[Federal Register Volume 63, Number 213 (Wednesday, November 4, 1998)]
[Notices]
[Pages 59519-59524]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29553]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-201-821]


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

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, N.W., Washington, D.C. 
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 references to 19 CFR part 351 (62 FR 
27296, May 19, 1997).

Preliminary Determination

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

Case History

    Since the initiation of this investigation (see 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 Nos. 731-TA-794-796).
    In May and June 1998, the Department obtained information from the 
U.S. Embassy in Mexico identifying Industrias Negromex, S.A. de C.V. 
(Negromex) as the only producer and/or exporter of the subject 
merchandise to the United States. Based on this

[[Page 59520]]

information, the Department issued the antidumping questionnaire to 
Negromex in May 1998.
    In June 1998, the Department received a response from Negromex to 
Section A of the questionnaire. Negromex 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 Negromex had made sales in 
the home market at less than the cost of production (COP). Our analysis 
of that allegation indicated that there were reasonable grounds to 
believe or suspect that Negromex sold ESBR in the home market at prices 
less than the COP. Accordingly, on August 21, 1998, we initiated a COP 
investigation with respect to ESBR pursuant to section 773(b) of the 
Act (see Memorandum from Team to Louis Apple, Director, Office 5, dated 
August 21, 1998).
    We issued a supplemental questionnaire for Sections A, B, and C to 
Negromex in August 1998 and received a response to that supplemental 
questionnaire, along with revised U.S. and home market sales listings, 
in September 1998. In those revised sales listings, Negromex included, 
at the request of the Department, one ``sample'' U.S. sale for which 
Negromex received payment and transferred ownership to the customer. We 
received Negromex's response to Section D of the questionnaire in 
September 1998. In October 1998, we issued a supplemental questionnaire 
for Section D to Negromex, but the response to that supplemental 
questionnaire, submitted on October 23, 1998, was not considered for 
purposes of the preliminary determination because of a lack of time to 
properly analyze the response. We will consider it, however, for 
purposes of the final determination.

Postponement of Final Determination and Extension of Provisional 
Measures

    On October 14, 1998, Negromex requested that, in the event of an 
affirmative preliminary determination in this investigation, the 
Department postpone its final determination until no later than 135 
days after the publication of this notice in the Federal Register, 
pursuant to section 735(a)(2)(A) of the Act. Negromex also requested 
that the Department extend provisional measures pursuant to section 
733(d) of the Act from four months to not more than six months. In 
accordance with 19 CFR 351.210(e), because: (1) Our preliminary 
determination is affirmative; (2) Negromex accounts for a significant 
proportion of exports of the subject merchandise; (3) no compelling 
reasons for denial exist; and (4) Negromex has requested an extension 
of provisional measures, we are granting this 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 Mexico to the United States 
were made at less than fair value, we compared the constructed export 
price (CEP) to the Normal Value (NV) for Negromex, as described in the 
``Constructed Export 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 CEPs for comparison to weighted-average 
NVs.
    On January 8, 1998, the Court of Appeals for the Federal Circuit 
issued a decision in CEMEX, S.A. v. United States, 133 F. 3d 897 (Fed. 
Cir. 1998). 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

[[Page 59521]]

comparisons to U.S. sales. Where there were no sales of identical 
merchandise in the home market made in the ordinary course of trade to 
compare to U.S. sales, 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 and CEP Offset

    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 constructed value (CV), that of the sales from which we 
derive selling, general and administrative (SG&A) expenses and profit. 
For EP, the LOT is also that 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 LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer in the comparison market. 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 a 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).
    For its home market sales, Negromex reported: (1) Four customer 
categories--large purchaser end users, other end users, unaffiliated 
distributors, and small footwear manufacturers; and (2) three channels 
of distribution--direct sales to large purchaser/other end users, 
direct sales to unaffiliated distributors, and direct sales to small 
footwear manufacturers through its Guadalajara warehouse. Negromex 
claimed two levels of trade in the home market: (1) Direct sales to 
large purchasers and other end users; and (2) direct sales to 
unaffiliated distributors and small footwear manufacturers through 
Guadalajara. For its U.S. sales, Negromex reported that its affiliated 
importer, GIRSA, Inc. (GIRSA), made sales to: (1) Two customer 
categories--large purchaser end users and other end users; and (2) 
through one channel of distribution. Negromex claimed one level of 
trade in the U.S. market (the CEP sale to GIRSA).
    According to Negromex, there is no level of trade in the home 
market that is comparable to the CEP level of trade (Negromex's sales 
to GIRSA). Negromex asserts that its CEP level of trade involves few 
selling activities while, in contrast, its NV levels of trade (home 
market sales to the four classes of customers) involve significantly 
greater selling activities. Thus, Negromex contends that each of its 
proffered NV levels of trade occurs at a different, and more advanced, 
marketing stage than its CEP level of trade. Based on that contention, 
Negromex requests that the Department apply a CEP offset by adjusting 
NV under section 773(a)(7)(B) of the Act (the CEP offset provision). 
Accordingly, we have performed an analysis of the information on the 
record to determine whether a LOT adjustment, or in the alternative, a 
CEP offset, is warranted.
    In order to determine whether NV was established at a different LOT 
than CEP sales, we examined stages in the marketing process and selling 
functions along the chains of distribution between Negromex and its 
home market customers. We compared the selling functions performed for 
home market sales with those performed with respect to the CEP 
transaction, exclusive of economic activities occurring in the United 
States, pursuant to section 772(d) of the Act, to determine if the home 
market levels of trade constituted more advanced stages of distribution 
than the CEP level of trade.
    Based on an analysis of the information on the record, we found 
that Negromex made sales in the home market at two distinct levels of 
trade, the end user level of trade and the unaffiliated distributor 
level of trade, each representing different marketing stages and tiers 
of selling functions and services. In addition, we found that one of 
the levels of trade in the home market, sales to unaffiliated 
distributors, was comparable to the CEP level of trade because of the 
similarities between the class of customer and distribution channel. 
Our analysis of the chains of distribution and selling functions 
performed for sales to unaffiliated distributors in the home market and 
CEP sales in the U.S. market indicated that both are made at the same 
stage in the marketing process and involve analogous levels of selling 
functions. For a detailed explanation of this analysis, see the 
memorandum to The File through James Maeder from The Team, issued for 
the preliminary determination of this investigation, dated October 28, 
1998.
    To the extent possible, we have used home market sales at the 
unaffiliated distributor level of trade for comparison purposes in our 
analysis without making a LOT adjustment. When we were unable to find 
sales of the foreign like product in the home market at the same LOT as 
the U.S. sales, we determined whether a LOT adjustment was warranted. 
To make that determination, pursuant to section 773(a)(7)(A)(ii) of the 
Act, we performed an analysis to ascertain whether there was a pattern 
of consistent price differences between the end user level of trade in 
the home market and the unaffiliated distributor level of trade in the 
home market, which is analogous to the CEP level of trade. To 
accomplish this, we compared the weighted-average of Negromex's NV 
prices of sales made at both home market levels of trade for products 
sold at both levels. We base our findings on whether the weighted-
average prices are higher for a preponderance of sales concerning the 
quantities of each product sold. See Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof from France, et. al.: 
Preliminary Results of Antidumping Duty Administrative Reviews (61 FR 
35713, July 8, 1996). Because the weighted-average prices were higher 
at the end user level of trade for a preponderance of the products and 
quantities sold, we found that there was a pattern of consistent price 
differences between the products sold at the two levels of trade in the 
home market. Thus, we made an adjustment to NV for the difference in 
levels of trade when we made our comparison of CEP sales to home market 
sales at the end user level of trade.
    Negromex requested a CEP offset in this investigation. Section 
773(a)(7)(B) of the Act establishes that a CEP ``offset'' may be made 
when two conditions exist: (1) NV is established at a level of trade 
which constitutes a more advanced stage of distribution than the level 
of trade of the CEP; and (2) the data available do not provide an 
appropriate basis to determine a level-of-trade adjustment. In this 
investigation, we made a level of trade adjustment to NV in accordance 
with section 773(a)(7)(A) of the Act.

[[Page 59522]]

Therefore, we have not made a CEP offset.

Date of Sale

    For U.S. sales made pursuant to the terms of two long-term 
contracts, Negromex has reported the contract date as the date of sale 
for all sales made under these contracts. Both contracts are year-long 
contracts that establish a minimum annual quantity of merchandise that 
is required to be purchased. Negromex reported that amounts of 
merchandise in addition to the minimum requirement could be purchased 
upon the agreement of both parties. Prices for the minimum annual 
quantity are fixed under the contracts and are based upon a 
mathematical formula that incorporates published monthly monomer prices 
and prices of butadiene and styrene--the major inputs of ESBR.
    Pursuant to 19 CFR 351.401(i), the date of sale is normally the 
date of invoice unless satisfactory evidence is presented that the 
material terms of sale, price and quantity, are established on some 
other date. See also Final Determination of Sales at Less Than Fair 
Value: Polyvinyl Alcohol from Taiwan, 61 FR 14067 (March 29, 1996). The 
Department has determined that, for a long-term contract, the price 
term is fixed if it is established by a published source outside of the 
control of either party to the contract, such that there is nothing 
more that the parties need to negotiate concerning the price of the 
goods sold. See Final Determination of Sales of Less Than Fair Value: 
Brass Sheet and Strip From France, 52 FR 812, 814 (January 9, 1987). In 
addition, the Department has decided that, for a long-term contract 
with a minimum quantity requirement, the date of the contract is the 
date of sale as to the minimum quantity specified in the contract. 
However, if the customer has not yet agreed to purchase any quantities 
above the minimum, then, for any amount sold in excess of the minimum, 
the Department will use the date of invoice as the date of sale. See 
Titanium Sponge From Japan; Final Results of Antidumping Duty 
Administrative Review and Tentative Determination To Revoke in Part, 54 
FR 13403, 13404 (April 3, 1989); see also Toho Titanium Co., Ltd. v. 
U.S., 743 F. Supp. 888, 890-91 (CIT 1990).
    Under the long-term contracts in this investigation, the price term 
is fixed on the contract date, based on a set formula of published 
monthly prices for major inputs which are outside the control of either 
party to the contract. A minimum quantity requirement is also fixed on 
the contract date, but the parties made no agreement to purchase 
quantities greater than the minimum. Given these facts and the 
Department's practice, for Negromex's long-term contracts in the U.S. 
market we have used the contract date as the date of sale for sales 
equaling the minimum quantity agreed to in the contract. For any 
quantity sold above the minimum under these contracts, we used the 
reported invoice date as the date of sale.

Addition of Product Characteristics by Negromex

    Negromex reported five additional product characteristics (ash 
content, free soap content, styrene content, mooney viscosity, and 
vulcanization time tolerance) not specified in the Department's 
questionnaire as matching criteria. Negromex alleged that these 
characteristics are commercially relevant because its customers have 
differing requirements for these characteristics and Negromex records 
the levels of these five characteristics for the ESBR it produces. 
Negromex referenced Notice of Final Determination of Sales at Less Than 
Fair Value: Certain Pasta from Italy, 61 FR 30326 (June 14, 1996) 
(Pasta from Italy) to support its addition of these product 
characteristics as matching criteria.
    The Department has not accepted these additional product 
characteristics as matching criteria for purposes of the preliminary 
determination. The product characteristics included in our 
questionnaire define standard grades of ESBR according to the generally 
accepted set of product specifications issued by the International 
Institute of Synthetic Rubber Producers. These characteristics 
sufficiently define the product for matching purposes and Negromex has 
not provided adequate information on the record to establish that their 
additional product characteristics would result in more appropriate 
product matches. Moreover, in Pasta from Italy, we accepted the 
addition of wheat quality as a product matching criterion because we 
found that the level of wheat quality materially affected pasta input 
costs and, ultimately, pasta prices. See Pasta from Italy at 30346. In 
this investigation, Negromex's cost information on the record does not 
provide evidence of any difference in ESBR production costs relating to 
any of the additional five physical characteristics. Therefore, we 
preliminarily determine that ESBR is sufficiently defined for matching 
purposes by the ten criteria included in the questionnaire.

Constructed Export Price

    We used CEP methodology for all sales by Negromex, in accordance 
with section 772(b) of the Act, because sales to the first unaffiliated 
purchaser took place after importation into the United States.
    We calculated CEP based on the packed, FOB Brownsville, Texas 
warehouse starting price to the first unaffiliated purchaser in the 
United States. In accordance with section 772(c)(1)(B) of the Act, we 
added an amount for uncollected import duties in Mexico. We made 
deductions from the starting price, where appropriate, for foreign 
inland freight, transport and storage insurance, foreign brokerage and 
handling, U.S. brokerage and handling (including U.S. Customs Service 
processing fees), and U.S. warehousing expenses, pursuant to section 
772(c)(2)(A) of the Act.
    We made additional deductions from the starting price, in 
accordance with section 772(d)(1) of the Act, for selling expenses 
associated with economic activities occurring in the United States, 
including direct selling expenses (credit costs and technical service 
expenses), indirect selling expenses, and inventory carrying costs. In 
those instances where Negromex did not report payment dates, we 
calculated credit expenses using the date of the preliminary 
determination as the payment date. Additionally, in the instance where 
Negromex did not report a shipment date, we computed the average number 
of days between shipment and payment on Negromex's U.S. sales and 
assigned the shipment date for that sale to be the date of the average 
number of credit days prior to the preliminary determination. Pursuant 
to section 772(d)(3) of the Act, the starting price was further reduced 
by an amount for profit to arrive at CEP. In accordance with section 
772(f) of the Act, we calculated the CEP profit rate using the expenses 
incurred by Negromex and GIRSA on their sales of the subject 
merchandise in the United States and the foreign like product in the 
home market and the profit associated with those sales.

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 Negromex'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 Negromex's 
aggregate volume of home market sales of the foreign like product

[[Page 59523]]

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 Negromex.
    Based on the information contained in the cost allegation submitted 
by the petitioners, the Department found reasonable grounds to believe 
or suspect that Negromex 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 
Negromex 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 Negromex's cost of 
materials and fabrication for the foreign like product, plus amounts 
for home market SG&A and financial expenses and packing costs, in 
accordance with section 773(b)(3) of the Act. In addition, we adjusted 
Negromex's G&A expense ratio and finance expense ratio calculations as 
set out in the Preliminary Determination Cost Calculation Memo from 
Sunkyu Kim to the File, dated October 28, 1998.
    We compared Negromex'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 Negromex'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 Negromex'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 
Negromex'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 Negromex's cost of materials, fabrication, SG&A 
expenses, profit, and U.S. packing costs. For Negromex, 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 Negromex 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 Negromex 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 packed, delivered prices to unaffiliated 
home market customers. We made deductions from the starting price, 
where appropriate, for price correction and customer pickup billing 
adjustments, volume rebates, and export rebates. We also made 
deductions, where appropriate, for foreign inland freight, warehousing, 
and foreign inland insurance expenses, pursuant to section 773(a)(6)(B) 
of the Act. Pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410, we made circumstance-of-sale adjustments, where appropriate, 
for differences in credit expenses, warranty expenses, and technical 
service expenses. In those instances where Negromex did not report 
payment dates, we calculated credit expenses using the date of the 
preliminary determination as the payment date. 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 CEP sales. In cases where NV was calculated at a 
different LOT, we made an adjustment, pursuant to section 773(a)(7) of 
the Act. This adjustment is 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. In addition, 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 
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 Mexican Peso 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.

[[Page 59524]]

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 constructed 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
------------------------------------------------------------------------
Industrias Negromex, S.A. de C.V...........................        29.57
All Others.................................................        29.57
------------------------------------------------------------------------

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, 1999, and rebuttal briefs no later than February 
12, 1999. 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, 1999, time and room to be determined, at 
the U.S. Department of Commerce, 14th Street and Constitution Avenue, 
N.W., Washington, D.C. 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 
773(d) and 777(i) of the Act.

    Dated: October 28, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-29553 Filed 11-3-98; 8:45 am]
BILLING CODE 3510-DS-P