[Federal Register Volume 63, Number 222 (Wednesday, November 18, 1998)]
[Notices]
[Pages 64042-64049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30857]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-122-829, A-533-814, A-588-844, A-580-830, A-469-808, A-583-829]


Notice of Preliminary Determinations of Sales at Less Than Fair 
Value and Postponement of Final Determinations--Stainless Steel Round 
Wire From Canada, India, Japan, Spain, and Taiwan; Preliminary 
Determination of Sales at Not Less Than Fair Value and Postponement of 
Final Determination--Stainless Steel Round Wire From Korea

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

EFFECTIVE DATE: November 18, 1998.

FOR FURTHER INFORMATION CONTACT: Thomas Schauer (Canada, Spain) at 
(202) 482-4852; Diane Krawczun (India) at (202) 482-0198; Jarrod 
Goldfeder (Japan), at (202) 482-1784; or Gabriel Adler (the Republic of 
Korea, Taiwan) at (202) 482-1442, Import Administration, Room 1870, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, DC 20230.

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to Department of Commerce (Department) 
regulations refer to the regulations codified at 19 CFR part 351 (April 
1998).

Preliminary Determinations

    We preliminarily determine that stainless steel round wire from 
Canada, India, Japan, Spain, and Taiwan is being sold, or is likely to 
be sold, in the United States at less than fair value (LTFV), as 
provided in section 733 of the Act. We also preliminarily determine 
that stainless steel round wire from the Republic of Korea (Korea) is 
not being sold, or is not likely to be sold, in the United States at 
less than fair value. The estimated margins are shown in the Suspension 
of Liquidation section of this notice.

Case History

    These investigations were initiated on May 6, 1998. See Initiation 
of Antidumping Duty Investigations: Stainless Steel Round Wire from 
Canada, India, Japan, the Republic of Korea, Spain, and Taiwan, 63 FR 
26150

[[Page 64043]]

(May 12, 1998) (Initiation Notice). Since the initiation of the 
investigations, the following events have occurred:
    On May 19, 1998, the Department invited interested parties to 
submit comments regarding model matching.
    On June 5, 1998, the United States International Trade Commission 
(the ITC) preliminarily determined that there is a reasonable 
indication that imports of the products under these investigations are 
materially injuring the United States industry.
    On June 12, 1998, the Department selected the following companies 
as respondents in these investigations: Central Wire Industries Ltd. 
(Central Wire) and Greening Donald Co. Ltd. (Greening Donald) in the 
Canada proceeding; Raajratna Metal Industries Limited (Raajratna) in 
the India proceeding; Suzuki Metal Industries Co., Ltd. (Suzuki) and 
Nippon Seisen Co., Ltd. (Nippon Seisen), in the Japan proceeding; Korea 
Sangsa in the Korea proceeding; Inoxfil S.A. in the Spain proceeding; 
and Tien Tai and Rodex in the Taiwan proceeding (collectively 
``respondents''). See Selection of Respondents, below. On June 15, 
1998, the Department issued an antidumping questionnaire to each of the 
selected respondents.
    The respondents submitted their initial responses to that 
questionnaire in July and August 1998. After analyzing these responses, 
we issued supplemental questionnaires to the respondents to clarify or 
correct the initial questionnaire responses. We also determined to 
treat Tien Tai and its affiliated producer Kuang Tai Metal Industrial 
Co., Ltd. (Kuang Tai), as a single entity (i.e., to collapse the two 
producers) for purposes of the investigation of wire from Taiwan. See 
Memorandum to Richard W. Moreland, dated August 11, 1998. In addition, 
we determined to collapse Korea Sangsa with its affiliated producer 
Korea Welding Electrode Co., Ltd. (Koweld). See Memorandum to Richard 
W. Moreland, dated September 24, 1998. The Department required that 
both Tien Tai and Korea Sangsa resubmit their questionnaire responses, 
consolidating their sales and cost data with that of their respective 
affiliated parties.1
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    \1\ Unless otherwise specified, any references below to Tien Tai 
or Korea Sangsa should be understood to refer to the collapsed 
entities of Tien Tai/Kuang Tai and Korea Sangsa/Koweld, 
respectively.
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    On August 24, 1998, the petitioners filed a timely request for a 
50-day postponement of the preliminary determinations. We granted the 
request. See Notice of Postponement of Preliminary Antidumping 
Determinations: Stainless Steel Round Wire from Canada, India, Japan, 
the Republic of Korea, Spain, and Taiwan, 63 FR 46999 (September 3, 
1998).

Postponement of Final Determinations and Extension of Provisional 
Measures

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise or, if in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioners. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for extension of provisional 
measures from a four-month period to not more than six months.
    We received requests from respondents for postponement of the final 
determinations in the Canada, India, Japan, Korea, Spain and Taiwan 
investigations. In their requests for an extension of the deadline for 
the final determinations, the respondents consented to the extension of 
provisional measures to no longer than six months. Because the 
preliminary determinations with respect to the Canada, India, Japan, 
Spain, and Taiwan investigations are affirmative, the respondents 
filing the requests account for a significant proportion of exports of 
the subject merchandise in their respective cases, and there is no 
compelling reason to deny the respondents' requests, we have extended 
the deadline for issuance of the final determinations for these cases 
until the 135th day after the date of publication of these preliminary 
determinations in the Federal Register.
    We also received a request from the petitioners for a postponement 
of the final determination in the Korea investigation. Because the 
preliminary determination with respect to that investigation is 
negative and there is no compelling reason to deny the petitioners' 
request, we have extended the deadline for issuance of the final 
determination for this case until the 135th day after the date of 
publication of this preliminary determination in the Federal Register.

Period of Investigations

    The period of the investigations (POI) is January 1, 1997 through 
December 31, 1997. This period corresponds to each respondent's four 
most recent fiscal quarters prior to the month of the filing of the 
petition (i.e., March 1998).

Scope of Investigation

    The scope of these investigations covers stainless steel round wire 
(SSRW). SSRW is any cold-formed (i.e., cold-drawn, cold-rolled) 
stainless steel product of a cylindrical contour, sold in coils or 
spools, and not over 0.703 inch (18 mm) in maximum solid cross-
sectional dimension. SSRW is made of iron-based alloys containing, by 
weight, 1.2 percent or less of carbon and 10.5 percent or more of 
chromium, with or without other elements. Metallic coatings, such as 
nickel and copper coatings, may be applied.
    The merchandise subject to these investigations is classifiable 
under subheadings 7223.00.1015, 7223.00.1030, 7223.00.1045, 
7223.00.1060, and 7223.00.1075 of the Harmonized Tariff Schedule of the 
United States (HTSUS). Although the HTSUS subheadings are provided for 
convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.
    On June 1, 1998, two Canadian producers of SSRW, Greening Donald 
and Central Wire, submitted comments on the scope of the investigation 
of stainless steel round wire from Canada in response to our 
solicitation of such comments in the Initiation Notice. These 
respondents argued in their submission that, because the stainless 
steel wire rod input used in producing the SSRW is not produced in 
Canada and because cold-drawing does not constitute ``substantial 
transformation'' of the wire rod, the SSRW is not ``from Canada'' and 
should not be the subject of an antidumping investigation. On June 5, 
1998, the petitioners submitted rebuttal comments to the Canadian 
producers' argument. We have analyzed the two Canadian producers' 
comments and concluded that the product in question is within the scope 
of this investigation. See Memorandum to Richard W. Moreland, dated 
November 12, 1998, for a full discussion and analysis of this issue.

Selection of Respondents

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual dumping margins for each known exporter and producer of the 
subject merchandise. However, section 777A(c)(2) of the Act gives the 
Department discretion, when faced with a large number of exporters/
producers, to limit its examination to a reasonable number of such 
companies if it is not

[[Page 64044]]

practicable to examine all companies. Where it is not practicable to 
examine all known producers/exporters of subject merchandise, this 
provision permits the Department to investigate either: (1) a sample of 
exporters, producers, or types of products that is statistically valid 
based on the information available at the time of selection, or (2) 
exporters and producers accounting for the largest volume of the 
subject merchandise that can reasonably be examined.
    After consideration of the complexities expected to arise in these 
proceedings (including issues of model matching) and the resources 
available to the Department, we determined that it was not practicable 
in these investigations to examine all known producers/exporters of 
subject merchandise. Instead, we found that, given our resources, we 
would be able to investigate the nine producers/exporters with the 
greatest export volume, as identified above. These companies accounted 
more than 50 percent of all known exports of the subject merchandise 
during the POI from their respective countries. For a more detailed 
discussion of respondent selection in these investigations, see 
Respondent Selection Memorandum dated June 12, 1998.

Facts Available

    Suzuki (Japan), Nippon Seisen (Japan), and Inoxfil (Spain) failed 
to respond to our questionnaire. Section 776(a)(2) of the Act provides 
that, if an interested party (A) withholds information that has been 
requested by the Department; (B) fails to provide such information in a 
timely manner or in the form or manner requested subject to section 
782(c)(1) and (e) of the Act; (C) significantly impedes a proceeding 
under the antidumping statute; or (D) provides such information but the 
information cannot be verified, the Department shall, subject to 
subsection 782(d) of the Act, use facts otherwise available in reaching 
the applicable determination. Because these firms failed to respond to 
our questionnaire and because the relevant subsections of section 782 
of the Act do not apply, we must use facts otherwise available to 
calculate the dumping margins for these companies.
    Section 776(b) of the Act provides that adverse inferences may be 
used against a party that has failed to cooperate by not acting to the 
best of its ability to comply with the Department's requests for 
information. See also Statement of Administrative Action accompanying 
the URAA, H.R. Rep. No. 316, Vol.1, 103d Cong., 2d Sess. 870 (1994) 
(SAA). The lack of response by Suzuki, Nippon Seisen, and Inoxfil to 
the Department's antidumping questionnaire constitutes a failure by 
these respondents to act to the best of their ability to comply with a 
request for information, within the meaning of section 776 of the Act. 
Thus, the Department has determined that, in selecting among the facts 
otherwise available, an adverse inference is warranted.
    Because we were unable to calculate margins for the respondents in 
the Japan or Spain investigations, we assigned these respondents the 
highest margins in the respective petitions (recalculated by the 
Department, as appropriate). This approach is consistent with 
Department practice. See Notice of Preliminary Determination of Sales 
at Less Than Fair Value: Stainless Steel Wire Rod from Germany, 63 FR 
10847 (March 5, 1998). The highest petition margins are 29.56 percent 
in the Japan investigation, and 35.80 percent in the Spain 
investigation.2
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    \2\ We note that, at the time of initiation, we did not accept 
the U.S. and home market packing data set forth in the petition with 
respect to the Japan case, and we revised the dumping margins in 
that petition so as to not reflect any adjustment for packing. In 
reviewing the petition margin calculations for the preliminary 
determination in the Japan case, we noted that the denominator for 
the margins was erroneously based on home market price, rather than 
U.S. price. We have revised the margins accordingly. See memorandum 
from Jarrod Goldfeder to the file, dated November 12, 1998.
    With respect to the Spain investigation, we note that, at the 
time of initiation, we revised petition margins based on price-to-
price comparisons because the petitioners had not provided 
sufficient support for the home market freight figures used in their 
calculations. We made no additional revisions to the petition 
margins in reviewing those calculations for the preliminary 
determination in the Spanish case.
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    Section 776(b) states that an adverse inference may include 
reliance on information derived from the petition or any other 
information placed on the record. See also SAA at 829-831. Section 
776(c) of the Act provides that, when the Department relies on 
secondary information (such as the petition) in using the facts 
otherwise available, it must, to the extent practicable, corroborate 
that information from independent sources that are reasonably at its 
disposal.
    During our pre-initiation analysis of the petition, we reviewed the 
adequacy and accuracy of the secondary information in the petition from 
which the margins were calculated, to the extent that appropriate 
information was available for this purpose. See Initiation Notice at 
26151. However, with respect to certain data included in the margin 
calculations included in the petition (e.g., gross U.S. and home market 
unit prices), the Department was provided no information by the 
respondents or other interested parties, and is aware of no other 
independent sources of information, that would enable it to further 
corroborate the remaining components of the margin calculation in the 
petition. The implementing regulation to section 776 of the Act, at 19 
CFR 351.308(c), states ``[t]he fact that corroboration may not be 
practicable in a given circumstance will not prevent the Secretary from 
applying an adverse inference as appropriate and using the secondary 
information in question.'' Additionally, we note that the SAA at 870 
specifically states that, where ``corroboration may not be practicable 
in a given circumstance'', the Department may nevertheless apply an 
adverse inference. We note further that the Department has used as the 
facts available margins developed in the petition that are based in 
part on foreign market research in other cases. See, e.g., Stainless 
Steel Wire Rod From Germany, and Notice of Preliminary Determination of 
Sales at Less Than Fair Value and Postponement of Final Determination: 
Melamine Institutional Dinnerware Products From Indonesia, 61 FR 43333 
(August 22, 1996). Finally, we note that the margins calculated for 
respondents in the other round wire investigations are in many 
instances of the same order of magnitude as the margins in the 
corresponding petitions, suggesting that the information contained in 
the round wire petitions is generally reliable.

Product Comparisons

    We have relied on five criteria to match U.S. sales of subject 
merchandise to comparison-market sales of the foreign like product: 
grade, thickness, tensile strength, coating, and surface finish. A 
detailed description of the matching criteria, as well as our matching 
methodology, is contained in the Preliminary Determination Memorandum, 
dated November 12, 1998 (Preliminary Determination Memorandum).

Fair Value Comparisons

    To determine whether sales of stainless steel round wire from 
Canada, India, the Republic of Korea, and Taiwan 3 were made 
in the United States at less than fair value, we compared the export 
price (EP) or constructed export

[[Page 64045]]

price (CEP) to the normal value, as described in the Export Price and 
Constructed Export Price and Normal Value sections of this notice. In 
accordance with section 777A(d)(1)(A)(i) of the Act, we calculated 
weighted-average EPs and CEPs for comparison to weighted-average normal 
values.
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    \3\ As stated above, because the respondents in the Japan and 
Spain proceedings did not respond to our requests for information, 
we based the margins for these respondents on total adverse facts 
available. See Facts Available above. Thus, the discussion of price 
adjustments in this section does not apply to the respondents in 
those proceedings.
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Export Price and Constructed Export Price

    In accordance with section 772 of the Act, we calculated either an 
EP or a CEP, depending on the nature of each sale. Section 772(a) of 
the Act defines EP as the price at which the subject merchandise is 
first sold before the date of importation by the exporter or producer 
outside the United States to an unaffiliated purchaser in the United 
States or to an unaffiliated purchaser for exportation to the United 
States. Section 772(b) of the Act defines CEP as the price at which the 
subject merchandise is first sold in the United States before or after 
the date of importation, by or for the account of the producer or 
exporter of the merchandise or by a seller affiliated with the producer 
or exporter, to an unaffiliated purchaser, as adjusted under sections 
772(c) and (d) of the Act.
    Consistent with these definitions, we have found that Central Wire, 
Greening Donald, Raajratna, Korea Sangsa, Rodex, and Tien Tai made EP 
sales during the POI. These sales are properly classified as EP sales 
because they were made by the exporter or producer outside the United 
States to unaffiliated customers in the United States prior to the date 
of importation.
    We also found that Central Wire and Korea Sangsa made CEP sales 
during the POI because they made sales through an affiliated reseller 
in the United States after the date of importation.
    For all respondents, we calculated EP and CEP, as appropriate, 
based on packed prices charged to the first unaffiliated customer in 
the United States. (Where sales were made through consignment sellers, 
we did not consider the consignment seller to be the customer; rather, 
the relevant customer was the consignment seller's customer.) For all 
respondents except Rodex, we based the date of sale on the date of the 
invoice issued to the U.S. customer. For Rodex, we based the date of 
sale on the date of Rodex's sales confirmation to its U.S. customer, 
because the terms of U.S. sales were firmly set on this date.
    In accordance with section 772(c)(2) of the Act, we reduced the EP 
and CEP by movement expenses and export taxes and duties, where 
appropriate. Section 772(d)(1) of the Act provides for additional 
adjustments to the CEP. Generally, where sales were made through an 
unaffiliated consignment seller for the account of the exporter, we 
deducted commissions from the CEP. Where sales were made through an 
affiliated reseller, we deducted direct and indirect selling expenses 
that related to commercial activity in the United States, in lieu of 
the commission paid to the affiliated reseller.
    Section 772(d)(3) of the Act requires that the CEP be adjusted for 
the profit allocated to the selling expenses of a producer/exporter's 
affiliated reseller. For Central Wire and Korea Sangsa, which made 
sales through affiliated resellers, we calculated a CEP-profit ratio 
following the methodology set forth in section 772(f) of the Act.
    We made company-specific adjustments as follows:
Central Wire (Canada)
    We based EP and CEP on delivered and FOB prices to unaffiliated 
customers in the United States. For both EP and CEP sales, we made 
deductions from the starting price, where appropriate, for movement 
expenses, including foreign inland freight from the factory to the 
customer or to the U.S. affiliate, U.S. brokerage and handling fees, 
and Customs duties. We also made deductions for post-sale price 
adjustments corresponding to claims and billing errors.
    In addition, for CEP sales, we made deductions for U.S. inland 
freight to the customer, imputed credit, commissions, indirect selling 
expenses and inventory carrying costs associated with commercial 
activity in the United States, U.S. repacking costs, and the cost of 
further processing the merchandise in the United States.
Greening Donald (Canada)
    We based EP sales on delivered prices to unaffiliated customers in 
the United States. We made deductions from the starting price, where 
appropriate, for movement expenses including foreign inland freight 
from factory to the customer, Customs duties, and U.S. brokerage and 
handling fees. We also increased the starting price by the amount of 
reported freight revenue.
Raajratna (India)
    We based EP on delivered prices to unaffiliated customers in the 
United States. We made deductions from the starting price, where 
appropriate, for movement expenses including foreign inland freight 
from the factory to the customer, domestic brokerage and handling fees, 
international freight, and marine insurance. Although Raajratna 
reported duty drawback for its U.S. sales, we did not make an addition 
to EP for duty drawback because Raajratna failed to meet our two-
pronged test for making such an adjustment.4 See Raajratna 
Analysis Memorandum, dated November 12, 1998, for a full discussion of 
this issue.
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    \4\ Section 772(c)(1)(B) of the Act provides for an upward 
adjustment to U.S. price for duty drawback on import duties which 
have been rebated (or which have not been collected) by reason of 
the exportation of the subject merchandise to the United States. The 
Department applies a two-pronged test to determine whether a 
respondent has fulfilled the statutory requirements for a duty 
drawback adjustment. See Steel Wire Rope from the Republic of Korea; 
Final Results of Antidumping Duty Administrative Review, 61 FR 
55965, 55968 (October 30, 1996). In accordance with this test, the 
Department grants a duty drawback adjustment if it finds that:
    (1) import duties and rebates are directly linked to and are 
dependent upon one another, and
    (2) the company claiming the adjustment can demonstrate that 
there are sufficient imports of raw materials to account for the 
duty drawback received on exports of the manufactured product.
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Korea Sangsa (Korea)
    We based EP and CEP on delivered and FOB prices to unaffiliated 
customers in the United States. For both EP and CEP sales, we made 
deductions from the starting price, where appropriate, for movement 
expenses including foreign brokerage and inland freight from the 
factory to the foreign port, and international freight. We also made 
adjustments for billing errors and early payment discounts, and we 
increased the starting price by the amount of duty drawback because it 
met our two-pronged test described above.
    In addition, for CEP sales, we made deductions for U.S. movement 
expenses, including U.S. inland freight to the customer, U.S. 
warehousing, U.S. brokerage and handling fees, and Customs duties. We 
also made deductions for direct and indirect selling expenses 
associated with commercial activity in the United States, including 
imputed credit, warranty expenses, miscellaneous other direct selling 
expenses (such as bank charges), indirect selling expenses, and 
inventory carrying costs.
Rodex (Taiwan)
    We based EP on delivered prices to unaffiliated customers in the 
United States. We made deductions from the starting price, where 
appropriate, for movement expenses including foreign inland freight 
from the factory to the customer, domestic brokerage and handling fees, 
international freight, and marine insurance. We also increased the 
starting price by the amount of duty drawback because it met our two-
pronged test described above.

[[Page 64046]]

Tien Tai (Taiwan)
    We based EP on delivered prices to unaffiliated customers in the 
United States. We made deductions from the starting price, where 
appropriate, for movement expenses including foreign inland freight 
from the factory to the customer, domestic brokerage and handling fees, 
international freight, and marine insurance.

Normal Value

A. Selection of Comparison Markets

    Section 773(a)(1) of the Act directs that normal value be based on 
the price at which the foreign like product is sold in the home market, 
provided that the merchandise is sold in sufficient quantities (or 
value, if quantity is inappropriate) and that there is no particular 
market situation that prevents a proper comparison with the EP or CEP. 
The statute contemplates that quantities (or value) will normally be 
considered insufficient if they are less than five percent of the 
aggregate quantity (or value) of sales of the subject merchandise to 
the United States.
    All respondents had viable home markets of stainless steel round 
wire, and they reported home market sales data for purposes of the 
calculation of normal value. Although Raajratna reported its home 
market sales, it claimed that normal value should be based on third-
country sales because, according to Raajratna, the merchandise sold to 
the United States is more similar to merchandise sold to third 
countries rather than merchandise sold in the home market. We disagreed 
with Raajratna because the merchandise sold in the home market provided 
an adequate basis for comparison, and, as discussed above, the Act 
directs us to base normal value on home market sales when possible. 
Therefore, we based normal value for Raajratna on home market sales. 
See Preliminary Determination Memorandum at 5.
    Adjustments we made in deriving the normal values for each company 
are described in detail in Calculation of Normal Value Based on Home-
Market Prices and Calculation of Normal Value Based on Constructed 
Value, below.

B. Cost of Production Analysis

    Based on allegations contained in the petitions, and in accordance 
with section 773(b)(2)(A)(i) of the Act, we found reasonable grounds to 
believe or suspect that sales of stainless steel round wire made in 
Canada, India, the Republic of Korea, and Taiwan were made at prices 
below the cost of production (COP). See Initiation Notice, 63 FR at 
26150, and Memorandum to Richard Moreland, dated May 6, 1998 
(Initiation Checklist) at 7-14. As a result, the Department has 
conducted investigations to determine whether the respondents made 
sales in their respective home markets at prices below their respective 
COPs during the POI within the meaning of section 773(b) of the Act. We 
conducted the COP analysis described below.
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP for stainless steel round wire, based on the sum 
of the cost of materials and fabrication for the foreign like product, 
plus amounts for the home-market general and administrative (G&A) 
expenses and packing costs. We relied on the COP data submitted by each 
respondent in its cost questionnaire response, except, as discussed 
below, in specific instances where the submitted costs were not 
appropriately quantified or valued.
Greening Donald
    We disallowed certain offsets Greening Donald had made to its 
reported variable overhead expenses. We revised Greening Donald's fixed 
overhead expense to be on the same basis as its reported direct 
materials and variable overhead expenses. See Greening Donald 
Preliminary Determination Analysis Memorandum, dated November 12, 1998, 
for a more complete description of these changes.
Korea Sangsa
    We revised the reported G&A by excluding dividend income, rental 
income, other miscellaneous income, and certain foreign exchange gains 
and losses. We also revised the reported net financing expense ratio to 
include net foreign exchange losses related to cash and borrowing.
Rodex
    We increased Rodex's reported direct material costs (which are 
comprised exclusively of purchases of wire rod) to account for net 
foreign exchange losses during the POI. We made two adjustments to 
overhead costs: we increased Rodex's reported direct labor and fixed 
and variable overhead costs to account for a year-end auditor's 
adjustment, and we reclassified certain costs reported as variable 
overhead to fixed overhead, consistent with our examination of these 
costs at verification. We also increased the average per-kg. packing 
cost to account for an overstatement in the denominator (total weight 
of packed merchandise) used in the calculation of those costs.
Tien Tai
    During the POI, respondent Kuang Tai (the collapsed affiliate of 
Tien Tai) became affiliated by virtue of stock ownership with a 
supplier of a major input in the production of round wire (i.e., wire 
rod). In calculating cost of production, the respondent relied on the 
transfer price of the major input for all POI purchases. For purchases 
of wire rod from this supplier after the date on which Kuang Tai became 
an affiliate, we applied the major-input rule set forth in section 
773(f)(3) of the Act and 19 CFR 351.407(b), and we relied on the 
greater of cost of production, transfer price, or market value.
    In addition, we increased Tien Tai's reported G&A ratio to account 
for stock bonuses to employees.
2. Test of Home-Market Sales Prices
    We compared the adjusted weighted-average COP for each respondent 
to the home market sales of the foreign like product, as required under 
section 773(b) of the Act, in order to determine whether these sales 
had been made at prices below the COP within an extended period of time 
(i.e., a period of one year) in substantial quantities 5 and 
whether such prices were sufficient to permit the recovery of all costs 
within a reasonable period of time.
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    \5\ In accordance with section 773(b)(2)(C)(i) of the Act, we 
determined that sales made below the COP were made in substantial 
quantities if the volume of such sales represented 20 percent or 
more of the volume of sales under consideration for the 
determination of normal value.
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    On a model-specific basis, we compared the revised COP to the home 
market prices, less any applicable movement charges, taxes, rebates, 
commissions and other direct and indirect selling expenses.
3. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a 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'' within an extended period of time in accordance with 
section 773(b)(2)(B) or 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.

[[Page 64047]]

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.
    We found that, for certain models of SSRW, more than 20 percent of 
the home-market sales of Central Wire, Greening Donald, Raajratna, 
Korea Sangsa, Tien Tai, and Rodex were made within an extended period 
of time at prices less than the 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. For those U.S. sales of SSRW for which 
there were no comparable home-market sales in the ordinary course of 
trade, we compared EPs or CEPs to CV in accordance with section 
773(a)(4) of the Act. See Calculation of Normal Value Based on 
Constructed Value, below.

C. Calculation of Normal Value Based on Home-Market Prices

    We performed price-to-price comparisons where there were sales of 
comparable merchandise in the home market that did not fail the cost 
test.
Central Wire
    We calculated normal value based on delivered or FOB prices and 
made deductions from the starting price, where appropriate, for 
movement expenses including inland freight and insurance. We also 
adjusted the starting price for claims and billing errors. In addition, 
we made circumstance-of-sale (COS) adjustments for direct expenses, 
where appropriate, in accordance with section 773(a)(6)(C)(iii) of the 
Act. These included imputed credit expenses. In accordance with 
sections 773(a)(6)(A) and (B) of the Act, we deducted home market 
packing costs and added U.S. packing costs.
    Central Wire claimed that a number of its sales were outside the 
ordinary course of trade and therefore not an appropriate basis for 
normal value. We examined Central Wire's claims and agreed that some of 
the home market sales were outside the ordinary course of trade. We 
therefore excluded these sales from our analysis. A full discussion of 
this issue requires reference to business-proprietary information; see 
Central Wire Preliminary Analysis Memorandum, dated November 12, 1998.
    As discussed in the Level of Trade/CEP Offset section of this 
notice below, we preliminarily determined that it was appropriate to 
make a CEP offset to normal value.
    In a letter dated October 27, 1998, Central Wire argued that the 
Department should treat ``quantity bands'' as a matching criterion and, 
when comparing sales involving non-identical quantity bands, make a 
quantity adjustment. This proposal for an entirely new model-match 
criterion and quantity adjustment came too late in our preparations for 
these preliminary determinations. We may consider Central Wire's 
proposal in preparing our final determinations in these investigations.
Greening Donald
    We calculated normal value based on delivered or FOB prices and 
made deductions from the starting price, where appropriate, for 
movement expenses including freight and freight revenue. We also 
adjusted the starting price for claims and billing errors. In addition, 
we made COS adjustments for direct expenses, where appropriate, in 
accordance with section 773(a)(6)(C)(iii) of the Act. These included 
imputed credit expenses. In accordance with sections 773(a)(6)(A) and 
(B) of the Act, we deducted home market packing costs and added U.S. 
packing costs.
    Greening Donald claimed that a number of its sales were outside the 
ordinary course of trade and therefore not an appropriate basis for 
normal value. We examined Greening Donald's claims and agreed that 
certain home market sales were outside the ordinary course of trade. We 
therefore excluded these sales from our analysis. A full discussion of 
this issue requires reference to business-proprietary information; see 
Greening Donald Preliminary Analysis Memorandum, dated November 12, 
1998.
Raajratna
    We calculated normal value based on delivered, FOB or ex-factory 
prices and made deductions from the starting price, where appropriate, 
for inland freight. In addition, we made COS adjustments for direct 
expenses, where appropriate, in accordance with section 
773(a)(6)(C)(iii) of the Act. These expenses included credit-insurance 
expenses and imputed credit expenses. In accordance with sections 
773(a)(6)(A) and (B) of the Act, we deducted home market packing costs 
and added U.S. packing costs.
Korea Sangsa
    We calculated normal value based on delivered or FOB prices, and we 
made deductions from the starting price, where appropriate, for 
movement expenses including inland freight and insurance. In addition, 
we made COS adjustments for direct expenses, where appropriate, in 
accordance with section 773(a)(6)(C)(iii) of the Act. These included 
bank charges, processing fees, and imputed credit expenses. In 
accordance with sections 773(a)(6)(A) and (B) of the Act, we deducted 
home market packing costs and added U.S. packing costs.
    As discussed in the Level of Trade/CEP Offset section of this 
notice below, we preliminarily determined that it was appropriate to 
make a CEP offset to normal value.
Rodex
    We calculated normal value based on delivered prices. We made 
deductions from the starting price, where appropriate, for movement 
expenses including inland freight. We also adjusted the starting price 
for claims and billing errors. In addition, we made COS adjustments for 
direct expenses, where appropriate, in accordance with section 
773(a)(6)(C)(iii) of the Act. These included imputed credit, bank 
charge, and warranty expenses. In accordance with sections 773(a)(6)(A) 
and (B) of the Act, we deducted home market packing costs and added 
U.S. packing costs.
Tien Tai
    We calculated normal value based on delivered and FOB prices. We 
made deductions from the starting price, where appropriate, for 
movement expenses including inland freight and warehousing. We also 
adjusted the starting price for early payment discounts. In addition, 
we made COS adjustments for direct expenses, where appropriate, in 
accordance with section 773(a)(6)(C)(iii) of the Act. These included 
imputed credit expenses. In accordance with sections 773(a)(6)(A) and 
(B) of the Act, we deducted home market packing costs and added U.S. 
packing costs.

D. Calculation of Normal Value Based on Constructed Value

    Section 773(a)(4) of the Act provides that, where normal value 
cannot be based on comparison-market sales, normal value may be based 
on constructed value. Accordingly, for those models of SSRW for which 
we could not determine the normal value based on comparison-market 
sales, either because there were no sales of a comparable product or 
all sales of the comparison products failed the COP test, we based 
normal value on constructed value.
    Section 773(e)(1) of the Act provides that constructed value shall 
be based on the sum of the cost of materials and fabrication for the 
imported merchandise plus amounts for selling,

[[Page 64048]]

general, and administrative expenses (SG&A), profit, and U.S. packing 
costs. With the exception of Raajratna, we calculated the cost of 
materials and fabrication based on the methodology described in the 
Calculation of COP section of this notice, above. We based SG&A and 
profit for every respondent on the actual 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 comparison market, in accordance with section 773(e)(2)(A) of the 
Act.
    Raajratna's direct materials costs reported on its constructed-
value database did not correspond with its supporting documents 
included in Raajratna's response. Therefore, we revised Raajratna's 
reported direct materials costs for constructed value to agree with its 
supporting documentation. As a result, we also revised the cost of 
manufacture, general and administrative expenses, and interest expenses 
accordingly. These revisions are described in further detail in 
Raajratna's Preliminary Analysis Memorandum, dated November 12, 1998.
    In addition, for each respondent we used U.S. packing costs as 
described in the Export Price and Constructed Export Price section of 
this notice, above.
    We made adjustments to constructed value for differences in COS in 
accordance with section 773(a)(8) of the Act and 19 CFR 351.410. For 
comparisons to EP, we made COS adjustments by deducting direct selling 
expenses incurred on home market sales from and adding U.S. direct 
selling expenses to constructed value. For comparisons to CEP, we made 
COS adjustments by deducting direct selling expenses incurred on home 
market sales from constructed value.

Level of Trade/CEP Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine normal value based on sales in the comparison 
market at the same level of trade as the EP or CEP transaction. The 
normal-value level of trade is that of the starting-price sales in the 
comparison market or, when normal value is based on constructed value, 
that of the sales from which we derive SG&A expenses and profit. For 
EP, the U.S. level of trade 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 normal-value 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 level of trade and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales on which normal value is based and 
comparison-market sales at the level of trade of the export 
transaction, we make a level-of-trade adjustment under section 
773(a)(7)(A) of the Act. For CEP sales, if the normal-value 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 normal 
value and CEP affects price comparability, we adjust normal value 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).
    In implementing these principles in these investigations, we 
obtained information from each respondent about the marketing stages 
involved in the reported U.S. and home market sales, including a 
description of the selling activities performed by the respondents for 
each channel of distribution. In identifying levels of trade for EP and 
home market sales we considered the selling functions reflected in the 
starting price before any adjustments. For CEP sales, we considered 
only the selling activities reflected in the price after the deduction 
of expenses and profit under section 772(d) of the Act.
    With respect to each respondent's EP sales, in these investigations 
we found a single level of trade in the United States, and a single, 
identical level of trade in the home market. It was thus unnecessary to 
make any level-of-trade adjustment for comparison of EP and home market 
prices. Two respondents, Central Wire and Korea Sangsa, also made CEP 
sales. For Central Wire, we found that (1) the adjusted CEP level of 
trade was significantly less advanced than the single home market level 
of trade, (2) a level-of-trade adjustment could not be quantified, and 
(3) a CEP offset was appropriate. For Korea Sangsa, we found that the 
adjusted CEP level of trade was essentially the same as that of the 
single home market level of trade, such that no level-of-trade 
adjustment or CEP offset was necessary. For a detailed level-of-trade 
analysis with respect to each respondent, see Preliminary Determination 
Memorandum, dated November 12, 1998.

Currency Conversions

    We made currency conversions in accordance with section 773A of the 
Act. The Department's preferred source for daily exchange rates is 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 generally 
substitute the benchmark rate for the daily rate, in accordance with 
established practice. (An exception to this rule is described below.) 
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 is deemed to occur 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. Since the Korean won did not appreciate against the U.S. dollar 
in a sustained manner during the POI, no such adjustment period was 
required.
    Our preliminary analysis of Federal Reserve U.S. dollar-Korean won 
exchange rate data shows that the won declined rapidly at the end of 
1997, losing over 40% of its value between the beginning of November 
and the end of December. The decline was, in both speed and magnitude, 
many times more severe than any change in the dollar-won exchange rate 
during the previous eight years. Had the won rebounded quickly enough 
to recover all or almost all of the initial loss, the Department might 
have considered the won's decline at the end of 1997 as nothing more 
than a sudden but only momentary drop, despite the magnitude of that 
drop. As it was, however, there was no significant rebound. Therefore, 
we have preliminarily determined that the decline in the won at the end 
of 1997 was so precipitous and large that the dollar-won exchange rate 
cannot reasonably be viewed as having simply fluctuated during this 
time, i.e., as having experienced only a momentary drop in value. 
Therefore, in making this

[[Page 64049]]

preliminary determination, the Department used daily rates exclusively 
for currency-conversion purposes for home market sales matched to U.S. 
sales occurring between November 1, 1997, and December 31, 1997.
    The Department welcomes comments from interested parties on all 
aspects of the above methodology. For the purposes of the final 
determination, we will also analyze the implications, if any, of the 
decline in the won during 1997 for price averaging and whether multiple 
averages are warranted. The Department is also considering this issue 
in the LTFV investigation on Mushrooms from Indonesia. See Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Certain Preserved Mushrooms from 
Indonesia, 63 FR 41783 (August 5, 1998).

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
all information relied upon in making our final 
determinations.6
---------------------------------------------------------------------------

    \6\ We were able to conduct sales and cost verifications of 
Rodex prior to the issuance of this preliminary determination. Our 
findings of verification with respect to Rodex are reflected in this 
determination.
---------------------------------------------------------------------------

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all entries of stainless 
steel round wire from Canada, India, Japan, Spain, and Taiwan, except 
for subject merchandise produced and exported by Tien Tai (which has a 
de minimis weighted-average margin), that are entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
this notice in the Federal Register. We are also instructing the 
Customs Service to require a cash deposit or the posting of a bond 
equal to the weighted-average amount by which the normal value exceeds 
the EP or CEP, as indicated in the chart below. These instructions 
suspending liquidation will remain in effect until further notice.
    The weighted-average dumping margins are provided below. We note 
that, while the margin for Korea Sangsa is included in this list, that 
margin is de minimis, and we are not suspending liquidation of entries 
of stainless steel round wire from Korea:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
                   Exporter/Manufacturer                        margin  
                                                              percentage
------------------------------------------------------------------------
Canada:                                                                 
  Central Wire.............................................        11.89
  Greening Donald..........................................         5.30
  All Others...............................................        10.23
India:                                                                  
  Raajratna................................................        18.97
  All Others...............................................        18.97
Japan:                                                                  
  Nippon Seisen............................................        29.56
  Suzuki...................................................        29.56
  All Others...............................................        15.20
Korea:                                                                  
  Korea Sangsa.............................................     \1\ 1.33
  All Others...............................................         0.00
Spain:                                                                  
  Inoxfil..................................................        35.80
  All Others...............................................        24.40
Taiwan:                                                                 
  Rodex....................................................         3.95
  Tien Tai.................................................     \1\ 1.83
  All Others...............................................         3.95
------------------------------------------------------------------------
\1\ De Minimis.                                                         

    Section 733(b)(3) of the Act directs the Department to exclude all 
zero and de minimis weighted-average dumping margins, as well as 
dumping margins determined entirely under facts available under section 
776 of the Act, from the calculation of the ``all others'' rate. 
Accordingly, we have excluded the de minimis dumping margin for Tien 
Tai from the calculation of the ``all others'' rate for the Taiwan 
investigation.
    Section 735(c)(5)(B) of the Act provides that, where the estimated 
weighted-average dumping margins established for all exporters and 
producers individually investigated are zero or de minimis margins or 
are determined entirely under section 776 of the Act, the Department 
may use any reasonable method to establish the estimated all-others 
rate for exporters and producers not individually investigated. This 
provision contemplates that we weight-average the facts-available 
margins to establish the all-others rate. Where the data do not permit 
weight-averaging of the facts-available rates, the SAA, at 873, 
provides that we may use other reasonable methods. Inasmuch as we do 
not have the data necessary to weight-average the respondents' facts-
available rates, we have based the all-others rates for Japan and Spain 
on a simple average of the margins in the respective petitions, as we 
revised at the time of initiation of these investigations.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determinations. If our final antidumping determinations are 
affirmative, the ITC will determine whether these imports are 
materially injuring, or threaten material injury to, the U.S. industry. 
The deadline for that ITC determination would be the later of 120 days 
after the date of these preliminary determinations or 45 days after the 
date of our final determinations.

Public Comment   

    For all round wire investigations, case briefs must be submitted no 
later than 110 days after the publication of this notice in the Federal 
Register. Rebuttal briefs must be filed within five days after the 
deadline for submission of case briefs. A list of authorities used, a 
table of contents, and an executive summary of issues should accompany 
any briefs submitted to the Department. Executive summaries should be 
limited to five pages total, including footnotes.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs, 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, N.W., Washington, DC 20230. In the event that the Department 
receives requests for hearings from parties to several round wire 
cases, the Department may schedule a single hearing to encompass all 
those cases. 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 within 30 days of 
the publication of this notice. Requests should specify the number of 
participants and provide a list of the issues to be discussed. Oral 
presentations will be limited to issues raised in the briefs.
    If these investigations proceed normally, we will make our final 
determinations of these investigations no later than 135 days after the 
date of publication of this notice in the Federal Register.
    These determinations are published pursuant to sections 733(f) and 
777(i)(I) of the Act.

    Dated: November 12, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-30857 Filed 11-17-98; 8:45 am]
BILLING CODE 3510-DS-P