. 
Supp. 883, 889 (CIT 1983) (``Diversified''). For these analyses, we 
relied upon the petition, the submissions by all interested parties, 
the International Trade Commission's (``ITC'') preliminary 
determination, and other information.
    After considering the respondent's comments and the petitioners' 
objections to the exclusion requests regarding the A913/65 beam, we 
find that the description of this grade of structural steel beam is 
dispositive such that further consideration of the criteria provided in 
their submissions is unnecessary. Furthermore, the description of the 
merchandise contained in the relevant submissions pertaining to this 
grade of beam does not preclude this product from being within the 
scope of the investigations. Accordingly, we preliminarily determine 
that the A913/65 beam does not constitute a separate class or kind of 
merchandise and, therefore, falls within the scope as defined in the 
petition.
    With respect to forklift mast profiles, having considered the 
comments we received from the interested parties and the criteria 
enumerated in Diversified, we find that the profiles in question, being 
doubly-symmetric and having an I-shape, fall within the scope of the 
investigations. These profiles also meet the other criteria included in 
the scope language contained in the petition. While the description by 
the interested party requesting the exclusion indicates some 
differences, such as in price, between forklift mast profiles and 
structural steel beams, these differences are not sufficient to 
recognize forklift mast profiles as a separate class or kind of 
merchandise. However, given these differences between forklift mast 
profiles and structural steel beams, we preliminarily determine that 
forklift mast profiles should be separately identified for model-
matching purposes.
    We also received a scope-exclusion request by an interested party 
for fabricated steel beams. This request was subsequently withdrawn 
pursuant to an agreement with the petitioners to clarify the scope 
language by adding that ``* * * beams that have additional weldments, 
connectors or attachments to I-sections, H-sections, or pilings are 
outside the scope definition.'' However, ``* * * if the only additional 
weldment, connector or attachment on the beam is a shipping brace 
attached to maintain stability during transportation, the beam is not 
removed from the scope definition by reason of such additional 
weldment, connector or attachment.'' Accordingly, we modified the scope 
definition to account for this clarification. See the ``Scope'' section 
above.
    We have addressed these scope-exclusion requests in detail in a 
Memorandum to Louis Apple and Laurie Parkhill, Directors, AD/CVD 
Enforcement Group I, Offices 2 and 3, respectively, from The Structural 
Steel Beams Teams Re: Scope Exclusion Requests, dated December 19, 
2001.

Period of Investigation

    The period of investigation (``POI'') is April 1, 2000, through 
March 31, 2001.

Fair Value Comparisons

    With respect to SWT, to determine whether sales of structural steel 
beams from Germany to the United States were made at less than fair 
value (``LTFV''), we compared the constructed export price (``CEP'') to 
the normal value (``NV''), as described in the ``Constructed Export 
Price'' and ``Normal Value'' sections of this notice, below. In 
accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI 
weighted-average CEPs to weighted-average NVs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the SWT in the home market during the POI 
that fit the description in the ``Scope of Investigation'' section of 
this notice to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We compared U.S. sales 
to sales of identical merchandise made in the home market. In making 
the product comparisons, we matched foreign like products based on the 
physical characteristics reported by the respondents in the following 
order of importance: Form; shape/size (section depth); strength/grade; 
and coating.
    SWT reported different forms in the home market for beams that had 
``special finishing'' and it reported different strength/grades in the 
home market for beams that had different notch-toughness requirements. 
SWT did not demonstrate that the hot-formed beams with ``special 
finishing'' should be distinguished from other hot-formed beams. 
Neither did SWT demonstrate that the grades that had different notch-
toughness requirements should be distinguished from other beams that 
had the same grade (but not the notch-toughness requirements). 
Therefore, we did not differentiate the forms either on the basis of 
``special finishing'' or on the basis of notch toughness.

Constructed Export Price

    In accordance with section 772(b) of the Act, we calculated CEP for 
those sales where the merchandise was sold (or agreed to be sold) in 
the United States before or after the date of importation by or for the 
account of the producer or exporter, or by a seller affiliated with the 
producer or exporter, to a purchaser not affiliated with the producer 
or exporter. In this case, all U.S. sales of merchandise produced by 
SWT are made in the United States by TradeARBED Inc. (``TANY''), which 
is a reseller affiliated with SWT.
    We based CEP on the packed FOB or CIF prices to unaffiliated 
purchasers in the United States. We made adjustments for price-billing 
errors. We made deductions for rebates, where applicable. We also made 
deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these included, where appropriate, ocean 
freight, marine insurance, U.S. brokerage and handling, U.S. customs 
duties, U.S. inland freight expenses (i.e.,

[[Page 67192]]

freight from port to warehouse), and warehousing expenses. In 
accordance with section 772(d)(1) of the Act and 19 CFR 351.402(b), we 
deducted those selling expenses associated with economic activities 
occurring in the United States, including direct selling expenses 
(imputed credit costs) and indirect selling expenses (including 
inventory carrying costs).
    For the U.S. sales for which SWT did not report a date of payment, 
we have used the signature date of the preliminary determination (i.e., 
December 19, 2001) in the calculation of imputed credit expenses.
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by SWT and its affiliate on their sales of the 
subject merchandise in the United States and the foreign like product 
in the home market and the profit associated with those sales.

Normal Value

A. 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)(C) 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.

B. Affiliated-Party Transactions and Arm's-Length Test

    The Department's standard practice with respect to the use of home-
market sales to affiliated parties for NV is to determine whether such 
sales are at arm's-length prices. Therefore, in accordance with that 
practice, we performed an arm's-length test on SWT's sales to 
affiliates as follows.
    We excluded sales to affiliated customers in the home market not 
made at arm's-length prices from our analysis because we considered 
them to be outside the ordinary course of trade. See 19 CFR 351.102. To 
test whether these sales were made at arm's-length prices, we compared 
on a model-specific basis the starting 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 constructed 
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 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).
    In accordance with 19 CFR 351.403(d), where the respondent's sales 
to its affiliates constituted at least five percent of the total home-
market sales and these sales failed the arm's-length test, we normally 
use the sales made by the affiliates to unaffiliated customers in our 
analysis. Because SWT did not report these sales as we requested, we 
relied on partial adverse facts available in order to estimate the 
downstream sales prices for the sales of these customers that we match 
to U.S. sales. See the ``Facts Available'' section below for a detailed 
discussion of this use of partial facts available.

C. Cost-of-Production Analysis

    Based on our analysis of an allegation contained in the petition, 
we found that there were reasonable grounds to believe or suspect that 
sales of structural steel beams in the home market were made at prices 
below their cost of production (``COP''). Accordingly, pursuant to 
section 773(b) of the Act, we initiated a country-wide sales-below-cost 
investigation to determine whether sales were made at prices below 
their respective COP (see Initiation Notice, 66 FR at 33048, 33051).
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus an amount for general and administrative 
expenses (``G&A''), interest expenses, and home-market packing costs 
(see ``Test of Home-Market Sales Prices'' section below for treatment 
of home-market selling expenses). We relied on the COP data submitted 
by SWT and TANY, except in specific instances. We revised the 
consolidated financial expense rate to exclude interest income offsets 
for dividends and trade receivables. We revised the denominator in the 
consolidated financial expense rate calculation to reflect cost of 
goods sold rather than raw materials. See Memorandum from Heidi Norris 
to Neal Halper, Director Office of Accounting, dated December 19, 2001, 
Re: Cost of Production and Constructed Value Calculation Adjustments 
for the Preliminary Determination (``Cost Calculation Memorandum'').
2. Test of Home-Market Sales Prices
    On a product-specific basis, we compared the weighted-average COP 
to the home-market sales of the foreign like product, as required under 
section 773(b) of the Act, in order to determine whether the sale 
prices were below the COP. The prices were exclusive of any applicable 
billing adjustments, movement charges, rebates, discounts, direct and 
indirect selling expenses, and packing expenses. In determining whether 
to disregard home-market sales made at prices less than their COP, we 
examined, in accordance with sections 773(b)(1)(A) and (B) of the Act, 
whether such sales were made (1) within an extended period of time in 
substantial quantities, and (2) at prices which permitted the recovery 
of all costs within a reasonable period of time.
3. Results of the COP Test
    Pursuant to section 773(b)(2)(C), where less than 20 percent of the 
respondent's sales of a given product during the POI are at prices less 
than the COP, we do not disregard any below-cost sales of that product, 
because we determine that in such instances 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 are at prices less 
than the COP during a POI, we determine that the below-cost sales 
represent ``substantial quantities'' of sales within an extended period 
of time, pursuant to section 773(b)(1)(A) of the Act. In such cases, we 
also determine if such sales were made at prices which permit recovery 
of all costs within a reasonable period of time, pursuant to 
773(b)(1)(B) of the Act.
    We found that, for certain specific products, more than 20 percent 
of SWT's home-market sales were at prices less than the COP and, 
therefore, the below-cost sales were made within an extended period of 
time in substantial quantities. In addition, because we compared the 
price to the weighted-average COP for the POI, we determined

[[Page 67193]]

that the below-cost sales were not made at prices which permitted the 
recovery of all costs within a reasonable period of time. Therefore, we 
excluded these sales and used the remaining sales, if any, as the basis 
for determining NV, in accordance with section 773(b)(1) of the Act.

D. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (``LOT'') as the EP or CEP. Sales are made at 
different LOTs if they are made at different marketing stages (or their 
equivalent). See 19 CFR 351.412(c)(2). Substantial differences in 
selling activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. Id.; 
see also Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 
FR 61731, 61732 (November 19, 1997). In order to determine whether the 
comparison sales were at different stages in the marketing process than 
the U.S. sales, we reviewed the distribution system in each market 
(i.e., the ``chain of distribution''),\1\ including selling 
functions,\2\ class of customer (``customer category''), and the level 
of selling expenses for each type of sale.
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    \1\ The marketing process in the United States and comparison 
markets begins with the producer and extends to the sale to the 
final user or consumer. The chain of distribution between the two 
may have many or few links, and the respondent's sales occur 
somewhat along this chain. In performing this evaluation, we 
considered the narrative responses of the respondent to properly 
determine whether in the chain of distribution the sale appears to 
occur.
    \2\ Selling functions associated with a particular chain of 
distribution help us to evaluate the level(s) of trade in a 
particular market. For purposes of this preliminary determination, 
we have organized the common structural steel beams selling 
functions into four major categories: sales process and marketing 
support, freight and delivery, inventory and warehousing, and 
quality assurance/warranty services.
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    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for EP and comparison-market sales (i.e., NV based on 
either home-market or third-country prices), we consider the starting 
prices before any adjustments. For CEP sales, we consider only the 
selling activities reflected in the price after the deduction of 
expenses and profit under section 772(d) of the Act. See Micron 
Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 (Fed. Cir. 
2001).
    When the Department is unable to find sales of the foreign like 
product in the comparison market at the same LOT as the EP or CEP, the 
Department may compare the U.S. sale to sales at a different LOT in the 
comparison market. In comparing EP or CEP sales at a different LOT in 
the comparison market, where available data make it practicable, we 
make a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, 
for CEP sales only, if a NV LOT is more remote from the factory than 
the CEP LOT and there is no basis for determining whether the 
difference in LOTs between NV and CEP affected price comparability 
(i.e., no LOT adjustment was practicable), the Department shall grant a 
CEP offset, as provided in section 773(a)(7)(B) of the Act. See Notice 
of Final Determination of Sales at Less Than Fair Value: Certain Cut-
to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 
19, 1997).
    We obtained information from SWT regarding the marketing stages 
involved in making the reported home-market and U.S. sales, including a 
description of the selling activities performed by the respondent for 
each channel of distribution. SWT's LOT findings are summarized below.
    We examined the chain of distribution and the selling activities 
associated with sales reported by SWT to distributors in the home 
market. SWT's sales to different distributors did not differ from each 
other with respect to selling activities (e.g., market research, 
advertising and promotion, technical services, sales calls and 
demonstrations). Based on our overall analysis, we found that all of 
SWT's sales to distributors constituted one LOT. SWT did not provide 
any information regarding the selling activities associated with the 
downstream sales by the distributors in spite of our request for this 
information. Therefore, we have assumed that SWT and its affiliates 
performed the same selling activities as SWT performed for sales to 
distributors and that the LOT of the downstream sales is the same as 
the LOT of the sales to distributors.
    In the U.S. market, SWT reported CEP sales only. Therefore, we 
treated all of SWT's U.S. sales as sales to an affiliated importer 
(i.e., at the constructed, or CEP LOT) and found only one LOT. This CEP 
LOT differed considerably from the home-market LOT in that SWT reported 
a lower intensity of selling activities associated with market 
research, advertising, technical service, sales calls and 
demonstrations, engineering services, and warranties for the CEP LOT 
than the home-market LOT. Therefore, we found the CEP level of trade to 
be different from the home-market LOT and to be at less advanced stages 
of distribution than the home-market LOT. Consequently, we could not 
match CEP sales at the same LOT in the home market. Furthermore, we 
have no information that provides an appropriate basis for determining 
a LOT adjustment.
    Because there is only one LOT in the home market, it is not 
possible to determine if there is a pattern of consistent price 
differences between the sales on which normal value is based and home 
market sales at the LOT of the export transaction. Accordingly, because 
the data available do not form an appropriate basis for making a level-
of-trade adjustment but the home-market LOT is at a more advanced stage 
of distribution than the CEP LOT, we have made a CEP offset to normal 
value in accordance with section 773(a)(7)(B) of the Act. The CEP 
offset is calculated as the lesser of: (1) The indirect selling 
expenses on the home-market sales, or (2) the indirect selling expenses 
deducted from the starting price in calculating CEP.

E. Calculation of Normal Value Based on Comparison-Market Prices

    We calculated NV based on delivered prices in the home market to 
unaffiliated customers or prices to affiliated customers that we 
determined to be at arm's-length. We made adjustments for price-billing 
errors. We made deductions, where appropriate, from the starting price 
for discounts and rebates. We also made deductions for movement 
expenses, including inland freight, and inland insurance under section 
773(a)(6)(B)(ii) of the Act. In addition, we made adjustments under 
section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 for differences 
in circumstances of sale for imputed credit expenses and warranties.
    We also deducted home-market packing costs and added U.S. packing 
costs in accordance with section 773(a)(6)(A) and (B) of the Act. 
Finally, for comparisons to CEP sales, we made a CEP offset pursuant to 
section 773(a)(7)(B) of the Act and 19 CFR 351.412(f). We calculated 
the CEP offset as the lesser of the indirect selling expenses on the 
comparison-market sales or the indirect selling expenses deducted from 
the starting price in calculating CEP.

F. Use of Facts Otherwise Available

    Section 776(a)(2) of the Act provides that, if an interested party 
or any other person: (A) withholds information that has been requested 
by the administering authority; (B) fails to provide such information 
by the deadlines for the submission of the information or in the form 
and manner requested, subject to

[[Page 67194]]

subsections (c)(1) and (e) of section 782; (C) significantly impedes a 
proceeding under this title; or (D) provides such information but the 
information cannot be verified as provided in section 782(i), the 
Department shall, subject to section 782(d), use the facts otherwise 
available in reaching the applicable determination under this title.
    Where the Department determines that a response to a request for 
information does not comply with the request, section 782(d) of the Act 
provides that the Department will so inform the party submitting the 
response and will, to the extent practicable, provide that party the 
opportunity to remedy or explain the deficiency. If the party fails to 
remedy the deficiency within the applicable time limits, the Department 
may, subject to section 782(e) of the Act, disregard all or part of the 
original and subsequent responses, as appropriate. Section 782(e) of 
the Act provides that the Department ``shall not decline to consider 
information that is submitted by an interested party and is necessary 
to the determination but does not meet all the applicable requirements 
established by the administering authority'' if the information is 
timely, can be verified, and is not so incomplete that it cannot be 
used, and if the interested party acted to the best of its ability in 
providing the information. Where all of these conditions are met, the 
statute requires the Department to use the information, if it can do so 
without undue difficulties.
    According to section 776(b) of the Act, if the Department finds 
that an interested party ``has failed to cooperate by not acting to the 
best of its ability to comply with a request for information,'' the 
Department may use information that is adverse to the interests of the 
party as facts otherwise available. Adverse inferences are appropriate 
``to ensure that the party does not obtain a more favorable result by 
failing to cooperate than if it had cooperated fully.'' See Statement 
of Administrative Action (``SAA'') accompanying the URAA, H.R. Doc. No. 
316, 103d Cong., 2d Session at 870 (1994). Furthermore, ``an 
affirmative finding of bad faith on the part of the respondent is not 
required before the Department may make an adverse inference.'' 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27340 (May 19, 1997).
    An adverse inference may include reliance on information derived 
from the petition, the final determination in the investigation, any 
previous review, or any other information placed on the record. See 
section 776(b) of the Act. However, section 776(c) provides that, when 
the Department relies on secondary information rather than on 
information obtained in the course of a investigation or review, the 
Department shall, to the extent practicable, corroborate that 
information from independent sources that are reasonably at its 
disposal. The SAA states that the independent sources may include 
published price lists, official import statistics and customs data, and 
information obtained from interested parties during the particular 
investigation or review. See SAA at 870. The SAA clarifies that 
``corroborate'' means that the Department will satisfy itself that the 
secondary information to be used has probative value. Id. As noted in 
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, 
from Japan, and Tapered Roller Bearings, Four Inches or Less in Outside 
Diameter, and Components Thereof, from Japan; Preliminary Results of 
Antidumping Duty Administrative Reviews and Partial Termination of 
Administrative Reviews, 61 FR 57391, 57392 (November 6, 1996), to 
corroborate secondary information, the Department will, to the extent 
practicable, examine the reliability and relevance of the information 
used.
1. Salzgitter
    On July 26, 2001, we issued a questionnaire to Salzgitter. We 
obtained confirmation from Federal Express that the questionnaire was 
delivered to Salzgitter on July 30, 2001. On August 10, 2001, we sent a 
letter of clarification of our questionnaire to Salzgitter. We obtained 
confirmation from Federal Express that this letter was delivered to 
Salzgitter on August 13, 2001. Salzgitter did not respond to our 
questionnaire.
    Because Salzgitter did not respond to our questionnaire and 
therefore withheld information requested by the Department, we find it 
necessary, under section 776(a)(2) of the Act, to use the facts 
otherwise available in order to calculate a dumping margin for this 
company.
    We find that, by not responding to our questionnaire, Salzgitter 
failed to cooperate by not acting to the best of its ability to comply 
with a request for information. Therefore, pursuant to section 776(b) 
of the Act, we find it appropriate to use an inference that is adverse 
to its interests in selecting from among the facts otherwise available. 
By doing so, we ensure that Salzgitter will not obtain a more favorable 
result by failing to cooperate than had it cooperated fully.
    In selecting from among the facts otherwise available and using an 
adverse inference, we reviewed the information provided in the petition 
and in the response submitted by SWT. The petition contained a margin 
calculation for each of three products sold by Salzgitter. See 
Initiation of Antidumping Duty Investigations: Structural Steel Beams 
from the People's Republic of China, Germany, Italy, Luxembourg, 
Russia, South Africa, Spain and Taiwan, 66 FR 33048 (June 20, 2001), 
for a review of the methodology used by the petitioner for its 
calculations of export price and normal value. One of these margins was 
higher than the margin that we calculated for SWT. Hence, we selected 
this margin for purposes of corroboration.
    We first corroborated the U.S. price from the petition (the same 
price being provided for all three products) by comparing it to prices 
of comparable product--product of the same grade and section depth--
sold by SWT. We found that SWT made sufficient sales of the comparable 
product at similar or lower prices in the United States in order to 
corroborate the price provided in the petition. For the ocean freight 
and U.S. duty expenses, we likewise found that the petition contained 
the same expenses for each of the three products and that the 
percentage of sales by SWT with ocean freight and U.S. duty expenses in 
excess of these amounts of expenses were sufficient to corroborate the 
amounts provided in the petition. We were unable to corroborate the 
port charges from the petition, since these were in excess of those 
reported by SWT by a significant percentage. Thus, we selected the 
weighted-average port charges reported by SWT for use in calculating a 
facts-available margin for Salzgitter.
    We then found that SWT made sufficient home-market sales at prices 
similar to or above the highest home-market price provided in the 
petition. Thus, we were able to corroborate this price and we selected 
the home-market prices from the petition for use in calculating the 
facts-available margin. One COP amount was provided in the petition for 
each of the three products sold by Salzgitter. We were not able to 
corroborate this amount, since it exceeded the highest COP reported by 
SWT for a comparable product. Thus, we selected the highest COP amount 
reported by SWT to estimate whether Salzgitter's home-market prices 
were made below the cost of production.
    Using the information corroborated and selected, we performed a 
below-cost test and found that none of the three home-market prices 
provided in the petition were below the selected COP.

[[Page 67195]]

Taking the highest of these prices, we compared it to the export price, 
based on the U.S. information corroborated and selected, and calculated 
the margin between the two amounts, as is our practice. See Notice of 
Final Determination of Sales at Less Than Fair Value: Welded Large 
Diameter Line Pipe from Japan, 66 FR 47172, 47173 (September 11, 2001). 
This margin of 35.75 percent, based on facts otherwise available and 
using an adverse inference in selecting from among those facts, is our 
preliminary margin for Salzgitter. Because it is a preliminary 
determination, we will consider all of the margins on the record at the 
time of the final determination in order to determine the most 
appropriate final margin for Salzgitter.
    For a detailed discussion of the calculation of the margin for 
Salzgitter, see the Decision Memorandum for Salzgitter AG for the 
Preliminary Results of the Less-Than-Fair-Value Investigation of 
Structural Steel Beams from Germany for the Period of Investigation 
April 1, 2000, through March 31, 2001, dated December 19, 2001.
2. SWT
    Normally, in accordance with 19 CFR 351.403(d), where a 
respondent's sales to its affiliates constituted at least five percent 
of the total home-market sales and these sales failed the arm's-length 
test, we use the sales made by the affiliates to unaffiliated customers 
in our analysis. However, in this case, SWT did not report the sales 
made by the affiliates to unaffiliated customers. Because we do not 
have the data we need to use our normal methodology, because SWT did 
not provide the information we requested, and because we find, as 
described below, that SWT has significantly impeded this proceeding in 
not providing the information we requested, the use of facts available 
with regard to these sales is warranted.
    In this proceeding, SWT has not complied with our requests for 
information with regard to downstream sales. We have given SWT two 
opportunities to remedy or explain the deficiency in its response. As 
discussed below, SWT has not remedied or adequately explained the 
deficiency in its response.
    We sent a questionnaire to SWT on July 26, 2001. In that 
questionnaire, we asked that SWT report the resales by affiliated 
customers to unaffiliated customers instead of the sales by SWT to 
affiliated customers. SWT did not provide the downstream sales by its 
affiliated customers in the home market, telling us that it could not 
do so. See SWT's section A response dated August 30, 2001, at page A-3. 
SWT stated that its affiliated resellers ``co-mingle in their warehouse 
structural steel beams from all their suppliers'' and that ``these 
affiliated resellers will not necessarily record the origin of the 
product in their sales records.'' Id. SWT further stated that the 
``situation is further complicated by the fact that part of SWT's 
inventory systems, while maintained in electronic format, differ 
throughout the organization. The inability to link data and an 
inconsistency between database layouts and data codes would make it 
both time consuming and difficult (and at times impossible) for SWT's 
affiliated resellers to link downstream sales of structural steel beams 
to the beams they purchased from SWT.'' Id.
    SWT expanded on its explanation in a letter dated October 1, 2001. 
SWT contends that it would be ``impossible'' to provide the downstream 
sales data as the Department requested. However, SWT focused on the 
difficulty in reporting downstream sales of beams that are of a grade 
which we do not use in our normal-value comparisons (hereinafter, 
``Grade B''). With regard to the grade sold in the United States 
(hereinafter, ``Grade A''), SWT stated that ``traceability of [Grade A] 
material is possible'' and ``for [Grade A] products, the inspection 
certificate will always go to the end customer. Nevertheless, because 
the link, in these situations, is not recorded in any retrievable 
system, and because historical sales records do not provide any 
information nor provide any basis for permitting retrieval through an 
electronic format, obtaining the information requested by the 
Department is impossible.'' See SWT letter dated October 1, 2001, at 
pages 4-5. Thus, it appears that SWT could have provided the downstream 
sales for Grade A beams, but that the operation of assembling this data 
would have to be done manually.
    We reiterated our request for the downstream sales in a 
supplemental questionnaire on October 17, 2001. In response to our 
request, SWT submitted documents demonstrating the difficulty or 
impossibility of gathering downstream sales. However, all documents 
pertained to Grade B beams. SWT did not submit documentation showing 
that it could not report information on Grade A beams.
    We sent a second supplemental questionnaire to SWT on November 27, 
2001, requesting that SWT report only the downstream sales of Grade A 
beams. We also limited the reporting requirements for SWT so that it 
only had to report downstream sales for those affiliates that failed 
the arm's-length test (as identified in our supplemental 
questionnaire). We asked that SWT explain, if it did not report these 
limited downstream sales, why it was unable to do so in light of the 
fact that the sales of this merchandise to these customers accounts for 
a relatively low quantity of sales.
    SWT did not report the downstream sales even on this limited basis. 
Instead, SWT told us, with respect to Grade A beams sold by two of the 
affiliates that failed the arm's-length test, that the beams had been 
sold prior to their being resold to the first unaffiliated party and, 
therefore, there are no sales records to end-customers. With regard to 
these customers, SWT stated that, prior to any re-sale from the related 
purchasers, the products of SWT would have been co-mingled with non-SWT 
product. SWT further told us that, with regard to one of the customers, 
some of the beams have not yet been resold and, therefore, there are no 
downstream sales. Finally, SWT stated that, with regard to a third 
customer, while obtaining the downstream sales would be possible, it 
would be ``an impracticable effort when viewed in the context of all 
tonnage that would have to be traced for the reporting of the detailed 
information on each downstream sale--a significantly impracticable 
effort in terms of cost and man-hours.'' See SWT's December 6, 2001, 
submission at pages 3-4.
    We find SWT's explanation unconvincing for the following reasons. 
First, SWT did not explain why it could not report these sales given 
the relatively small quantity of sales that would have to be captured. 
For example, SWT states that obtaining the downstream sales information 
for the third customer would be ``a significantly impracticable effort 
in terms of cost and man-hours'' but it did not explain why that was 
the case given that the quantity of that customer's sales of Grade A 
beams is very low.
    Second, the fact that some of the merchandise sold to one of the 
affiliates has not yet been resold does not justify not reporting that 
merchandise which has been resold. Indeed, the fact that the affiliate 
was able to report that some of the merchandise was not yet resold 
suggests that the company was able to trace its inventory to particular 
purchases from SWT.
    Third, SWT states that traceability of the merchandise is 
complicated due to the co-mingling with non-SWT product and that it 
would be ``impossible'' for the reasons explained in the October 1, 
2001, letter as described above.

[[Page 67196]]

However, the October 1, 2001, letter suggests that Grade A beams can be 
traced and that the problem is that it cannot be done electronically. 
SWT does not explain why the tracing of sales of Grade A beams could 
not be done manually given the small quantity of sales in question. 
Furthermore, if SWT had required more time to obtain the information we 
requested, it could have asked for an extension of the deadline to 
respond to our request. Although we have not always granted SWT the 
entire amount of time it requested when it has requested extensions, we 
have not denied SWT's requests for additional time to respond to our 
requests for information.
    Finally, SWT claims that there are no sales records to end-
customers for some of the merchandise sold by these affiliates. This is 
not an adequate justification for not reporting these sales. Because 
the facts of this matter are proprietary, please see the SWT 
preliminary analysis memorandum dated December 19, 2001, for a full 
description. Also, this is the first time SWT made the Department aware 
of this complication. Had SWT made us aware of this circumstance 
previously, we could have instructed SWT on the proper methodology for 
reporting such sales.
    In sum, we are not convinced that SWT, acting to the best of its 
ability, could not report the downstream sales of Grade A beams sold to 
the parties that failed the arm's-length test. Indeed, it appears that 
SWT has made no attempt to gather the downstream sales information as 
of this date, even though it had been notified that it should report 
its downstream sales on July 26, 2001, or, in the alternative, a 
limited number of downstream sales on November 27, 2001. Furthermore, 
SWT has not provided us an adequate explanation for why it cannot 
report the more limited selection of downstream sales identified by the 
Department in its November 27, 2001, supplemental questionnaire.
    Therefore, we find it appropriate to rely on the facts available in 
order to estimate the downstream sales prices of Grade A beams sold by 
the parties that failed the arm's-length test. Also, because we have 
preliminarily determined that SWT has not acted to the best of its 
ability in reporting these sales, we find that it is appropriate to use 
an adverse inference in estimating these downstream sales prices.
    In the course of performing the arm's-length test, we have 
calculated customer-specific price ratios. We calculated these ratios 
on a model-specific basis by dividing the weighted-average price of 
sales to the affiliate by the weighted-average price of sales to 
unaffiliated parties. We then weight-averaged the model-specific ratios 
for each customer. As stated above, where 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.
    As adverse facts available, we have recalculated the prices of 
Grade A beams sold to the parties that failed the arm's-length test. We 
recalculated this price by multiplying the reported prices by the 
highest customer ratio we found among SWT's affiliates and dividing the 
product by the customer ratio for each affiliate that failed the arm's-
length test.
    For a detailed discussion of the use of facts otherwise available 
for affiliated sales, see the SWT Preliminary Determination Analysis 
Memorandum dated December 19, 2001.
    We intend to examine this issue further at verification.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act based on the exchange rates in effect on the 
dates of the U.S. sales as certified by the Federal Reserve Bank.

Verification

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

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
the Customs Service to suspend liquidation of all imports of subject 
merchandise that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct the Customs Service to require a 
cash deposit or the posting of a bond equal to the weighted-average 
amount by which the NV exceeds the 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-
                  Exporter/manufacturer                   average margin
                                                            percentage
------------------------------------------------------------------------
SWT.....................................................            6.58
Salzgitter..............................................           35.75
All Others..............................................       \1\ 6.58
------------------------------------------------------------------------
\1\ Pursuant to section 735(c)(5)(A), we have excluded from the
  calculation of the all-others rate margins which are zero or de
  mimimis, or determined entirely on facts available. Because we
  determined Salzgitter's margin entirely on facts available, we used
  SWT's margin as the all-others rate.

ITC Notification

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

Disclosure

    We will disclose the calculations used in our analysis to parties 
in this proceeding in accordance with 19 CFR 351.224(b).

Public Comment

    Case briefs for this investigation must be submitted to the 
Department no later than seven days after the date of the final 
verification report issued in this proceeding. Rebuttal briefs must be 
filed five days from the deadline date for case briefs. A list of 
authorities used, a table of contents, and an executive summary of 
issues should accompany any briefs submitted to the Department. 
Executive summaries should be limited to five pages total, including 
footnotes. Section 774 of the Act provides that the Department will 
hold a public hearing to afford interested parties an opportunity to 
comment on arguments raised in case or rebuttal briefs, provided that 
such a hearing is requested by an interested party. If a request for a 
hearing is made in this investigation, the hearing will tentatively be 
held two days after the rebuttal brief deadline date 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;

[[Page 67197]]

(2) the number of participants; and (3) a list of the issues to be 
discussed. Oral presentations will be limited to issues raised in the 
briefs.
    We will make our final determination no later than 135 days after 
the publication of this notice in the Federal Register.
    This determination is published pursuant to sections 733(f) and 
777(i) of the Act.

    Dated: December 19, 2001.
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 01-31980 Filed 12-27-01; 8:45 am]
BILLING CODE 3510-DS-P
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