[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Notices]
[Pages 8914-8918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5259]



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[[Page 8915]]


DEPARTMENT OF COMMERCE
[A-427-811]


Certain Stainless Steel Wire Rods From France: Preliminary 
Results of Antidumping Duty Administrative Review

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

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

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SUMMARY: In response to a request by Imphy S.A., and Ugine-Savoie, 
respondents, the Department of Commerce (the Department) is conducting 
an administrative review of the antidumping duty order on certain 
stainless steel wire rods from France. This review covers the above 
manufacturers/exporters of the subject merchandise to the United 
States. The period of review (POR) is August 5, 1993 through December 
31, 1994.
    We have preliminarily determined that respondents sold subject 
merchandise at less than normal value (NV) during the POR. Interested 
parties are invited to comment on these preliminary results. Parties 
who submit argument in this proceeding should also submit with the 
argument (1) a statement of the issue, and (2) a brief (no longer than 
five pages, including footnotes) summary of the argument.

EFFECTIVE DATE: February 28, 1996.

FOR FURTHER INFORMATION CONTACT: Stephen Jacques or Jean Kemp, Office 
of Agreements Compliance, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
3434 or (202) 482-4037, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act), by the 
Uruguay Rounds Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
current regulations, as amended by the interim regulations published in 
the Federal Register on May 11, 1995 (60 FR 25130).

Background

    On December 29, 1993, the Department published in the Federal 
Register (58 FR 68865) the final affirmative antidumping duty 
determination on certain stainless steel wire rods from France, and 
published an amended final determination and antidumping duty order on 
January 28, 1994. On January 12, 1995, the Department published the 
Opportunity to Request an Administrative Review of this order for the 
period August 5, 1993-December 31, 1994 ( 60 FR 2941). The Department 
received a request for administrative review from Imphy, S.A., 
(``Imphy'') and Ugine Savoie (``Ugine''), related producers/exporters 
of the subject merchandise on January 30, 1995. We initiated the review 
on February 15, 1995. On November 7, 1995, the Department published in 
the Federal Register its notice extending the deadline in this review 
(60 FR 56142).
    The Department is now conducting this review in accordance with 
section 751 of the Act. The review covers sales of certain stainless 
steel wire rods by Imphy, Ugine, and their affiliated companies, 
Metalimphy Alloys Corp. (``MAC''), and Techalloy Company, Inc. 
(``Techalloy'').

Scope of the Review

    The products covered by this administrative review are certain 
stainless steel wire rods (SSWR), products which are hot-rolled or hot-
rolled annealed, and/or pickled rounds, squares, octagons, hexagons, or 
other shapes, in coils. SSWR are made of alloy steels containing, by 
weight, 1.2 percent or less of carbon and 10.5 percent or more of 
chromium, with or without other elements. These products are only 
manufactured by hot-rolling, are normally sold in coiled form, and are 
of solid cross section. The majority of SSWR sold in the United States 
is round in cross-sectional shape, annealed, and pickled. The most 
common size is 5.5 millimeters in diameter.
    The SSWR subject to this review is currently classifiable under 
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0020, 7221.00.0030, 
7221.00.0040, 7221.00.0045, 7221.00.0060, 7221.00.0075, and 
7221.00.0080 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and Customs purposes, our written description of the scope of the order 
is dispositive.

Verification

    As provided in section 782(i) of the Tariff Act, we verified 
information provided by the respondent by using standard verification 
procedures, including onsite inspection of the manufacturer's 
facilities, the examination of relevant sales and financial records, 
and selection of original documentation containing relevant 
information. Our verification results are outlined in the public 
versions of the verification reports.

Transactions Reviewed

    In accordance with Section 751 of the Act, the Department is 
required to determine the normal value and export price (EP) or 
constructed export price (CEP) of each entry of subject merchandise 
during the relevant review period. Because there can be a significant 
lag between entry date and sale date for CEP sales, it has been the 
Department's practice to examine U.S. CEP sales during the period of 
review. Gray Portland Cement and Clinker from Japan; Final Results of 
Antidumping Duty Administrative Review, 58 FR 48826 (1993) (Dept. did 
not consider ESP (now CEP) entries which were sold after the POR). The 
Court of International Trade has upheld the Department's practice in 
this regard. See, The Ad Hoc Committee of Southern California Producers 
of Gray Portland Cement v. United States, CIT Slip Op. 95-195, December 
1, 1995.1

    \1\ Although the CIT, in Ad Hoc, accepted that ``consideration 
of all sales, rather than entries, made during the period of review 
may result in the consideration of entries made prior to the 
suspension of liquidation'', Ad Hoc is not a case in which the 
respondent linked specific sales during the POR to specific entries 
prior to the suspension of liquidation. Ad Hoc, Slip Op. at 19 
(emphasis added).
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    The Department has adopted an exception to its practice of 
examining all U.S. sales during the period of review. That exception 
applies when a respondent is able to demonstrate, to the satisfaction 
of the Department, that the merchandise covered by a particular sale 
entered prior to the suspension of liquidation pursuant to the 
Department's preliminary determination in the LTFV investigation. See, 
High-Tenacity Rayon Filament Yarn, Preliminary Results of Antidumping 
Duty Administrative Review, 59 FR 32181 (1994) (specific sales excluded 
when linked to pre-suspension entries); compare, Certain Corrosion-
Resistant Carbon Steel Flat Products from Australia; Preliminary 
Results of Antidumping Duty Administrative Review, 60 FR 42507 (1995) 
(sales not excluded when respondent unable to link them to specific 
pre-suspension entries). Merchandise proven to have entered the U.S. 
prior to the suspension of liquidation (and in the absence of an 
affirmative critical circumstances finding) is not subject merchandise 
within the meaning of section 771(25) of the Act.
    In this review, respondent claimed that certain merchandise was not 


[[Page 8916]]
subject to review because it entered prior to the period of review for 
sale by an affiliated U.S. company during the period of review. The 
Department verified that respondent was able to link certain sales 
during the period to entries of merchandise prior to the suspension of 
liquidation. Because respondent has demonstrated that certain 
merchandise entered prior to the suspension of liquidation, we excluded 
sales of that merchandise from our analysis.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondent, covered by the description in the 
Scope of the Review section, above, and sold in the home market during 
the POR, to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. Where there were no 
sales of identical merchandise in the home market to compare to U.S. 
sales, we compared U.S. sales to the next most similar foreign like 
product on the basis of the characteristics listed in Appendix III of 
the Department's June 20, 1995 antidumping questionnaire and additional 
specifications listed in our December 1, 1995 supplemental 
questionnaire. In making the product comparisons, we matched foreign 
like products based on the physical characteristics reported by the 
respondents and verified by the Department.

Level of Trade

    As set forth in section 773(a)(2)(B)(i) of the Act and in the 
Statement of Administrative Action (SAA) accompanying the Uruguay Round 
Agreements Act, at 829-831, to the extent practicable, the Department 
will calculate normal value based on sales at the same level of trade 
as the U.S. sale. When the Department is unable to find sale(s) in the 
comparison market at the same level of trade as the U.S. sale(s), the 
Department may compare sales in the U.S. and foreign markets at a 
different level of trade.
    In accordance with section 773(a)(7)(A) of the Act, if we compare a 
U.S. sale at one level of trade to normal value sales at a different 
level of trade, the Department will adjust the normal value to account 
for the difference in level of trade if two conditions are met. First, 
there must be differences between the actual selling functions 
performed by the seller at the level of trade of the U.S. sale and at 
the level of trade of the NV sale. Second, the differences must affect 
price comparability as evidenced by a pattern of consistent price 
differences between sales at the different levels of trade in the 
market in which normal value is determined. When constructed export 
price is applicable, section 773(a)(7)(B) of the Act establishes the 
procedures for making a constructed export price offset when: (1) 
normal value is at a different level of trade, and (2) the data 
available do not provide an appropriate basis for a level of trade 
adjustment from the U.S. sale. Also, in accordance with section 
773(a)(7)(B), to qualify for a CEP offset, the level of trade in the 
home market must also constitute a more advanced stage of distribution 
than the level or trade of the CEP.
    In order to identify levels of trade, the Department must review 
information concerning selling functions of the exporter. Therefore, in 
addition to the questions related to the level of trade in our June 20, 
1995, questionnaire, on December 13, 1995, we sent respondents 
supplemental questions related to level of trade comparisons and 
adjustments. We asked respondents to establish any claimed levels of 
trade based on selling functions performed and services offered to each 
customer or customer class, and to document and explain any claims for 
a level of trade adjustment.
    Respondents' reported one level of trade in the home market (to end 
users) and two channels of distribution: 1) direct to end users; and 2) 
through Ugine Service, a joint-venture between Imphy and Ugine which 
acts as a selling arm. We examined and verified the selling functions 
performed in each channel and found that the two sales channels 
provided many of the same or similar selling functions including: 
strategic planning, order evaluation, warranty claims, technical 
services, inventory maintenance, packing and freight and delivery. We 
found some differences between the two channels of trade in 
advertising, customer contacts, computer systems (order input/invoice 
system), and administrative functions. Overall, we determine that the 
selling functions between the two sales channels are sufficiently 
similar to consider them as one level of trade in the home market.
    For the U.S. market, respondents claimed that they sold to two 
levels of trade: 1) end users through MAC (EP sales); and 2) 
distributors, e.g., MAC, Techalloy and US&A (CEP sales). We examined 
and verified the selling functions performed for U.S. sales to end 
users through MAC and determined that they are at the same level of 
trade as home market sales. We then examined and verified that 
different (fewer) selling functions were performed for U.S. sales to 
distributors than for home market sales. Specifically, we found the 
selling functions were sufficiently different in customer sales 
contacts, technical services, inventory maintenance, computer systems 
and administrative functions to warrant treating U.S. sales to 
distributors and the home market sales as different levels of trade.
    To the extent practicable, we compared normal value at the same 
level of trade as the U.S. sale. Because we compared these CEP sales to 
home market sales at a different level of trade, we examined whether a 
level of trade adjustment may be appropriate. In this case, respondent 
only sold at one level of trade in the home market; therefore, there is 
no basis upon which respondent can demonstrate a consistent pattern of 
price differences between levels of trade. Further, we do not have 
information which would allow us to examine pricing patterns based on 
respondent's sales of other products and there are no other respondents 
or other record information on which such an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a level of trade adjustment but the level of trade in the HM is 
a more advanced stage of distribution than the LOT of the CEP sale, a 
CEP offset is appropriate. Respondents claimed a CEP offset for those 
U.S. CEP and CEP/FM (CEP/Further Manufactured) sales compared to sales 
in France through Ugine Service. We included a CEP offset for all sales 
in France which are compared with CEP and CEP/FM sales in the United 
States since the comparison of home market sales to CEP sales is at a 
different level of trade. We applied the CEP offset to normal value or 
constructed value, as appropriate (See Fair Value Comparisons Section, 
below). The level of trade methodology employed by the Department in 
these preliminary results of review is based on the facts particular to 
this review. The Department will continue to examine its policy for 
making level of trade comparisons and adjustments for its final results 
of review.

Fair Value Comparisons

    To determine whether sales of SSWR by respondents to the United 
States were made at less than fair value, we compared the EP or CEP to 
the normal value (NV), as described in the ``Export Price and 
Constructed Export Price'' and ``Normal Value'' sections of this 
notice. In accordance with section 777A(d)(2), we calculated monthly 
weighted-average prices for NV and compared these to individual U.S. 
transactions. Where possible, in calculating a monthly weighted average 
normal 

[[Page 8917]]
value, we averaged home market sales across the channel of distribution 
most comparable to that in which the U.S. transaction was made. Where 
there were no home market sales through that channel of distribution, 
we averaged home market sales through the other channel of 
distribution.

Export Price and Constructed Export Price

    We used EP, in accordance with subsections 772(a) and (c) of the 
Act, where the subject merchandise was sold directly or indirectly to 
the first unaffiliated purchaser in the United States prior to 
importation and CEP was not otherwise warranted based on the facts of 
record. In addition, we used CEP in accordance with subsections 772(b), 
(c) and (d) of the Act, for those sales to the first unaffiliated 
purchaser that took place after importation into the United States.
    We made adjustments as follows:
    We calculated EP based on packed prices to unaffiliated customers 
in the United States. Where appropriate, we made deductions from the 
starting price for discounts, foreign inland freight, foreign brokerage 
and handling, international freight, U.S. inland freight, U.S. 
brokerage and handling, and U.S. Customs duties. We also adjusted the 
starting price for billing adjustments to the invoice price.
    We calculated CEP sales based on packed prices to unaffiliated 
customers. Where appropriate, we made deductions for early payment 
discounts, credit expenses, warranty expenses, other direct selling 
expenses and commissions. We deducted those indirect selling expenses, 
including inventory carrying costs and product liability premiums, that 
related to commercial activity in the United States. We also made 
deductions for foreign brokerage and handling, foreign inland freight, 
international freight, U.S. inland freight, U.S. brokerage and 
handling, and U.S. duty and harbor fees. We also adjusted the starting 
price for billing adjustments to the invoice price and for interest 
revenue. Finally, we made an adjustment for CEP profit in accordance 
with section 772(d)(3) of the Act.

Further Manufacturing

    For product that was further manufactured after importation, we 
adjusted for all value added in the United States, including the 
proportional amount of profit attributable to the value added. We 
computed profit based on total revenues realized on sales in both the 
U.S. and home markets, less all expenses associated with those sales. 
We then allocated profit to expenses incurred with respect to U.S. 
economic activity (including further manufacturing costs), based on the 
ratio of total U.S. expenses to total expenses for both the U.S. and 
home market.

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared respondents' 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. Since respondents' 
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. 
Therefore, we have based NV on home market sales.
    Where appropriate, we deducted discounts, credit expenses, warranty 
expenses, inland freight, inland insurance and packing. We also 
adjusted the starting price for billing adjustments to the invoice 
price and interest revenue. We did not adjust the starting price for 
commissions in the home market (please see the Concurrence Memo for a 
discussion of this issue).
    To calculate the CEP offset, we took the home market indirect 
selling expenses and deducted this amount from normal value, on home 
market sales which were compared to U.S. CEP sales. We limited the home 
market indirect selling expense deduction by the amount of the indirect 
selling expenses incurred in the United States.
    We made adjustments, where appropriate, for physical differences in 
the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. 
In accordance with the Department's practice, where the difference in 
merchandise adjustment for any product comparison exceeded 20 percent, 
we based normal value on CV. In addition, in accordance with section 
773(a)(6), we deducted home market packing costs and added U.S. packing 
costs.
    Further, because we disallowed all home market commissions, we 
deducted from normal value the lesser of either (1) the amount of 
commission paid on a U.S. sale for a particular product, or (2) the 
amount of indirect selling expenses incurred on the home market sales 
for a particular product.

Price to CV Comparisons

    Where we compared CV to EP, we deducted from CV the weighted-
average home market direct selling expenses and added the weighted-
average U.S. product-specific direct selling expenses.

Cost of Production Analysis

    Based on the fact that the Department had disregarded sales in the 
LTFV investigation because they were made below the cost of production 
(COP), the Department found reasonable grounds in this review, in 
accordance with section 773(b)(2)(A)(ii) of the Act, to believe or 
suspect that respondents made sales in the home market at prices below 
the cost of producing the merchandise. As a result, the Department 
initiated an investigation to determine whether the respondents made 
home market sales during the POR at prices below their COP within the 
meaning of section 773(b) of the Act.
    Before making any fair value comparisons, we conducted the COP 
analysis described below.

A. Calculation of COP

    We calculated the COP based on the sum of respondents' cost of 
materials and fabrication for the foreign like product, plus amounts 
for home market selling, general, and administrative expenses (SG&A) 
and packing costs in accordance with section 773(b)(3) of the Act. We 
relied on the respondents' reported COP amounts.

B. Test of Home Market Prices

    We used the respondents' weighted-average COP for the POR. We 
compared the weighted-average COP figures to home market sales of the 
foreign like product as required under section 773(b) of the Act, in 
order to determine whether these sales had been made at below-cost 
prices within an extended period of time in substantial quantities, and 
whether they were at prices which permit recovery of all costs within a 
reasonable period of time. On a product-specific basis, we compared the 
COP to the home market prices, less any applicable movement charges, 
rebates, and direct and indirect selling expenses.

C. Results of COP Test

    Pursuant to section 773(b)(2)(c), where less than 20 percent of 
respondents' sales of a given product were at prices less than the COP, 
we did not disregard any below-cost sales of that product because we 
determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of a respondent's sales of a 
given product were at prices less than the COP, we disregarded the 

[[Page 8918]]
below-cost sales because we determined that the below-cost sales were 
made within an extended period of time in ``substantial quantities'' in 
accordance with section 773(b)(2)(B) of the Act, and because we 
determined that the below-cost sales of the product were at prices 
which would not permit recovery of all costs within a reasonable period 
of time, in accordance with section 773(b)(2)(D) of the Act. Where all 
sales of a specific product were at prices below the COP, we 
disregarded all sales of that product, and calculated NV based on CV, 
in accordance with section 773(b)(1) of the Act.

D. Calculation of CV

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of respondents' cost of materials, fabrication, SG&A , 
U.S. packing costs, interest expenses and profit as reported in the 
U.S. sales databases. In accordance with sections 773(e)(2)(A), we 
based SG&A and profit on the amounts incurred and realized by the 
respondent in connection with the production and sale of the foreign 
like product in the ordinary course of trade, for consumption in the 
foreign country. We relied on the respondents' reported CV amounts. For 
selling expenses, we used the weighted-average home market selling 
expenses.

Arm's-Length Sales

    Sales to affiliated customers in the home market not made at arm's 
length were excluded from our analysis. To test whether these sales 
were made at arm's length, we compared the starting prices of sales to 
affiliated and unaffiliated customers net of all movement charges, 
direct and indirect selling expenses, discounts and packing. Where the 
price to the related party was 99.5 percent or more of the price to the 
unrelated party, we determined that the sale made to the related party 
was at arm's-length. Where no related customer ratio could be 
constructed because identical merchandise was not sold to unrelated 
customers, we were unable to determine that these sales were made at 
arm's length and, therefore, excluded them from our 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)). Where the exclusion of such sales eliminated all sales of the 
most appropriate comparison product, we made comparison to the next 
most similar model.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions based on the official exchange rates in effect on the dates 
of the U.S. sales as certified by the Federal Reserve Bank of New York. 
Section 773A(a) directs the Department to use a daily exchange rate in 
order to convert foreign currencies into U.S. dollars, unless the daily 
rate involves a ``fluctuation.'' For these preliminary results of 
review, we have determined that a fluctuation exists when the daily 
exchange rate differs from a benchmark by 2.25 percent. The benchmark 
is defined as the rolling average of rates for the past 40 business 
days. Therefore, when we determined a fluctuation existed, we 
substituted the benchmark for the daily rate.

Preliminary Results of the Review

    As a result of our comparison of USP and NV, we preliminarily 
determine that the following weighted-average dumping margin exists:

                                                                        
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            Manufacturer/exporter                    Period       Margin
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Imphy/Ugine-Savoie...........................    8/5/93-12/31/94    5.01
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five days 
of the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the date of publication or the 
first business day thereafter. Case briefs and/or other written 
comments from interested parties may be submitted not later than 30 
days after the date of publication. Rebuttal briefs and rebuttals to 
written comments, limited to issues raised in those comments, may be 
filed not later than 37 days after the date of publication of this 
notice. The Department will publish the final results of this 
administrative review, including its analysis of issues raised in any 
written comments or at a hearing, not later than 180 days after the 
date of publication of this notice.
    Upon completion of this review, the following deposit requirements 
will be effective upon publication of the final results of this 
antidumping duty review for all shipments of SSWR from France, entered, 
or withdrawn from warehouse, for consumption on or after the 
publication date, as provided by section 751(a) of the Tariff Act: (1) 
the cash deposit rate for the reviewed companies will be that 
established in the final results of review; (2) for exporters not 
covered in this review, but covered in the LTFV investigation, the cash 
deposit rate will continue to be the company-specific rate from the 
LTFV investigation; (3) if the exporter is not a firm covered in this 
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; (4) the cash deposit 
rate for all other manufacturers or exporters will continue to be 24.51 
percent, the ``All Others'' rate made effective by the LTFV 
investigation. These requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice serves as a preliminary 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.
    These preliminary results of review are published pursuant to 
section 751(a)(1) of the Act and 19 CFR 353.22.

    Dated: February 28, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-5259 Filed 3-5-96; 8:45 am]
BILLING CODE 3510-25-P