[Federal Register Volume 63, Number 36 (Tuesday, February 24, 1998)]
[Notices]
[Pages 9177-9182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4695]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-274-802]


Notice of Final Determination of Sales at Less Than Fair Value: 
Steel Wire Rod From Trinidad & Tobago

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

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

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EFFECTIVE DATE: February 24, 1998.

FOR FURTHER INFORMATION CONTACT: Abdelali Elouaradia or Alexander 
Braier, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-2243 or (202) 482-3818, 
respectively.

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (``URAA''). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
references to the provisions codified at

[[Page 9178]]

19 CFR Part 353 (April 1997). Although the Department's new 
regulations, codified at 19 CFR 351 (62 FR 27296, May 19, 1997), do not 
govern these proceedings, citations to those regulations are provided, 
where appropriate, to explain current departmental practice.

Final Determination

    We determine that steel wire rod (``SWR'') from Trinidad & Tobago 
is being, or is likely to be, sold in the United States at less than 
fair value (LTFV), as provided in section 735 of the Act.

Case History

    Since the preliminary determination in this investigation 
(Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Steel Wire Rod from Trinidad & 
Tobago), 62 FR 51581 (October 1, 1997) (``SWR''), the following events 
have occurred:
    In November 1997, we conducted a verification of the respondent's 
questionnaire responses. On December 15, 1997, the Department issued 
its reports on verification findings for Caribbean Ispat, Ltd. (CIL). 
On December 29, 1997, respondents submitted new computer sales listings 
which included only data corrections identified through verification. 
Petitioners and respondents submitted case briefs on December 22, 1997, 
and rebuttal briefs on January 5, 1998. A public hearing was not held 
as there were no requests for a hearing.

Scope of Investigation

    The products covered by this 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 Notice of Preliminary Determination, 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 investigation 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 and instructions to Customs dated February 3, 1998).

Period of Investigation

    The period of investigation (``POI'') is January 1, 1996 through 
December 31, 1996.

Fair Value Comparisons

    To determine whether sales of steel wire rod sold by CIL to the 
United States were made at less than fair value, we compared the Export 
Price (``EP'') to the normal value (``NV''), as described in the ``EP'' 
and ``Normal Value'' sections of this notice below. In accordance with 
section 777A(d)(1)(A)(i), we calculated weighted-average EPs for 
comparisons to weighted-average NVs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondent, covered by the description in the 
Scope of Investigation section above, and sold in the home market 
during the POI, to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. Where there were no 
sales of identical merchandise in the home market to compare to U.S. 
sales, we compared U.S. sales to the next most similar foreign like 
product on the basis of the characteristics listed in the antidumping 
duty questionnaire and the May 22, 1997, reporting instructions.
    Consistent with our practice, we compared prime merchandise sold in 
the United States to prime merchandise sold in the home market, and 
secondary merchandise to secondary merchandise. See, e.g., Certain 
Cold-Rolled Carbon Steel Flat Products from the Netherlands; Final 
Results of Antidumping Duty Administrative Review, 61 FR 48465, 
(September 13, 1996).
    On January 8, 1998, the Court of Appeals of the Federal Circuit 
issued a decision in Cemex, S.A. v. United States, No. 97-1151, 1998 WL 
3626 (Fed. Cir. Jan. 8, 1998). In that case,

[[Page 9179]]

based on the pre-URAA version of the Act, the Court discussed the 
appropriateness of using constructed value (``CV'') as the basis for 
foreign market value when the Department finds home market sales to be 
outside the ordinary course of trade. This issue was not raised by any 
party in this proceeding. However, the URAA amended the definition of 
sales outside the ``ordinary course of trade'' to include sales 
disregarded as below cost. See section 771(15) of the Act. Because the 
Court's decision was issued so close to the deadline for completing 
this administrative review, we have not had sufficient time to evaluate 
and apply (if appropriate and if there are adequate facts on the 
record) the decision to the facts of this ``post-URAA'' case. For these 
reasons, we have determined to continue to apply our policy regarding 
the use of CV when we have disregarded below-cost sales from the 
calculation of NV.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the EP or CEP. The NV LOT is that of 
the starting-price sales in the comparison market or, when NV is based 
on constructed value (CV), that of the sales from which we derive 
selling, general and administrative (SG&A) expenses and profit. For EP, 
the U.S. LOT is also the level of the starting-price sale, which is 
usually the sale from the exporter to the importer. For CEP, it is the 
level of the constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than the EP or 
CEP, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make an LOT adjustment under section 
773(a)(7)(A) of the Act. See Notice of Final Determination of Sales at 
Less Than Fair Value: Certain Cut-to-length Carbon Steel Plate From 
South Africa, 62 FR 61731 (November 19, 1997).
    Neither CIL nor petitioners commented on our preliminary level of 
trade analysis. Furthermore, our verification findings were consistent 
with our preliminary level of trade analysis. Therefore, consistent 
with our findings in the preliminary determination, for this final 
determination we have continued to treat all of CIL's home market and 
U.S. sales as being at a single level of trade and we have made no 
level of trade adjustment when matching its U.S. sales to home market 
sales.

Export Price

    We based price in the United States on EP, in accordance with 
subsections 772 (a) and (c) of the Act because the subject merchandise 
was sold directly to the first unaffiliated purchaser in the United 
States prior to importation and CEP was not otherwise warranted based 
on the facts on the record.
    We calculated EP based on packed prices to the first unaffiliated 
customer in the United States. We made adjustments, where appropriate, 
for international ocean freight, marine insurance, U.S. brokerage and 
handling, U.S. Customs duties and user fees, U.S. inland freight from 
port to unaffiliated customer, U.S. inland insurance, dock handling and 
survey fees in both the United States and Trinidad in accordance with 
section 772(c)(2) of the Act.
    We corrected the CIL's data for certain errors and omissions found 
at verification and submitted to the Department.
Normal Value
    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
if the aggregate volume of home market sales of the foreign like 
product is greater than five percent of the aggregate volume of U.S. 
sales), we compare the respondent's volume of home market sales of the 
foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1)(C) of the Act. Since 
CIL's aggregate volume of home market sales of the foreign like product 
was greater than five percent of its aggregate volume of U.S. sales for 
the subject merchandise, we determined that the home market was viable. 
Therefore, we have based NV on home market sales.

Cost of Production Analysis

    Pursuant to an allegation made by petitioner, we initiated a cost 
of production investigation in our notice of initiation (62 FR 13854 
March 24, 1997). Before making any fair value comparisons, we conducted 
the COP analysis described below.

Calculation of COP

    We calculated the COP based on the sum of respondent's cost of 
materials and fabrication for the foreign like product, plus amounts 
for home market general expenses and packing costs in accordance with 
section 773(b)(3) of the Act. We relied on the submitted COP data, 
except in the following instances where the costs were not 
appropriately quantified or valued:
    1. We revised the reported general and administrative expense 
(``G&A'') rate to include only net foreign exchange losses related to 
accounts payable. See comment 4.
    2. We used CIL's COP/CV files which assign the cost of purchased 
billets to specific control numbers. See comment 5.

Test of Home Market Prices

    We used the respondent's submitted POI weighted-average COPs, as 
adjusted (see above). We compared the weighted-average COP figures to 
home market sales of the foreign like product as required under section 
773(b) of the Act. In determining whether to disregard home-market 
sales made at prices below the COP, we examined whether (1) within an 
extended period of time, such sales were made in substantial 
quantities, and (2) such sales were made at prices which permitted the 
recovery of all costs within a reasonable period of time. On a product-
specific basis, we compared the COP to the home market prices, less any 
applicable movement charges, rebates, discounts, and direct and 
indirect selling expenses.

Results of COP Test

    Pursuant to section 773(b)(2)(C), where less than 20 percent of 
respondent's sales of a given product were at prices less than the COP, 
we did not disregard any below-cost sales of that product because we 
determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of a respondent's sales of a 
given product during the POI were at prices less than the COP, we 
determined such sales to have been made in ``substantial quantities,'' 
and within an extended period of time in accordance with section 
773(b)(2)(B) of the Act. Where we determined that such sales were also 
not made at prices which would permit recovery of all costs within a 
reasonable period of time, in accordance with section 773(b)(2)(D) of 
the Act, we disregarded the below-cost sales. Where all sales of a 
specific product were at prices below the COP, we disregarded all sales 
of that product, and calculated NV based on CV.

[[Page 9180]]

Calculation of CV

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of respondent's cost of materials, fabrication, SG&A, 
U.S. packing costs, interest expenses and profit. As noted above, we 
assigned the cost of purchased billets to specific control numbers and 
recalculated Ispat's general and administrative expense amount. In 
accordance with section 773(e)(2)(A) of the Act, we based SG&A and 
profit on the amounts incurred and realized by the respondent in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade, for consumption in the foreign country.

Price-to-Price Comparisons

    For those product comparisons for which there were sales at prices 
above the COP, we based NV on prices to home market customers. We made 
adjustments, where appropriate, for physical differences in the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.
    We calculated NV based on prices to unaffiliated home market 
customers. We made deductions for discounts, rebates, and inland 
freight. In addition, we made circumstance-of-sale adjustments or 
deductions for credit, mark-up by affiliated parties, and warranty, 
where appropriate. In accordance with section 773(a)(6), we deducted 
home market packing costs and added U.S. packing costs.

Currency Conversion

    For purposes of the preliminary determination, we made currency 
conversions using the official daily exchange rate in effect on the 
date of the U.S. sales. The Department's preferred source for daily 
exchange rates is the Federal Reserve Bank. However, the Federal 
Reserve Bank does not track or publish exchange rates for Trinidad 
currency. Therefore, we made currency conversions based on the daily 
exchange rates from the Dow Jones Business Information Service, as 
published in the Wall Street Journal. This is consistent with the 
Department's practice. See, i.e., Final Affirmative Countervailing Duty 
Determination on Steel Wire Rod From Trinidad and Tobago, (FR cite).

Verification

    As provided in section 782 (i) of the Act, we conducted a 
verification of the information submitted by CIL for use in our final 
determination. We used standard verification procedures, including 
examination of relevant accounting and sales/production records and 
original source documents provided by respondents.

Interest Party Comments

Comment 1: Composite Coils

    CIL argues that the Department incorrectly treated its sales of 
composite coil as sales of secondary merchandise rather than prime 
merchandise. CIL states that a composite coil consists of smaller 
sections of prime merchandise, which are physically banded together to 
produce a full coil of prime merchandise. CIL argues that ``[Fo]ot for 
foot, composite coil is prime merchandise'' (CIL Case Brief at 2) 
because it shares the identical physical characteristics as prime 
merchandise. Further, CIL maintains, petitioners have not introduced 
any evidence that the physical characteristics of composite coils make 
it a second quality product.
    CIL notes that petitioner's argument that the Department should 
classify sales of composite coils as secondary merchandise on the basis 
of price alone is contrary to section 1677(16)(A) of the Act, which 
states that the preferred ``foreign like product'' is the merchandise 
``identical in physical characteristics'' with the subject merchandise 
(CIL Case Brief at 3). CIL concludes, therefore, that the Department 
must consider its sales of composite coils to be sales of prime 
merchandise.
    Petitioners urge the Department to uphold its preliminary 
determination to treat composite coil sales as non-prime merchandise 
sales, arguing that (1) the physical characteristics of composite coils 
are different from prime merchandise, (2) composite coils are much more 
difficult for wire drawers to process because they are not one 
continuous piece of wire rod, and (3) therefore, composite coils are 
priced lower than prime coils because they are less desirable to 
customers, and not, as CIL contends, because of competitive pressures 
in the home market. Petitioners assert that the very definition of a 
composite coil points to the most significant physical difference 
between it and prime merchandise, the fact that there are one or more 
breaks in the coil which renders it much more difficult to process and 
hence less desirable to customers. Petitioners conclude by rebutting 
CIL's allegation that the Department has based its preliminary finding 
that composite coils are not prime merchandise only based on price 
differences. Petitioners state that ``* * * the Department is using the 
unquestionable physical difference between composite coils and prime 
merchandise as a matching criterion, not price'' (CIL Case Brief at 3).

DOC Position

    We agree with CIL. Section 771(16) of the Act directs the 
Department to compare sales of home market merchandise which are ``such 
or similar'' to merchandise sold in the United States. In accordance 
with section 771(16)(A), the Department first identifies and compares 
that merchandise which is ``identical'' in terms of physical 
characteristics, followed by sales of merchandise which is most 
``similar'' in physical characteristics. To make these determinations, 
the Department devises a hierarchy of commercially meaningful 
characteristics suitable to each class or kind of merchandise. The 
Department considers merchandise to be identical within the meaning of 
section 771(16)(A) when all the relevant characteristics match. 
Composite coils were verified as identical in every way to prime 
merchandise within each CONNUM (see CIL Sales Verification) (Dec. 15, 
1997), within the meaning of the statute and the Department's product 
matching hierarchy. In addition, composite coils are purchased and used 
by customers as prime merchandise, are used to fill orders of prime 
merchandise sold, and are used in the same applications as continuous 
coils. Therefore, as there is no basis for considering them as 
secondary merchandise, the Department has revised these final results 
to treat composite coils as prime merchandise.

Comment 2: U.S. Commissions

    CIL claims that we made an improper adjustment to the U.S. price, 
by deducting the mark-up retained by its affiliated parties from the 
U.S. price. CIL further states that for the U.S. price calculation, in 
the case of EP sales, the Department should not deduct any selling 
expenses, direct or indirect, but can adjust normal value to reflect 
differences in direct selling expenses incurred on U.S. and home market 
sales through a ``circumstance of sale adjustment''. Furthermore, CIL 
argues that the mark-up retained by its U.S. affiliates is irrelevant 
to the dumping calculation, since it represents revenue to the overall 
Ispat group, not an expense.
    Petitioners argue that this mark-up is commission incurred only on 
certain U.S. sales, but not in the home market. In addition, 
petitioners argued that (1) the Department policy is to adjust for 
commissions to affiliates or employees on EP sales, and (2) the 
regulations

[[Page 9181]]

permit circumstance of sale adjustments for direct selling expenses.

DOC Position

    We disagree with both CIL and petitioners, in part. We disagree 
with CIL that the Department made an improper adjustment to U.S. price 
based on the mark-up retained by CIL's U.S. sales affiliates. The 
program log which was disclosed to all parties at disclosure clearly 
indicates that no such adjustment relating to this mark-up was made to 
U.S. price, and CIL's price calculation sheets for U.S. sales (see, 
i.e. Sales Analysis Memo) (Sept. 24, 1997) clearly demonstrate that 
this mark-up is incorporated into the gross unit price reported to the 
Department (See, i.e., CIL Verification Exhibit 7).
    We disagree with petitioners that this mark-up is a commission 
warranting a circumstance of sale adjustment, because the Department 
applies a two-pronged test to determine whether an adjustment for 
related party commissions is appropriate. First, we determine if the 
commissions are directly related to specific sales and, secondly, we 
determine whether the commissions are at arm's length (See Final 
Results of Antidumping Duty Administrative Review; Certain Welded 
Carbons Steel Standard Pipes and Tubes from India, 57 FR 54360 (Nov. 
18, 1992). Even though the facts on the record support the allegation 
that this mark-up is directly related to specific sales, they do not 
demonstrate that it is at arm's length. Since the preliminary 
determination, we have reconsidered this issue. The Department's 
current practice, as well as the stated preference in the finalized 
regulations, is to use actual expenses incurred by U.S. affiliates. See 
19 CFR 351.402; and e.g. Granular Polytetrafluoroethylene Resin from 
Italy, 62 Fed. Reg. 48592, 48593 (September 16, 1997) (Comment 2). The 
reported expenses incurred by CIL's U.S. affiliate are indirect 
expenses. Thus, a circumstance of sale adjustment pursuant to section 
353.56(a) of the Department's regulations is not warranted.

Comment 3: Applicable Exchange Rates

    CIL contends that in absence of official Trinidad dollar to U.S. 
dollar exchange rates from the Federal Reserve Bank, the Department 
should use the publicly available published rates from the Central Bank 
of Trinidad and Tobago (``Bank''). CIL argues that these rates are more 
appropriate than the (Dow Jones rates) rates the Department used in the 
preliminary determination because the difference between the Bank rates 
and the preliminary determination rates is significant, and the Bank 
rates are more reasonable and reflective of commercial reality in 
Trinidad during the POI. CIL asserts that these rates do not represent 
``new factual information'' in the context of the Department's 
regulations because exchange rates are not provided by respondents, but 
rather are obtained independently by the Department from publicly 
availably sources.
    Petitioners argue that CIL's proposition to use the Bank exchange 
rates should be rejected because (1) the Bank's exchange rates 
constitute new factual information, and (2) CIL's argument that the 
Bank's rates are more reflective of commercial reality is predicated on 
an analysis of only two weeks of data, which is an insufficient sample 
to determine any significant difference between the two rates during 
the POI.

DOC Position

    The Department's normal practice is to use exchange rates provided 
by the Federal Reserve Bank. When the Federal Reserve does not provide 
exchange rates, as in the case of Trinidad, a reasonable alternative is 
to use rates from the Dow Jones Business Information Services (see 
Final Determination of Sales at Less Than Fair Value: Certain Steel 
Concrete Reinforcing Bars From Turkey, 62 FR 9737 (March 4, 1997), and 
Ferrosilicon From Brazil; Preliminary Results of Antidumping Duty 
Administrative Review, 61 FR 20793 (May 8, 1996)). The Dow Jones is a 
well established, reliable source of commercially available exchange 
rates. Thus it is reasonable to use these rates for this final 
determination. Furthermore, Ispat provided no evidence that the Bank 
rate was available to Ispat, or that Ispat used this rate during the 
POI. For all of these reasons, the Department is continuing to utilize 
Dow Jones exchange rates for this final determination.

Comment 4: Exchange Gains and Losses

    CIL argues that the Department's policy to include exchange gains 
and losses arising from the purchase of production inputs, but exclude 
gains and losses arising from other foreign currency denominated 
accounts, fails to reflect normal commercial business practices. CIL 
argues that the Department calculated a nonexistent cost by recognizing 
a foreign exchange loss on purchases transactions (accounts payable), 
but disregarding foreign exchange gains on sales transactions (cash and 
accounts receivable). CIL states that in normal financial practices, 
corporate treasurers do not manage specific accounts, but instead 
manage the net exposed position of the corporation. For example, if a 
corporation is holding an accounts receivable (or cash) balance and an 
accounts payable balance in the same currency maturing on approximately 
the same date, the treasurer will consider the company hedged. Under 
these circumstances any change in relative currency values will be 
offset with no cost to the corporation. CIL claims that this situation 
is in fact what happened within their organization during the POI.
    CIL explains that the Act requires the Department to use the 
exchange rate prevailing on the date of the sales transaction to 
convert foreign currency amounts to U.S. dollars, and any exchange gain 
or loss incurred when the actual payment is received is ignored. CIL 
argues that the Department uses the exchange rate as of the date of the 
sales transaction because the Department does not expect the producer 
to adjust its sales prices for unforeseeable future favorable or 
unfavorable exchange rate fluctuations. The Department's current policy 
for purchase transactions, however, assumes that a producer can foresee 
favorable or unfavorable exchange rate fluctuations, and can adjust 
sales prices accordingly. CIL argues that to ensure nonexistent (due to 
hedging) or unforeseeable (due to exchange rate fluctuations) costs are 
not included in the cost of production, the Department should either 
totally ignore the exchange gains and losses (regardless of whether 
they arise from purchase or sales transactions) or offset the exchange 
losses from purchase transactions with the exchange gain on sales 
transactions.
    Petitioners argue that the Department should follow its 
longstanding practice as outlined in Circular Welded Non-Alloy Steel 
Pipe and Tube from Mexico, (62 FR 37014, 37026, July 10, 1997) (Final 
Results of the Administrative Review), where the Department did not 
include exchange gains and losses on accounts receivables, because 
these gains and losses relate to selling activities rather than 
production costs. Petitioners state that the Department should not 
alter its longstanding policy and should continue to ignore exchange 
gains and losses on accounts receivables, as it did in the preliminary 
determination.

DOC Position

    We agree with the petitioner that foreign exchange gains and losses 
arising from sales transactions should not be included in CIL's COP and 
CV. It is the Department's normal practice to

[[Page 9182]]

distinguish between exchange gains and losses from sales transactions 
and exchange gains and losses from purchase transactions. See, e.g., 
Circular Welded Non-Alloy Steel Pipe and Tube from Mexico, 62 FR 37014, 
37026 (July 10, 1997) (Final Results of the Administrative Review, 
Comment 31). The Department normally includes in its calculation of COP 
and CV foreign exchange gains and losses resulting from transactions 
related to a company's manufacturing operations (e.g., purchases of 
inputs). See, e.g., Final Determination of Sales Less Than Fair Value: 
Polyethylene Tenephthalate Film, Sheet, and Ship From the Republic of 
Korea, 56 FR 16305, 16313 (April 22, 1991) (comment 16). We do not 
consider foreign exchange gains and losses arising from sales 
transactions to relate to manufacturing activities of a company. 
Accordingly, for the final determination we included in COP and CV 
exchange gains and losses arising from purchase transactions (accounts 
payable), but disallowed exchange gains and losses arising from sales 
transactions.

Comment 5: Purchased Billet Costs

    CIL argues that the Department should not specifically assign the 
cost of purchased billets to the specific CONNUMs produced from these 
billets. Instead, CIL maintains that the Department should allocate the 
cost of the purchased billets over all of CIL's production of subject 
merchandise. CIL claims that assigning the cost of purchased billets to 
the specific CONNUM distorts CIL's actual cost of production. CIL 
states that the company could have produced the purchased billet 
internally. The decision of which types of billets to purchase, 
however, was discretionary and driven by revenue and cost 
considerations, not by the type of billet.
    CIL further claims that the purchase of billets is a departure from 
the company's normal course of business, in which it internally 
produces all billets. CIL states that, consistent with section 
773(f)(1)(B) of the Act, its purchase of billets was a type of 
nonrecurring cost that benefitted the company's current production. 
Thus, according to CIL, the Department should adjust costs such that 
purchased billets are spread across all production.
    Petitioners contend that whenever the Department is able to do so, 
it should assign costs only to those specific products whose production 
incurred such costs. Petitioners state that because the costs for 
purchased billets can be directly tied to specific CONNUMs, the most 
accurate method of calculating COP is to allocate purchased billet 
costs to the specific CONNUMs they were used to produce.

DOC Position

    We agree with petitioners that the costs incurred for purchased 
billets should be charged directly to the products produced from these 
same billets. In fact, in this case, to do otherwise would not result 
in a product-specific cost since the record clearly demonstrates which 
products were manufactured by CIL from purchased billets.
    With respect to CIL's characterization of purchased billets as a 
nonrecurring cost, we consider the company's reliance upon section 
773(f)(1)(B) of the Act to be misplaced (19 U.S.C. 1677(f)(1)(B)). The 
billets at issue were purchased as direct material inputs used in the 
production of specific steel rod products. The statute, on the other 
hand, envisions nonrecurring costs as indirect costs that, by their 
nature, can be shown to benefit current or future production and, thus, 
should be systematically allocated to those products benefitted. As an 
example of such nonrecurring costs, the Statement of Administration 
Action (SAA), at page 835, cites preproduction research and development 
costs. Such costs may be demonstrated to provide a clear but indirect 
benefit to future production. In that regard, they differ markedly from 
the cost of purchased billets at issue here since the billets are 
simply a direct material input for a specific type of finished steel 
rod.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to continue to suspend liquidation of all entries of 
steel wire rod from Trinidad and Tobago, that are entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
this notice in the Federal Register. The Customs Service will require a 
cash deposit or posting of a bond equal to the estimated duty margins 
by which the normal value exceeds the expert price, as shown below. 
These suspension of liquidation instructions will remain in effect 
until further notice. The weighted-average dumping margins are as 
follows:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
               Manufacturer/producer/exporter                 percentage
                                                                margin  
------------------------------------------------------------------------
CIL........................................................        11.85
All other..................................................        11.85
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. As our final determination is affirmative, 
the ITC will determine, within 45 days, whether these imports are 
causing material injury, or threat of material injury, to an industry 
in the United States. If the ITC determines that material injury, or 
threat of material injury, does not exist, the proceedings will be 
terminated and all securities posted will be refunded or canceled. If 
the ITC determines that such injury does exist, the Department will 
issue antidumping duty orders directing Customs officials to assess 
antidumping duties on all imports of the subject merchandise entered, 
or withdrawn from warehouse, for consumption on or after the effective 
date of the suspension of liquidation.
    This determination is published pursuant to section 735(d) of the 
Act.

    Dated: February 13, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-4695 Filed 2-23-98; 8:45 am]
BILLING CODE 3510-DS-P