[Federal Register Volume 60, Number 237 (Monday, December 11, 1995)]
[Notices]
[Pages 63499-63507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30088]



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DEPARTMENT OF COMMERCE
[A-580-811]


Steel Wire Rope From the Republic of Korea; Final Results of 
Antidumping Duty Administrative Review

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


[[Page 63500]]

ACTION: Notice of final results of antidumping duty administrative 
review.

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SUMMARY: On March 17, 1995, the Department of Commerce (the Department) 
issued the preliminary results of its 1992-94 administrative review of 
the antidumping duty order on steel wire rope from Korea (60 FR 14421; 
March 17, 1995). The review covers 25 manufacturers/exporters for the 
period September 30, 1992, through February 28, 1994 (the POR). We gave 
interested parties an opportunity to comment on our preliminary 
results. Based on our analysis of the comments received, we have made 
changes, including corrections of certain clerical errors, in the 
margin calculations. Therefore, the final results differ from the 
preliminary results. The final weighted-average dumping margins for 
each of the reviewed firms are listed below in the section entitled 
``Final Results of Review.''

EFFECTIVE DATE: December 11, 1995.

FOR FURTHER INFORMATION CONTACT: Thomas O. Barlow, Davina Friedmann, 
Matthew Rosenbaum, or Michael Rill, Office of Antidumping Compliance, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, 
Washington, DC 20230; telephone: (202) 482-4733.

SUPPLEMENTARY INFORMATION:

Background

    On March 17, 1995, the Department published in the Federal Register 
the preliminary results of its 1992-94 administrative review of the 
antidumping duty order on steel wire rope from the Republic of Korea 
(60 FR 14421). There was no request for a hearing. The Department has 
now conducted this review in accordance with section 751 of the Tariff 
Act of 1930, as amended (the Tariff Act).

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute and to the 
Department's regulations are references to the provisions as they 
existed on December 31, 1994.

Scope of Review

    The product covered by this review is steel wire rope. Steel wire 
rope encompasses ropes, cables, and cordage of iron or carbon steel, 
other than stranded wire, not fitted with fittings or made up into 
articles, and not made up of brass-plated wire. Imports of these 
products are currently classifiable under the following Harmonized 
Tariff Schedule (HTS) subheadings: 7312.10.9030, 7312.10.9060, and 
7312.10.9090. Excluded from this review is stainless steel wire rope, 
i.e., ropes, cables and cordage other than stranded wire, of stainless 
steel, not fitted with fittings or made up into articles, which is 
classifiable under HTS subheading 7312.10.6000. Although HTS 
subheadings are provided for convenience and Customs purposes, our own 
written description of the scope of this review is dispositive.

Best Information Available

    In accordance with section 776(c) of the Act, we have determined 
that the use of BIA is appropriate for certain firms. In determining 
what to use as BIA, the Department employs a two-tiered methodology. In 
the case of respondents who do not cooperate, or who significantly 
impede the review, we use as BIA the higher of (1) the highest of the 
rates found for any firm for the same class or kind of merchandise in 
the LTFV investigation or prior administrative reviews; or (2) the 
highest calculated rate in the current review for any firm. When a 
company substantially cooperates with our requests for information, but 
fails to provide all information requested in a timely manner or in the 
form requested, we use as BIA the higher of (1) the highest rate 
(including the ``all others'' rate) ever applicable to the firm for the 
same class or kind of merchandise from the same country from either the 
LTFV investigation or a prior administrative review; or (2) the highest 
calculated rate in the current review for any firm for the class or 
kind of merchandise from the same country (see Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof From France, et 
al.: Final Results of Antidumping Duty Administrative Reviews, 57 FR 
28360 (June 24, 1992)). See also Allied-Signal Aerospace Co. v. United 
States, 996 F.2d. 1185 (Fed. Cir. 1993) (Allied Signal); Krupp Stahl AG 
et al. v. United States, 822 F. Supp 789 (CIT 1993).
    For a discussion of our application of BIA regarding specific 
firms, see comments one through five, below.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received case briefs and rebuttal briefs from 
the petitioner, the Committee of Domestic Steel Wire Rope and Specialty 
Cable Manufacturers (the Committee), and nine respondents including 
Boo-Kook Corp. (Boo-Kook), Chung-Woo Rope Co., Ltd. (Chung Woo), Chun 
Kee Steel & Wire Rope Co. Ltd. (Chun Kee), Hanboo Wire Rope, Inc. 
(Hanboo), Manho Rope & Wire Ltd. (Manho), Kumho Wire Rope Mfg. Co., 
Ltd. (Kumho), Ssang Yong Steel Wire Co., Inc. (Ssang Yong), Sungjin 
Company (Sungjin), and Yeonsin Metal Industrial Co., Ltd. (Yeonsin).
    Comment 1: The Committee argues that the Department should not use 
its two-tiered methodology for establishing the BIA rate for 
uncooperative respondents, but instead should apply a dumping margin of 
48.8 percent to these firms, as calculated by the Committee. Referring 
to its letter of November 15, 1994, the Committee urges the Department 
to establish a rate reflective of POR costs and values based on a 
comparison of the constructed value of Korean steel wire rope and the 
U.S. price of Korean wire rope. It claims that the U.S. price of steel 
wire rope from Korea should be based upon an actual price quotation for 
sales to the United States.
    The Committee cites, in support of that proposition, Sodium 
Thiosulfate from the People's Republic of China: Final Results of 
Antidumping Duty Administrative Review, 59 FR 12934 (March 8, 1993) 
(Sodium Thiosulfate from China). The Committee asserts that, in that 
review, the Department used a BIA rate premised upon petitioner-
supplied information because the petitioner demonstrated that costs and 
prices in the relevant industry had changed substantially since the 
original investigation. The Committee argues that substantial evidence 
indicates that Korean wire rope producers' raw material costs increased 
dramatically over the POR, while the U.S. price of Korean imports of 
carbon steel wire rope declined. The Committee also cites a decision by 
the Court of Appeals for the Federal Circuit that states that first-
tier BIA ``merely establishes a presumption that the highest prior 
margins are the best information available'' (Allied-Signal at 1185 and 
1187). The Committee argues that the presumption may be rebutted with 
evidence which included ``all information that is accessible or may be 
obtained, whatever its sources,'' citing Timken Co. v. United States, 
11 CIT 786, 673 F. Supp. 495, 500 (October 29, 1987).
    In further support of its position, the Committee refers to Silicon 
Metal From Argentina: Final Results of Antidumping Duty Administrative 
Review, 58 FR 65336, 65337 (December 14, 1993) (Silicon Metal from 
Argentina). The Committee argues that, in that decision, the Department 
reiterated its position and explained that the BIA provision of the 
statute 

[[Page 63501]]
ensures that the antidumping duties assessed are not less than the 
actual amounts might have been, had the Department received full and 
accurate information. The Committee concludes that a respondent should 
not find itself in a better position as a result of its noncompliance 
than it would have had it provided the Department with complete, 
accurate and timely data. The Committee argues that respondents are 
likely to not submit any information to the Department after 
considering the low dumping margin established in Steel Wire Rope from 
Korea: Final Determination of Sales at Less Than Fair Value, 58 FR 
11029, 11032 (February 23, 1993) (LTFV Final Determination), and the 
possibility that the margins calculated in the review will also be low. 
It states that the Court of International Trade has affirmed the 
appropriateness of the Department's use of information from other 
sources. The Committee quotes the Court as saying that BIA ``is not 
necessarily accurate information, it is information which becomes 
usable because the respondent has failed to provide accurate 
information,'' citing Asociacion Colombiana de Exportadores de Flores 
v. United States, 13 CIT 13, 28, 704 F. Supp. 1114, 1126.
    Boo-Kook responds by arguing that the purpose of BIA is to set an 
accurate assessment of current dumping margins. Since there are eight 
respondents in this review and three companies in the LTFV Final 
Determination for which the Department calculated individual dumping 
margins, Boo-Kook asserts that the verified data of the companies for 
which the Department calculated dumping margins should be the most 
accurate assessment of current dumping margins.
    Department's Position: We disagree with the Committee and find that 
reliance on petitioner-supplied data as a basis for BIA would be 
inappropriate in the context of this review. The Department has broad 
discretion in determining what constitutes BIA in a given situation. 
Krupp Stahl at 792; see also Allied Signal at 1191: ``[b]ecause 
Congress has `explicitly left a gap for the agency to fill' in 
determining what constitutes the best information available, the ITA's 
construction of the statute must be accorded considerable deference,'' 
citing Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 
467 U.S. 837, 833-44 (1984). The Department's two-tiered BIA 
methodology has been upheld as ``a reasonable and permissible exercise 
of the ITA's statutory authority to use the best information available 
when a respondent refuses or is unable to provide requested 
information.'' Allied Signal at 1192.
    The Department has used the two-tiered methodology in the vast 
majority of cases involving the application of BIA to non-responsive 
companies since the adoption of this approach in the first 
administrative review of Antifriction Bearings (Other Than Tapered 
Roller Bearings) and Parts Thereof From Germany, et al.: Final Results 
of Antidumping Duty Administrative Reviews (56 FR 31692, 31705 (July 
11, 1991)). In such cases we have been satisfied that the two-tiered 
methodology effectuates the purpose of the BIA provision of the Act, 
which is to encourage compliance in our reviews.
    In any given review, a respondent will have knowledge of the 
antidumping rates from the investigation and past reviews but not of 
the rates that will be established in the ongoing review. Because the 
two-tiered approach incorporates the highest rate from the current 
review as one source of BIA, potentially uncooperative respondents will 
generally be less able to predict their BIA rate as the number of 
participants in the ongoing review increases. Thus the two-tiered 
methodology induces respondents to participate and receive their own 
known rates as opposed to a potentially much higher unknown rate. 
Therefore in most cases the BIA selection pursuant to the two-tiered 
methodology satisfies the cooperation-inducing function of the BIA 
provision. However, the Department recognizes that there are instances 
in which the BIA resulting from the two-tiered methodology may not 
induce respondents to cooperate. The rare cases in which we have not 
relied on this approach have involved an extremely limited number of 
participants, and a consequent small number of rates available for use 
as BIA. For instance, in Sodium Thiosulfate, we used information 
supplied by the petitioner to establish the BIA rate for the one 
respondent that had shipments of subject merchandise during the POR. 
Similarly, in Silicon Metal, we resorted to petitioner-supplied data 
where we had a calculated rate for only one firm: ``[i]n this instance, 
we have only Andina's rate from the LTFV investigation * * *. Because 
Andina's rate is also the `all other' rate, Silarsa would be assured a 
rate no higher than Andina's, the only respondent who cooperated fully 
with the Department in this administrative review. The use of the two-
tier methodology, in this instance, restricts the field of potential 
BIA rates to the rate established for one firm.'' Silicon Metal, 58 FR 
65336, at 65337 (December 14, 1993) (emphasis added). The concern in 
such cases with respect to the two-tiered methodology is that the lack 
of past rates, as well as the small number of participants in the 
current review, could allow a respondent in such a review to manipulate 
the proceeding by choosing not to comply with our requests for 
information. In such cases the cooperation-inducing function of the BIA 
provision of the Act may not be achieved by use of the two-tiered BIA 
methodology, in which case the Department will resort to alternatives 
sources in determining the BIA rate for uncooperative respondents.
    The cases cited by the Committee thus establish only that we will 
consider, on a case-by-case basis as appropriate, petitioner-supplied 
data in situations involving a number of calculated rates insufficient 
to provide an adequate indication of the best information available and 
to induce cooperation by respondents in the proceeding. In those cases, 
we did not have rates for more than one company and therefore 
determined that use of a BIA rate outside our two-tiered methodology 
was appropriate to encourage future cooperation.
    Our recent determination in Certain Malleable Cast Iron Pipe 
Fittings from Brazil; Final Results of Antidumping Duty Administrative 
Review is a further example of a situation in which the circumstances 
of the case clearly demonstrated that the two-tiered BIA selection was 
not sufficient to induce the respondent to cooperate. In Pipe Fittings, 
we applied a petition- based BIA rate to a non-responsive company that 
was the only company to have ever been investigated or reviewed: ``[we] 
have only calculated one margin, which was in the less-than- fair-value 
(LTFV) investigation. Due to the unusual situation, we have determined 
to use as BIA the simple average of the rates from the petition * * *. 
In not responding to our requests for information, Tupy could be 
relying upon our normal BIA practice to lock in a rate that is capped 
at its LTFV rate.'' Pipe Fittings, 60 FR 41876, 41877-78 (August 14, 
1995).
    Given the number of rates and respondents involved in both the LTFV 
investigation and in this review, the concern over potential 
manipulation of antidumping rates cited in Sodium Thiosulfate, Silicon 
Metal, and Pipe Fittings does not exist in the present case, wherein we 
have calculated rates from three companies in the LTFV final 
determination and eight companies in this review. We are satisfied that 
selection of the highest of these rates is appropriate for BIA for this 
review, is consistent with our practice, and 

[[Page 63502]]
effectuates the cooperation-inducing purpose of the BIA rule.
    Comment 2: The Committee contends that Boo-Kook should be treated 
as an uncooperative respondent in this review and receive a dumping 
margin based on the best information available (BIA). It argues that 
Boo-Kook was uncooperative since it did not respond to the Department's 
cost of production (COP) questionnaire and canceled the scheduled 
verification. The Committee states that the Department was unable to 
substantiate the information submitted by Boo-Kook since the Department 
did not verify the sales questionnaire response. Further, the Committee 
claims that the Department has determined that a company which does not 
permit verification of its response to the sales questionnaire and does 
not respond to the COP questionnaire must be classified as an 
``uncooperative'' respondent, citing Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof From the Federal Republic of 
Germany: Final Determinations of Sales at Less Than Fair Value, 54 FR 
18992, 19033 (May 3, 1989) (AFBs from Germany).
    In response, Boo-Kook argues that it filed timely responses to the 
Department's initial sales questionnaire and to the supplemental 
questionnaires. It states that during its preparation of the sales 
response it discovered that it was the victim of misconduct, including 
embezzlement, by the company's former chief director and the company's 
accountant. Due to these circumstances, Boo-Kook contends that key 
records were unavailable to it. Boo-Kook maintains that some of the key 
records were missing and it assumes that they were destroyed by the 
embezzler, while others were confiscated by Korean authorities as 
evidence. Hence, Boo-Kook argues that it was unable to undergo 
verification or respond to the COP questionnaire. It states further 
that the uncooperative (first-tier) BIA rate is intended to induce 
foreign manufacturers to respond and that Boo-Kook did respond to the 
best of its ability.
    Department's Position: We agree with Boo-Kook. Boo-Kook submitted a 
timely response to our original and supplemental sales questionnaires. 
Before its cost response was due and before the verification, Boo-Kook 
informed us that a former president and the present chief accountant 
had been arrested and prosecuted for embezzlement. Boo-Kook indicated 
that it hoped to recover missing records and be able to respond to the 
cost questionnaire in 90 days.
    In addition, Boo-Kook also requested that we postpone the 
verification for 60 to 90 days. In Allied Signal, the U.S. Court of 
Appeals ruled that ``[i]n order to apply the first tier [BIA] to a 
particular respondent, the ITA must conclude that the respondent 
`refused to cooperate with the ITA or otherwise significantly impeded' 
the review. However, if the respondent `substantially cooperated * * * 
but failed to provide the information in a timely manner or in the 
format required,' the second tier (cooperative rate) is applicable.'' 
(At 1192). The court concluded, in that case, that, because respondent 
supplied as much of the requested information as it could and offered 
to provide the remaining information in a simplified form, it was 
unreasonable for the Department to have characterized respondent's 
behavior as a refusal to cooperate. Therefore, because Boo-Kook 
cooperated with the Department to the best of its ability, and given 
the unusual and extenuating circumstances, we have applied second-tier 
total BIA to Boo-Kook's U.S. sales.
    Comment 3: The Committee contends that the Department's preliminary 
results regarding Jinyang Wire Rope (Jinyang), Korope Co. (Korope), and 
Sungsan Special Steel Processing Inc. (Sungsan) were erroneous. It 
states that the Department incorrectly applied a zero dumping margin to 
the companies based on the companies' claims that they had no shipments 
or sales of subject merchandise during the POR. The Committee states 
further that the Department must classify Jinyang and Korope as 
uncooperative respondents because their submissions were not submitted 
according to the Department's regulations. It claims that it was never 
served with submissions from Jinyang and Korope. Petitioner argues that 
it has seen in the public file a copy of a letter from the Department 
to Jinyang that refers to a June 22, 1994 letter from Jinyang and a 
copy of a letter from the Department referring to a July 28, 1994 
letter from Korope. In these letters, the Committee further argues, the 
Department asked Jinyang and Korope to resubmit their letters. Since 
the companies neglected to do so, the petitioner believes that the 
Department should consider them to be uncooperative respondents and 
apply the first-tier BIA rate to their U.S. sales.
    The Committee acknowledges that Sungsan submitted a letter on the 
file indicating that it sold subject merchandise during the POR that 
was not manufactured by Sungsan. However, the Committee notes, the 
Department then sent Sungsan a letter, asking it to demonstrate that 
the manufacturer had knowledge of the ultimate destination of the 
merchandise. The Committee states that Sungsan failed to respond to the 
above-mentioned inquiry and thus should also be treated as an 
uncooperative respondent and receive the first-tier BIA rate.
    Department's Position: We agree with the Committee regarding 
Jinyang and Korope and we disagree regarding Sungsan. Sungsan submitted 
for the record on August 5, 1994, a letter and attachment indicating 
that the supplier of the steel wire rope that it shipped to the United 
States during the POR was aware at the time of purchase that the 
product was destined to the United States. The attached invoice from 
the supplier to Sungsan indicates the destination as the United States. 
Therefore, we have sufficient evidence on the record that the only 
shipments of subject merchandise that Sungsan made to the United States 
during the POR were manufactured by a supplier that had knowledge that 
the product was destined to the United States. Hence, we have not 
applied BIA to Sungsan's shipments.
    Neither Jinyang nor Korope properly submitted a response to our 
original questionnaire. In accordance with section 777(d) of the Tariff 
Act, we do not accept documents that are not served on all interested 
parties. In addition, section 777(e) of the Tariff Act states that all 
submissions shall be submitted in a timely manner. Jinyang submitted a 
letter, but did not serve it upon interested parties. Because Jinyang 
did not serve interested parties, we have rejected Jinyang's response 
and we have applied first-tier BIA to its sales of subject merchandise 
to the United States. Korope submitted a late response which it also 
did not serve upon interested parties. Therefore, we have rejected 
Korope's submission and have applied first-tier BIA to Korope.
    Comment 4: The Committee argues that Atlantic and Pacific, Dong-Il 
Metal, Dong Yong Rope, Kwang Shin Industries and Seo Hae Industrial 
(Seo Hae), which the Department classified as ``unlocated companies,'' 
should be assigned a BIA rate. It argues that the Department provided 
no indication of whether these five companies remain functioning 
entities or what efforts the Department took to locate them. Further, 
it states that, for Dong-Il Metal, the address was set forth on the 
service list for this administrative review. The Committee argues that, 
in the absence of verified information, the Department must determine 
that these companies are still functioning entities and that they have 
refused to cooperate or have significantly impeded this proceeding 

[[Page 63503]]
and should be treated as uncooperative respondents.
    Department's Position: We disagree with the Committee and have 
assigned the ``All Others'' rate to the unlocated companies. The U.S. 
Embassy in Seoul, Korea, provided us with information for each company 
and their response to our inquiry is in the public file. The Embassy 
confirmed, with help from the Korea Iron and Steel Association, that 
Atlantic and Pacific was bankrupt, Seo Hae was closed, and Kwang Shin 
Industries was closed. None of these companies had forwarding 
addresses. The Embassy initially provided us with addresses for Dong-Il 
metal and Dong Yong and we sent them questionnaires. We did not receive 
responses from these companies and later the questionnaires for these 
companies were returned by the U.S. Postal Service as undeliverable. 
Also, upon further inquiry, we learned through the Embassy that Dong 
Yong Rope and Dong-Il Metal were closed. We are not applying BIA to 
these companies because we use BIA as an adverse assumption for 
companies that have refused to cooperate in the Department's 
solicitation or verification of information. Therefore, we are 
continuing to classify these companies as ``unlocated companies,'' and 
are assigning them the ``All Others'' rate.
    Comment 5: The Committee states that, because the Department did 
not verify Chun Kee's COP information, it must use constructed value in 
the calculation of the foreign market value for Chun Kee. The Committee 
contends that the Department was obligated to verify Chun Kee's COP 
response under the statute and the Department's regulations. Further, 
it argues that Chun Kee's constructed value information cannot be 
relied upon without a cost verification. Therefore, the Committee 
asserts, the Department should base its calculation on information 
submitted in the Committee's original petition, dated November 15, 
1994, which constitutes BIA.
    Chun Kee responds by stating that it was fully cooperative and 
provided all of the cost information as requested. Further, it was 
ready, willing, and able to substantiate its cost information through 
verification. It cites Olympic Adhesives v. United States, 889 F.2d 
1565, 1574 (Fed. Cir. 1990), to argue that the Department may not make 
adverse inferences unless a respondent refuses or is unable to provide 
information requested by the Department. Further, Chun Kee argues that 
the Committee's request for a verification was untimely and in any case 
there was not good cause for verification. Further, even if the 
Department should have verified the COP information, Chun Kee asserts 
that there would still not be a basis for making adverse inferences 
against it.
    Department's Position: We agree with Chun Kee. Although the 
Committee cites 19 CFR 353.36(a)(1)(v) in arguing that we were required 
to verify Chun Kee's submitted information, the statute and regulations 
state that we will verify all factual information submitted if no 
verification was conducted during either of the two immediately 
preceding administrative reviews. Section 776(b)(3)(B) of the Act. See 
also 19 CFR 353.36(a)(v)(B). Since this is only the first 
administrative review, and no information has been placed on the record 
indicating that Chun Kee's response is inaccurate, we are not obligated 
to verify any responses. Hence, we have used the cost information Chun 
Kee submitted in this review.
    Comment 6: The Committee asserts that the Department should reject 
the claimed circumstance-of-sale (COS) adjustment to foreign market 
value for Chun Kee, Chung Woo, and Manho regarding home market credit 
expenses. The Committee argues that these three respondents' 
calculations for credit expenses are incorrect because they used the 
total value of home market sales, including non-subject merchandise, 
and divided this amount by the total accounts receivable balance. The 
Committee asserts that these calculations must include non- subject 
merchandise since the total sales values of subject merchandise for 
each firm vary from the figures in the credit expense calculations. The 
Committee argues that the Department has only allowed such an 
adjustment when the calculations are exclusive of non-subject 
merchandise, citing AFBs from Germany and Final Determination of Sales 
at Less Than Fair Value: Polyethylene Terephthalate File, Sheet, and 
Strip from the Republic of Korea, 56 FR 16305, 16310 (April 22, 1991) 
(Pet Film from Korea).
    All three respondents argue that they provided their home market 
imputed credit expenses in accordance with well-established Department 
policy. They argue further that the Department never asked any of the 
respondents to revise their methodology, nor did the petitioner urge 
the respondents to do so during the course of the review. They cite 
Final Determination of Sales at Less than Fair Value: Certain Hot-
Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel 
Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products, 
and Certain Cut-to Length Carbon Steel Plate from Korea, 58 FR 37176, 
37184 (July 9, 1993) (Carbon Steel Flat Products from Korea), in which 
the Department accepted credit expenses where company-wide credit 
periods were used to calculate credit. They also state that, for Chun 
Kee, Chung Woo, and Manho, the Department verified their methodology 
and found no discrepancies. They state that, while the calculation 
included data on non-subject merchandise, there is no difference 
between the payment terms for subject and non-subject merchandise, nor 
do terms of payment under the respondents' open accounting system 
recognize a difference between subject and non-subject merchandise. Due 
to the similarities among all of the products they sold and the 
similarities of the payment, the respondents claim that there is no 
business reason to maintain different accounts based on different types 
of merchandise, and the payment methods do not even allow it. Hence, 
respondents argue, they could not possibly provide information that 
does not exist in their accounting records. Further, the respondents 
claim that their case is not analogous to the cases petitioner cites 
since, in AFBs from Germany, by including sales of non-subject 
merchandise in the turnover rate calculation, the respondent distorted 
the actual average credit period of the subject merchandise. In 
addition, the respondents assert, at verification in AFBs from Germany, 
the Department found that the average credit period for the subject 
merchandise was much less than the respondent had originally reported. 
Chun Kee, Chung Woo and Manho argue that there is no indication that 
the inclusion of non-subject merchandise in their calculations of the 
turnover period distorts the credit calculation. Further, respondents 
claim that, in Pet Film from Korea, the Department accepted a 
respondent's company-wide turnover calculation. Respondents claim that 
the only difference between Pet Film from Korea and the present review 
is that in the present case the accounts receivable balances for 
subject and non-subject merchandise cannot be separated. Therefore, 
respondents argue, the Department should accept their company-wide 
turnover calculations.
    Department's Position: We disagree with the Committee and have not 
changed our adjustment for home market credit expenses. In AFBs from 
Germany, as cited by the Committee, we rejected the respondent's 
calculation of home market credit expenses because its calculation 
distorted the actual average credit period on the products under 
investigation and we discovered that the average credit period on sales 
of subject 

[[Page 63504]]
merchandise in the home market was consistently much less than 
respondent had originally reported. In Pet Film from Korea, we accepted 
respondent's reported home market credit expenses and at verification 
we calculated all balances exclusive of non-subject merchandise. In 
that case, we also indicated that reliance on an average collection 
period method to determine home market credit expense is reasonable.
    At verification of Chun Kee, Chung Woo, and Manho, we verified the 
amounts of total sales and receivables and found no discrepancies and 
have no reason to believe that the inclusion of sales not under review 
distorted the actual average credit period on the products under 
review. Moreover, it has been our practice to accept such calculations 
where we are satisfied that a company has provided us reasonable 
information, given its normal record-keeping system. See Carbon Steel 
Flat Products from Korea. Therefore, we are accepting Chun Kee's, Chung 
Woo's, and Manho's calculations of home market credit expenses.
    Comment 7: The Committee argues that six respondents incorrectly 
calculated the turnover ratio in their calculations of imputed credit 
by including value added tax (VAT) in the accounts receivable (AR) 
balance and the total home market sales amount. The Committee argues 
that the Department should revise the home market credit expenses for 
these respondents by excluding VAT. The Committee cites Pet Film from 
Korea and argues that the Department determined in that case that an 
adjustment for VAT payments was not warranted when the respondent did 
not pay the VAT to the government at the time of sale, but instead 
maintained a rolling account. Citing the LTFV Final Determination at 
11032 for this case, the Committee asserts that the Department 
determined that the calculation of home market credit expenses 
inclusive of VAT was erroneous.
    Respondents claim that they included the VAT both in the numerator 
and the denominator in the calculation of the turnover ratio, resulting 
in an ``apples-to-apples'' ratio and the same results would be achieved 
by excluding VAT from total home market sales and the AR balance. They 
also argue that VAT is part of the actual sales price respondents 
charged to their customers and, therefore, they should receive an 
imputed credit expense on the VAT. They claim that removing the VAT 
would be equivalent to removing the profit from the sales price. They 
cite Color Television Receivers from Korea: Final Results of 
Antidumping Duty Determination, 51 FR 41365 (November 14, 1986), to 
support their position that respondents justifiably may include VAT in 
their total sale price when calculating credit expense.
    Department's Position: We disagree with the Committee concerning 
exclusion of VAT from the turnover ratio calculation. The respondents 
calculated the turnover rates reasonably, including VAT in the AR 
balance and the total home market sales amount, and, because VAT is 
included in both the denominator and the numerator of the turnover 
ratio, the resulting figure is not distorted. However, we agree with 
the Committee concerning the adjustment to FMV for the imputed VAT 
credit expenses. We find that there is no statutory or regulatory 
requirement for making the proposed adjustment. While we recognize that 
there may be a potential opportunity cost associated with the 
respondents' prepayment of the VAT, this fact is not sufficient for us 
to make an adjustment in price-to-price comparisons. Most charges or 
expenses associated with price-to-price comparisons are either prepaid 
or paid for at some point after the cost is incurred and they may each 
involve an opportunity cost or gain. Therefore, to allow an adjustment 
for the VAT in this case would imply that we make adjustments for every 
charge and expense reported by the respondents. Such an exercise would 
make our dumping calculations inordinately complicated, placing an 
unreasonable and onerous burden on both respondents and the Department 
(see LTFV Final Determination at 11032). Therefore, we have changed the 
final results and adjusted the credit expense to not include VAT for 
the final results, and we have not adjusted the potential opportunity 
cost related to each expense.
    Comment 8: The Committee asserts that the Department must revise 
its calculations of the addition to United States price (USP) for 
Korean VAT. Although the Department stated that it had applied its 
methodology from Silicomanganese from Venezuela: Notice of Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination, 59 FR 31204 (June 17, 1994) (Silicomanganese from 
Venezuela), the Committee asserts that, for some respondents, the 
Department's calculations in this case contradicted Silicomanganese 
from Venezuela. The committee claims that, although the Department 
stated in Silicomanganese from Venezuela that the addition to USP 
should be the result of applying the foreign market tax rate to the 
price of the United States merchandise at the same point in the chain 
of commerce that the foreign market tax was applied to foreign market 
sales, in the preliminary results the Department performed the VAT 
adjustment to the net unit price of subject merchandise, which includes 
an adjustment for duty drawback. The Committee argues that the addition 
of the amount for duty drawback to the base price against which the 
Department applied VAT was inconsistent with earlier determinations. In 
the Committee's view, the Department should not apply VAT to the duty 
drawback adjustment because respondents do not receive duty drawback on 
sales in the home market. Therefore, the Committee argues, to apply a 
VAT adjustment after adjusting USP for duty drawback ignores the 
importance of applying VAT at an analogous point in the chain of 
commerce. In addition, the Committee argues that the Department must 
limit the VAT adjustment to the USP at the absolute level of the VAT 
adjustment it applies to the home market price of the subject 
merchandise.
    Respondents argue that the Court of International Trade has upheld 
the Department's decision to include duty drawback in the USP base to 
calculate the VAT adjustment in Avesta Sheffield v. United States, 
Court No. 93-01-00062, Slip Op. 94-53 (1994). They state that the 
Department, in that case, argued that it includes duty drawback in the 
U.S. base to avoid the creation of fictitious margins. Respondents 
argue that the cases the Committee cites are not relevant here and that 
they simply explain that the tax base for the U.S. sale should be 
calculated by applying the foreign market tax rate to the price of the 
United States merchandise at the same point in the chain of commerce 
that the foreign market tax was applied to the foreign market sale. The 
respondents interpret Section 772(d) (1)(B) of the Tariff Act to mean 
that USP is comparable to the home market price only when duty drawback 
is added to USP, since this is the price which is comparable to the 
home market price. Concerning the Committee's proposed limit on the VAT 
adjustment, the respondents argue that the CIT presently requires the 
Department to apply the home market tax rate to a U.S. tax base that is 
appropriately adjusted rather than adjusting for the absolute amount of 
the foreign tax. They further argue that it is not appropriate to limit 
the adjustment under the new methodology in which the Department 
applies the home market tax rate to the USP citing Zenith Electronics. 
Corp. v. United 

[[Page 63505]]
States, Consol. Ct. No. 88-07-00488, Slip op. 95-38 (1995). The 
respondents also cite Zenith Electronic. Corp. v. United States, 10 CIT 
268, 633 F. Supp. 1382 (1986), to argue that the Department's prior 
methodology is no longer applicable.
    Department's Position: In light of the Federal Circuit's decision 
in Federal Mogul v. United States, CAFC No. 94-1097, the Department has 
changed its treatment of home market consumption taxes. Where 
merchandise exported to the United States is exempt from the 
consumption tax, the Department will add to the U.S. price the absolute 
amount of such taxes charged on the comparison sales in the home 
market. This is the same methodology that the Department adopted 
following the decision of the Federal Circuit in Zenith v. United 
States, 988 F. 2d 1573, 1582 (1993), and which was suggested by that 
court in footnote 4 of its decision. The Court of International Trade 
(CIT) overturned this methodology in Federal Mogul v. United States, 
834 F. Supp. 1391 (1993), and the Department acquiesced in the CIT's 
decision. The Department then followed the CIT's preferred methodology, 
which was to calculate the tax to be added to U.S. price by multiplying 
the adjusted U.S. price by the foreign market tax rate; the Department 
made adjustments to this amount so that the tax adjustment would not 
alter a ``zero'' pre-tax dumping assessment.
    The foreign exporters in the Federal Mogul case, however, appealed 
that decision to the Federal Circuit, which reversed the CIT and held 
that the statute did not preclude Commerce from using the ``Zenith 
footnote 4'' methodology to calculate tax-neutral dumping assessments 
(i.e., assessments that are unaffected by the existence or amount of 
home market consumption taxes). Moreover, the Federal Circuit 
recognized that certain international agreements of the United States, 
in particular the General Agreement on Tariffs and Trade (GATT) and the 
Tokyo Round Antidumping Code, required the calculation of tax-neutral 
dumping assessments. The Federal Circuit remanded the case to the CIT 
with instructions to direct Commerce to determine which tax methodology 
it will employ.
    The Department has determined that the ``Zenith footnote 4'' 
methodology should be used. First, as the Department has explained in 
numerous administrative determinations and court filings over the past 
decade, and as the Federal Circuit has now recognized, Article VI of 
the GATT and Article 2 of the Tokyo Round Antidumping Code required 
that dumping assessments be tax-neutral. This requirement continues 
under the new Agreement on Implementation of Article VI of the General 
Agreement on Tariffs and Trade. Second, the Uruguay Round Agreements 
Act (URAA) explicitly amended the antidumping law to remove consumption 
taxes from the home market price and to eliminate the addition of taxes 
to U.S. price, so that no consumption tax is included in the price in 
either market. The Statement of Administrative Action (p. 159) 
explicitly states that this change was intended to result in tax 
neutrality.
    While the ``Zenith footnote 4'' methodology is slightly different 
from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA 
law required that the tax be added to United States price rather than 
subtracted from home market price, it does result in tax- neutral duty 
assessments. In sum, the Department has elected to treat consumption 
taxes in a manner consistent with its longstanding policy of tax-
neutrality and with the GATT. Accordingly, in the final results, we 
have not applied VAT to the adjustments for duty drawback.
    Comment 9: Chung Woo, Hanboo, Kumho, Ssang Yong, Sungjin and 
Yeonsin disagree with the Department's decision not to adjust USP for 
duty drawback. They argue that it was inappropriate to deny the 
adjustment simply because the respondents used the ``simplified fixed 
amount duty drawback application'' method. Respondents argue that this 
method, in which the Korean Customs Authority determines and refunds 
duty drawback using a percentage of the export dollar amount, reflects 
the Korean government's analysis of the average drawback amounts given 
for particular products under the individual method (which refunds duty 
drawback on a product-specific basis). They cite Article 2.6 of the 
GATT Antidumping Code which states that ``due allowance shall be made 
in each case, on its merits, for the difference in conditions and terms 
of sale, for the differences in taxation, and for the other differences 
affecting price comparability.'' In this case, the respondents view 
duty drawback as a difference in taxation which affects comparability 
of transactions. In addition, respondents argue, the Department 
verified that they receive duty drawback under this simplified method.
    The Committee argues that the respondents fail to meet the 
requirements of the Department's two-pronged test for determining 
whether a party is entitled to an adjustment to USP for duty drawback. 
Under this test, according to the Committee, a respondent must 
demonstrate that (1) the import duty and the rebate received under the 
duty drawback program are directly linked to and dependent upon one 
another, and (2) there were sufficient imports of raw materials to 
account for the duty drawback received on exports of the manufactured 
product. The Committee claims that this has been upheld by the Court of 
International Trade, citing Far East Machinery Co. v. United States, 12 
CIT 972, 699 F. Supp. 309 (1988), and Carlisle Tire & Rubber Co. v. 
United States, 11 CIT 168 (1987). The Committee argues that, in this 
case, the respondents received a fixed amount of duty drawback based on 
the export dollar amount and did not demonstrate that the drawback 
amounts they received were contingent upon the weight and value of 
imported raw materials incorporated in the exported merchandise. The 
Committee cites section 772(a)(1)(B) of the Tariff Act to support its 
view that USP must be increased by ``the amount of any import duties 
imposed by the country of exportation which have been rebated, or which 
have not been collected, by reason of the exportation of the 
merchandise to the United States.'' In this case, the Committee claims, 
the Department is left without means for determining the amount of any 
import duties rebated on particular export shipments because 
respondents received duty drawback under the simplified method.
    Department's Position: We agree with the Committee. As we stated in 
the preliminary results, we did not adjust USP for duty drawback for 
respondents that reported using the simplified method. Under this 
method, the respondents were unable to demonstrate a connection between 
imports for which they paid duties and exports of steel wire rope. The 
second prong of our two- pronged test requires sufficient imports of 
raw materials to account for the duty drawback received on exports of 
the manufactured product (see Fourth Review of AFBs): ``[t]he second 
prong requires the foreign producer to show that it imported a 
sufficient amount of raw materials (upon which it paid import duties) 
to account for the exports, based on which it claimed rebates.'' In its 
supplemental questionnaire response of December 19, 1994, Sungjin 
stated that it is not required to demonstrate to the Korean government 
that the product it exports contains the actual imported product. All 
of the respondents clearly stated in their questionnaire responses that 
the 

[[Page 63506]]
Korean government determines the drawback amount using its calculation 
of the amount of duty each importer paid on average. Hence, although 
respondents do not have to tie their imports to the exports in order to 
receive duty drawback from the Korean government, this average drawback 
approach does not satisfy the second prong of our duty drawback test. 
Although we verified that respondents received duty drawback under the 
simplified method, an adjustment to USP to determine the amount of 
dumping of a specific product might be distorted if that adjustment has 
not been calculated on a product-specific basis. Therefore, we have not 
adjusted USP for duty drawback where the respondents used the 
simplified method.
    Comment 10: Ssang Yong asserts that the Department failed to adjust 
its USP for drawback it received using the individual drawback system. 
Ssang Yong further states that it received duty drawback under the 
individual method and the simplified method. Ssang Yong states that the 
Department verified its records for drawback and, citing the 
verification report, was satisfied that there were no discrepancies. 
Ssang Yong requests that the Department adjust USP for duty drawback in 
the cases where it was received under the individual drawback system.
    Department's Position: We are satisfied that Ssang Yong's 
calculation of duty drawback under the individual method, as calculated 
during a portion of the POR, meets our test and have adjusted USP for 
duty drawback where appropriate.
    Comment 11: Chun Kee asserts that the Department calculated the VAT 
tax twice on its home market sales by multiplying the net home market 
price (NETPRIH) by the VAT rate, and by multiplying the final foreign 
market value (FUPDOL), which the Department derives from NETPRIH, by 
the VAT rate later in the calculations. Chun Kee states that all 
positive and negative adjustments to the gross unit price must be 
multiplied by the VAT rate, but argues that the Department's 
calculations inflate the entire net price by applying the VAT rate 
twice.
    The Committee responds, that, according to the Analysis Memorandum 
for Chun Kee, all positive and negative adjustments to the gross unit 
price must be multiplied by the VAT rate. The Committee further claims 
that first the Department performs the VAT adjustment with respect to 
negative adjustments and, later in the calculations, performs the 
adjustment with respect to the positive adjustments, and, hence, there 
was no double-counting of the VAT rate.
    Department's Position: We agree with Chun Kee that we made a 
ministerial error. However, for the final results we have made tax 
adjustments based on our new methodology. See comment eight above.
    Comment 12: Chun Kee and Manho contend that, in a number of cases, 
they provided similar home market matches for U.S. sales, but the 
Department calculated constructed value to determine the dumping 
margin. They explain that this occurs in the model match portion of the 
Department's program. Respondents suggest that, because the 
Department's program retains only the first occurrence of each home 
market model that matches a U.S. sale, even though a home market model 
may be comparable to more than one U.S. model, subsequent U.S. sales 
cannot find a match and, therefore, the Department relied on 
constructed value. They recommend that one way to correct this would be 
to ensure that every U.S. sale which does not have an identical home 
market match, has a home market control number attached to the 
observation so that a merge of databases and information can occur when 
appropriate.
    Department's Position: We agree with respondents and have ensured 
that, where appropriate, each U.S. sale is matched to a home market 
model.
    Comment 13: Chun Kee claims that the Department inadvertently added 
home market packing to FMV instead of subtracting the expense. It 
claims that this had a very large impact on FMV and provides an example 
of the effect of this error.
    The Committee argues that Chun Kee's explanation of the error is 
incorrect and that the Department's calculation of FMV is correct.
    Department's Position: We agree with Chun Kee and have corrected 
this ministerial error. In our calculations for Chun Kee we 
inadvertently inserted a minus sign twice, which had the effect of 
adding packing instead of subtracting it. We have corrected this by 
deleting one of the minus signs.
    Comment 14: Chun Kee claims that the Department failed to subtract 
home market inspection fees and rebates from the home market net price 
in its calculations.
    Department's Position: We agree with Chun Kee and have corrected 
this ministerial error.
    Comment 15: Chun Kee and Manho assert that major errors exist in 
the COP portion of the Department's calculations which affect the 
integrity of the COP test. Respondents request that the Department 
correct these errors for the final results.
    Department's Position: We agree with Chun Kee and Manho. We have 
corrected the error.
    Comment 16: Chun Kee asserts that the Department neglected to apply 
the 90/60 day contemporaneity guideline for finding home market sales 
matches. It claims further that the Department's calculations relied 
only on home market sales in the same month as the U.S. sale, and, 
instead of examining the 90/60 window for home market sales, the 
Department relied on constructed value to determine FMV.
    Department's Position: We agree with Chun Kee and have applied our 
90/60 day contemporaneity guideline in our calculations for Chun Kee.
    Comment 17: Chun Kee claims that the Department failed to 
incorporate the corrections which Chun Kee submitted in attachment 13 
of its supplemental questionnaire response. Chun Kee requests that the 
Department reflect these corrections in the final results.
    Department's Position: We agree with Chun Kee and have made these 
corrections.
    Comment 18: Manho claims that the Department mistakenly added U.S. 
packing to the FMV, even though the calculations for constructed value 
contains U.S. packing costs. Respondent requests that the Department 
correct this double-counting error.
    Department's Position: We agree with Manho and have corrected this 
ministerial error.
    Comment 19: Manho claims that the Department incorrectly subtracted 
duty drawback from USP rather than adding it, as the statute requires. 
Manho requests that the Department correct this error.
    Department's Position: We agree with Manho and have corrected this 
ministerial error.

Final Results of Review

    We determine the following percentage weighted-average margins 
exist for the period September 30, 1992, through February 28, 1994:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
Atlantic & Pacific.........................................         1.51
Boo Kook Corporation.......................................         1.51
Chun Kee Steel & Wire Rope Co., Ltd........................         0.20
Chung Woo Rope Co., Ltd....................................         0.14
Dae Heung Industrial Co....................................        (\1\)
Dae Kyung Metal............................................         1.51
Dong-Il Metal..............................................         1.51
Dong-Il Steel Manufacturing Co., Ltd.......................         1.51
Dong Young.................................................        1.51 

[[Page 63507]]
                                                                        
Hanboo Wire Rope, Inc......................................         0.51
Jinyang Wire Rope, Inc.....................................         1.51
Korea Sangsa Co............................................        (\1\)
Korope Co..................................................         1.51
Kumho Rope.................................................         0.01
Kwang Shin Ind.............................................         1.51
Kwangshin Rope.............................................         1.51
Manho Rope & Wire, Ltd.....................................         0.00
Myung Jin Co...............................................         1.51
Seo Hae Ind................................................         1.51
Seo Jin Rope...............................................         1.51
Ssang Yong Steel Wire Co., Ltd.............................         0.06
Sung Jin...................................................         0.04
Sungsan Special Steel Processing Inc.......................        (\1\)
TSK (Korea) Co., Ltd.......................................        (\1\)
Yeonsin Metal..............................................        0.18 
------------------------------------------------------------------------
\1\ No shipments or sales subject to this review.                       


    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between USP and FMV may vary from the percentages stated 
above. The Department will issue appraisement instructions on each 
exporter directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of these 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rates for the reviewed 
companies will be those rates established above (except that if the 
rate for a firm is de minimis, i.e., less than 0.5 percent, a cash 
deposit of zero will be required for that firm); (2) for previously 
reviewed or investigated companies not listed above, the cash deposit 
rate will continue to be the company-specific rate published for the 
most recent period; (3) if the exporter is not a firm covered in this 
review, a prior review, or the original LTFV investigation, but the 
manufacturer is, the cash deposit rate will be the rate established for 
the most recent period for the manufacturer of the merchandise; and (4) 
if neither the exporter nor the manufacturer is a firm covered in this 
or any previous review or the original investigation, the cash deposit 
rate will be 1.51 percent, the ``All Others'' rate established in the 
LTFV Final Determination (58 FR 11029).
    These deposit requirements shall remain in effect until publication 
of the final results of the next administrative review.
    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification 
of the return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: December 4, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-30088 Filed 12-8-95; 8:45 am]
BILLING CODE 3510-DS-P