[Federal Register Volume 61, Number 177 (Wednesday, September 11, 1996)]
[Notices]
[Pages 47874-47884]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23234]


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DEPARTMENT OF COMMERCE
[A-427-811]


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

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

SUMMARY: On March 6, 1996, the Department of Commerce (the Department) 
published the preliminary results of the administrative review of the 
antidumping duty order on certain stainless steel wire rods from 
France. This review covers Imphy S.A., and Ugine-Savoie, two 
manufacturers/exporters of the subject merchandise to the United 
States. The period of review (POR) is August 5, 1993, through December 
31, 1994. We gave interested parties an opportunity to comment on our 
preliminary results. Based on our analysis of the comments received, we 
have changed the results from those presented in the preliminary 
results of review.

EFFECTIVE DATE: September 11, 1996.

FOR FURTHER INFORMATION CONTACT:
Stephen Jacques or Jean Kemp, AD/CVD Enforcement Group III, Office 9, 
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 Round 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 March 6, 1996, the Department published in the Federal Register 
the preliminary results of the administrative review of the antidumping 
duty order on certain stainless steel wire rods from France (61 FR 
8915, March 6, 1996). The Department has now completed this 
administrative review in accordance with section 751 of the Act.

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 picklet 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 picklet. The most 
common size is 5.5 millimeters in diameter.
    The SSWR subjet to this review is currently classified 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.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments and rebuttal comments from 
Imphy S.A. and Ugine-Savoie, manufacturers/exporters of the subject 
merchandise (respondents), and from Al Tech Specialty Steel Corp., 
Armco Stainless & Alloy Products, Carpenter Technology Corp., Republic 
Engineered Steels, Talley Metals Technology, Inc., United Steelworkers 
of America, AFL-CIO/CLC (petitioners). At the request of petitioners, 
the Department held a hearing on May 13, 1996.
    Comment 1: Petitioners contend that the Department's decision to 
depart from its practice of examining constructed export price (CEP) 
sales during the POR because respondents were able to link-suspension 
of liquidation entries with sales should be changed for the final 
results. Petitioners urge the Department to revise its preliminary 
results to analyze all constructed export price (CEP) sales during the 
POR for the purpose of calculating antidumping assessment and cash 
deposit rates. Petitioners claim that there is nothing in the new 
statute that requires the Department to depart from its longstanding 
practice of focusing on CEP sales rather than entries in a review. 
Petitioners contend that the Department can analyze entries made prior 
to the suspension of liquidation so long as assessment is applied only 
to entries in the review period.
    Petitioners claim that the only legal justification the Department 
has offered for its position that sales of merchandise entered prior to 
the POR should be excluded from the agency's analysis is that 
``[m]erchandise proven to have entered to U.S. prior to the suspension 
of liquidation . . . is not subject within the meaning of section 
771(25) of the Act'' (61 FR 8915). Petitioners contend that section 
771(25) of the Act is merely a general provision defining ``subject 
merchandise'' as ``the class or kind of merchandise that is within the 
scope of an investigation, a review, a suspension agreement, an order 
under this title or section 303, or a finding under the Antidumping Act 
of 1921,'' and that this provision did not change prior law. 
Petitioners further note that nothing prevents the Department from 
examining CEP sales to derive antidumping rates in the Agreement on 
Implementation of Article VI of GATT 1994 (WTO Antidumping Agreement). 
In addition, petitioners claim that neither U.S. law (see 19 U.S.C. 
1673e) nor the WTO Antidumping Agreement discusses the manner in which 
those antidumping duties are to be calculated or whether sales or 
entries should serve as the basis of that calculation.
    Petitioners also contend that the Court of International Trade 
(CIT) held that it is perfectly lawful for the agency to analyze 
entries made prior to the suspension of liquidation so long as the 
assessment is applied only to POR entries (see The Ad Hoc Committee of 
Southern California Producers of Gray Portland Cement v. United States, 
18 CIT______, 914 F. Supp. 535 (1995)).
    Petitioners note that the CIT stated ``the 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 * * *'' Petitioners claim that the respondents' ability to 
link sales

[[Page 47875]]

with entries in this review does not mean that the CIT's holding in Ad 
Hoc Committee would not apply to this situation. Petitioners state that 
in the review which was the subject of Ad Hoc Committee, duties were 
only assessed on entries which occurred during the POR. Petitioners 
allege that so long as duties are only assessed on POR entries, the 
CIT's decision is valid in this proceeding and that the definition of 
``subject merchandise,'' referring to merchandise on which duties will 
be assessed, consistent with the CIT's holding.
    Petitioners claim that the Department's proposed regulations also 
recognize the continued need to focus on CEP sales rather than entries 
to calculate margins. Petitioners cite the preamble to paragraph (b)(1) 
of section 351,212 in which ``the Department normally will calculate a 
duty assessment rate based on sales reviewed, and will apply those 
rates to entries made during the review period. In all cases, this will 
result in the assessment of duties on merchandise entered during the 
review period.'' Antidumping Duties; Countervailing Duties; Proposed 
Rule, 1(Proposed Regulations) 61 FR 7308, 7316 Feb. 27, 1996). 
Consequently, petitioners argue that the Department should maintain its 
practice of focusing on CEP sales for dumping analysis purposes but 
only assessing duties on entries in the POR.
    Respondents argue that in the preliminary results of review, the 
Department correctly determined that respondents' merchandise sold 
during the POR, but proven to have entered the United States prior to 
suspension of liquidation should be excluded from the agency's 
analysis. Respondents note that petitioners do not contest that the 
merchandise excluded from review by the Department is non-subject 
merchandise, but that petitioners claim that the Department can legally 
review sales of merchandise entered prior to the suspension of 
liquidation provided that duties are only assessed on entries during 
the POR. Respondents claim that petitioners inappropriately cite Ad Hoc 
Committee and NSK, which respondents claim deal with different factual 
situations and are not applicable to this review.
    Respondents argue that the statute, consistent with the WTO 
Antidumping Agreement, excludes merchandise entered prior to the 
publication of notice of suspension of liquidation. They claim that 
section 736(b)(1) of the Tariff Act of 1930, as amended, provides for 
the imposition of duties on ``entries of the subject merchandise, the 
liquidation of which has been suspended under section 733(d)(2)''. 
Respondents also note that section 751 of the antidumping law directs 
the Department to determine the ``normal value and export price (or 
constructed export price) of each entry of the subject merchandise'' 
and calculate the ``dumping margin for such entry'' which is to serve 
as the basis for assessing duties on the entries. Therefore, 
respondents argue that the statute is clear that reviewing sales of 
merchandise that are shown to involve non-subject merchandise via 
linkage of sales to entries would exceed the mandate of the Department.
    Respondents note that the Department's decision in the preliminary 
results is consistent with previous proceedings. In support of their 
position, respondents cite Preliminary Results of Antidumping Duty 
Administrative Review of High-Tenacity Rayon Yarn from Germany, 59 FR 
32181, 32182 (June 22, 1994), and Final Results of Antidumping Duty 
Administrative Review of Industrial Belts and Components and Parts 
Thereof, Whether Cured of Uncured, From Italy, 57 FR 8295, 8296 (March 
9, 1992). Respondents note that in reaching its determination in the 
Yarn case, the Department clearly stated its practice ``not to include 
ESP sales that were not subject to the antidumping duty order in the 
calculation of U.S. price, regardless of when the sale occurred.'' The 
Department further stated that ``such ESP sales would be excluded from 
the administrative review if [respondent] could provide adequate 
documentation, on a sale-by-sale basis, proving that the individual 
entries of merchandise prior to the preliminary determination could be 
traced to individual sales during the POR.'' Respondents note that the 
Department precisely followed this practice in the preliminary results 
of this review.
    Respondents also not that petitioners' counsel has previously 
advised the Department that respondents can and should link entries of 
merchandise subject to an antidumping order to sales. Respondents claim 
that petitioners have not explained their change of position on this 
issue.
    Department's Position: We disagree with petitioners. Sales of 
merchandise that can be demonstrably linked with entries prior to the 
suspension of liquidation are not subject merchandise and therefore are 
not subject to review by the Department. Merchandise that entered the 
United States 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.
    As we stated in our preliminary results, under 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 (September 20, 1993) (the Department did not consider ESP (now 
CEP) merchandise entered during the POR but sold after the POR). The 
proposed regulation cited by petitioners (section 361.221) recognizes 
this practice.
    However, the Department has a well established exception to its 
practice of examining CEP 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 (June 
22, 1994). In that review, the Department determined that because 
merchandise was entered prior to the date of the preliminary 
determination, it was not covered by the antidumping order. Therefore, 
the Department excluded these sales from the review. In contrast, in 
Certain Corrosion-Resistant Carbon Steel Flat Products from Australia; 
Preliminary Results of Antidumping Duty Administrative Review, 60 FR 
42507 (August 16, 1995), the respondent was unable to link POR sales to 
specific pre-suspension entries and, therefore, the Department did not 
exclude those sales.
    In this review, respondents claimed that certain merchandise was 
not subject to review because it entered prior to the period of review 
for sale by Metalimphy Alloys Corporation (MAC), an affiliated U.S. 
company during the period of review. The Department verified that 
respondents were able to link specific sales during the period to 
entries of merchandise prior to the suspension of liquidation. In the 
preliminary results, we excluded those sales from our analysis because 
respondent had demonstrated that the

[[Page 47876]]

merchandise entered prior to the suspension of liquidation.
    Petitioners' cite of Ad Hoc Committee and NSK is not appropriate in 
this case. Ad Hoc Committee differed because, in that case, respondent 
argued the dumping margins and the assessment of duties on entries made 
during a review period should have been based on sales of merchandise 
entered after the review period. The approach advocated by respondent 
in that case raised the possibility of double counting or missing sales 
in future reviews, as noted by the Court. The Department's practice, as 
reflected in the present case, does not involve the danger of 
inconsistent future reporting. The NSK case did not involve a situation 
in which the respondent could link specific sales and entries. Further, 
in that case, the Department determined dumping margins based on 
sampling and not a review of all sales and entries.
    Comment 2: Petitioners also contend that respondents' ability to 
link CEP sales with entries does not permit the Department to examine 
all entries during the POR, leaving the Department with an incomplete 
review of sales. Petitioners note that in the preliminary results, the 
Department did not examine either all sales or all entries during the 
POR but some very limited hybrid of the two, leading to an incomplete 
examination of subject merchandise. Petitioners contend that because 
respondents enter CEP merchandise in one POR and sell it in another 
POR, the Department cannot examine those entries because the sale has 
not been made. Specifically, petitioners contend that certain scenarios 
exist where CEP sales take place during the review but are not reviewed 
by the Department.
    First, petitioners contend that CEP sales made during the POR but 
where the entry occurs after the POR are not being reviewed by the 
Department. Petitioners assert that these sales should be included in 
the Department's final results as the date of sale is in the POR.
    Likewise, petitioners contend that CEP sales entered during the POR 
but sold after the POR are not included in the Department's analysis in 
this review. Petitioners contend that respondents have not reported the 
sales linked to these entries at all in their U.S. sales databases. 
Petitioners note that respondents also have pressed the Department to 
exclude POR sales with pre-POR entry dates because respondents can link 
sales with entries. Petitioners assert that the logical consequence of 
this exclusion is that all entries within the current POR with 
subsequent (post-POR) dates of sales should be examined in this review 
by the Department. However, they assert that respondents have not 
reported CEP entries with post POR sale dates.
    Petitioners also noted that the Department included in its 
preliminary those CEP sales where the entry occurs during the POR but 
the sale pre-dates the POR. Petitioners contend that the Department has 
provided no explanation as to why it has included these sales in its 
analysis.
    Petitioners contend that the only practical way to ensure coverage 
of subject merchandise is by examining all CEP sales. Petitioners argue 
that the Department include in its final results all sales that fall 
within the POR.
    Respondents state that there is no merit to petitioners' suggestion 
that the Department's preliminary results lead to a non-comprehensive 
review of respondents' sales. They contend that petitioners' argument 
is irrelevant to the issue of whether sales of demonstrably non-subject 
merchandise are appropriately subject to review. Also, respondents 
assert that petitioners' position completely ignores the Department's 
instructions regarding what sales should be reported in an 
administrative review.
    Respondents note that they reported all CEP sales consistent with 
the instructions of the Department's questionnaire. Respondents assert 
that the Department's questionnaire instructions ensure that reviews 
are comprehensive and that no sales of subject merchandise go 
unreviewed.
    Further, respondents contend that petitioners' arguments regarding 
which sales are included and excluded from the Department's review is 
inaccurate. They state that in accordance with the Department's 
reporting instructions, all CEP sales of subject merchandise are 
included in the Department's initial review or in subsequent reviews.
    Respondents argue that petitioners' position on the reporting of 
CEP transactions includes types of sales that are not covered by the 
Department's questionnaire as they involve neither POR entries nor 
post-importation POR sales. Respondents state that the Department will 
review these sales in the period in which entered. They also argue that 
the Department's questionnaire instructions do not cover CEP entries 
made during the POR but with a date of sale after the POR. Respondents 
contend that these are precisely the type of transactions, as 
recognized in Gray Portland Cement, for which the data required to 
calculate CEP are not necessarily available at the time of responding 
to a questionnaire for the period in which the merchandise entered.
    Finally, respondents argue that petitioners have no basis for 
alleging that the sales will not be examined because the corresponding 
entries will have been liquidated at the time of the second 
administrative review. They argue under a master-list approach, the 
entries in the prior review period will not be liquidated until the 
sale occurs and, even if they are liquidated on a simplified assessment 
basis, the sale of subject merchandise could be pertinent to a 
subsequent review for purposes of determining a duty assessment rate 
and duty deposit rate.
    Department's Position: The Department disagrees with petitioners 
that the Department did not make a comprehensive examination of all 
relevant sales or entries in the preliminary results. The Department 
closely examined respondents' submission of sales/entries data in this 
review, including specifically addressing this issue in its December 1, 
1995 supplemental questionnaire and conducting verifications in both 
the home market and the United States. The Department verified that 
respondents correctly reported the quantity and value of subject 
merchandise pursuant to the Department's questionnaire instructions. 
The questionnaire instructed that respondents were to ``[r]eport each 
U.S. sale of merchandise entered for consumption during the POR except 
(1) for EP sales, if you do not know the entry dates, report each 
transaction involving merchandise shipped during the POR; and (2) for 
CEP sales made after importation, report each transaction that has a 
date of sale within the POR'' (emphasis in original). The Department 
found that respondents correctly reported the quantity and value of 
their home market and U.S. sales consistent with the questionnaire 
instructions.
    CEP sales made after importation will be examined by the Department 
in the POR in which they are sold consistent with the questionnaire 
instructions. As indicated in Gray Portland Cement and NSK, these are 
the type of CEP transactions for which the data required to calculate 
CEP may not be available at the time of responding to the Department's 
questionnaire because the sale occurs after the period of review. We 
also disagree with petitioner's claim that CEP sales made during the 
POR but entered after the POR (i.e., after sale) will not be examined. 
These sales are not covered by the Department's questionnaire 
instructions for this review, as they do not involve POR entries or 
post-importation POR sales. The Department will review these sales in 
the POR in which they are entered

[[Page 47877]]

into the United States, if a review is requested. While the Department 
has some latitude to examine POR sales in lieu of examining POR 
entries, it is not necessary to do so when the sale occurs prior to 
entry. For example, respondents reported, and the Department included 
in this review, CEP transactions in which the merchandise entered 
during the POR but was sold before the POR (i.e., prior to entry) 
pursuant to the Department's questionnaire instructions.
    Consequently, the Department disagrees with petitioners' view that 
there has been an incomplete examination of sales and entries during 
this review. Respondents accurately reported their U.S. sales during 
the POR pursuant to the questionnaire instructions issued by the 
Department and the information was fully verified. Petitioners' 
scenarios of CEP sales and entries not examined in this review were 
either non-subject merchandise under section 771(25) of the Act or are 
subject merchandise that will be examined by the Department in any 
future reviews.
    Comment 3: Petitoners argue that the Department's decision in the 
preliminary results to exclude sales during the POR where the entries 
preceded the POR would invite manipulation of the dumping laws. In 
addition, petitioners contend that if respondents can avoid a finding 
of dumping on sales following issuance of an antidumping order merely 
by linking those sales with entries made prior to the POR, linkage will 
become common as a way to avoid dumping duties. Consequently, 
petitioners argue that the linkage of values and entries would invite 
respondents to send in as much merchandise as possible before a 
preliminary determination and sell that merchandise during future years 
at dumped prices without recourse.
    Petitioners note that in their letter to the Department of February 
21, 1996, they indicated that there was price discrimination by 
respondents on CEP sales that entered the U.S. prior to suspension of 
liquidation when compared to POR sales. Petitioners assert that the 
Department's policy of linking sales with entries permits dumping 
practices that would cause a domestic manufacturer to lose business 
because of price discrimination during the POR. Consequently, 
petitioners contend that the purpose of the antidumping laws in 
remedying price discrimination taking place during the POR would be 
effectuated by the imposition of an antidumping margin that took 
account of the unfair pricing, even if the duties applied only to POR 
entries and were used to establish future cash deposit rates.
    Petitioners assert that the critical circumstances provision of the 
statute would not prohibit manipulation. They contend that by law, a 
finding of critical circumstances is predicated on a number of 
statutory factors, including not only massive imports of the 
merchandise, knowledge that dumping is occurring, and a finding by the 
International Trade Commission (ITC) that the imports are likely to 
undermine the antidumping order. Thus, petitioners contend that 
critical circumstances findings go not only to the question of import 
surges prior to a preliminary decision but to resultant serious 
injury--a finding that, petitioners assert, is rarely made by the ITC. 
Petitioners also contend that the critical circumstances provision does 
not have anything to do with dumping practices in sales that occur 
after the investigation. Accordingly, petitioners claim that the 
Department cannot rely on the critical circumstances provision as a 
means of addressing this price manipulation problem with its approach 
in the preliminary results.
    Petitioners contend that the Department should recognize that 
examination of CEP sales is critical not only to assessment of duties 
on past entries, but also to the establishment of a cash deposit rate. 
Petitioners argue that the cash deposit rate should reflect 
respondent's pricing practices during the POR. Petitioners state that 
failure to examine sales that relate to pre-POR entries will ignore 
potentially significant price discrimination during the POR merely 
because respondents beat the preliminary determination by their 
shipments.
    Respondents contend that there is no manipulation of the 
antidumping laws, as all subject merchandise is reviewed by the 
Department, in accordance with its reporting instructions.
    Respondents assert that the exclusion from review of sales of pre-
suspension entries requires a rigorous demonstration of verifiable 
linkage between the particular entries being excluded and their 
subsequent sale. Respondents believe that linkage will not become the 
rule because the majority of respondents do not and cannot maintain the 
necessary information and records to do so. Respondents claim that the 
Department has recognized this situation citing Proposed Regulations at 
7316.
    Respondents also point out that the critical circumstances 
provision of the statute is designed to prevent manipulation. 
Furthermore, respondents note that the Department did not find critical 
circumstances in the LTFV investigation (see Final Determination of 
Sales at Less than Fair Value: Certain Stainless Steel Wire Rods from 
France, 58 FR 68865, 68868 (December 29, 1993)).
    Respondents argue that petitioners' assertions that the 
Department's approach will invite price manipulation have nothing to 
with this case. Respondents claim that petitioners failed to establish 
any price discrimination between subject and non-subject merchandise 
(i.e. those sales that entered prior to suspension of liquidation) 
during this review. Respondents assert that the prices charged for all 
CEP sales examined by petitioners were virtually identical. 
Consequently, respondents contend that they did not engage any price 
discrimination.
    Respondents also urge the Department to reject petitioners' 
suggestion that dumping margins should be calculated on non-subject 
merchandise for purposes of establishing a cash deposit rate for future 
entries. Respondents assert that it is inappropriate to use sales of 
non-subject merchandise for deposit rate purposes, in that such sales 
do not represent a fair, reasonable or accurate basis to gauge 
estimated duties which is the very purpose of the cash deposit.
    Finally, respondents argue that the remedial purpose of the 
antidumping law in no way supports the examination of non-subject 
merchandise. Respondents contend that they changed their behavior as a 
consequence of the LTFV investigation. They argue that the law 
contemplates that the dumping margins (if any) calculated by the 
Department should accurately reflect respondent's behavior regarding 
subject merchandise, not the pricing practices during the POR that 
include non-subject merchandise.
    Department's Position: We disagree with petitioners that the 
Department's decision in the preliminary results would invite 
manipulation of the dumping law. We do not agree with petitioners' 
contention that linkage would encourage other respondents to flood the 
U.S. market with merchandise prior to a preliminary determination. As 
we stated in our preliminary results, the exclusion of sales of 
merchandise entered prior to suspension of liquidation requires that a 
respondent must demonstrate, to the satisfaction of the Department, the 
linkage between the entry and the sale. This stringent requirement, 
coupled with the provisions on critical circumstances, eliminates a 
significant risk of manipulation. See, e.g. Certain

[[Page 47878]]

Corrosion-Resistant Carbon Steel Flat Products from Australia; 
Preliminary Results of Antidumping Duty Administrative Review, 60 FR 
42507 (1995) (the Department did not exclude certain sales because the 
respondent was unable to link the sales to specific pre-suspension 
entries).
    We disagree with petitioners' contention that linkage would 
encourage dumping as most producers would not have the necessary 
linkage information that would meet the Department's requirement in a 
verification. In fact the necessary linkage has been demonstrated in 
only one case. (See High-Tenacity Rayon Filament Yarn, Preliminary 
Results of Antidumping Duty Administrative Review, 59 FR 32181, (June 
22, 1994)).
    We examined the issue of potential manipulation throughout the 
proceeding as well as at our sales verifications of respondents. We 
found no evidence of ``paired sales,'' where the price of that sale 
that entered prior to suspension of liquidation was priced lower than 
the simultaneous sales of the same merchandise to the same customer. We 
reviewed petitioners' February 21, 1996 submission to the Department 
concerning alleged price manipulation by respondents as well as 
respondents' rebuttal submission of February 22, 1996. After examining 
the issue, we found no evidence that respondents were engaged in price 
manipulation with sales of pre-POR entries (see Final Analysis 
Memorandum).
    We also disagree with petitioners' arguments concerning critical 
circumstances in this review. The requirements of the critical 
circumstances provision demonstrate that Congress only intended that 
entries made prior to the LTFV preliminary determination be covered 
under very specific circumstances. In the LTFV investigation, the 
Department found no critical circumstances warranting inclusion of such 
entries.
    We also disagree with petitioners' assertion that the Department's 
approach results in an inappropriate cash deposit rate. As discussed 
above, merchandise proven to have entered the United States prior to 
the suspension of liquidation (and in the absence of an affirmative 
critical circumstances finding) is not subject to merchandise within 
the meaning of section 771(25) of the Act. Sales of non-subject 
merchandise are not an appropriate basis for the Department to estimate 
the duties that will be due on future entries of subject merchandise.
    Comment 4: Petitioners contend that the Department should not 
segregate home market channels of distribution for purposes of product 
group averaging. Petitioners state that the statute and proposed 
regulations provide for the derivation of averaging groups only for 
U.S. sales in investigations. Petitioners note that Section 777A(d) of 
the statute was modified by the Uruguay Round Agreement Act (URAA) to 
require the averaging of U.S. prices of investigations (see, 19 U.S.C. 
1677A(d)(1)). Petitioners also state that under the Statement of 
Administrative Action (SAA), the averaging of U.S. price with respect 
to groups of comparable merchandise is limited only to the 
investigation phase of the proceeding (see, SAA at p. 843). In 
addition, petitioners state that the statutory section pertaining to 
averaging in reviews says nothing about the averaging of comparable 
merchandise in the home market based on factors relating to regions or 
customers.
    Petitioners argue that the Department has erroneously extended this 
concept to averaging of home market prices in administrative reviews. 
Petitioners state that neither the plain language of the statute nor 
the Statement of Administrative Action contemplates extension of the 
product averaging concept to reviews.
    Petitioners argue that the Department has already determined in 
this review that sales in the home market comprise a single level of 
trade based on common functions in both channels. Thus, petitioners 
contend that the Department cannot distinguish between its channels of 
distribution as different levels of trade for product group averaging. 
Petitioners also state that the channels of distribution are not 
distinct based on the class of customer, as all home market sales are 
to end users. Petitioners argue that the manner in which the sales are 
made--either from inventory or direct from factory--provide no basis to 
distinguish these alleged ``channels,'' as all sales are shipped direct 
from the factory. Consequently, petitioners allege that there is no 
basis to segregate home market sales in product group averaging based 
on these ``channels of distribution.''
    Petitioners also assert that the Department cannot rely on the 
``class of customer'' to distinguish averaging groups. They claim that 
all sales are to end users and do not involve different points in the 
claim of distribution of the product. Petitioners note that in past 
cases, the Department has differentiated between sales to distributors 
and end-users, recognizing that sales at different points in a chain of 
commerce may reflect different functions and/or different pricing 
practices. In support of their position, petitioners cite Final 
Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit 
from Thailand, 60 FR 29553 (June 5, 1995) and Final Determination of 
Sales at Less Than Fair Value: Certain Carbon and Alloy Steel Wire Rod 
from Canada, 59 FR 18791, 18794 (April 20, 1994).
    Petitioners argue that the ``channels'' of trade are not, in fact, 
different channels of distribution but merely reflect different sales 
entities that undertake the same role. In the past, petitioners contend 
that the Department has differentiated between different sales entities 
that undertake the same role (see, Final Determination of Sales at Less 
Than Fair Value: Stainless Steel Bar from Spain, 59 FR 66931, 66936 
(December 28, 1994)).
    Consequently, petitioners state that there is no legal or factual 
justification for segregating averaging groups based on whether the 
sale was made by Imphy/Ugine-Savoie or by an agent of the wholly-owned 
joint venture, Ugine-Service. Accordingly, petitioners argue that the 
Department should eliminate channels of distribution as a factor in its 
product averaging groups.
    Respondents agree that the Department inappropriately included a 
preference for matching U.S. sales to home market sales in the channel 
of distribution which the Department deemed ``most comparable to that 
in which the U.S. transaction was made.'' Respondents contend that 
having determined that all home market sales were at the same level of 
trade, the Department should not have truncated its analysis of sales 
of the foreign like product. Respondents assert that the Department 
should have conducted its matching exercise on the basis of 
contemporaneous sales within the level of trade, without excluding 
sales based upon distribution channel. Respondents contend that the 
Department's approach subordinated physical comparability to a 
criterion (distribution channel) which has no foundation in the statute 
and, hence, which should not have been employed. They state that the 
Department's elevation of distribution channel over physical 
characteristics is inappropriate under the antidumping law. Respondents 
assert that the courts have made clear that selecting proper product 
matches based on physical characteristics lies at the heart of a fair 
dumping comparison (see Timkpin Co. v. United States, 630 F. Supp. 
1327, 1336 (CIT 1986) and Hussey Copper, Ltd. v. United States, No. 95-
145 at 6 (CIT 1995)). Respondents argue that in making its comparison, 
the Department's matching of U.S. and home market sales must be based 
on the closest identity of physical

[[Page 47879]]

characteristics (see Hussey Copper, Ltd. v. United States, No. 95-145 
at 6 (CIT 1995)). Respondents state that any channel of distribution 
choice is irrelevant to the proper selection. Consequently, respondents 
contend that the Department's final results should be based on 
comparisons of contemporaneously sold, identical merchandise within the 
level of trade being compared and, if identical merchandise was not 
sold, the most similar merchandise contemporaneously sold within that 
level of trade should be utilized.
    However, if the Department should regard EP sales as more 
comparable to sales by Imphy/Ugine-Savoie.
    Department's Position: We agree with petitioners and respondents 
that the Department should not use home market channels of distribution 
for purposes of product group averaging in its calculation of normal 
value in this administrative review. The Department indicated in the 
SAA that in determining which sales to include with a particular 
average, ``Commerce will consider factors it deems appropriate, such as 
the physical characteristics of the merchandise, the region of the 
country in which the merchandise is sold, the time period, and class of 
customer involved.'' SAA at 842. See also, Proposed Regulations at 
7349. However, that section of the SAA is discussing the average-to-
average methodology in investigations. With the exception of the 
contemporaneity rule in section 777A(d)(2), neither the statute nor the 
SAA provides any guidance of what, if any, factors should be considered 
when averaging in reviews. The facts of this case do not warrant 
averaging by channel of distribution.
    Consequently, for the final results, we have not segregated home 
market channels of distribution for purposes of product group averaging 
of normal values to compare to U.S. prices. Instead, after correcting 
the model match program (see comment 6), we have taken the identical 
and similar merchandise matches generated by the model match program 
and attempted to match with contemporaneous sales within the same level 
of trade. If we found no contemporaneous identical merchandise within 
the same level of trade, we matched without regard to level of trade.
    Comment 5: Petitioners allege the Department's level of trade 
analysis and decision to grant a CEP offset is fundamentally flawed and 
not consistent with the law. They assert that the Department was 
incorrect in analyzing CEP sales for level of trade purposes with an 
adjusted price that deducts U.S. selling expenses. Petitioners contend 
that there is no legal justification for adjusting the CEP to deduct 
actual U.S. selling expenses incurred in selling the merchandise prior 
to determining at what level of trade the sale is made. They claim that 
the statute says nothing about an adjusted CEP for level of trade 
purposes, but that the statute merely sets forth the factors the agency 
must consider in determining whether an adjustment for differences in 
levels of trade is appropriate.
    Petitioners note that the Department, in its preamble to the 
Proposed Rules, stated that we will look at the CEP as adjusted but 
will look at the EP and normal value (NV) price as unadjusted for 
levels of trade. Petitioners assert that by making the U.S. CEP level 
of trade a ``constructed'' or ``adjusted'' level of trade but NV sales 
``unconstructed'' or unadjusted, the Department is beginning its 
analysis with an apples-and-oranges comparison that is inconsistent 
with law and longstanding agency practice to ``make a fair comparison 
of sales in the two markets by reconstructing prices at a specific 
common point in the chain of commerce, when the merchandise is leaving 
the factory gates.'' (See Porcelain-on-Steel Cooking Ware from Mexico, 
58 FR 43327, 43330 (August 16, 1993) and AOC International, Inc. v. 
United States, 713 F.2d 1568, 1572 (Fed. Cir. 1983), cert. denied, 465 
U.S. 1022 (1984)).
    Petitioners note that by law, the starting price for a CEP sales is 
the price offered to an unaffiliated purchaser in the United States and 
they contend that the Department cannot alter the statutory definition 
of CEP sales merely to ease its ability to make a level of trade 
adjustment.
    Petitioners also assert that if the Department does not use the 
unadjusted starting price for CEP sales just as it does for EP and 
normal value sales, the Department will establish a system whereby 
sales that are made in the same fashion in both the U.S. and home 
markets will not be regarded as the same level of trade. Petitioners 
contend this approach is unreasonable and illogical. They note that the 
Department used the same alleged incorrect CEP deduction methodology in 
Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide from the 
Netherlands; Preliminary Results of Antidumping Duty Administrative 
Review, 61 FR 15766, 15768 (April 9, 1996).
    Petitioners also contend that the Department should not rely solely 
on selling functions as the determinant of whether different levels of 
trade exist. Petitioners state that the statute sets forth two 
factors--selling functions and price distinctions--as the basis for 
determining whether an adjustment for differences in levels of trade 
should be granted (see 19 U.S.C. 1677b)(a)(7)). Petitioners argue that 
the statute does not, however, state that levels of trade themselves 
are based on selling functions. Petitioners continue that the term 
``level of trade'' is not new, but has been subject to much litigation 
and has consistently been defined as the point in the chain of commerce 
that a sale is made, such as the wholesale, retail or end-user level. 
In support of their position, petitioners cite NAR S.p.A. v. United 
States, 13 CIT 82, 707 F. Supp. 553, 556 (1989). Petitioners argue that 
based on this definition and the facts of record, the Department should 
treat all U.S. sales as a single level of trade.
    Petitioners argue that if the Department persists in its assumption 
that section 772(d) adjustments to CEP must be made to place CEP on an 
equal basis as EP, then the Department cannot conclude that having made 
these adjustments the CEP and EP sales reflect different levels of 
trade, as the entire purpose of the adjustment was to render the CEP 
and EP prices as comparable.
    Respondents contend that petitioners' challenges to the 
Department's methodology for analyzing level of trade and the decision 
to grant a CEP offset are without merit. Respondents assert that the 
methodology used by the Department for analyzing level of trade is 
consistent with, and required by, the law. They contend that the 
Department properly conducted its examination of the CEP level of trade 
based on the price after adjustments under section 772(d), i.e., 
looking at the selling functions performed by the foreign exporters in 
selling to MAC, an affiliated U.S. super-distributor, and to end-users 
in the home market. Respondents argue that the Department conducted a 
careful and thorough analysis of selling functions and properly 
determined that Imphy and Ugine-Savoie assumed significantly different 
and more selling functions for home market sales to end-users, which 
constitutes a more advanced level of trade than the CEP sales. 
Respondents state that pursuant to section 773(a)(7)(b), the Department 
appropriately granted a CEP offset.
    Department's Position: We agree with respondents. As described in 
our recent Preliminary Results of Antidumping Duty Administrative 
Reviews of Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, Germany, Italy, Japan, Romania, 
Singapore, Thailand and the United Kingdom, 61 FR 35713 (July 8, 1996), 
the Department's position

[[Page 47880]]

is that it will, to the extent practicable, calculate normal value (NV) 
based on sales at the same level of trade as the U.S. sales. When the 
Department is unable to find sales of the foreign like product in the 
comparison market at the same level of trade as the U.S. sale, the 
Department may compare the U.S. sale to sales at a different level of 
trade in the comparison market.
    In accordance with section 773(a)(7)(A) of the Act, if sales at 
allegedly different levels of trade are compared, the Department will 
adjust the NV to account for the difference in level of trade if two 
conditions are met. First there must be differences between the actual 
selling activities performed by the exporter at the level of trade of 
the U.S. sale and the level of trade of the comparison market sales 
used to determine NV. Second, the differences must affect price 
comparability as evidenced by a pattern of consistent price differences 
between sales at the difference levels of trade in which NV is 
determined.
    Section 773(a)(7)(B) of the Act establishes that a CEP ``offset'' 
may be made when two conditions exist: (1) NV is established at a level 
of trade which constitutes a more advanced stage of distribution than 
the level of trade of the CEP; and (2) the data available do not 
provide an appropriate basis for a level-of-trade adjustment.
    In implementing these principles in this review, we issued a 
supplemental questionnaire on December 13, 1995 concerning level of 
trade. We asked respondents to explicitly state what specific 
differences and similarities there were in selling functions and/or 
support services between all channels of distribution in the home 
market and the United States.
    In order to determine whether separate levels of trade actually 
existed within or between the U.S. and home markets, we reviewed the 
selling activities associated with each channel of distribution claimed 
by the respondents. However, the starting point for our analysis was 
the separate channels. Therefore, we did not rely solely on selling 
activities.
    Pursuant to section 773(a)(7)(B)(i) of the Act and the SAA at 827, 
in identifying levels of trade for EP and home market sales we 
considered the selling functions reflected in the starting price before 
any adjustments. For CEP sales, we considered only the selling 
activities reflected in the constructed price, i.e. after the expenses 
and profit were deducted under section 772(d) of the Act. Whenever 
sales were made by or through an affiliated company or agent, we 
considered all selling activities of both affiliated parties, except 
for those selling activities related to the expenses deducted under 
section 772(d) of the Act in CEP situations.
    In reviewing the selling functions reported by the respondents, we 
examined all types of selling functions and activities reported in 
respondents' January 18, 1996 supplemental response on level of trade. 
In analyzing whether separate levels of trade existing in this review, 
we found that no single selling function was sufficient to warrant a 
separate level of trade in the home market (see Proposed Regulations at 
7348).
    In determining whether separate levels of trade existed in or 
between the U.S. and home market, the Department considered the level-
of-trade claims of respondents. To test the claimed levels of trade, we 
analyzed the selling activities associated with the channels of 
distribution respondents reported. We determined that fewer and 
different selling functions were performed for CEP sales to MAC than 
for home market sales to end-users. In addition, we found that the home 
market sales involved a more advanced stage of distribution (to end-
users) as compared to respondents' CEP sales in the United States 
(distributor).
    In this review there were no sales of the foreign like product in 
the home market at the same level of trade as that of the CEP sales. 
Therefore, we examined whether a level-of-trade adjustment was 
appropriate.
    We disagree with petitioners that there is no evidence of any 
commercial differences or distinct selling functions between the 
claimed two levels of trade in the U.S. market. For the U.S. market, 
respondents reported two levels of trade: (1) sales to end users 
through MAC (EP sales); and (2) sales to distributors through MAC, 
Techalloy and US&A (CEP sales). The Department examined and verified 
the selling functions performed for both levels of trade. As we 
indicated in our preliminary results, we found that the selling 
functions were sufficiently different in customer sales contacts, 
technical services, inventory maintenance, computer systems and 
administrative functions to warrant two levels of trade in the United 
States.
    We disagree with petitioners' contention that the Department should 
base the level of trade on the starting price of CEP sales. As we 
discussed in the commentary of the Proposed Regulations at 7347, the 
Department believes that this position is not supported by the statute 
or the SAA, and that it is neither reasonable nor logical. First, the 
statue clearly defines CEP as a U.S. price ``as adjusted'' (Section 
772(b) of the Act). Moreover, if the starting price is used for all 
U.S. sales, the Department's ability to make meaningful comparisons at 
the same level of trade (or appropriate adjustments for differences in 
levels of trade) would be severely undermined in cases involving CEP 
sales. Using the starting price to determine the level of trade of both 
EP and CEP sales would result in a finding of different levels of trade 
for an EP an EPA and a CEP sale adjusted to a price that reflected the 
same selling functions. Accordingly, the Department will follow the 
commentary of the proposed regulations which specify that the level of 
trade analyzed for EP sales is that of the starting price, and for CEP 
sales it is the constructed level of trade of the price after the 
deduction of U.S. selling expenses and profit.
    Comment 6: Petitioners contend that the Department's product 
concordance computer program is flawed and does not compare U.S. sales 
to the most similar merchandise in accordance with the methodology that 
the Department intended to use. Petitioners note that they do not 
disagree with the proposed comparisons or the hierarchy and they agree 
that a focus on a hierarchy of grade, diameter and further processing 
is consistent with the approach adopted in the underlying 
investigation.
    However, petitioners allege that the program had the following 
errors: (1) The program failed to search for differences in further 
processing before searching for different grades; (2) the product match 
program failed to search for differences in diameters before searching 
for different grades; (3) the program ignored similar grade comparisons 
and substituted non-similar grade comparisons; (4) where similar grade 
comparisons were not possible, the program selected dissimilar 
merchandise rather than relying on constructed value; and (5) the 
program improperly rejected similar comparison sales because the 
Department compared home market variable manufacturing costs stated in 
cost per kilogram to U.S. variable manufacturing costs stated in cost 
per pound for purposes of the 20 percent difference-in-merchandise 
analysis.
    Respondents agree that the Department's model match computer 
program did not properly match U.S. sales to the identical or most 
similar merchandise sold in the home market. Respondents agree with 
petitioners that the Department should use the same model matching 
methodology that the Department used in the LTFV investigation. 
Respondents contend that

[[Page 47881]]

the Department should match identical U.S. and home market products by 
control number (CONNUM), before matching similar products. Respondent 
notes that to identify identical products, Imphy used its internal 
product code and Ugine-Savoie used its commercial grade and internal 
product code, in addition to the Department's specified characteristics 
(i.e., grade, diameter, and further processing). Therefore, respondents 
urge the Department to correct the ministerial error in the model match 
program and rely on CONNUMs to identify and match identical products.
    Department's Position: We agree with both petitioners and 
respondents, in part, that the Department's model computer program did 
not match products as we intended. We have corrected the errors for the 
final results. For the final results, we have used the model match 
methodology used by the Department in the LTFV investigation and are 
therefore using respondents' CONNUMs to match identical products. The 
Department confirmed the accuracy of respondents' reported home market 
and U.S. CONNUMs, product codes and physical characteristics of the 
products at verification.
    For those U.S. sales that do not have an identical match in the 
home market, the model match program identifies similar matches using 
the following three physical criteria: the grade of the wire rod, the 
diameter and whether the product was further processed or not. The 
Department's model match program matches similar products by grade 
using the identical or most similar grade as indicated in Appendix 3 of 
the January 11, 1996 supplemental response and the product matching 
hierarchy as described in Appendix 4 of the same January 11, 1996 
supplemental response.
    We disagree with petitioners that the Department's model match 
program failed to search for differences in further processing or 
diameters before searching for different grades. The program did search 
for differences in further processing or diameters; however, the error 
in the difference in merchandise portion of the program resulted in 
erroneous comparisons in the model match that made it appear that the 
program did not search for differences in further processing or 
diameters before searching for different grades. We have corrected this 
error for the final results.
    Comment 7: Petitioners contend that the Department should apply 
facts available to recalculate imputed credit for certain U.S. sales 
with unreported payment dates, by relying on the date of the final 
results of this review as the date of payment, as the Department did in 
the underlying investigation. Petitioners also assert that when date of 
payment is not reported because payment has not been made, the 
Department's long-standing practice has been to use the date of the 
final determination as the surrogate for the date of payment. In 
support of their position, petitioners cite Final Determination of 
Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat 
Products, Certain Cold-Rolled Carbon Steel Flat Products, and Certain 
Cut-to-Length Carbon Steel Plate from Belgium, 58 FR 37083 (July 9, 
1993) and Final Determination of Sales at Less Than Fair Value Certain 
Stainless Steel Wire Rod from France, 58 FR 68865, 68871 (December 29, 
1993).
    Department's Position: We agree with petitioners and we have used 
the date of the final results as date of payment for those U.S. sales 
when there is no reported date of payment, consistent with Department 
practice. (See Carbon Steel Flat Products from Belgium and Certain 
Stainless Steel Wire Rods from France).
    Comment 8: Petitioners allege that the Department erroneously 
treated marine insurance expenses as an indirect selling expense. 
Petitioners contend that these expenses should be treated as movement 
charges, as the Department did in the underlying investigation and 
consistent with the Department's normal practice.
    Department's Position: We agree with petitioners and have corrected 
the error for the final results.
    Comment 9: Petitioners allege that the Department made the 
following ministerial errors: (1) The Department failed to include cost 
of manufacture in calculating constructed value; (2) the Department 
failed to convert the CEP offset from French francs to U.S. dollars; 
(3) the Department failed to cap the CEP offset by the amount of 
indirect selling expenses incurred in the United States; (4) the 
Department failed to include inventory carrying expenses in its 
calculation of total U.S. indirect selling expenses; (5) the Department 
failed to subtract respondents' repacking expenses from U.S. price; (6) 
the Department failed to subtract movement expenses from net home 
market price for its sales below-cost analysis; and (7) the Department 
failed to subtract home market indirect selling expenses from home 
market prices in conducting its arm's length test.
    Department's Position: We agree with petitioners with the exception 
of point seven (subtraction of home market indirect selling expenses 
from home market prices for the arm's length test). In calculating the 
net home market price used for the arm's length test, the Department 
deducts direct selling expenses, discounts and rebates, movement 
expenses and packing from the home market gross unit price. There is no 
deduction for indirect selling expenses in the arm's-length test.
    Comment 10: Respondents allege that the Department incorrectly 
converted the quantity fields for U.S. sales by dividing the quantity 
when it should have multiplied the quantity field by the pounds to 
kilogram conversion factor.
    Department's Position: We agree and have corrected this error for 
the final results.
    Comment 11: Respondents allege that the Department should not have 
deducted indirect selling expenses incurred in France in its 
calculation of CEP. Respondents claim that Section 772(d)(1) of the 
antidumping law does not provide for the deduction of indirect selling 
expenses incurred in the home market as they do not represent expenses 
``associated with economic activities occurring in the United States.'' 
Respondents also note that the Department's proposed antidumping 
regulations confirm that indirect selling expenses incurred in the home 
market for sales to an affiliated importer are not expenses within the 
meaning of section 772(d)(1). Respondents claim the commentary makes a 
clear distinction between expenses associated with selling to the 
affiliated reseller in the United States and those expenses made to the 
affiliated reseller's unaffiliated customer.
    Petitioners disagree with respondents' comment that the Department 
incorrectly calculated CEP by deducting all selling expenses, 
regardless of where incurred. Petitioners argue that the plain language 
of section 772(d)(1) requires the Department to deduct all expenses 
that relate to U.S. sales. Petitioners contend that this provision has 
been interpreted by the courts to require the deduction of the types of 
indirect selling expenses incurred by the foreign producer outside of 
the United States. In support of their position, petitioners cite 
Silver Reed America, Inc. v. United States, 683 F. Supp. 1393, 1397 
(CIT 1988). Petitioners allege that the new statute did not change this 
fundamental requirement and, indeed, the legislative history and the 
SAA show clear legislative intent not to change the calculation of CEP 
from prior law (see, SAA at 823-4; S. Rep. No. 412, 103d Cong. 2d Sess. 
At 63 (1994). Petitioners argue that based on the plain language of the 
statute, the agency may not construe another, ambiguous sentence

[[Page 47882]]

in the SAA to limit CEP deduction to those incurred in the United 
States.
    Department's Position: We agree with respondents in part. The 
Department does not deduct indirect expenses incurred in selling to the 
affiliated U.S. importer under section 772(d) of the Act. See Notice of 
Final Determination of Sales at Less Than Fair Value: Certain Pasta 
from Italy, 61 FR 30326, 30352 (June 14, 1996). As stated clearly in 
the SAA, and as required by the WTO antidumping agreement, that 
provision only permits deduction of expenses associated with economic 
activities occurring in the United States. See SAA at 823: Antidumping 
Agreement, article 2.4. However, some of the respondents' indirect 
expenses incurred in the home market are actually associated with 
economic activities in the United States. Specifically, liability 
insurance purchased in France is associated with U.S. economic 
activities to the extent it covers subject merchandise while warehoused 
in the United States. On the other hand, some indirect expenses 
involved in this case relate solely to the sale to the affiliated 
importer. For example, inventory carrying costs incurred prior to 
exportation relate solely to the sale to the affiliated importer. 
Further, unlike the situation in Pasta from Italy, the inventory 
carrying costs in the present case were not verified to relate 
exclusively to the product sold to the unaffiliated purchaser in the 
United States. Finally, contrary to petitioners' contention, the URAA 
changed the deductions in CEP situations. SAA at 823. Therefore, cases 
addressing pre-URAA practice are not applicable.
    Comment 12: Respondents allege that the Department erroneously 
failed to take into consideration freight charges borne by customers in 
the U.S. market in the calculation of EP and CEP. Respondents claim 
that the Department should correct this apparent ministerial error by 
adding freight revenue to price.
    Department's Position: We agree with respondents and have corrected 
this error for the final results.
    Comment 13: Respondents claim that the Department overstated total 
profit by failing to take into account imputed expenses (credit 
expenses and inventory carrying costs) in total expenses used to 
calculate total actual profit. Respondents note that the Department 
took imputed expenses into account in its calculation of CEP and normal 
value. They argue that, to the extent that imputed expenses are 
considered expenses for that purpose, by definition, they are also 
expenses within total expenses pursuant to section 772(f)(2)(C). 
Consequently, respondents argue that the Department should correct this 
error in its final results of review and either include imputed 
expenses in the total expenses deducted from total revenue used in 
calculating total actual profit or eliminate their deduction in 
determining CEP and normal value.
    Petitioners argue that the Department correctly calculated excluded 
expenses from the expenses used to calculate total actual profit. 
Petitioners note that the Department based its profit calculations on 
the actual total revenues and the actual expenses reported by 
respondents for subject merchandise. Petitioners contend where the 
Department relies on actual expenses in its calculation, the use of 
imputed expenses is unnecessary and unwarranted. Also, petitioners 
argue that including the imputed credit and inventory carrying expenses 
as respondents requested, would double-count interest expenses.
    Department's Position: We agree with petitioners. It is the 
Department's policy to base the calculation of profit for CEP sales on 
actual revenues and expenses that are listed on the company's audited 
financial statements. Section 772(f)(1) and 772(f)(2)(D) state that the 
profit shall be an amount determined by multiplying the total actual 
profit by the applicable percentage and that the total actual profit 
means the total profit earned by the foreign producer, exporter, and 
affiliated parties. In calculating the per unit cost figures, the 
Department has included net interest expense. Therefore, the Department 
does not need to include imputed interest expenses in the profit 
calculation since we have already accounted for actual interest in 
computing ``actual profit'' under section 772(f)(1). When the 
Department allocates a portion of the actual profit to each U.S. CEP 
sale, we have included imputed credit and inventory carrying costs as 
part of the total U.S. expenses allocation factor. This methodology is 
consistent with Section 772(f)(1) of the statute which defines ``total 
United States Expenses'' as the total expenses described under section 
772(d) (1) and (2). Such expenses include both imputed credit and 
inventory carrying costs.
    Comment 14: Respondents contend that the Department should not have 
included indirect selling expenses incurred in France in the total 
United States expenses used to calculate CEP profit. Respondents state 
that indirect selling expenses incurred in the home market are not 
expenses encompassed within section 772(d)(1) of the antidumping law. 
Accordingly, respondents argue that for the same reasons that these 
expenses should also not be deducted from CEP (see Comment 11), they 
should also not be treated as U.S. expenses to which profit is to be 
allocated pursuant to section 772(d)(3).
    Petitioners argue that the relevant expenses under section 
772(d)(1) are all selling expenses related to U.S. sales, regardless of 
where incurred. Consequently, petitioners contend that the Department's 
decision in the preliminary results to account for all direct and 
indirect selling expenses in the CEP profit calculations is correct and 
should be maintained for the final result.
    Department's Position: We agree with respondents in part to the 
extent these expenses are not part of the 772(d)(1) adjustment (see 
comment 11), they should also not be included in U.S. expenses for 
purposes of calculating CEP profit.
    Comment 15: Respondents allege that the Department inadvertently 
overstated normal value by double-counting U.S. commissions in its 
circumstances of sale adjustment to normal value for EP sales. 
Respondents also contend that the Department double-counted selling and 
packing expenses and that the Department neglected to apply the CEP 
offset when basing NV on constructed value.
    Petitioners agree with respondents that the Department double-
counted commissions and should correct the ministerial error.
    Department's Position: We agree and have corrected these errors for 
the final results.
    Comment 16: Respondents contend that the Department's proposed duty 
assessment methodology is impractical and unnecessarily burdensome. 
Respondents claim in view of their verified linkage of entities to 
sales, the Department is in a position to issue assessment instructions 
on a master list approach in this review. Respondents note that the 
Department's commentary to the Proposed Regulations acknowledged that 
linking sales to entries results in the most precise determination/
assessment of antidumping duties.
    At the same time, respondents state that they recognize that the 
Department may prefer not to proceed with a master list approach, for 
its own convenience and that of the U.S. Customs Service. In that 
event, respondents state that they would not object to the ad valorem 
assessment rate approach set forth in the Department's proposed 
regulations provided that the rate is not constructed based on 
transactions involving entries of non-subject merchandise (i.e.,

[[Page 47883]]

merchandise outside the scope of the SSWR order because it entered 
prior to the suspension of liquidation). Respondents assert that 
encompassing sales of entities which are not subject to the antidumping 
duty order in this review in the calculation of the duty assessment 
rate would grossly distort the margin calculation and resultant duties.
    Respondents assert that the proposed methodology contemplates 
calculating an individual duty assessment amount for EP transactions 
and a duty assessment rate for CEP transactions. Respondents argue that 
the proposed duty assessment rate methodology for EP transactions is 
entirely unnecessary since MAC is the only importer. Therefore, 
respondents argue there is no need to distinguish between EP and CEP 
sales. They contend that the Department should either compute a uniform 
duty assessment amount or rate, based upon the sales quantity or the 
entered value of the sale reviewed, as applicable, if it opts for a 
simplified assessment approach.
    Petitioners state that the assessment instructions are consistent 
with the Department's past practice of assessing duties on entered 
values and also consistent with the proposed regulations. In support of 
their position, petitioners cite Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof from the Federal Republic of 
Germany, Final Results of Antidumping Duty Administrative Review, 56 FR 
31692, 31693-5, and 31698--701 (July 11, 1991); and Proposed 
Regulations at 7316 and 7364. Petitioners contend that the only 
justifiable reason to rely on entries rather than sales is if the 
Department can tie all entries with sales and assess sale-specific 
duties on POR entries. Petitioners claim that where respondents cannot 
derive dumping margins on all POR entries as is true in this review, 
the use of a uniform assessment rate in lieu of sales-specific rates is 
a reasonable alternative for the Department. However, petitioners state 
that given this approach, the most accurate manner of determining the 
magnitude of dumping during the POR is based on an examination of all 
CEP sales, not entries, which petitioners claim is consistent with the 
Department's normal practice and its proposed regulations.
    Department's Position: We agree with petitioners that our 
assessment instructions are consistent with those described in our 
Proposed Regulations at 7316. As the Department discusses in its 
commentary in the Proposed Regulations, section 351.212(b)(1) of the 
proposed regulations provides that the Department normally will 
calculate a duty assessment rate based on sales reviewed, and will 
apply those rates to entries made during the review period. This is 
consistent with past practice and has been upheld by the courts. See, 
Antifriction Bearings from France, et al., 60 FR 10900, 10902 (1995); 
Koyo Seiko v. United States, 796 F. Supp. 1526, 1529 (CIT 1992). In all 
cases, this will result in the assessment of duties on merchandise 
entered during the review period. To the extent possible, these 
assessments will be specific to each importer, because the amount of 
duties assessed should correspond to the degree of dumping reflected in 
the price paid by each importer. In this review, all subject 
merchandise was imported by MAC, an affiliated distributor of the 
respondents.
    We disagree with petitioners' contention that the only reason to 
rely on entries rather than sales is if the Department can tie all 
entries with sales. As we stated in our Proposed Rule, it is the 
Department's belief that, except in unusual situations, it should not 
abandon the objective of assessing duties on the basis of entries. In 
most antidumping proceedings, it is necessary to assess duties on the 
basis of entries in order to maintain continuity with periods of no 
review and to avoid the over- or under-collection of duties.

Final Results of Reviews

    As a result of our review, we have determined that the following 
margins exist:

----------------------------------------------------------------------------------------------------------------
                                                                                                        Margin  
             Manufacturer/exporter                                  Time period                       (percent) 
----------------------------------------------------------------------------------------------------------------
Imphy/Ugine-Savoie............................  8/5/93-12/31/94....................................        10.06
----------------------------------------------------------------------------------------------------------------

    The Department shall determine, and the Customs service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between United States price and foreign market value may 
vary from the percentages stated above. The Department will issue 
appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective, 
upon publication of this notice of final results of review for all 
shipments of certain stainless steel wire rods from France entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date, as provided for by section 751(a)(1) of the Act: (1) The cash 
deposit rates for the reviewed companies will be the rates for those 
firms as stated above (except that if the rate for a particular product 
is de minimis i.e., less than 0.5 percent, a cash deposit rate of zero 
will be required for that company); (2) for previously 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, or the original 
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) the cash deposit rate for all other 
manufacturers or exporters will continue to be 24.51 percent for 
stainless steel wire rods, the all others rate established in the LTFV 
investigations. See Amended Final Determination and Antidumping Duty 
Order: Certain Stainless Steel Wire Rods from France, (59 FR 4022, 
January 28, 1994).
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice 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 the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with section 353.34(d) of the Department's 
regulations. Timely notification of return/destruction of APO materials 
or conversion to judicial

[[Page 47884]]

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 Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: September 3, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-23234 Filed 9-10-96; 8:45 am]
BILLING CODE 3510-DS-M