[Federal Register Volume 62, Number 112 (Wednesday, June 11, 1997)]
[Notices]
[Pages 31972-31979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15294]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-849]


Preliminary Determination of Sales at Less Than Fair Value: 
Certain Cut-to-Length Carbon Steel Plate From The People's Republic of 
China

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

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

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EFFECTIVE DATE: June 11, 1997.

FOR FURTHER INFORMATION CONTACT: Elizabeth Patience, Stephen Jacques, 
or Jean Kemp, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
3793.

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, codified at 19 CFR part 353 (April 1, 1996).

Preliminary Determination

    We determine preliminarily that certain cut-to-length carbon steel 
plate from the People's Republic of China (``PRC'') is being, or is 
likely to be, sold in the United States at less than fair value 
(``LTFV''), as provided in section 733 of the Act. The estimated 
margins are shown in the ``Suspension of Liquidation'' section of this 
notice.

Case History

    Since the initiation of this investigation (61 FR 64051, December 
3, 1996), the following events have occurred:
    On November 27, 1997, we sent a survey to the Chinese Ministry of 
Foreign Trade and Economic Cooperation (``MOFTEC'') and the China 
Chamber of Commerce of Metals, Minerals & Chemicals Importers & 
Exporters (``CCCMC'') to determine the identity of producers and 
exporters of subject merchandise, but we received no response.
    On December 19, 1996, the United States International Trade 
Commission (``ITC'') issued an affirmative preliminary injury 
determination in this case (see ITC Investigations Nos. 731TA-753-756). 
The ITC found that there is a reasonable indication that an industry in 
the United States is threatened with material injury by reason of 
imports from the PRC of steel plate. We issued an antidumping 
questionnaire to the Chinese Ministry of Foreign Trade and Economic 
Cooperation (``MOFTEC'') with a list of 20 possible producers of 
subject merchandise and requested MOFTEC to forward it to all 
producers/exporters of subject merchandise on December 20, 1996. We 
also sent courtesy copies to the 20 producers on that date. These 
producers were identified in Iron and Steel Works of the World, 11th 
edition, 1994.
    The questionnaire is divided into four sections. Section A requests 
general information concerning a company's corporate structure and 
business practices, the merchandise under investigation that it sells, 
and the sales of the merchandise in all of its markets. Sections B and 
C request home market sales listings and U.S. sales listings, 
respectively. (Section B does not normally apply in antidumping 
proceedings involving the PRC). Section D requests information on the 
factors of production of the subject merchandise.
    On January 10, 1997, Geneva Steel Company and Gulf States Steel 
Company, (petitioners) amended their petition to allege that critical 
circumstances existed with respect to subject merchandise.
    On January 24, 1997 the following submitted their section A 
response: China Metallurgical Import & Export Liaoning Company 
(Liaoning), an exporter of subject merchandise; Wuyang Iron and Steel 
Company (Wuyang), which produced the merchandise sold by Liaoning; 
Anshan Iron and Steel Complex (AISCO), a producer of subject 
merchandise; Angang International Trade Corporation (Anshan 
International), a wholly-owned AISCO subsidiary in China with its own 
business license to import and export merchandise, and Sincerely Asia, 
Limited (SAL) a partially-owned Hong Kong affiliate of AISCO involved 
in sales of subject merchandise to the United States, (collectively, 
Anshan); Baoshan Iron & Steel Corporation (Bao), a producer of subject 
merchandise; Bao Steel International Trade Corporation (Bao Steel ITC), 
a wholly-owned subsidiary of Bao responsible for selling Bao material 
domestically and abroad; and Bao Steel Metals Trading Corporation (B. 
M. International), a partially-owned U.S. subsidiary involved in U.S. 
sales, (collectively

[[Page 31973]]

Baoshan); Wuhan Iron & Steel Company (Wuhan) a producer of subject 
merchandise; International Economic and Trading Corporation (IETC), a 
wholly-owned subsidiary responsible for exporting WISCO merchandise; 
Cheerwu Trader Ltd. (Cheerwu) a partially-owned Hong Kong affiliate of 
Wuhan involved in sales of subject merchandise to the United States 
(collectively, WISCO); Shanghai Pudong Iron and Steel Company (Shanghai 
Pudong) a producer and exporter of subject merchandise. See the 
Collapsing section of this memorandum, below. We consider Anshan, 
Baoshan, Liaoning, WISCO and Shanghai Pudong to be sellers of the 
subject merchandise during the POI.
    In a letter entering notice of its appearance, Liaoning stated that 
it purchased and sold subject merchandise from an unaffiliated 
producer, Wuyang Iron and Steel Company (``Wuyang''). We therefore 
requested that Wuyang also respond to the Department's questionnaires. 
Wuyang complied with the Department's request.
    On February 12 and February 14, 1997, the five exporters submitted 
their section C responses. On February 19 and February 20, 1997, 
Anshan, Baoshan, Wuyang, Shanghai Pudong, and WISCO producer/supplier 
factories submitted section D questionnaire responses.
    On March 11, 1997, we issued a supplemental questionnaire to 
Liaoning and Wuyang. On March 12, 1997 we issued supplemental 
questionnaires to Anshan, Shanghai Pudong, and WISCO. On March 13, 
1997, we issued a supplemental questionnaire to Baoshan.
    We received a supplemental questionnaire response from Liaoning and 
Wuyang on April 9, 1997. We received supplemental questionnaire 
responses from Anshan, Baoshan , Shanghai Pudong and WISCO on April 14, 
1997. Anshan provided corrections to minor errors in its responses on 
April 21, 1997, Baoshan submitted corrections on April 24, 1997 and 
Shanghai Pudong submitted corrections in their April 29, 1997 
submission.
    On May 2, 1997, we issued supplemental questionnaires requesting 
additional information regarding each respondent's labor consumption 
factors. Additionally, we requested information about Shanghai Pudong's 
affiliation with Shanghai No. 1 a non-exporting producer of subject 
merchandise which Shanghai Pudong had earlier indicated shared a common 
trustee, Shanghai Metallurgical Holding (Group) Co. (``Shanghai 
Metallurgical''). Wuyang submitted its response on May 9, 1997. The 
other respondents submitted their labor information on May 16, 1997. At 
their request, we granted Shanghai Pudong an extension, until May 23, 
1997, to submit affiliation information.
    On January 30, 1997, we requested publicly-available information 
for valuing the factors of production and for surrogate country 
selection. Petitioners had already provided comments on surrogate 
values to be used in this investigation in their petition of November 
5, 1996. Respondents provided their comments on this matter on March 4, 
1997. Petitioners provided further surrogate values and rebuttal to 
respondent's comments on April 10, 1997. On April 11, 1997, respondents 
objected this filing. Respondent stated that petitioners sought to 
insert new information on the record in an untimely fashion. We granted 
respondents an opportunity to submit comments on petitioners' April 10, 
1997 filing. We received no response.
    On March 28, 1997, we postponed the preliminary determination until 
not later than May 14, 1997 (62 FR 14887), because we determined this 
investigation to be extraordinarily complicated within the meaning of 
section 733(c)(1)(B)(i) of the Act.
    On April 15, 1997, petitioners submitted a request that the scope 
of their petitions be amended to include three items--plate in coil; 
plate made to carbon plate specifications regardless of alloy content; 
and plate sold to nominal plate thicknesses whose actual thickness is 
slightly less than the thickness of plate but within specified 
thickness tolerances. With respect to plate in coil, petitioners 
maintain that this product has essentially the same physical 
characteristics and end uses as cut-to-length plate. Petitioners 
further claim that a post-initiation shift has occurred in the pattern 
of trade from cut-to-length plate to plate in coil form, and that such 
a development indicates that any eventual order on cut-to-length plate 
will be susceptible to circumvention. Petitioners submitted additional 
information on May 9, 1997. Respondents submitted extensive rebuttal 
comments on April 25, 1997, and May 30, 1997.
    Because of the very recent submission of arguments on these complex 
and technical subjects, we were unable to fully analyze all of the 
relevant information on the record prior to this preliminary 
determination. In order to fully examine petitioners' claims, we intend 
to carefully examine all evidence and argument on the record regarding 
this matter and issue a decision as soon as possible.
    On April 30, 1997 (62 FR 23433) we further postponed the 
preliminary determination until not later than June 3, 1997.

Scope of the Investigation

    The products covered by this investigation are hot-rolled iron and 
non-alloy steel universal mill plates (i.e., flat-rolled products 
rolled on four faces or in a closed box pass, of a width exceeding 150 
mm but not exceeding 1250 mm and of a thickness of not less than 4 mm, 
not in coils and without patterns in relief), of rectangular shape, 
neither clad, plated nor coated with metal, whether or not painted, 
varnished, or coated with plastics or other nonmetallic substances; and 
certain iron and non-alloy steel flat-rolled products not in coils, of 
rectangular shape, hot-rolled, neither clad, plated, nor coated with 
metal, whether or not painted, varnished, or coated with plastics or 
other nonmetallic substances, 4.75 mm or more in thickness and of a 
width which exceeds 150 mm and measures at least twice the thickness. 
Included as subject merchandise in this petition are flat-rolled 
products of nonrectangular cross-section where such cross-section is 
achieved subsequent to the rolling process (i.e., products which have 
been ``worked after rolling'')--for example, products which have been 
bevelled or rounded at the edges. This merchandise is currently 
classified in the Harmonized Tariff Schedule of the United States (HTS) 
under item numbers 7208.40.3030, 7208.40.3060, 7208.51.0030, 
7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000, 
7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 
7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000. Although the 
HTS subheadings are provided for convenience and customs purposes, our 
written description of the scope of this investigation is dispositive.

Period of Investigation

    The period of investigation (POI) is April 1, 1996, through 
September 30, 1996.

Non-Market-Economy Country Status

    The Department has treated the PRC as a nonmarket-economy country 
(NME) in all past antidumping investigations and administrative 
reviews. See, e.g., Final Determination of Sales at Less Than Fair 
Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 
(May 2, 1994) (Silicon Carbide); and Final Determination of Sales at 
Less Than Fair Value: Furfuryl Alcohol from the People's Republic of 
China, 60 FR

[[Page 31974]]

22545 (May 8, 1995) (Furfuryl Alcohol). Neither respondents nor 
petitioners have challenged such treatment. Therefore, in accordance 
with section 771(18)(C) of the Act, we will continue to treat the PRC 
as an NME in this investigation.

Surrogate Country

    When investigating imports from an NME, section 773(c)(1) of the 
Act directs the Department in most circumstances to base normal value 
(NV) on the NME producers' factors of production, valued in a surrogate 
market-economy country or countries considered to be appropriate by the 
Department. In accordance with section 773(c)(4), the Department, in 
valuing the factors of production, shall utilize, to the extent 
possible, the prices or costs of factors of production in one or more 
market-economy countries that are comparable in terms of economic 
development to the NME country and are significant producers of 
comparable merchandise. The sources of the surrogate factor values are 
discussed under the NV section below.
    The Department has determined that India, Pakistan, Sri Lanka, 
Egypt and Indonesia are countries comparable to the PRC in terms of 
economic development. See Memorandum from David Mueller to Edward Yang, 
dated January 29, 1997.
    Customarily, we select an appropriate surrogate based on the 
availability and reliability of data from these countries. For PRC 
cases, the primary surrogate has usually been India if it is a 
significant producer of comparable merchandise. However, the Department 
has determined that Indonesia also is a significant producer of 
comparable merchandise.
    We used India as the primary surrogate country and accordingly, we 
have calculated NV using Indian prices to value the PRC producers' 
factors of production, when available and appropriate. We have obtained 
and relied upon publicly-available information wherever possible. Where 
Indian surrogate values were not available or where we considered these 
values to be aberrational, we have used Indonesian import prices as 
surrogate values. For one factor, slag, we were unable to locate an 
appropriate surrogate value from any of the comparable countries 
identified above. Therefore, we selected a U.S. slag value as the most 
appropriate surrogate. See Concurrence Memoranda.

Non-Responsive Exporters

    Consistent with Department practice, we presumed that those 
respondents who failed to respond constitute a single enterprise, and 
are under common control by the PRC government. See Final Determination 
of Sales at Less Than Fair Value: Bicycles from the People's Republic 
of China, 61 FR 19026 (April 30, 1996) (Bicycles). We applied a single 
antidumping deposit rate--the China-wide rate--to these exporters and 
all other exporters in the PRC who did not respond to our 
questionnaire.

Separate Rates

    All of the respondents have requested separate, company-specific 
rates. In their questionnaire responses, respondents state that they 
are independent legal entities. Of the five respondents, Anshan, 
Baoshan, Liaoning and WISCO have reported that they are collectively-
owned enterprises, registered as being ``owned by all the people'', 
Shanghai Pudong and Shanghai No. 1 are owned by Shanghai Metallurgical. 
Shanghai Metallurgical is also owned by ``all the people.'' Shanghai 
Pudong stated that it does not have any corporate relationship with any 
level of the PRC Government. As stated Silicon Carbide and Furfuryl 
Alcohol, ownership of a company by all the people does not require the 
application of a single rate. Accordingly, each of these respondents is 
eligible for consideration for a separate rate.
    To establish whether a firm is sufficiently independent to be 
entitled to a separate rate, the Department analyzes each exporting 
entity under the test established in the Final Determination of Sales 
at Less Than Fair Value: Sparklers from the People's Republic of China, 
56 FR 20588 (May 6, 1991) (Sparklers) and amplified in Silicon Carbide. 
Under this test, the Department assigns separate rates in nonmarket-
economy cases only if an exporter can affirmatively demonstrate the 
absence of both (1) de jure and (2) de facto governmental control over 
export activities. See Silicon Carbide and Furfuryl Alcohol.
1. De Jure Control
    The respondents have placed on the administrative record a number 
of documents to demonstrate absence of de jure control. Respondents 
submitted the ``Law of the PRC on Industrial Enterprises Owned By the 
Whole People,'' adopted on April 13, 1988 (the Industrial Enterprises 
Law). The Department has previously determined that the Civil Law does 
not confer de jure independence on the branches of government-owned and 
controlled enterprises. See Sigma Corp v. United States, 890 F. Supp. 
1077, 1080 (CIT 1995). However, the Industrial Enterprises Law has been 
analyzed by the Department in past cases and has been found to 
sufficiently establish an absence of de jure control of companies 
``owned by the whole people,'' such as those participating in this 
case. (See Notice of Preliminary Determination of Sales at Less Than 
Fair Value and Postponement of Final Determination: Certain Partial-
Extension Steel Drawer Slides with Rollers from the People's Republic 
of China, 60 FR 14725, 14727 (June 5, 1995); Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Honey from the People's 
Republic of China, 60 FR 14725, 14727 (March 20, 1995); and Furfuryl 
Alcohol. The Industrial Enterprises Law provides that enterprises owned 
by ``the whole people'' shall make their own management decisions, be 
responsible for their own profits and losses, choose their own 
suppliers, and purchase their own goods and materials. The Regulations 
of the People's Republic of China for Controlling the Registration of 
Enterprises as Legal Persons (Legal Persons Regulations), issued on 
July 13, 1988 by the State Administration for Industry and Commerce of 
the PRC, provide that, to qualify as legal persons, companies must have 
the ``ability to bear civil liability independently'' and the right to 
control and manage their business. These regulations also state that, 
as an independent legal entity, a company is responsible for its own 
profits and losses. See Notice of Final Determination of Sales at Less 
Than Fair Value: Manganese Metal from the People's Republic of China, 
60 FR 56046 (November 6, 1995).
    In sum, in prior cases, the Department has analyzed the Chinese 
laws and regulations on the record in this case, and found that they 
establish an absence of de jure control. We have no new information in 
these proceedings which would cause us to reconsider this 
determination.
2. De Facto Control
    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by or are 
subject to the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of

[[Page 31975]]

losses. See, e.g., Silicon Carbide and Furfuryl Alcohol.
    Respondents have asserted the following: (1) They establish their 
own export prices independently of the government and without the 
approval of a government authority; (2) they negotiate contracts, 
without guidance from any governmental entities or organizations; (3) 
they make their own personnel decisions including the selection of 
management; and (4) they retain the proceeds of their export sales, use 
profits according to their business needs, and have the authority to 
obtain loans. In addition, respondents' questionnaire responses 
indicate that company-specific pricing during the POI does not suggest 
coordination among exporters. The subject merchandise appears on the 
``List of Products Subject to Export Permit Administration at Different 
Levels'' issued by the Ministry of Foreign Trade and Economic 
Cooperation (``MOFTEC'') on November 9, 1995. Respondents stated that, 
to the best of their knowledge, steel plate is included on the list 
because it is considered an important raw material for the economic 
development of China (e.g., for the use in the construction of basic 
infrastructure), and the Chinese government wishes to have a mechanism 
in place to ensure adequate domestic supply in the event of a shortage. 
Despite inclusion of the subject merchandise on this list, we have 
found no indication from the respondents' business licences that the 
issuing authority imposes any type of restriction on respondents' 
business (for a more complete explanation of this issue, see the 
Concurrence Memorandum).
    Consequently, we preliminarily determine that the five responding 
exporters have met the criteria for the application of separate rates. 
We will examine this matter further at verification.
    For non-responsive exporters, we preliminarily determine, as facts 
available, that they have not met the criteria for application of 
separate rates.

Facts Available: China-Wide Rate

    The petition filed on November 5, 1996 identified 28 steel 
producers with the capacity to produce cut-to-length carbon steel plate 
during the POI. We received adequate responses from the five 
respondents identified above. We received certification of non-shipment 
by seven companies from the China Chamber of Commerce for Metals and 
Chemicals (CCCMC). Additionally, we received a letter from one 
respondent factory indicating shipments through parties who have not 
responded to the questionnaire. See Non-Responsive Exporters section 
above. All other companies did not respond to our questionnaire. 
Further, U.S. import statistics indicate that the total quantity and 
value of U.S. imports of cut-to-length carbon steel plate from the PRC 
is greater that the total quantity and value of plate reported by all 
PRC companies that submitted questionnaire responses. Given these 
discrepancies, we conclude that not all exporters of PRC plate 
responded to our questionnaire. Accordingly, we are applying a single 
antidumping deposit rate--the China-wide rate--to all exporters in the 
PRC (other than those receiving an individual rate), based on our 
presumption that those respondents who failed to respond constitute a 
single enterprise, and are under common control by the PRC government. 
See, e.g., Final Determination of Sales at Less Than Fair Value: 
Bicycles From the People's Republic of China, 61 FR 19026 (April 30, 
1996) (Bicycles).
    This China-wide antidumping rate is based on facts available. 
Section 776(a)(2) of the Act provides that ``if an interested party or 
any other person--(A) withholds information that has been requested by 
the administering authority; (B) fails to provide such information by 
the deadlines for the submission of the information or in the form and 
manner requested, subject to subsections (c)(1) and (e) of section 782; 
(C) significantly impedes a proceeding under this title; or (D) 
provides such information but the information cannot be verified as 
provided in section 782(i), the administering authority * * * shall, 
subject to section 782(d), use the facts otherwise available in 
reaching the applicable determination under this title.''
    In addition, section 776(b) of the Act provides that, if the 
Department finds that an interested party ``has failed to cooperate by 
not acting to the best of its ability to comply with a request for 
information,'' the Department may use information that is adverse to 
the interests of that party as the facts otherwise available. The 
statute also provides that such an adverse inference may be based on 
secondary information, including information drawn from the petition.
    As discussed above, all PRC exporters that do not qualify for a 
separate rate are treated as a single enterprise. Because some 
exporters of the single enterprise failed to respond to the 
Department's requests for information, that single enterprise is 
considered to be uncooperative. Accordingly, consistent with section 
776(b)(1) of the Act, we have applied, as total adverse facts 
available, the highest margin calculated for a respondent in this 
proceeding. Based on our comparison of the calculated margins for the 
other respondents in this proceeding to the average margin in the 
petition, we have concluded that the highest calculated margin is the 
most appropriate record information on which to form the basis for 
dumping calculations in this investigation. Accordingly, the Department 
has based the China-wide rate on information from respondents. In this 
case, the highest calculated margin is 172.20 percent.
    Section 776(c) of the Act provides that where the Department relies 
on ``secondary information,'' the Department shall, to the extent 
practicable, corroborate that information from independent sources 
reasonably at the Department's disposal. The Statement of 
Administrative Action (SAA), accompanying the URAA clarifies that the 
petition is ``secondary information.'' See SAA at 870. The SAA also 
clarifies that ``corroborate'' means to determine that the information 
used has probative value. Id. However, where corroboration is not 
practicable, the Department may use uncorroborated information.
    The information contained in the petition shows that petitioners 
calculated export price based on two methods: (1) The import values 
declared to the U.S. Customs Service; and (2) an average Chinese export 
price derived from actual U.S. selling prices of Chinese exporters, 
known to petitioners. Petitioners stated that in order to ensure a fair 
value comparison, import and export values from the same HTS categories 
as subject merchandise were used to calculate the export price and the 
factor consumption rates were used as a basis for normal value. In 
addition, petitioners only used those HTS categories for subject 
products which included only subject merchandise. Petitioners made 
adjustments for foreign inland freight to FAS values to derive ex 
factory prices. They also submitted supporting documentation including 
an affidavit referring to sources and how petitioners obtained 
information concerning adjustments and that these adjustments 
represented current actual charges or expenses associated with the 
importation and sale of cut-to-length carbon steel plate into the U.S. 
market.
    The information in the petition with respect to the normal value 
(NV) is based on factors of production used by the petitioners in the 
production of steel plate. Petitioners submitted usage amounts for 
materials, labor and energy, adjusted for known differences in

[[Page 31976]]

production efficiencies. Petitioners submitted three cost models in the 
petition: (1) Basic Oxygen Furnace (BOF) Cost Model; (2) Open-Hearth 
Furnace Cost Model; and (3) Weighted-Average Normal Value of the BOF 
and Open-Hearth methods to account for differences between the 
production processes of petitioners and potential respondents. We 
determine that this information has probative value and that we have 
corroborated, to the extent practicable, the data contained in the 
petition. See Corroboration Memorandum.

Fair Value Comparisons

    To determine whether sales of certain cut-to-length carbon steel 
plate from the PRC to the United States were made at less than fair 
value, we compared the United States price (USP) to the foreign market 
value (FMV), as specified in the ``United States Price'' and ``Normal 
Value'' sections of this notice.

Export Price

    We based USP on export price (EP) in accordance with section 772(a) 
of the Act, because the subject merchandise was sold to unrelated 
purchasers in the United States prior to importation and because 
constructed export price methodology was not otherwise indicated. In 
accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI-
wide weighted-average export prices (EPs) to the factors of production. 
See Company specific Calculation Memoranda, June 3,1997.
    For those exporters that responded to the Department's 
questionnaire, we calculated EP based on prices to unaffiliated 
purchasers in the United States. We made deductions, where appropriate, 
for foreign inland freight, ocean freight, marine insurance, and 
foreign brokerage. See ``Factor Valuations'' section of this notice.

Normal Value

    In accordance with section 773(c) of the Act, we calculated NV 
based on the value of the factors of production reported by the 
factories in the PRC which produced subject merchandise for the five 
exporters. Where an input was sourced from a market economy and paid 
for in market economy currency, we have used the actual price paid for 
the input to calculate the factors-based NV in accordance with our 
practice. See Lasko Metal Products v. United States (Lasko), 437 F. 3d 
1442 (Fed. Cir. 1994). Otherwise, we used publicly available 
information from India where possible. Where appropriate Indian values 
were not available, we used publicly available information from 
Indonesia.
    Certain respondents purchase certain raw materials through 
affiliated parties in Hong Kong. The Hong Kong parties also receive 
payment, and transfer the funds to the PRC respondents, from U.S. 
customers for the respondents' sales of plate. The amount of funds 
transferred to the PRC respondents is reduced by the cost of any inputs 
purchased on behalf of the PRC respondents. The Hong Kong affiliates 
also reduce the payment by administrative costs it charges the PRC 
respondents. In their responses, respondents provided sample contracts 
for market economy purchases. They included contracts between the Hong 
Kong affiliates and the original raw material suppliers as well as 
contracts between the material suppliers and the PRC respondents. They 
did not provide documentation of the transactions occurring between the 
PRC respondents and the Hong Kong affiliates. We valued the relevant 
inputs at the contract, market-economy, prices provided in the 
responses for the preliminary determination. We will seek additional 
clarification of these contracts and administrative costs at 
verification.
    Shanghai Pudong's questionnaire response indicates that, within the 
meaning of section 771(33) of the Act, it may be affiliated with 
Shanghai No. 1 based on the fact that Shanghai Metallurgical serves as 
``trustee'' for both companies and thus may exercise control over the 
two producers. Further, because both Shanghai Pudong and Shanghai No. 1 
produce subject merchandise, the Department will consider whether these 
two firms should be treated as a single entity (i.e., ``collapsed''). 
In order for the Department to treat two or more producers as a single 
entity, the Department relies on a test set forth in Nihon Cement v. 
United States, 17 CIT 400, 425 (1993). Pursuant to that test, the 
Department will only collapse the producers if each of these criteria 
are met: (1) The producers must be affiliated, (2) the producers must 
have production facilities for similar or identical products that would 
not require substantial retooling in order to restructure manufacturing 
priorities, and (3) there must be a significant potential for the 
manipulation of price or production. Because we lacked sufficient 
information to make the affiliation and collapsing decisions, we 
requested additional information from Shanghai Pudong regarding both 
its relationship with Shanghai No. 1 and Shanghai's No. 1's factors of 
production. At Shanghai Pudong's request, we granted an extension on 
the reporting of this information. Shanghai Pudong responded on May 23 
advising that it does not control Shanghai No.1 and therefore could not 
obtain its factors of production. Based on the data received prior to 
the preliminary determination, including portions of the response 
regarding Shanghai No. 1, we have determined that it is not clear from 
the current record whether Shanghai Metallurgical controls Shanghai 
Pudong and Shanghai No. 1. Therefore, we will not collapse Shanghai 
Pudong and Shanghai No. 1 for the purposes of the preliminary 
determination. We will continue to examine this issue and we will 
verify the reported information of both Shanghai Pudong and Shanghai 
No. 1, and consider the information with respect to both producers for 
our final determination.
    Four respondents identified a significant number of raw material 
inputs. Certain of these inputs appeared to be variations or subsets of 
larger inputs. We were unable to locate publicly available surrogate 
values for these inputs for this preliminary determination. See each 
responding firm's Calculation Memorandum. Based on the steel production 
process, we combined the inputs into the larger subcategories for which 
we have located a surrogate value in our preliminary determination. We 
will continue to try to locate a surrogate value for these inputs for 
our final determination.
    Four respondents have identified a number of gases either produced 
and reused in the production process or purchased from outside sources 
for use in the production of subject merchandise. These respondents 
have argued that all of these gases should be treated as overhead 
items. Petitioners argue that these gases are direct inputs in the 
steelmaking process and should not be considered as overhead items. In 
previous cases in which the Department has used the same surrogate 
value, power and fuel are specifically removed from the overhead 
calculation so as to be treated as direct inputs. See Final Results of 
Antidumping Duty Administrative Review: Sebacic Acid from the PRC, 62 
FR 10530, March 7, 1997. We treated these gases as direct inputs as 
they, in general, serve as power and fuel to the production process. We 
offset the cost of production by the amount of any by-product 
generated. This offset is based on our assumption that the by-products 
either are re-used as an input to the production processes or has a 
market for its uses. See Calculation Memoranda.

[[Page 31977]]

Factor Valuations

    The selection of the surrogate values was based on the quality and 
contemporaneity of the data. Where possible, we attempted to value 
material inputs on the basis of tax-exclusive domestic prices. Where we 
were not able to rely on domestic prices, we used import prices to 
value factors. We removed from the import data import prices from 
countries which the Department has previously determined to be NMEs. As 
appropriate, we adjusted input prices to make them delivered prices. 
For those values not contemporaneous with the POI, we adjusted for 
inflation using wholesale price indices (WPI), or, in the case of labor 
rates, consumer price indices (CPI), published in the International 
Monetary Fund's International Financial Statistics. For a complete 
analysis of surrogate values, see each company's Factors Valuation 
Memorandum, dated June 3, 1997.
    For certain raw material surrogate values, we used values as 
reported in the Monthly Statistics of Foreign Trade of India, Vol. II--
Imports, Directorate General of Commercial Intelligence & Statistics, 
Ministry of Commerce, Government of India, Calcutta. The price 
information from Monthly Statistics of Foreign Trade of India 
represents cumulative values for the period of April 1995 through 
January 1996. For each input value obtained from the above publication, 
we used the average value per one kilogram for that input from market 
economies. Import statistics from non-market economies were excluded in 
the calculation of the average value. Since the data from this 
publication is not contemporaneous with the POI, we adjusted material 
values for inflation by using WPI rate for India. We then converted 
each of the raw material inputs to U.S. dollars using an exchange rate 
conversion factor.
    For certain material inputs, we were unable to obtain specific 
price information from India. Therefore, for these inputs, we resorted 
to public information from Indonesia. The values for these inputs were 
obtained from the publication Foreign Trade Statistics Bulletin 
Imports, March 1996. The price information represents cumulative values 
from January to March 1996. These inputs were adjusted for inflation.
    Certain respondents reported the amount of slag, a by-product of 
the plate production process, produced in the production of subject 
merchandise and sold in China by some respondents. Normally, the 
Department offsets the calculated cost of manufacturing by the value of 
any by-products. The only surrogate value for slag from India or 
Indonesia was aberrationally high when compared to an available U.S. 
rate. Based on our knowledge of the steelmaking process, we know that 
slag is a by-product with a relatively low value (compared to the price 
of steel plate). We were able to locate an appropriate value for slag 
from the U.S. Geological Survey, Mineral Commodities Summaries from 
February 1997. We used the U.S. slag value for the preliminary 
determination. We will continue to try to locate an appropriate 
surrogate value from India, Indonesia, or another country at a 
comparable level of development for our final determination.
    We were unable to locate specific surrogate values for each of the 
reported gases. Specifically, we were unable to locate surrogate values 
for the gases generated in the production facilities (e.g., furnace 
gas). We will continue to search for surrogate values for each of the 
gases for the final determination. For our preliminary determination, 
we applied surrogate gas values for gases for which we could find a 
surrogate value and applied a natural gas surrogate value to the other 
gases for which we could not locate a value.
    For certain factors for which we could not locate import values, we 
used values provided by petitioners which represent market values 
reported in the 1995-96 Annual Report for Steel Authority of India 
Limited (``SAIL''), a producer in India of cut-to-length carbon steel 
plate. We adjusted these values for inflation.
    For materials purchased from market economy country suppliers that 
are paid for in a market economy currency and if the portion of the 
input from the market economy was significant, we used the actual 
purchase price paid during the POI as reported in the questionnaire 
responses. This practice is consistent with the Department's new 
regulations and with Lasko. In cases in which the same producer 
reported several different market economy suppliers for the same input, 
we used the average market economy price paid for that input.
    For labor, we used the average labor cost per man-day worked for 
the Basic Metal and Alloys Industries as reported in the Ministry of 
Labour Government of India Annual Report 1994-1995. This source 
included in its calculation of labor values ``a sum of various 
components like wages and salaries; all types of bonus; money value of 
benefits in kind; old age benefits; maternity benefits; social security 
charges such as ESI compensation for injuries, family pension, lay-off/
retrenchment benefits, and other group benefits.'' We applied a single 
labor rate for all levels of labor, i.e., skilled, unskilled, and 
indirect labor. Accordingly, we adjusted for inflation from the time 
period of the information (1990-1991) to the POI using the CPI, as 
reported in the International Monetary Fund's International Financial 
Statistics. The work day in India is an eight-hour day. See Coumarin 
from PRC; Preliminary Determination of Sales at Less Than Fair Value, 
59 FR 39727 (Aug. 4, 1994), citing to Country Reports: Human Rights 
Practices for 1990; Coumarin from the PRC; Final Determination of Sales 
at Less than Fair Value, 59 FR 66895 (Dec. 28, 1994) (Coumarin). 
Therefore, we then divided the surrogate value by 8 hours to arrive at 
an hourly wage rate. Petitioners have argued that the labor usage rates 
reported by respondents are abnormally low for steel production. We 
will carefully review the reported labor rates at verification and for 
our final determination.
    For overhead, profit and SG&A expenses, we used information 
reported in the April 1995 Reserve Bank of India Bulletin. See 
Statement 1--``Combined Income, Value of Production, Expenditure and 
Appropriation Accounts, Industry Group-Wise, 1992-93.''
    Respondents allocated a majority of the labor employed in their 
facilities to overhead and selling and general administrative (SG&A) 
tasks. Only a small percentage of the labor employed in respondents' 
facilities has been reported as direct costs of production and 
therefore included in our NV calculations. Conversely, the Indian 
surrogate values for overhead and SG&A do not include a separate 
allowance for labor. See Factor Valuation Memoranda. We therefore 
increased the surrogate overhead value to include the significant labor 
resources respondents allocated to overhead. See, Calculation 
Memoranda.
    We included certain indirect materials as part of ``overhead 
expenses.'' In previous final determinations, the Department has 
considered inputs which ``are not direct materials consumed in the 
production process'' as part of factory overhead. See Brake Drums and 
Brake Rotors From the PRC; Notice of Preliminary Determination, 61 FR, 
53190, 63196 (Oct. 10, 1996); Brake Drums and Brake Rotors From the 
PRC; Final Determination of Sales at Less than Fair Value, 62 FR 9154, 
9160 (Feb. 24, 1997). The treatment of indirect materials as 
``overhead'' is consistent with Compendium of Statements and Standards: 
Accounting (India).

[[Page 31978]]

    In calculating the cost of raw material inputs in NME cases, we 
include an adjustment for the cost of transporting the input from the 
supplier to the respondent. This adjustment is based on the distance 
from the supplier to the producing factory and the mode of 
transportation; see, e.g., Sulfanilic Acid from the People's Republic 
of China; Final Results and Partial Recission of Antidumping Duty 
Administrative Review, 61 Fed. Reg. 53702, 53705 (Comment 3) (October 
15, 1996). We determine a value from the surrogate country based on 
this distance and on mode of transportation used. While all respondents 
provided distances for some of their inputs, only one of the 
respondents provided distances and mode of transportation for all 
material inputs. We requested this information for all inputs in our 
original and supplemental questionnaires. For each respondent that did 
not comply with our requests for this information, as to some inputs, 
we applied, as facts available, the highest freight cost calculated for 
any input of that respondent to those inputs for which we did not 
receive the required freight information. This presumes that the 
respondents chose not to provide information that would be adverse to 
them.
    For the preliminary determination, we were unable to find specific 
surrogate values for a small number of inputs. Therefore, we excluded 
them from our calculations for the preliminary determination. We will 
continue to research price information for these inputs for the final 
determination.

Critical Circumstances

    On January 10, 1997, petitioners alleged that there is a reasonable 
basis to believe or suspect that critical circumstances exist with 
respect to subject merchandise. In accordance with 19 C.F.R. 
353.16(b)(2)(i) (1996), since these allegations were filed earlier than 
the deadline for the Department's preliminary determination, we must 
issue our preliminary critical circumstances determinations not later 
than the preliminary determination.
    Section 733(e)(1) of the Act provides that the Department will 
determine that there is a reasonable basis to believe or suspect that: 
(A)(i) There is a history of dumping and material injury by reason of 
dumped imports in the United States or elsewhere of the subject 
merchandise, or (ii) the person by whom, or for whose account, the 
merchandise was imported knew or should have known that the exporter 
was selling the subject merchandise at less than its fair value and 
that there was likely to be material injury by reason of such sales, 
and (B) there have been massive imports of the subject merchandise over 
a relatively short period.
    The statute and the Statement of Administrative Action (SAA) which 
accompanies the Uruguay Round Agreements Act are silent as to how we 
are to make a finding that there was knowledge that there was likely to 
be material injury. Therefore, Congress has left the method of 
implementing this provision to the Department's discretion.
    In determining whether there is a reasonable basis to believe or 
suspect that an importer knew or should have known that the exporter 
was selling the plate at less than fair value, the Department normally 
considers margins of 15 percent or more sufficient to impute knowledge 
of dumping for constructed export price (CEP) sales, and margins of 25 
percent or more for export price (EP) sales. See, e.g., Preliminary 
Critical Circumstances Determination: Honey from the People's Republic 
of China (PRC), 60 FR 29824 (June 6, 1995) (Honey). Since the company 
specific margins for EP sales in our preliminary determination for 
carbon steel plate are greater than 25 percent for Anshan, Shanghai 
Pudong and WISCO, we have imputed knowledge of dumping. We found that 
Baoshan and Liaoning had margins below 25 percent. Because we found 
margins to be below 25 percent, we do not impute importer knowledge of 
dumping. Therefore for Baoshan and Liaoning, we find that critical 
circumstances do not exist with respect to the subject merchandise.
    In determining whether there is a reasonable basis to believe or 
suspect that an importer knew or should have known that there was 
likely to be material injury by reason of dumped imports, the 
Department normally will look to the preliminary injury determination 
of the ITC. If the ITC finds a reasonable indication of present 
material injury to the relevant U.S. industry, the Department will 
determine that a reasonable basis exists to impute importer knowledge 
that there was likely to be material injury by reason of dumped imports 
during the critical circumstances period--the 90-day period beginning 
with the initiation of the investigation (see 19 C.F.R. 351.16(g). If, 
as in this case, the ITC preliminarily finds threat of material injury 
(See, Cut-to-Length Carbon Steel Plate from China, Russia, South 
Africa, and Ukraine, U.S. International Trade Commission, December 
1996), the Department will also consider the extent of the increase in 
the volume of imports of the subject merchandise during the critical 
circumstances period and the magnitude of the margins in determining 
whether a reasonable basis exists to impute knowledge that material 
injury was likely.
    In this case, imports of Chinese plate increased 29 percent in the 
three months following the initiation of the investigation when 
compared to the three months preceding initiation, or nearly two times 
the level of increase needed to find ``massive imports'' during the 
same period (see below). Furthermore, we have preliminarily found 
margins of 40.35 percent for Shanghai Pudong, 172.20 percent for Anshan 
and 51.70 for WISCO.
    Based on the ITC's preliminary determination of threat of injury, 
the increase in imports noted above, and the high preliminary margins, 
the Department determines that there is a reasonable basis to believe 
or suspect that the importer knew or should have known that there was 
likely to be material injury by means of sales of the subject 
merchandise at less than fair value.
    To determine whether imports were massive over a relatively short 
time period, the Department typically compares the import volume of the 
subject merchandise for the three months immediately preceding and 
following the initiation of the proceeding. See 19 C.F.R. 353.16(g). 
Pursuant to 19 C.F.R. 353.16(f)(2), the Department will consider an 
increase of 15 percent or more in the imports of the subject 
merchandise over the relevant period to be massive. As noted, imports 
of the subject merchandise increased 29 percent during the relevant 
period, and thus we determine that imports have been massive.
    Thus, because we determine that there is a reasonable basis to 
believe or suspect that the importer knew or should have known that 
Anshan, Shanghai Pudong and WISCO were selling the subject merchandise 
at less than its fair value and that there was likely to be material 
injury by reason of such sales, and that there have been massive 
imports of the subject merchandise over a relatively short time period, 
we preliminarily determine that critical circumstances exist for 
Anshan, Shanghai Pudong and WISCO.
    For companies subject to the China-wide rate (i.e., companies which 
did not respond to the Department's questionnaire), we are imputing 
knowledge based on the China-wide rate, and determine, based on facts 
available, that there were massive imports of certain cut-to-length 
carbon steel plate by companies that did not

[[Page 31979]]

respond to the Department's questionnaire.
    Therefore, we preliminarily determine that critical circumstances 
exist with regard to these companies.

Verification

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

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all imports of subject 
merchandise from Baoshan and Liaoning, entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice in the Federal Register. For Anshan, Shanghai Pudong, WISCO and 
companies subject to the China-wide rate, we are directing Customs to 
suspend liquidation of all imports of subject merchandise entered, or 
withdrawn from warehouse, for consumption on or after the date 90 days 
prior to the date of publication of this notice in the Federal 
Register. We will instruct Customs Service to require a cash deposit or 
the posting of a bond equal to the weighted-average amount by which the 
NV exceeds the export price, as indicated in the chart below. These 
suspension of liquidation instructions will remain in effect until 
further notice.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
                   Manufacturer/exporter                        margin  
                                                              (percent) 
------------------------------------------------------------------------
Anshan (AISCO/Anshan International/Sincerely Asia Ltd).....       172.20
Baoshan (Bao/Bao Steel International Trade Corp/Bao Steel               
 Metals Trading Corp)......................................        14.20
Liaoning...................................................         8.19
Shanghai Pudong............................................        40.35
WISCO (Wuhan/International Economic and Trading Corp/                   
 Cheerwu Trader Ltd).......................................        51.70
China-wide Rate 1..........................................       172.20
------------------------------------------------------------------------
\1\ The China-wide rate applies to all entries of the subject           
  merchandise except for entries from exporters that are identified     
  individually above.                                                   

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether the domestic industry in the United States is materially 
injured, or threatened with material injury, by reason of imports, or 
sales (or the likelihood of sales) for importation, of the subject 
merchandise.

Public Comment

    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies must be submitted to the Assistant 
Secretary for Import Administration no later than 50 days after the 
publication of this preliminary determination, and rebuttal briefs, no 
later than five days after the filing of case briefs. A list of 
authorities used and a summary of arguments made in the briefs should 
accompany these briefs. Such summary should be limited to five pages 
total, including footnotes. We will hold a public hearing, if requested 
within 10 days of publication of this notice, to afford interested 
parties an opportunity to comment on arguments raised in case or 
rebuttal briefs. The hearing will be held at the U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230, time, date and room to be determined. Parties should confirm by 
telephone the time, date, and place of the hearing 48 hours before the 
scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within ten days of the publication of this notice. Requests 
should contain: (1) The party's name, address, and telephone number; 
(2) the number of participants; and (3) a list of the issues to be 
discussed. In accordance with 19 CFR 353.38(b), oral presentations will 
be limited to issues raised in the briefs. If this investigation 
proceeds normally, we will make our final determination by August 18, 
1997.
    This determination is published pursuant to section 733(f) of the 
Act.

    Dated: June 3, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-15294 Filed 6-10-97; 8:45 am]
BILLING CODE 3510-DS-P