[Federal Register Volume 63, Number 35 (Monday, February 23, 1998)]
[Notices]
[Pages 8948-8953]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4539]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-307-813]


Suspension of Antidumping Duty Investigation: Steel Wire Rod From 
Venezuela

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

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[[Page 8949]]

SUMMARY: The Department of Commerce (the Department) has suspended the 
antidumping duty investigation involving steel wire rod from Venezuela. 
The basis for this action is an agreement between the Department and 
C.V.G. Siderurgica del Orinoco, C.A. (Sidor) to revise their prices to 
eliminate completely sales of this merchandise to the United States at 
less than fair value.

EFFECTIVE DATE: February 13, 1998.

FOR FURTHER INFORMATION CONTACT: Lyn Baranowski, Lesley Stagliano, 
Elisabeth Urfer, or Edward Yang, Office of AD/CVD Enforcement III, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th & Constitution Avenue N.W., Washington, DC 
20230; telephone (202) 482-1385, (202) 482-0648, (202) 482-4236, or 
(202) 482-0406, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On March 18, 1997, the Department initiated an antidumping 
investigation under section 732 of the Tariff Act of 1930, (the Act), 
as amended, to determine whether imports of steel wire rod from 
Venezuela are being or are likely to be sold in the United States at 
less than fair value (62 FR 13854 (March 18, 1997)). On April 14, 1997, 
the United States International Trade Commission (ITC) notified the 
Department of its affirmative preliminary injury determination (see ITC 
Investigation Nos. 701-TA-368-371 and 731-TA-763-766). On October 1, 
1997, the Department preliminarily determined that steel wire rod 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 Tariff Act of 1930, as 
amended by the Uruguay Round Agreements Act (62 FR 51584 (October 1, 
1997) (``LTFV Prelim'')).
    The Department and Sidor initialed a proposed agreement suspending 
this investigation on January 14, 1998. On January 14, 1998, we invited 
interested parties to provide written comments on the agreement and 
received comments from Connecticut Steel Corporation, Co-Steel Raritan, 
GS Industries, Inc., Keystone Steel & Wire Company, North Star Steel 
Texas, Inc. and Northwestern Steel and Wire Company.
    The Department and Sidor signed the final suspension agreement on 
February 13, 1998.

Scope of Investigation

    The products covered by the investigation are certain hot-rolled 
carbon steel and alloy steel products, in coils, of approximately round 
cross section, between 5.00 mm (0.20 inch) and 19.0 mm (0.75 inch), 
inclusive, in solid cross-sectional diameter. Specifically excluded are 
steel products possessing the above noted physical characteristics and 
meeting the Harmonized Tariff Schedule of the United States (``HTSUS'') 
definitions for a) stainless steel; b) tool steel; c) high nickel 
steel; d) ball bearing steel; e) free machining steel that contains by 
weight 0.03 percent or more of lead, 0.05 percent or more of bismuth, 
0.08 percent or more of sulfur, more than 0.4 percent of phosphorus, 
more than 0.05 percent of selenium, and/or more than 0.01 percent of 
tellurium; or f) concrete reinforcing bars and rods. The following 
products are also excluded from the scope of this investigation:
     Coiled products 5.50 mm or less in true diameter with an 
average partial decarburization per coil of no more than 70 microns in 
depth, no inclusions greater than 20 microns, containing by weight the 
following: carbon greater than or equal to 0.68 percent; aluminum less 
than or equal to 0.005 percent; phosphorous plus sulfur less than or 
equal to 0.040 percent; maximum combined copper, nickel and chromium 
content of 0.13 percent; and nitrogen less than or equal to 0.006 
percent. This product is commonly referred to as ``Tire Cord Wire 
Rod.''
     Coiled products 7.9 to 18 mm in diameter, with a partial 
decarburization of 75 microns or less in depth and seams no more than 
75 microns in depth, containing 0.48 to 0.73 percent carbon by weight. 
This product is commonly referred to as ``Valve Spring Quality Wire 
Rod.''
     Coiled products 11 mm to 12.5 mm in diameter, with an 
average partial decarburization per coil of no more than 70 microns in 
depth, no inclusions greater than 20 microns, containing by weight the 
following: carbon greater than or equal to 0.72 percent; manganese 
0.50-1.10 percent; phosphorus less than or equal to 0.030 percent; 
sulfur less than or equal to 0.035 percent; and silicon 0.10-0.35 
percent. This product is free of injurious piping and undue 
segregation. The use of this excluded product is to fulfill contracts 
for the sale of Class III pipe wrap wire in conformity with ASTM 
specification A648-95 and imports of this product must be accompanied 
by such a declaration on the mill certificate and/or sales invoice. 
This excluded product is commonly referred to as ``Semifinished Class 
III Pipe Wrap Wire.''
    The products under investigation are currently classifiable under 
subheadings 7213.91.3000, 7213.91.4500, 7213.91.6000, 7213.99.0030, 
7213.99.0090, 7227.20.0000, and 7227.90.6050 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
our written description of the scope of this investigation is 
dispositive.

Exclusion of Pipe Wrap Wire

    As stated in the LTFV Prelim, North American Wire Products 
Corporation (``NAW''), an importer of the subject merchandise from 
Germany, requested that the Department exclude steel wire rod used to 
manufacture Class III pipe wrapping wire from the scope of the 
investigations of steel wire rod from Canada, Germany, Trinidad and 
Tobago, and Venezuela. On December 22, 1997, NAW submitted to the 
Department a proposed exclusion definition. On December 30, 1997, and 
January 7, 1998, the petitioners submitted letters concurring with the 
definition of the scope exclusion and requesting exclusion of this 
product from the scope of the investigation. We have reviewed NAW's 
request and petitioners' comments and have excluded steel wire rod for 
manufacturing Class III pipe wrapping wire from the scope of this 
investigation (see Memorandum to Richard W. Moreland dated January 9, 
1998).

Suspension of Investigation

    The Department consulted with parties to the proceeding and has 
considered the comments submitted with respect to the proposed 
suspension agreement. In accordance with Section 734(b) of the Act, 
exporters of the subject merchandise who account for substantially all 
of the imports of that merchandise agree to revise their prices to 
eliminate completely any amount by which the normal value of the 
subject merchandise exceeds the export price or constructed export 
price of that merchandise. We are satisfied that suspension of the 
investigation pursuant to section 734(b) of the Act is in the public 
interest and have concluded that the agreement can be monitored 
effectively. See Public Interest Memorandum, February 13, 1998. We 
find, therefore, that the criteria for suspension of an investigation 
pursuant to section 734(b) of the Act have been met. The terms and 
conditions of this agreement, signed February 13, 1998, are set forth 
in Annex I to this notice.
    Pursuant to section 734(f)(2)(A)(ii) of the Act, the suspension of 
liquidation of all entries of steel wire rod from Venezuela entered or 
withdrawn from warehouse, for consumption, as directed in our LTFV 
Prelim is hereby

[[Page 8950]]

terminated. Pursuant to section 734(f)(2)(A)(iii) and 733(d)(1)(B) of 
the Act, any cash deposits on entries of steel wire rod from Venezuela 
pursuant to that suspension of liquidation shall be refunded and any 
bonds shall be released.
    Notwithstanding the suspension agreement, the Department will 
continue the investigation if we receive a request for continuation of 
the investigation from an appropriate party in accordance with section 
734(g) of the Act within 20 days after the date of publication of this 
notice. In accordance with section 734(g) of the Act, if we receive 
such a request for continuation, we will complete the investigation and 
notify the ITC of our final determination. If the ITC's injury 
determination is negative, the agreement will have no force or effect, 
and the investigation will be terminated (See section 734(f)(3)(A) of 
the Act). If the ITC's determination is affirmative, the Department 
will not issue an antidumping duty order as long as the suspension 
agreement remains in force, the agreement continues to meet the 
requirements of subsections (b) and (d) of section 734 of the Act, and 
the parties to the agreement carry out their obligations under the 
agreement in accordance with its terms (see section 734(f)(3)(B) of the 
Act).
    This notice is published pursuant to section 734(f)(1)(A) of the 
Act.

    Dated: February 19, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.

Suspension Agreement Carbon Steel Wire Rod from Venezuela

    Under section 734(b) of the Tariff Act of 1930, as amended (19 
U.S.C. 1673c(b)) (the Act), and 19 CFR 353.18, the U.S. Department of 
Commerce (the Department) and the signatory producers/exporters of 
carbon steel wire rod from Venezuela enter into this suspension 
agreement (the Agreement). On the basis of the Agreement, the 
Department shall suspend its antidumping investigation initiated on 
March 24, 1997(62 FR 13854), with respect to carbon steel wire rod from 
Venezuela, subject to the terms and provisions set out below.

(A) Product Coverage

    The products covered by this Agreement (``subject merchandise'') 
are certain hot-rolled carbon steel and alloy steel products, in coils, 
of approximately round cross section, between 5.00 mm (0.20 inch) and 
19.0 mm (0.75 inch), inclusive, in solid cross-sectional diameter. 
Specifically excluded are steel products possessing the above noted 
physical characteristics and meeting the Harmonized Tariff Schedule of 
the United States (HTSUS) definitions for (a) stainless steel; (b) tool 
steel; (c) high nickel steel; (d) ball bearing steel; (e) free 
machining steel that contains by weight 0.03 percent or more of lead, 
0.05 percent or more of bismuth, 0.08 percent or more of sulfur, more 
than 0.4 percent of phosphorus, more than 0.05 percent of selenium, 
and/or more than 0.01 percent of tellurium; or (f) concrete reinforcing 
bars and rods.
    The following products are also excluded from the scope of this 
Agreement:
    Coiled products 5.50 mm or less in true diameter with an average 
partial decarburization per coil of no more than 70 microns in depth, 
no inclusions greater than 20 microns, containing by weight the 
following: carbon greater than or equal to 0.68 percent; aluminum less 
than or equal to 0.005 percent; phosphorous plus sulfur less than or 
equal to 0.040 percent; maximum combined copper, nickel and chromium 
content of 0.13 percent; and nitrogen less than or equal to 0.006 
percent. This product is commonly referred to as ``Tire Cord Wire 
Rod.''
    Coiled products 7.9 to 18 mm in diameter, with a partial 
decarburization of 75 microns or less in depth and seams no more than 
75 microns in depth; containing 0.48 to 0.73 percent carbon by weight. 
This product is commonly referred to as ``Valve Spring Quality Wire 
Rod.''
    Coiled products 11 mm to 12.5 mm in diameter, with an average 
partial decarburization per coil of no more than 70 microns in depth, 
no inclusions greater than 20 microns, containing by weight the 
following: carbon greater than or equal to 0.72 percent; manganese 
0.50--1.10 percent; phosphorus less than or equal to 0.030 percent; 
sulfur less than or equal to 0.035 percent; and silicon 0.10--0.35 
percent. This product is free of injurious piping and undue 
segregation. The use of this excluded product is to fulfill contracts 
for the sale of Class III pipe wrap wire in conformity with ASTM 
specification A648-95 and imports of this product must be accompanied 
by such a declaration on the mill certificate and/or sales invoice. 
This excluded product is commonly referred to as ``Semifinished Class 
III Pipe Wrap Wire.''
    The products subject to this Agreement are currently classifiable 
under subheadings 7213.91.3000, 7213.91.4500, 7213.91.6000, 
7213.99.0030, 7213.99.0090, 7227.20.0000, and 7227.90.6050 of the 
HTSUS. Although the HTSUS subheadings are provided for convenience and 
customs purposes, the written description of the scope of this 
Agreement is dispositive.

(B) U.S. Import Coverage

    The signatory producers/exporters collectively are the producers 
and exporters in Venezuela which, during the antidumping investigation 
of the merchandise subject to the Agreement, accounted for 
substantially all (not less than at least 85 percent) of the subject 
merchandise imported into the United States. The Department may at any 
time during the period of the Agreement require additional producers/
exporters in Venezuela to sign the Agreement in order to ensure that 
not less than substantially all imports of subject merchandise into the 
United States are covered by the Agreement.

(C) Basis of the Agreement

    On and after the effective date of the Agreement, each signatory 
producer/exporter individually agrees to make any necessary price 
revisions to eliminate completely any amount by which the normal value 
(NV) of this merchandise exceeds the U.S. price of its merchandise 
subject to the Agreement. For this purpose, the Department will 
determine the NV in accordance with section 773(e) of the Act and U.S. 
price in accordance with section 772 of the Act.
    (1) For all sales occurring on or after the effective date of the 
Agreement through June 30, 1998, each signatory producer/exporter 
agrees not to sell its merchandise subject to the Agreement, whether in 
the form imported or as further manufactured subsequent to importation, 
to unaffiliated purchasers in the United States; and
    (2) For all sales occurring from July 1, 1998 through September 30, 
1998, each signatory producer/exporter agrees not to sell its 
merchandise subject to the Agreement, whether in the form imported or 
as further manufactured subsequent to importation, to unaffiliated 
purchasers in the United States at prices that are less than its NV, as 
determined by the Department based on cost information for the period 
October 1, 1997 through December 31, 1997, and provided to parties not 
later than June 20, 1998; and
    (3) For all sales occurring on or after October 1, 1998, each 
producer/exporter agrees not to sell its merchandise subject to the 
Agreement, whether in the form imported or as further manufactured 
subsequent to

[[Page 8951]]

importation, to any unaffiliated purchaser in the United States at 
prices that are less than its NV of the merchandise, as determined by 
the Department on the basis of information submitted to the Department 
not later than the dates specified in Section D of the Agreement and 
provided to parties not later than September 20, December 20, March 20, 
and June 20 of each year. This NV shall apply to sales occurring during 
the fiscal quarter beginning on the first day of the month following 
the date the Department provides the NV, as stated in this paragraph.

(D) Monitoring

    Each signatory producer/exporter will supply to the Department all 
information that the Department decides is necessary to ensure that the 
producer/exporter is in full compliance with the terms of the 
Agreement. As explained below, the Department will provide each 
signatory producer/exporter a detailed request for information and 
prescribe a required format and method of data compilation, not later 
than the beginning of each reporting period.
(1) Sales Information
    The Department will require each producer/exporter to report, on 
computer tape in the prescribed format and using the prescribed method 
of data compilation, each sale (which includes further manufactured 
sales) of the merchandise subject to the Agreement, either directly or 
indirectly to unaffiliated purchasers in the United States, including 
each adjustment applicable to each sale, as specified by the 
Department.
    The first report of sales data shall be submitted to the 
Department, on computer tape in the prescribed format and using the 
prescribed method of data compilation, not later than October 15, 1998, 
and shall contain the specified sales information covering the period 
of July 1 through September 30, 1998. Each subsequent report of sales 
data shall be submitted to the Department not later than January 15, 
April 15, July 15, and October 15 of each year, and each report shall 
contain the specified sales information for the quarterly period ending 
one month prior to the due date, except that if the Department receives 
information that a possible violation of the Agreement may have 
occurred, the Department may request sales data on a monthly, rather 
than quarterly basis.
(2) Cost Information
    Producers/exporters must request NVs for all subject merchandise 
that will be sold in the United States. For those products for which 
the producer/exporter is requesting NVs, the Department will require 
each producer/exporter to report: their actual cost of manufacturing; 
selling, general and administrative (SG&A) expenses; further 
manufacturing costs; and profit data on a quarterly basis, in the 
prescribed format and using the prescribed method of data compilation. 
Further manufacturing costs plus an allocable portion of profit, as 
provided in section 772(d)(2) and (3) of the Act, will be subtracted 
from the U.S. sale price to determine compliance with the NV. Each such 
producer/exporter also must report anticipated increases in production 
costs and may report anticipated decreases in production costs in the 
quarter in which the information is submitted resulting from factors 
such as anticipated changes in production yield, changes in production 
process, changes in production quantities or changes in production 
facilities. Extraordinary cost items related to the privatization will 
be considered, consistent with the Department's regulations and 
policies. If they meet our statutory and regulatory criteria, such 
items may include shutdowns of facilities, environmental cleanups, and 
workforce reductions. (For example, see the Side Letter to the 
Suspension Agreement for Grey Portland Cement and Clinker from 
Venezuela (initialed version dated December 22, 1991, finalized 
February 11, 1992).)
    The first report of cost data related to the relevant period of 
July 1, 1998, through September 30, 1998 shall be submitted to the 
Department not later than April 30, 1998, and shall contain the 
specified cost data covering the period October 1, 1997, through 
December 31, 1997. Each subsequent report shall be submitted to the 
Department not later than July 31, October 31, January 31, and April 30 
of each year, and each report shall contain specified information for 
the quarter ending one month prior to the due date.
(3) Special Adjustment of Normal Value
    If the Department determines that the NV it determined for a 
previous quarter was erroneous because the reported costs for that 
period were inaccurate or incomplete, or for any other reason, the 
Department may adjust NV in a subsequent period or periods, unless the 
Department determines that Section F of the Agreement applies.
(4) Verification
    Each producer/exporter agrees to permit full verification of all 
cost and sales information semi-annually, or more frequently, as the 
Department deems necessary.
(5) Bundling or Other Arrangements
    Producers/exporters agree not to circumvent the Agreement. In 
accordance with the date set forth in Section D(1) of the Agreement, 
producers/exporters will submit a written statement to the Department 
certifying that the sales reported herein were not, or are not part of 
or related to, any bundling arrangement, on-site processing 
arrangement, discounts/free goods/financing package, swap, or other 
exchange where such arrangement is designed to circumvent the basis of 
the Agreement.
    Where there is reason to believe that such an arrangement does 
circumvent the basis of the Agreement, the Department will request the 
producers/exporters to provide, within 15 days, all particulars 
regarding any such arrangement, including, but not limited to, sales 
information pertaining to covered and non-covered merchandise that is 
manufactured or sold by producers/exporters. The Department will accept 
written comments, not to exceed 30 pages, from all parties no later 
than 15 days after the date of receipt of such producer/exporter 
information.
    If the Department, after reviewing all submissions, determines that 
such arrangement circumvents the basis of the Agreement, it may, as it 
deems most appropriate, utilize one of two options: (1) the cumulative 
amount of the effective price discount resulting from such arrangement 
shall be reflected in NV in accordance with Section D(3), or (2) the 
Department shall determine that the Agreement has been violated and 
take action according to the provisions under Section F.
(6) Rejection of Submissions
    The Department may reject any information submitted after the 
deadlines set forth in this section or any information which it is 
unable to verify to its satisfaction. If information is not submitted 
in a complete and timely fashion or is not fully verifiable, the 
Department may calculate fair value, NV, and/or U.S. price based on 
facts otherwise available, as it determines appropriate, unless the 
Department determines that Section F applies.

(E) Disclosure and Comment

    (1) The Department may make available to representatives of each 
domestic party to the proceeding, under appropriately drawn 
administrative protective orders, business proprietary information 
submitted to the

[[Page 8952]]

Department during the reporting period as well as the results of its 
analysis under section 773 of the Act.
    (2) Not later than May 31, August 31, November 31, and the last day 
in February of each year, the Department will disclose to each 
producer/exporter the results and the methodology of the Department's 
calculations of its NV. At that time, the Department may also make 
available such information to the domestic parties to the proceeding, 
in accordance with this section.
    (3) Not later than 7 days after the date of disclosure under 
paragraph E(2), the parties to the proceeding may submit written 
comments to the Department, not to exceed 15 pages. After reviewing 
these submissions, the Department will provide to each producer/
exporter its NV as provided in paragraph C(2). In addition, the 
Department may provide such information to domestic interested parties 
as specified in this section.

(F) Violations of the Agreement

    If the Department determines that the Agreement is being or has 
been violated or no longer meets the requirements of section 734 (b) or 
(d) of the Act, the Department shall take action it determines 
appropriate under section 734(i) of the Act and the regulations.

(G) Other Provision

    In entering into the Agreement, the signatory producer/exporter 
does not admit that any sales of the merchandise subject to the 
Agreement have been made at less than fair value.

(H) Termination

    The Department will not consider requests for termination of this 
suspended investigation prior to February 13, 2003. Termination will be 
conducted in accordance with section 751(c) of the Act and the 
Department's regulations.
    Any producer/exporter may terminate the Agreement at any time upon 
notice to the Department. Termination shall be effective 60 days after 
such notice is given to the Department. Upon termination, the 
Department shall follow the procedures outlined in section 734(i)(1) of 
the Act.

(I) Definitions

    For purposes of the Agreement, the following definitions apply:
    (1) U.S. Price--means the export price or constructed export price 
at which merchandise is sold by the producer or exporter to the first 
unaffiliated party in the United States, including the amount of any 
discounts, rebates, price protection or ship and debit adjustments, and 
other adjustments affecting the net amount paid or to be paid by the 
unaffiliated purchaser, as determined by the Department under section 
772 of the Act.
    (2) Normal Value--means the constructed value (CV) of the 
merchandise, as determined by the Department under section 773 of the 
Act and the corresponding sections of the Department's regulations.
    (3) Producer/Exporter--means (1) the foreign manufacturer or 
producer, (2) the foreign producer or reseller which also exports, and 
(3) the affiliated person by whom or for whose account the merchandise 
is imported into the United States, as defined in section 771(28) of 
the Act.
    (4) Date of Sale--means the date on which the essential terms of 
the contract, including price and quantity, are agreed and 
determinable.
    The effective date of the Agreement is the date on which it is 
published in the Federal Register.

    For the Venezuelan Producers/Exporters.

    Dated: February 13, 1998.
Oscar Montero,
Director for Strategic Planning.

    For the U.S. Department of Commerce.

    Dated: February 12, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.

Appendix A--Carbon Steel Wire Rod from Venezuela Principles of Cost

General Framework

    The cost information reported to the Department that will form 
the basis of the NV calculations for purposes of the Agreement must 
be:
     Comprehensive in nature and based on a reliable 
accounting system (i.e., a system based on well-established 
standards and can be tied to the audited financial statements);
     Representative of the company's costs incurred for the 
general class of merchandise;
     Calculated on a quarterly weighted-average basis of the 
plants or cost centers manufacturing the product;
     Based on fully-absorbed costs of production, including 
any downtime;
     Valued in accordance with generally accepted accounting 
principles;
     Reflective of appropriately allocated common costs so 
that the costs necessary for the manufacturing of the product are 
not absorbed by other products; and
     Reflective of the actual cost of producing the product.
    Additionally, a single figure should be reported for each cost 
component.

Cost of Manufacturing (COM)

    Costs of manufacturing are reported by major cost category and 
for major stages of production. Weighted-average costs are used for 
a product that is produced at more than one facility (including 
further manufacturing in the United States); based on the cost at 
each facility.
    Direct materials--cost of those materials which are input into 
the production process and physically become part of the final 
product.
    Direct labor--cost identified with a specific product. These 
costs are not allocated among products except when two or more 
products are produced at the same cost center. Direct labor costs 
should include salary, bonus, and overtime pay, training expenses, 
and all fringe benefits. Any contracted-labor expense should reflect 
the actual billed cost or the actual costs incurred by the 
subcontractor when the corporation has influence over the 
contractor.
    Factory overhead--overhead costs include indirect materials, 
indirect labor, depreciation, and other fixed and variable expenses 
attributable to a production line or factory. Because overhead costs 
are typically incurred for an entire production line, an appropriate 
portion of those costs must be allocated to covered products, as 
well as any other products produced on that line. Acceptable cost 
allocations can be based on labor hours or machine hours. Overhead 
costs should also reflect any idle or downtime and be fully absorbed 
by the products.

Cost of Production (COP)

    Is equal to the sum of materials, labor, and overhead (COM) plus 
SG&A expenses in the home market (HM).
    SG&A--those expenses incurred for the operation of the 
corporation as a whole and not directly related to the manufacture 
of a particular product. They include corporate general and 
administrative expenses, financing expenses, and general research 
and development expenses. Additionally, direct and indirect selling 
expenses incurred in the HM for sales of the product under 
investigation are included. Such expenses are allocated over cost of 
goods sold.

Constructed Value (CV)

    Is equal to the sum of materials, labor, and overhead (COM) and 
SG&A expenses plus profit in the comparison market and the cost of 
packing for exportation to the United States.

Calculation of Suspension Agreement NVs

    NVs (for purposes of the Agreement) are calculated by adjusting 
the CV and are provided for both EP and CEP transactions. In effect, 
any expenses uniquely associated with the covered products sold in 
the HM are subtracted from the CV, and any such expenses which are 
uniquely associated with the covered products sold in the United 
States are added to the CV to calculate the NV.
    Export Price--Generally, a U.S. sale is classified as an export 
price sale when the first sale to an unaffiliated person occurs 
before the goods are imported into the United States. In cases where 
the foreign manufacturer knows or has reason to believe that the 
merchandise is ultimately destined for the United States, the 
manufacturer's sale is the sale subject to review. If, on the other 
hand, the manufacturer sold the merchandise to a foreign trader 
without knowledge of the

[[Page 8953]]

trader's intention to export the merchandise to the United States, 
then the trader's first sale to an unaffiliated person is the sale 
subject to review. For EP NVs, the CV is adjusted for movement costs 
and differences in direct selling expenses such as commissions, 
credit, warranties, technical services, advertising, and sales 
promotion.
    Constructed Export Price--Generally, a U.S. sale is classified 
as a constructed export price sale when the first sale to an 
unaffiliated person occurs after importation. However, if the first 
sale to the unaffiliated person is made by a person in the United 
States affiliated with the foreign exporter, constructed export 
price applies even if the sale occurs prior to importation, unless 
the U.S. affiliate performs only clerical functions in connection 
with the sale. For CEP NVs, the CV is adjusted similar to EP sales, 
with differences for adjustment to U.S. and HM indirect-selling 
expenses.
    Home market direct-selling expenses--expenses that are incurred 
as a direct result of a sale. These include such expenses as 
commissions, advertising, discounts and rebates, credit, warranty 
expenses, freight costs, etc. The following direct-selling expenses 
are treated individually:
    Commission expenses--payments to unaffiliated parties for sales 
in the HM.
    Credit expenses--expenses incurred for the extension of credit 
to HM customers.
    Movement expenses--freight, brokerage and handling, and 
insurance expenses.
    U.S. direct-selling expenses--the same as HM direct-selling 
expenses except that they are incurred for sales in the United 
States.
    Movement expenses--additional expenses incidental to importation 
into the United States. These typically include U.S. inland freight, 
insurance, brokerage and handling expenses, U.S. Customs duties, and 
international freight.
    U.S. indirect-selling expenses--include general fixed expenses 
incurred by the U.S. sales subsidiary or affiliated exporter for 
sales to the United States. They may also include a portion of 
indirect expenses incurred in the HM for export sales.

For EP Transactions

+direct materials
+direct labor
+factory overhead
=Cost of Manufacturing
+home market SG&A
=Cost of Production
+U.S. packing
+Profit
=Constructed Value
+U.S. direct selling expense
+U.S. commission expense
+U.S. movement expense
+U.S. credit expense
-HM direct selling expense
-HM commission expense 1
---------------------------------------------------------------------------

    \1\ If the company does not have HM commissions, HM indirect 
expenses are subtracted only up to the amount of the U.S. 
commissions.
---------------------------------------------------------------------------

-HM credit expense
=NV for EP sales

For CEP Transactions

+direct materials
+direct labor
+factory overhead
=Cost of Manufacturing
+home market SG&A
=Cost of Production
+U.S. packing
+profit
=Constructed Value
+U.S. direct selling expense
+U.S. indirect selling expense
+U.S. commission expense
+U.S. movement expense
+U.S. credit expense
+U.S. further manufacturing expenses (if any)
+CEP profit
-HM direct selling expense
-HM commission expense 2
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    \2\ If the company does not have HM commissions, HM indirect 
expenses are subtracted only up to the amount of the U.S. 
commissions.
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-HM credit expense
=NV for CEP sales
[FR Doc. 98-4539 Filed 2-20-98; 8:45 am]
BILLING CODE 3510-DS-P