[Federal Register Volume 63, Number 213 (Wednesday, November 4, 1998)]
[Notices]
[Pages 59509-59514]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29551]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-351-827]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Emulsion Styrene-
Butadiene Rubber from Brazil

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

EFFECTIVE DATE: November 4, 1998.

FOR FURTHER INFORMATION CONTACT: Sunkyu Kim or John Maloney, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230; telephone: (202) 482-2613 or (202) 482-1503, respectively.

The Applicable Statute

    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 of Commerce's (the 
Department's) regulations are to the

[[Page 59510]]

regulations at 19 CFR Part 351, 62 FR 27296 (May 19, 1997).

Preliminary D etermination

    We preliminarily determine that emulsion styrene-butadiene rubber 
(ESBR) from Brazil 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 of sales at LTFV are shown in the 
``Suspension of Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation (Notice of Initiation of 
Antidumping Investigations: Emulsion Styrene-Butadiene Rubber from 
Brazil, the Republic of Korea, and Mexico (63 FR 20575, April 27, 
1998)), the following events have occurred:
    On May 18, 1998, the United States International Trade Commission 
(ITC) issued an affirmative preliminary injury determination in this 
case (see ITC Investigation No. 731-TA-794-796).
    In May 1998, the Department obtained information from the U.S. 
Embassy in Brazil identifying Petroflex Industria e Comercio S.A. 
(Petroflex) as the only producer and/or exporter of the subject 
merchandise to the United States. Based on this information, the 
Department issued the antidumping questionnaire to Petroflex in May 
1998.
    On May 22, 1998, Petroflex requested that it be permitted to use 
calendar year 1997 (i.e., its fiscal year) as its cost calculation 
period rather than the period of investigation (i.e., April 1, 1997, 
through March 31, 1998). We granted Petroflex's request on May 26, 
1998. We note, however, that Petroflex subsequently submitted cost 
information for the period of investigation in its Section D 
questionnaire response. Also, on May 26, 1998, Petroflex requested that 
the Department not require Petroflex to report resales of ESBR made by 
its affiliated customers in Brazil because such sales represent less 
than five percent of Petroflex's total sales in the home market. On May 
27, 1998, pursuant to 19 CFR 351.403(d), the Department granted 
Petroflex's request.
    In June 1998, the Department received a response to Section A of 
the questionnaire from Petroflex. Petroflex submitted its response to 
Sections B and C of the questionnaire in July 1998.
    On July 21, 1998, pursuant to section 733(c)(1)(A) of the Act, the 
petitioners made a timely request to postpone the preliminary 
determination. The petitioners filed an explanatory amendment to that 
request on July 23, 1998. We granted this request and, on July 28, 
1998, postponed the preliminary determination until no later than 
October 28, 1998 (see Notice of Postponement of Preliminary 
Determinations of Sales at Less Than Fair Value: Emulsion Styrene-
Butadiene Rubber From Brazil, the Republic of Korea, and Mexico (63 FR 
41544, August 4, 1998)).
    On July 27, 1998, the petitioners submitted a timely allegation 
pursuant to section 773(b) of the Act that Petroflex had made sales in 
the home market at less than the cost of production (COP). Our analysis 
of the allegation indicated that there were reasonable grounds to 
believe or suspect that Petroflex sold ESBR in the home market at less 
than the COP. Accordingly, we initiated a COP investigation with 
respect to Petroflex pursuant to section 773(b) of the Act (see 
Memorandum from Team to Louis Apple, Office Director, dated August 21, 
1998).
    We issued supplemental questionnaires for Sections A, B, and C to 
Petroflex in August 1998 and received responses to these questionnaires 
along with revised U.S. and home market sales listings in August and 
September 1998. We received Petroflex's response to Section D of the 
questionnaire in September 1998. We issued a supplemental questionnaire 
for Section D in October 1998, but the response to the supplemental 
questionnaire was not received in time to be considered for purposes of 
the preliminary determination. We will consider it, however, for 
purposes of the final determination.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on October 13, 1998, 
Petroflex requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the publication of 
this notice in the Federal Register. On October 16, 1998, Petroflex 
amended its request to include a request to extend the provisional 
measures to not more than six months. In accordance with 19 CFR 
351.210(b), because: (1) Our preliminary determination is affirmative; 
(2) Petroflex accounts for a significant proportion of exports of the 
subject merchandise; (3) no compelling reasons for denial exist; and 
(4) Petroflex has requested an extension of provisional measures, we 
are granting the respondent's request and are postponing the final 
determination until no later than 135 days after the publication of 
this notice in the Federal Register. Suspension of liquidation will be 
extended accordingly.

Scope of Investigation

    For purposes of this investigation, the product covered is ESBR. 
ESBR is a synthetic polymer made via free radical cold emulsion 
copolymerization of styrene and butadiene monomers in reactors. The 
reaction process involves combining styrene and butadiene monomers in 
water, with an initiator system, an emulsifier system, and molecular 
weight modifiers. ESBR consists of cold non-pigmented rubbers and cold 
oil extended non-pigmented rubbers that contain at least one percent of 
organic acids from the emulsion polymerization process.
    ESBR is produced and sold, both inside the United States and 
internationally, in accordance with a generally accepted set of product 
specifications issued by the International Institute of Synthetic 
Rubber Producers (IISRP). The universe of products subject to this 
investigation are grades of ESBR included in the IISRP 1500 series and 
IISRP 1700 series of synthetic rubbers. The 1500 grades are light in 
color and are often described as ``Clear'' or ``White Rubber.'' The 
1700 grades are oil-extended and thus darker in color, and are often 
called ``Brown Rubber.'' ESBR is used primarily in the production of 
tires. It is also used in a variety of other products, including 
conveyor belts, shoe soles, some kinds of hoses, roller coverings, and 
flooring.
    Products manufactured by blending ESBR with other polymers, high 
styrene resin master batch, carbon black master batch (i.e., IISRP 1600 
series and 1800 series) and latex (an intermediate product) are not 
included within the scope of this investigation.
    The products under investigation are currently classifiable under 
subheading 4002.19.0010 of the Harmonized Tariff Schedule of the United 
States (HTSUS). Although the HTSUS subheading is provided for 
convenience and customs purposes, the written description of the scope 
of this investigation is dispositive.

Period of Investigation

    The period of investigation (POI) is April 1, 1997, through March 
31, 1998.

Fair Value Comparisons

    To determine whether sales of ESBR from Brazil to the United States 
were made at less than fair value, we compared the export price (EP) or 
constructed export price (CEP) to the Normal Value (NV), as described 
in the ``Export Price and Constructed Export

[[Page 59511]]

Price'' and ``Normal Value'' sections of this notice, below. In 
accordance with section 777A(d)(1)(A)(i) of the Act, we calculated 
weighted-average EPs and CEPs for comparison to weighted-average NVs.
    On January 8, 1998, the Court of Appeals for the Federal Circuit 
issued a decision in CEMEX v. United States, 1998 WL 3626 (Fed Cir.). 
In that case, 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 below cost. See Section 771(15) of the Act. Consequently, 
the Department has reconsidered its practice in accordance with this 
court decision and has determined that it would be inappropriate to 
resort directly to CV, in lieu of foreign market sales, as the basis 
for NV if the Department finds foreign market sales of merchandise 
identical or most similar to that sold in the United States to be 
outside the ``ordinary course of trade.'' Instead, the Department will 
use sales of similar merchandise, if such sales exist. The Department 
will use CV as the basis for NV only when there are no above-cost sales 
that are otherwise suitable for comparison. Therefore, in this 
proceeding, when making comparisons in accordance with section 771(16) 
of the Act, we considered all products sold in the home market as 
described in the ``Scope of Investigation'' section of this notice, 
above, that were in the ordinary course of trade for purposes of 
determining appropriate product comparisons to U.S. sales. Where there 
were no sales of identical merchandise in the home market made in the 
ordinary course of trade, we compared U.S. sales to sales of the most 
similar foreign like product made in the ordinary course of trade, 
based on the characteristics listed in Sections B and C of our 
antidumping questionnaire.

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 transaction. The NV LOT 
is that of the starting-price sales in the comparison market or, when 
NV is based on CV, that of the sales from which we derive selling, 
general and administrative (SG&A) expenses and profit. For EP, the LOT 
is also the level of the starting-price sale, which is usually from 
exporter to 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 level of trade 
than 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. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP-offset provision). 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).
    Petroflex reported two customer categories (i.e., end users and 
distributors) and two channels of distribution corresponding to each 
customer category for its home market sales. In its response, Petroflex 
claims that its sales to the end users are at a different LOT than its 
sales to the distributors, arguing that it provides significantly 
different selling services to its end-user customers than its 
distributors. In the U.S. market, Petroflex reported both EP and CEP 
sales. For EP sales, Petroflex reported one channel of distribution and 
one customer category (i.e., direct sales to unaffiliated end users) 
and claims that sales to this customer category are at the same level 
of trade as its sales to end users in the home market. For CEP sales, 
Petroflex reported one channel of distribution and one customer 
category (i.e., sales to small end-users through its U.S. affiliate). 
Petroflex claims that these sales constitute a separate level of trade 
from its EP sales and the same level of trade as its home market sales 
to distributors.
    In determining whether separate levels of trade actually existed in 
the home market, we examined whether Petroflex's sales involved 
different marketing stages (or their equivalent) based on the channel 
of distribution, customer categories and selling functions. As noted 
above, Petroflex made sales to two different customer categories (i.e., 
end users and distributors). With respect to selling activities, 
Petroflex identified the following selling services it provides to its 
end users: (1) freight and delivery; (2) pre-and post-sale technical 
services; (3) warranty services; and (4) market research. For sales to 
distributors, Petroflex stated that it does not perform any of the 
services it performs for its sales to end users except for post-sale 
technical services. With respect to technical services, however, 
Petroflex further stated that such services are provided infrequently 
to distributors, whereas they are provided frequently to end users. 
Based upon this information, we have determined that Petroflex's sales 
to end users differ significantly from its sales to distributors with 
respect to selling activities and, therefore, constitute a different 
level of trade than its sales to distributors.
    In analyzing Petroflex's selling activities for its EP sales (i.e., 
sales to end users), we noted that the sales involved basically the 
same selling functions associated with the home market sales to end 
users described above. Therefore, we determine that Petroflex's EP 
sales and its home market sales to end users are made at the same level 
of trade.
    The CEP sales were based on sales made by Petroflex to its U.S. 
affiliate, which then sold the merchandise to unaffiliated purchasers 
in the United States. Based on our analysis, we find that the selling 
functions performed at the CEP level do not significantly differ from 
those performed in the home market for sales to distributors. 
Specifically, after making deductions pursuant to section 772(d) of the 
Act, we determined that there were two selling activities performed by 
Petroflex associated with its sales to its U.S. affiliate: (1) Freight; 
and (2) post-sale technical services, which, according to Petroflex, 
are offered infrequently. Based on this information, we determined that 
Petroflex's CEP sales and its home market sales to distributors are 
made at the same level of trade.
    To the extent possible, we determined NV based on sales in the home 
market at the same LOT as the EP or CEP transactions. When we were 
unable to find sales of the foreign like product in the home market at 
the same LOT as the U.S. sale, we determined whether a LOT adjustment 
was warranted. To make that determination, we examined whether there 
was a pattern of consistent price differences between the two levels of 
trade in the home market by comparing, for each model sold at both 
levels, the average net price of sales made in the ordinary course of 
trade at the two

[[Page 59512]]

levels of trade. We examined whether average prices were higher at one 
of the levels of trade for a preponderance of the models, so as to 
demonstrate a pattern of consistent price differences. We also 
considered whether the average prices were higher at one of the levels 
of trade for a preponderance of sales, based on the quantities of each 
model sold, in making this determination. Based on our analysis, we did 
not find that there existed a pattern of consistent price differences 
between the two levels of trade in the home market. Therefore, we did 
not make level of trade adjustments in our calculation. Since there was 
no pattern of consistent price differences between sales at the 
different levels of trade, we also did not make a CEP offset adjustment 
to NV. See Calculation Memorandum from Case Analyst dated October 28, 
1998, for further discussion.

Export Price and Constructed Export Price

    Petroflex reported as EP transactions its sales of subject 
merchandise sold to unaffiliated U.S. customers prior to importation 
through its affiliated company, Nemotrade Corporation (Nemotrade). 
Petroflex reported as CEP transactions its sales of subject merchandise 
sold to Nemotrade for its own account. Nemotrade then resold the 
subject merchandise after importation to unaffiliated customers in the 
United States.
    With respect to sales made through Nemotrade prior to importation, 
Petroflex claims that these sales are properly classified as EP sales 
because Nemotrade acted only as a sales-document processor and 
communication link to facilitate Petroflex's U.S. sales to unaffiliated 
customers. Specifically, Petroflex states the following: (1) Nemotrade 
does not take physical possession of the merchandise; (2) the 
merchandise is shipped directly from Petroflex to the customer; (3) 
Nemotrade does not have independent authority to establish prices; and 
(4) the essential terms of sales are set and approved by Petroflex in 
Brazil.
    We examine several factors to determine whether sales made prior to 
importation through an affiliated sales agent to an unaffiliated 
customer in the United States are EP sales, such as: (1) Whether the 
merchandise was shipped directly from the manufacturer to the 
unaffiliated U.S. customer; (2) whether the sales follow customary 
commercial channels between the parties involved; and (3) whether the 
function of the U.S. selling agent is limited to that of a ``processor 
of sales-related documentation'' and a ``communication link'' with the 
unrelated U.S. buyer. Where the factors indicate that the activities of 
the U.S. affiliate are ancillary to the sale (e.g., arranging 
transportation or customs clearance), we treat the transactions as EP 
sales. Where the U.S. affiliate is substantially involved in the sales 
process (e.g., negotiating prices), we treat the transactions as CEP 
sales.
    Based on our review of the selling activities of Petroflex's U.S. 
affiliate, we preliminarily determine that EP is appropriate for 
Petroflex's sales made to the first unaffiliated customers in the 
United States through Nemotrade prior to importation. The customary 
commercial channel between Petroflex and its unaffiliated customers is 
that Petroflex ships the EP merchandise directly to the unaffiliated 
U.S. customers without having the merchandise enter into the inventory 
of the U.S. affiliate and that the U.S. affiliate's activities are 
limited to that of a ``processor of sales-related documentation'' and a 
``communication link'' with the unaffiliated U.S. buyers. Information 
on the record reflects that Nemotrade does no more than relay to 
Petroflex purchase orders received from U.S. customers and does not 
solicit such orders or negotiate terms with the customers. Accordingly, 
for purposes of the preliminary determination, we are treating the 
sales in question as EP transactions. We will examine this issue 
further at verification.
    We calculated EP, in accordance with section 772(a) of the Act, for 
those sales where the merchandise was sold to the first unaffiliated 
purchaser in the United States prior to importation and CEP methodology 
was not otherwise warranted, based on the facts of record. We based EP 
on the packed CIF or C&F price to unaffiliated purchasers in the United 
States. We made deductions for movement expenses in accordance with 
section 772(c)(2)(A) of the Act; these included, where appropriate, 
foreign inland freight, ocean freight and marine insurance.
    We calculated CEP, in accordance with subsections 772(b) of the 
Act, for those sales to the first unaffiliated purchaser that took 
place after importation into the United States. We based CEP on the 
packed FOB or delivered prices to unaffiliated purchasers in the United 
States. We made adjustments for price-billing errors, where applicable. 
We also made deductions for movement expenses in accordance with 
section 772(c)(2)(A) of the Act; these included, where appropriate, 
foreign inland freight, ocean freight, marine insurance, U.S. customs 
duties (including harbor maintenance fees and merchandise processing 
fees), U.S. inland freight, and U.S. warehousing expenses. In 
accordance with section 772(d)(1) of the Act, we deducted those selling 
expenses associated with economic activities occurring in the United 
States, including direct selling expenses (credit costs and warranty 
expenses), inventory carrying costs, and indirect selling expenses. We 
also made an adjustment for profit in accordance with section 772(d)(3) 
of the Act.

Affiliated-Party Transactions and Arm's-Length Test

    Sales to affiliated customers in the home market not made at arm's-
length prices (if any) were excluded from our analysis because we 
considered them to be outside the ordinary course of trade. See 19 CFR 
351.102. To test whether these sales were made at arm's-length prices, 
we compared on a model-specific basis the starting prices of sales to 
affiliated and unaffiliated customers net of all movement charges, 
direct selling expenses, and packing. Where, for the tested models of 
subject merchandise, prices to the affiliated party were on average 
99.5 percent or more of the price to the unaffiliated parties, we 
determined that sales made to the affiliated party were at arm's 
length. See 19 CFR 351.403(c). In instances where no price ratio could 
be constructed for an affiliated customer because identical merchandise 
was not sold to unaffiliated customers, we were unable to determine 
that these sales were made at arm's-length prices and, therefore, 
excluded them from our LTFV analysis. See Final Determination of Sales 
at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products 
from Argentina (58 FR 37062, 37077 (July 9, 1993)). Where the exclusion 
of such sales eliminated all sales of the most appropriate comparison 
product, we made a comparison to the next most similar model.

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, we 
compared Petroflex's volume of home market sales of the foreign like 
product to the volume of its U.S. sales of the subject merchandise, in 
accordance with section 773(a)(1)(C) of the Act. Because Petroflex'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 of the 
subject merchandise, we determined that the home market was viable for 
Petroflex.

[[Page 59513]]

    Based on the information contained in the cost allegation submitted 
by the petitioners, the Department found reasonable grounds to believe 
or suspect that Petroflex made sales in the home market at prices below 
their COPs, in accordance with section 773(b)(1) of the Act. As a 
result, the Department initiated an investigation to determine whether 
Petroflex made home market sales at prices below their COPs during the 
POI, within the meaning of section 773(b) of the Act. See Memorandum 
from the Team to Louis Apple, Director, Office 5, dated August 21, 
1998. Before making any fair value comparisons, we conducted the COP 
analysis described below.
    We calculated the COP based on the sum of Petroflex's cost of 
materials and fabrication for the foreign like product, plus amounts 
for home market SG&A, financial expenses and packing costs, in 
accordance with section 773(b)(3) of the Act. Petroflex purchased a 
major input, butadiene, for ESBR from both unaffiliated and affiliated 
parties. At the time of this determination, no information was 
available on the affiliated party's cost to produce the input. 
Therefore, in accordance with section 773(f)(2) of the Act, we valued 
butadiene that Petroflex purchased from its affiliated producer by 
applying the higher of the transfer price or the market price of the 
input. We intend to consider the affiliate's cost of production in our 
analysis for the final determination. In addition, we adjusted 
Petroflex's G&A and financial expense ratio calculation using fiscal 
year, rather that POI data, as set out in the Cost Calculation 
Adjustment Memorandum from William Jones to Neal Halper, Acting 
Director, Office of Accounting, dated October 28, 1998.
    We compared Petroflex's weighted-average COP figures to home market 
sales of the foreign like product, as required under section 773(b) of 
the Act, in order to determine whether sales had been made at prices 
below their COPs. On a product-specific basis, we compared the COP to 
home market price, less any applicable movement charges, discounts, 
direct selling expenses and packing expenses.
    In determining whether to disregard home market sales made at 
prices below the COP, we examined whether such sales were made: (1) in 
substantial quantities within an extended period of time; and (2) at 
prices which permitted the recovery of all costs within a reasonable 
period of time in the normal course of trade, pursuant to section 
773(b)(1) of the Act.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of Petroflex'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 Petroflex'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'' within an extended period of time in accordance with 
section 773(b)(2)(B) of the Act. In such cases, we also determined that 
such sales were 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. Therefore, 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. For those U.S. sales of 
ESBR for which there were no comparable home market sales in the 
ordinary course of trade, we compared the CEP to CV in accordance with 
section 773(a)(4) of the Act.
    We found that, for certain models of ESBR, more than 20 percent of 
Petroflex's home market sales within an extended period of time were at 
prices less than COP. Further, the prices did not provide for the 
recovery of costs within a reasonable period of time. We, therefore, 
disregarded the below-cost sales and used the remaining above-cost 
sales as the basis for determining NV, in accordance with section 
773(b)(1) of the Act.
    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of Petroflex's cost of materials, fabrication, SG&A 
expenses, profit, and U.S. packing costs. For Petroflex, in accordance 
with section 773(e)(2)(A) of the Act, we based SG&A expenses and profit 
on the amounts incurred and realized by Petroflex in connection with 
the production and sale of the foreign like product in the ordinary 
course of trade, for consumption in the foreign country.
    We calculated NV for Petroflex as noted in the ``Price to Price 
Comparisons'' and ``Price to CV Comparisons'' sections of this notice, 
below.

Price-to-Price Comparisons

    We calculated NV based on FOB or delivered prices to unaffiliated 
customers or prices to affiliated customers that we determined to be at 
arm's-length prices. We made adjustments for price billing errors, 
where appropriate. We made deductions, where appropriate, for foreign 
inland freight, pursuant to section 773 (a)(6)(B) of the Act. In 
addition, we made adjustments for differences in cost attributable to 
differences in physical characteristics of the merchandise pursuant to 
section 773(a)(6)(C)(ii) of the Act, as well as for differences in 
circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We made COS 
adjustments for imputed credit expenses. Finally, we deducted home 
market packing costs and added U.S. packing costs in accordance with 
section 773(a)(6)(A) and (B) of the Act.
    To the extent practicable, we based NV on sales at the same level 
of trade as the EP or CEP transactions. In cases where NV was 
calculated at a different LOT, we did not make any LOT adjustment, as 
discussed further in the Level of Trade section, above.

Price-to-CV Comparisons

    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act. Where we compared CV to 
EP, we deducted from CV the weighted-average home market direct selling 
expenses and added the weighted-average U.S. product-specific direct 
selling expenses in accordance with section 773(a)(6)(C)(iii) of the 
Act. Where we compared CV to CEP, we deducted from CV the weighted-
average home market direct selling expenses.

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank.
    Section 773A(a) of the Act directs the Department to use a daily 
exchange rate in order to convert foreign currencies into U.S. dollars 
unless the daily rate involves a fluctuation. It is the Department's 
practice to find that a fluctuation exists when the daily exchange rate 
differs from the benchmark rate by 2.25 percent. The benchmark is 
defined as the moving average of rates for the past 40 business days. 
When we determine a fluctuation to have existed, we substitute the 
benchmark rate for the daily rate, in accordance with established 
practice. Further, section 773A(b) of the Act directs the Department to 
allow a 60-day adjustment period when a currency has undergone a 
sustained movement. A sustained movement has occurred when the weekly 
average of actual daily rates exceeds the weekly average of benchmark 
rates by more than five percent for eight consecutive weeks. (For an 
explanation of this method, see Policy Bulletin 96-1: Currency

[[Page 59514]]

Conversions (61 FR 9434, March 8, 1996).) Such an adjustment period is 
required only when a foreign currency is appreciating against the U.S. 
dollar. The use of an adjustment period was not warranted in this case 
because the Brazilian Real did not undergo a sustained movement.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information determined to be acceptable for use 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 that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct the 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
                   Exporter/Manufacturer                        Margin
                                                              Percentage
------------------------------------------------------------------------
Petroflex Industria e Comercio S.A.........................        61.71
All Others.................................................        61.71
------------------------------------------------------------------------

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 these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Public Comment

    Case briefs or other written comments in at least ten copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than February 5, 1998, and rebuttal briefs no later than February 
12, 1998. A list of authorities used and an executive summary of issues 
should accompany any briefs submitted to the Department. Such summary 
should be limited to five pages total, including footnotes. In 
accordance with section 774 of the Act, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. Tentatively, the hearing 
will be held on February 16, 1998, time and room to be determined, at 
the U.S. Department of Commerce, 14th Street and Constitution Avenue, 
NW., Washington, DC 20230. 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 30 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. 
Oral presentations will be limited to issues raised in the briefs. If 
this investigation proceeds normally, we will make our final 
determination by no later than 135 days after the publication of this 
notice in the Federal Register.
    This determination is issued and published pursuant to sections 
733(d) and 777(i) of the Act.

    Dated: October 28, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-29551 Filed 11-3-98; 8:45 am]
BILLING CODE 3510-DS-P