[Federal Register Volume 64, Number 1 (Monday, January 4, 1999)]
[Notices]
[Pages 130-137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34466]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-427-814]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Stainless Steel Sheet 
and Strip in Coils From France

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

EFFECTIVE DATE: January 4, 1999.

FOR FURTHER INFORMATION CONTACT: Doug Campau or Robert Bolling, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230; telephone: (202) 482-3964 or (202) 482-3434, 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 
(``Department'') regulations are to the regulations at 19 CFR Part 351, 
(May 19, 1997).

Preliminary Determination

    We preliminarily determine that Stainless Steel Sheet and Strip in 
Coils (``SSSS'') from France is being, or is likely to be, sold in the 
United States at less than fair value (``LTFV''), as provided in 
section 733 of the Act. The estimated margins of sales at LTFV are 
shown in the ``Suspension of Liquidation'' section of this notice. The 
Department used the data submitted December 1, 1998 in its analysis.

Case History

    On July 13, 1998, the Department initiated antidumping duty

[[Page 131]]

investigations of imports of stainless steel sheet and strip in coils 
from France, Germany, Italy, Japan, Mexico, South Korea, Taiwan and the 
United Kingdom (Notice of Initiation of Antidumping Investigations: 
Stainless Steel Sheet and Strip in Coils From France, Germany, Italy, 
Japan, Mexico, South Korea, Taiwan and the United Kingdom (63 FR 37521 
(July 13, 1998)). Since the initiation of this investigation the 
following events have occurred.
    The Department set aside a period for all interested parties to 
raise issues regarding product coverage. On July 27, 1998, Allegheny 
Ludlum Corporation, Armco, Inc.,1 J&L Specialty Steel, 
Inc.,2 Washington Steel Division of Bethlehem Steel 
Corporation (formerly Lukens, Inc.), the United Steelworkers of 
America, AFL-CIO/CLC , the Butler Armco Independent Union 3 
and the Zanesville Armco Independent Organization, Inc.4 
(``petitioners'') submitted comments to the Department stating that 
they generally agree with the Department's product characteristics and 
model match criteria. However, petitioners noted that the products' 
actual alloy content, within certain ranges, must be incorporated from 
the outset into the product characteristics that comprise the product 
matching hierarchy that create the control numbers (CONNUMs). 
Additionally, on July 27, 1998, respondent Usinor submitted comments 
stating that the order and categories of some of the elements should be 
modified to ensure that the Department's model matching criteria 
appropriately identify identical and like products, consistent with the 
statute. Further, on July 28, 1998, respondent submitted additional 
comments on its product specification information regarding certain 
products (i.e., Durphynox 17 and Gilphy 36). On December 3, 1998, 
petitioners submitted additional comments, pertaining to all of the 
pending SSSS investigations, detailing for the Department the 
appropriate basis for product comparison when matching sales of non-
identical merchandise. On December 4, 1998, petitioners submitted 
additional comments, specific to the French SSSS case, on the 
additional finish information provided by Usinor. On December 7, 1998, 
Usinor submitted comments arguing that the Department should disregard 
concerns articulated by petitioners in their letters of December 4th 
and 7th, 1998. However, Usinor misinterprets the purpose of the early 
deadline for commenting on model matching. The purpose of that deadline 
is not to cut off comment on all model match related issues, but rather 
to let parties know the date by which they must respond in order to 
ensure that their comments are considered in formulating initial 
questionnaires. In this way the Department tries to avoid situations in 
which parties point out relevant matching criteria too late for the 
Department to gather necessary data. Petitioners' December comments do 
not propose gathering new types of information, but rather suggest 
other ways to arrange the criteria already reported. Depending on the 
content, such general comments are subject to the deadlines of new 
factual information, or for legal arguments. 19 CFR 351.301 and 
351.309, respectively.
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    \1\ Armco, Inc. is not a petitioner in the Mexico case.
    \2\ J&L Specialty Steel, Inc, is not a petitioner in the France 
case.
    \3\ Butler Armco Independent Union is not a petitioner in the 
Mexico case.
    \4\ Zanesville Armco Independent Organization, Inc. is not a 
petitioner in the Mexico case.
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    On July 24, 1998, the United States International Trade Commission 
(``ITC'') notified the Department of its affirmative preliminary injury 
determination in this case. Additionally, on August 5, 1998, the ITC 
published its preliminary determination that there is a reasonable 
indication that an industry in the United States is being materially 
injured or is threatened with material injury by reason of imports of 
the subject merchandise from France (63 FR 29250).
    On August 3, 1998, the Department issued an antidumping duty 
questionnaire to Usinor and Imphy, S.A. On September 9, 1998, the 
Department received Usinor's response to Section A of the 
questionnaire. In this response, Usinor stated that it made sales in 
the home market through its Ugine division, and through Bernier SNC 
(Bernier) and Ugine-Service SAS (Ugine-Service), and in the U.S. market 
through its affiliate Uginox. Additionally, on September 29, 1998, the 
Department received Usinor's responses to Sections B, C, D, and E of 
the questionnaire. On September 29 and October 14, 1998, petitioners 
filed comments on Usinor's questionnaire responses. On October 20, 
1998, we issued a supplemental questionnaire to Usinor for Sections A, 
B, C, D, and E. On November 12 and December 1, 1998, we received 
Usinor's responses to the Department's supplemental questionnaire. On 
December 2, 1998, petitioners filed comments to the upcoming 
preliminary determination with respect to Usinor's sales and 
confirmation dates.
    On August 31, 1998, in a letter to the Department, respondent 
Usinor requested that it not be required to report downstream sales in 
France by Bernier or Ugine-Service, or sales in the United States by 
Edgcomb Metals, Inc. (Edgcomb). Usinor requested that it not be 
required to report downstream sales in France because Bernier's and 
Ugine-Service's relevant resales: (1) represent approximately five 
percent of sales in France during the POI; (2) are all at a different 
level of trade from United States sales; (3) for the most part are not 
likely to match U.S. sales; and (4) would entail a disproportionately 
large effort to report. Additionally, Usinor also requested that it not 
be required to report sales in the United States by Edgcomb, an 
affiliated processor/reseller. Usinor stated that the majority of 
Ugine's sales of SSSS in the United States are made by Uginox, a 
wholly-owned subsidiary of Usinor, and that during the POI, Uginox sold 
a small quantity of SSSS to Edgcomb. Also, Usinor argues that while 
Edgcomb is affiliated with Usinor, since January 1, 1998, Usinor only 
indirectly owns 28.5% of its shares through its control of Sollac, 
which is wholly owned by Usinor.5 Usinor asserts that 
Edgcomb should not be regarded as affiliated with Uginox because Uginox 
and Edgcomb are not under common control, and neither Uginox nor 
Edgcomb controls the other. On September 11, 1998, in a letter to the 
Department, petitioners contested Usinor's request for exemption from 
reporting certain home market and U.S. sales. In the home market, 
petitioners argue that Usinor misapplied the Department's five percent 
test 6 by calculating the percentage of sales made by 
affiliated buyers to their unaffiliated customers rather than 
calculating the percentage of sales made by Usinor to all of its 
affiliated customers. On October 19, 1998, we determined that Bernier 
and Ugine-Service were required to report their home market downstream 
sales, and that Edgcomb was required to report its U.S. downstream 
sales. See Decision Memorandum from Roland MacDonald, Office Director, 
Office VII to Joseph A. Spetrini, Deputy Assistant Secretary, Group 
III, dated October 19, 1998. See also, Affiliation Memorandum from Case 
Analysts to Roland MacDonald, dated December 14, 1998.
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    \5\ Prior to January 1, 1998, Unisor indirectly owned 49% of 
Edgcomb through its wholly-owned subsidiary Sollac.
    \6\ The Department's practice of not requiring the reporting of 
downstream sales for purposes of determining normal value if the 
firm in question does not have sales of the foreign like product 
over five percent to its affiliated customers.
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    On October 6, 1998, pursuant to section 733(c)(1)(A) of the Act, 
the petitioners made a timely request to

[[Page 132]]

postpone the preliminary determination for thirty days. The Department 
determined that this investigation is extraordinarily complicated and 
that the additional time is necessary for the Department to make its 
preliminary determination. On October 15, 1998, we postponed the 
preliminary determination until no later than December 17, 1998. See 
Notice of Postponement of Preliminary Antidumping Duty Investigations 
of Stainless Steel Sheet and Strip in Coils: from France, Germany, 
Italy, Japan, Mexico, South Korea, Taiwan and the United Kingdom, 63 FR 
56909 (October 23, 1998).
    Finally, Imphy S.A. reported that it did not produce or sell 
subject merchandise. See Memorandum from Robert James, to Joseph A. 
Spetrini, Deputy Assistant Secretary through Roland MacDonald, Office 
Director, Office VII, Richard Weible, Office Director, Office VIII, 
Edward Yang, Office Director, Office IX, Group III, dated December 14, 
1998.

Scope of Investigation

    For purposes of this investigation, the products covered are 
certain stainless steel sheet and strip in coils. Stainless steel is an 
alloy steel containing, by weight, 1.2 percent or less of carbon and 
10.5 percent or more of chromium, with or without other elements. The 
subject sheet and strip is a flat-rolled product in coils that is 
greater than 9.5 mm in width and less than 4.75 mm in thickness, and 
that is annealed or otherwise heat treated and pickled or otherwise 
descaled. The subject sheet and strip may also be further processed 
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that 
it maintains the specific dimensions of sheet and strip following such 
processing.
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (``HTSUS'') at 
subheadings: 7219.13.00.30, 7219.13.00.50, 7219.13.00.70, 
7219.13.00.80, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 
7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 
7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 
7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 
7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 
7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 
7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 
7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 
7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 
7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 
7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 
7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 
7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 
7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 
7220.90.00.80. Although the HTS subheadings are provided for 
convenience and Customs purposes, the Department's written description 
of the merchandise under investigation is dispositive.
    Excluded from the scope of this investigation are the following: 
(1) sheet and strip that is not annealed or otherwise heat treated and 
pickled or otherwise descaled, (2) sheet and strip that is cut to 
length, (3) plate (i.e., flat-rolled stainless steel products of a 
thickness of 4.75 mm or more), (4) flat wire (i.e., cold-rolled 
sections, with a prepared edge, rectangular in shape, of a width of not 
more than 9.5 mm), and (5) razor blade steel. Razor blade steel is a 
flat rolled product of stainless steel, not further worked than cold-
rolled (cold-reduced), in coils, of a width of not more than 23 mm and 
a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5 
percent chromium, and certified at the time of entry to be used in the 
manufacture of razor blades. See Chapter 72 of the HTSUS, ``Additional 
U.S. Note'' 1(d).
    In response to comments by interested parties the Department has 
determined that certain specialty stainless steel products are also 
excluded from the scope of this investigation. These excluded products 
are described below:
    Flapper valve steel is defined as stainless steel strip in coils 
containing, by weight, between 0.37 and 0.43 percent carbon, between 
1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent 
manganese. This steel also contains, by weight, phosphorus of 0.025 
percent or less, silicon of between 0.20 and 0.50 percent, and sulfur 
of 0.020 percent or less. The product is manufactured by means of 
vacuum arc remelting, with inclusion controls for sulphide of no more 
than 0.04 percent and for oxide of no more than 0.05 percent. Flapper 
valve steel has a tensile strength of between 210 and 300 ksi, yield 
strength of between 170 and 270 ksi, plus or minus 8 ksi, and a 
hardness (Hv) of between 460 and 590. Flapper valve steel is most 
commonly used to produce specialty flapper valves in compressors.
    Also excluded is a product referred to as suspension foil, a 
specialty steel product used in the manufacture of suspension 
assemblies for computer disk drives. Suspension foil is described as 
302/304 grade or 202 grade stainless steel of a thickness between 14 
and 127 microns, with a thickness tolerance of plus-or-minus 2.01 
microns, and surface glossiness of 200 to 700 percent Gs. Suspension 
foil must be supplied in coil widths of not more than 407 mm, and with 
a mass of 225 kg or less. Roll marks may only be visible on one side, 
with no scratches of measurable depth. The material must exhibit 
residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm 
over 685 mm length.
    Certain stainless steel foil for automotive catalytic converters is 
also excluded from the scope of this investigation. This stainless 
steel strip in coils is a specialty foil with a thickness of between 20 
and 110 microns used to produce a metallic substrate with a honeycomb 
structure for use in automotive catalytic converters. The steel 
contains, by weight, carbon of no more than 0.030 percent, silicon of 
no more than 1.0 percent, manganese of no more than 1.0 percent, 
chromium of between 19 and 22 percent, aluminum of no less than 5.0 
percent, phosphorus of no more than 0.045 percent, sulfur of no more 
than 0.03 percent, lanthanum of between 0.002 and 0.05 percent, and 
total rare earth elements of more than 0.06 percent, with the balance 
iron.
    Permanent magnet iron-chromium-cobalt alloy stainless strip is also 
excluded from the scope of this investigation. This ductile stainless 
steel strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 
percent cobalt, with the remainder of iron, in widths 228.6 mm or less, 
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic 
remanence between 9,000 and 12,000 gauss, and a coercivity of between 
50 and 300 oersteds. This product is most commonly used in electronic 
sensors and is currently available under proprietary trade names such 
as ``Arnokrome III.'' 7
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    \7\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
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    Certain electrical resistance alloy steel is also excluded from the 
scope of this investigation. This product is defined as a non-magnetic 
stainless steel manufactured to American Society of Testing and 
Materials (ASTM) specification B344 and containing, by weight, 36 
percent nickel, 18 percent chromium, and 46 percent iron, and is most 
notable for its resistance to high temperature corrosion. It has a 
melting

[[Page 133]]

point of 1390 degrees Celsius and displays a creep rupture limit of 4 
kilograms per square millimeter at 1000 degrees Celsius. This steel is 
most commonly used in the production of heating ribbons for circuit 
breakers and industrial furnaces, and in rheostats for railway 
locomotives. The product is currently available under proprietary trade 
names such as ``Gilphy 36.'' 8
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    \8\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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    Certain martensitic precipitation-hardenable stainless steel is 
also excluded from the scope of this investigation. This high-strength, 
ductile stainless steel product is designated under the Unified 
Numbering System (UNS) as S45500-grade steel, and contains, by weight, 
11 to 13 percent chromium, and 7 to 10 percent nickel. Carbon, 
manganese, silicon and molybdenum each comprise, by weight, 0.05 
percent or less, with phosphorus and sulfur each comprising, by weight, 
0.03 percent or less. This steel has copper, niobium, and titanium 
added to achieve aging, and will exhibit yield strengths as high as 
1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after 
aging, with elongation percentages of 3 percent or less in 50 mm. It is 
generally provided in thicknesses between 0.635 and 0.787 mm, and in 
widths of 25.4 mm. This product is most commonly used in the 
manufacture of television tubes and is currently available under 
proprietary trade names such as ``Durphynox 17.'' 9
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    \9\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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    Finally, three specialty stainless steels typically used in certain 
industrial blades and surgical and medical instruments are also 
excluded from the scope of this investigation. These include stainless 
steel strip in coils used in the production of textile cutting tools 
(e.g., carpet knives).10 This steel is similar to ASTM grade 
440F, but containing, by weight, 0.5 to 0.7 percent of molybdenum. The 
steel also contains, by weight, carbon of between 1.0 and 1.1 percent, 
sulfur of 0.020 percent or less, and includes between 0.20 and 0.30 
percent copper and between 0.20 and 0.50 percent cobalt. This steel is 
sold under proprietary names such as ``GIN4 Mo.'' The second excluded 
stainless steel strip in coils is similar to AISI 420-J2 and contains, 
by weight, carbon of between 0.62 and 0.70 percent, silicon of between 
0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent, 
phosphorus of no more than 0.025 percent and sulfur of no more than 
0.020 percent. This steel has a carbide density on average of 100 
carbide particles per square micron. An example of this product is 
``GIN5'' steel. The third specialty steel has a chemical composition 
similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent, 
molybdenum of between 1.15 and 1.35 percent, but lower manganese of 
between 0.20 and 0.80 percent, phosphorus of no more than 0.025 
percent, silicon of between 0.20 and 0.50 percent, and sulfur of no 
more than 0.020 percent. This product is supplied with a hardness of 
more than Hv 500 guaranteed after customer processing, and is supplied 
as, for example, ``GIN6''.11
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    \10\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \11\ ``GIN4 Mo'', ``GIN5'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
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Period of Investigation

    The Period of Investigation (POI) is April 1, 1997, through March 
31, 1998.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to Section 735(a)(2) of the Act, on November 25, 1998, 
Usinor requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the date of the 
publication of an affirmative preliminary determination in the Federal 
Register, and extend the provisional measures to not more than six 
months. In accordance with 19 CFR 351.210(b), because (1) our 
preliminary determination is affirmative, (2) Usinor accounts for a 
significant proportion of exports of the subject merchandise, and (3) 
no compelling reasons for denial exist, we are granting the 
respondent's request and are postponing the final determination until 
no later than 135 days after the publication of this notice in the 
Federal Register. Suspension of liquidation will be extended 
accordingly.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by Usinor covered by the description in the Scope of 
Investigation section, above, and sold in France during the POI, to be 
foreign like products for purposes of determining appropriate product 
comparisons to U.S. sales. We have relied on nine characteristics to 
match U.S. sales of subject merchandise to comparison sales of the 
foreign like product (listed in order of preference): grade, hot/cold 
rolled, gauge, finish, metallic coating, non-metallic coating, width, 
tempered/tensile strength, and edge trim. The Department's 
questionnaire authorized respondents to make distinctions (sub-codes) 
within some of these characteristics, but not within others. For 
certain product characteristics (i.e., finish and coating) Usinor 
reported additional sub-codes which were specifically permitted by the 
Department's questionnaire. However, Usinor also reported additional 
sub-codes in its hot/cold rolled, and tempered product characteristic 
categories. These are characteristics for which the Department's 
questionnaire did not explicitly permit sub-codes. Nevertheless, for 
this preliminary determination, the Department has included the 
additional codes that Usinor reported in the aforementioned categories 
in the Department's product matching methodology. See Analysis Memo 
from Doug Campau to The File, dated December 17, 1998. We will further 
review Usinor's distinctions within characteristics to determine their 
appropriateness for the final determination. Where there were no sales 
of identical merchandise in the home market to compare to U.S. sales, 
we compared U.S. sales to the next most similar foreign like product on 
the basis of the characteristics listed in the antidumping duty 
questionnaire and the August 3, 1998, reporting instructions.

Date of Sale

    In the home market and U.S. market, Usinor has reported date of 
sale as the invoice date. Based on information reported in Usinor's 
questionnaire response, it appeared that the date of the order 
confirmation may be the appropriate date of sale. On October 14, 1998, 
petitioners requested that the Department inquire further into how 
Usinor reported its date of sale. Given the relevance of petitioners' 
comments and the nature of marketing these types of made-to-order 
products, petitioners' claims have some merit. Consequently, on October 
20, 1998, the Department requested sales data bases reported on that 
basis. On November 2, 1998, Usinor submitted a letter requesting that 
the Department not require the submission of order confirmation date 
data because the companies' record keeping systems were not equipped to 
report order acknowledgments, in some cases because order 
acknowledgments were not generated, and in some cases because they were 
routinely purged from the involved databases. Furthermore, Usinor 
reported that the essential terms of the companies' orders change 
between the date of order acknowledgment and the invoice date for most, 
but not all, of its U.S. and home market sales. On December 1, 1998, 
Usinor provided the Department

[[Page 134]]

with a database containing sales by order confirmation date. On 
December 2, 1998, petitioners submitted a letter stating that Usinor 
misrepresented its date of sale data by reporting invoice date instead 
of order date. Petitioners contend that Usinor's material terms of sale 
do not change but for changes to sales tolerance levels.
    Section 351.401(i) of the Department's regulations states that the 
Department will normally use the date of invoice, as recorded in the 
exporter's or producer's records kept in the ordinary course of 
business, as the date of sale. The preamble to the Final Rules (the 
``Preamble'') provides an explanation of this policy and examples of 
when the Department may choose to base the date of sale on a date other 
than the date of invoice. See 62 FR at 27348-49 (May 19, 1997). For the 
reasons given in the November 2, 1998 letter discussed above, Usinor 
has argued that invoice date should be considered the proper date of 
sale. In accordance with 19 CFR 351.401(i), where appropriate, we based 
date of sale on invoice dates recorded in the ordinary course of 
business by the involved sellers and resellers of the subject 
merchandise. However, we intend to fully verify information concerning 
respondent's claims that invoice date is the appropriate date of sale. 
Based on the outcome of our verification, we will determine whether it 
is appropriate to continue to use the date of invoice as the date of 
sale. We will consider, among other things, whether, in fact, there 
were any changes to the material contract terms between the original 
order confirmation and the date of invoice. See e.g., Notice of Final 
Results of Antidumping Duty Administrative Review: Canned Pineapple 
Fruit from Thailand, 63 FR 7392 at 7394-95 (February 13, 1988).

Fair Value Comparisons

    To determine whether sales of SSSS from France to the United States 
were made at LTFV, we compared constructed export price (``CEP'') to 
the Normal Value (``NV''), 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 CEP sales for comparison to weighted-average NV sales 
or CV sales.

Constructed Export Price

    We calculated CEP in accordance with section 772(b) of the Act 
because the first sales to an unaffiliated purchaser took place after 
the subject merchandise was imported into the United States.
    We based CEP on the packed ex-warehouse or delivered prices to 
unaffiliated purchasers in the United States. Where appropriate, we 
made deductions from the starting price for discounts, credit, warranty 
expenses, and commissions. We also made deductions for the following 
movement expenses, where appropriate, in accordance with section 
772(c)(2)(A) of the Act: inland freight from plant to distribution 
warehouse, inland freight from plant/warehouse to port of exportation, 
international freight, marine insurance, U.S. inland freight from port 
to warehouse, U.S. inland freight from warehouse to the unaffiliated 
customer, U.S. inland insurance, U.S. warehouse expenses, and U.S. 
Customs duties. In accordance with section 772(d)(1) of the Act, we 
deducted selling expenses associated with economic activities occurring 
in the United States, including direct selling expenses, inventory 
carrying costs, and other indirect selling expenses. We recalculated 
credit expenses for those sales with missing payment dates because 
payment has not yet been made. For sales with missing payment dates, 
the Department set the date of payment as the projected preliminary 
results date. For a further explanation, see Analysis Memo from Doug 
Campau to The File, dated December 17, 1998. We also adjusted the 
starting price for billing adjustments to the invoice price. For 
products that were further manufactured after importation, we adjusted 
for all costs of further manufacturing in the United States in 
accordance with section 772(d)(2) of the Act. We deducted the profit 
allocated to expenses deducted under section 772(d)(1) and (d)(2) in 
accordance with sections 772(d)(3) and 772(f) of the Act. In accordance 
with section 772(f) of the Act, we computed profit based on total 
revenues realized on sales in both the U.S. and home markets, less all 
expenses associated with those sales. We then allocated profit to 
expenses incurred with respect to U.S. economic activity (including 
further manufacturing costs), based on the ratio of total U.S. expenses 
to total expenses for both the U.S. and home market. In our U.S. CEP 
calculation, we included all downstream sales from Edgcomb and Hague 
Steel Corp. (Hague) reported in respondent's December 1, 1998 
submission.

Normal Value

    After testing home market viability, as discussed below, we 
calculated NV as noted in the ``Price-to-CV Comparisons'' and ``Price-
to-Price Comparisons'' sections of this notice.

1. Home Market Viability

    In accordance with section 773(a)(1)(C) of the Act, to determine 
whether there was sufficient volume of sales in the home market to 
serve as a viable basis for calculating NV (i.e., the aggregate volume 
of home market sales of the foreign like product is greater than or 
equal to five percent of the aggregate volume of U.S. sales), we 
compared the respondent's volume of home market sales of the foreign 
like product to the volume of U.S. sales of the subject merchandise. 
Because Usinor's aggregate volume of home market sales of the foreign 
like product was greater than five percent of its aggregate volume of 
U.S. sales for the subject merchandise, we determined that the home 
market was viable. We therefore based NV on home market sales.

2. Cost of Production Analysis

    Based on a cost allegation filed by the petitioners, the Department 
found reasonable grounds to believe or suspect that sales by Usinor in 
its home market were made at prices below the costs of production 
(COP), pursuant to section 773(b)(1). As a result, the Department has 
initiated an investigation to determine whether the respondent made 
home market sales during the POI at prices below their respective COPs, 
within the meaning of section 773(b) of the Act.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP based on the sum of Usinor's cost of materials and 
fabrication for the foreign like product, plus amounts for general and 
administrative expenses, interest expenses, and packing costs. We 
relied on the COP data submitted by Usinor in its original and 
supplemental cost questionnaire responses. For this preliminary 
determination, we did not make any adjustments to Usinor's submitted 
costs.

B. Test of Home Market Prices

    We compared the weighted-average COP for Usinor to 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. In determining whether to disregard home market 
sales made at prices below the COP, we examined whether such sales were 
made (1) within an extended period of time in substantial quantities, 
and (2) at prices which permitted the recovery of all costs within a 
reasonable period of time in the normal course of

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trade, in accordance with section 773(b)(1)(A) and (B) of the Act. On a 
product-specific basis, we compared the COP to home market prices, less 
any applicable billing adjustments, movement charges, discounts, and 
direct and indirect selling expenses.

C. Results of the COP Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of Usinor'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 Usinor's sales 
of a given product during the POI were at prices less than the COP, we 
determined that such sales 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, because we use POI average 
costs, 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.

D. Calculation of CV

    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of Usinor's cost of materials, fabrication, G&A, U.S. 
packing costs, direct and indirect selling expenses, interest expenses 
and profit. 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 
Usinor in connection with the production and sale of the foreign like 
product in the ordinary course of trade, for consumption in the foreign 
country. For selling expenses, we used the actual weighted-average home 
market direct and indirect selling expenses.

Price-to-Price Comparisons

    For those product comparisons for which there were sales at prices 
above the COP, we based NV on prices to home market customers. We made 
adjustments, where appropriate, for physical differences in the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. In 
accordance with section 773(a)(6), we deducted home market packing 
costs and added U.S. packing costs.
    We calculated NV based on prices to unaffiliated home market 
customers. Where appropriate, we deducted discounts, rebates, credit 
expenses, warranty expenses, inland freight, inland insurance, and 
warehousing expense. We also adjusted the starting price for billing 
adjustments and freight revenue. We also made adjustments, where 
applicable, for home market indirect selling expenses to offset U.S. 
commissions in CEP comparisons.
    We recalculated credit expenses for those sales with missing 
payment dates. For sales with missing payment dates, the Department set 
the date of payment to the projected preliminary results date. We also 
recalculated indirect selling expenses incurred by Ugine, subtracting 
indirect selling expenses not clearly attributable to the scope 
merchandise. See Analysis Memo from Doug Campau to The File, dated 
December 17, 1998. In our home market NV calculation, we included all 
downstream sales from Bernier and Ugine-Service reported in 
respondent's December 1, 1998 submission.
    For reasons discussed below in the ``Level of Trade'' section, we 
allowed a CEP offset for comparisons made at different levels of trade. 
To calculate the CEP offset, we deducted the home market indirect 
selling expenses from normal value for home market sales that were 
compared to U.S. CEP sales. We limited the home market indirect selling 
expense deduction by the amount of the indirect selling expenses 
deducted in calculating the CEP as required under section 772(d)(1)(D) 
of the Act.

Price-to-CV Comparisons

    In accordance with section 773(a)(4) of the Tariff Act, we based NV 
on CV if we were unable to find a home market match of identical or 
similar merchandise. We calculated CV based on the costs of materials 
and fabrication employed in producing the subject merchandise, SG&A, 
and profit. In accordance with section 773(a)(2)(A) of the Tariff Act, 
we based SG&A expense and profit on the amounts incurred and realized 
by the respondent in connection with the production and sale of the 
foreign like product in the ordinary course of trade for consumption in 
France. For selling expenses, we used the weighted-average home market 
selling expenses. Where appropriate, we made adjustments to CV in 
accordance with section 773(a)(8) of the Tariff Act. We deducted from 
CV the weighted-average home market direct selling expenses and allowed 
a CEP offset adjustment (see ``Level of Trade'' section).

Arm's-Length Sales

    Usinor reported that it made sales in the home market to affiliated 
end users. Sales to affiliated customers in the home market not made at 
arm's length were excluded from our analysis. To test whether these 
sales were made at arm's length, we compared the starting prices of 
sales to affiliated and unaffiliated customers net of all movement 
charges, direct selling expenses, discounts and packing. Where prices 
to the affiliated party were on average 99.5 percent or more of the 
price to the unrelated party, we determined that sales made to the 
related party were at arm's length. Where no affiliated customer ratio 
could be calculated because identical merchandise was not sold to 
unaffiliated customers, we were unable to determine that these sales 
were made at arm's length and, therefore, excluded them from our 
analysis. See Final Determination of Sales at Less Than Fair Value: 
Certain Cold-Rolled Carbon Steel Flat Products from Argentina, 58 FR 
37062, 37077 (July 9, 1993). Where the exclusion of such sales 
eliminated all sales of the most appropriate comparison product, we 
made comparisons to the next most similar model.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the EP or CEP transaction. The NV LOT 
is that of the starting-price sales in the comparison market, or when 
NV is based on constructed value (CV), that of the sales from which we 
derive selling, general and administrative (SG&A) expenses and profit. 
For EP, the U.S. LOT is also the level of the starting-price sale, 
which is usually 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, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make 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

[[Page 136]]

there is no basis for determining whether the difference in 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, 61732 
(November 19, 1997).
    In reviewing the selling functions reported by the respondents, we 
examined all types of selling functions and activities reported in 
respondent's questionnaire response on LOT. In analyzing whether 
separate LOTs existed in this review, we found that no single selling 
function was sufficient to warrant a separate LOT in the home market. 
See Antidumping Duties; Countervailing Duties, Final Rule, 63 FR 65347 
(November 25, 1998).)
    We determined that Usinor sold merchandise at two LOTs in the home 
market during the POI. One level of trade involved sales made through 
two channels: 1. Sales by Usinor's Ugine division, directly to 
unaffiliated service centers or end users (Channel 1), and 2. Sales 
made by Usinor's Ugine division, with the assistance of Ugine-Service 
in its capacity as sales agent, to unaffiliated service centers or end 
users (Channel 2). The second level of trade involved sales from Ugine 
to Usinor's affiliates, Ugine-Service and Bernier, together with 
subsequent resales by those affiliates to unaffiliated end users 
(Channel 3). From our analysis of the marketing process for these 
sales, we determined that sales through Channel 3 were made at a more 
remote marketing stage than that for sales through Channels 1 or 2. See 
Memorandum from Doug Campau to Roland MacDonald, dated December 12, 
1998, on file in Import Administration's Central Records Unit, Room B-
099, U.S. Department of Commerce, 14th & Constitution Avenue, NW., 
Washington, DC. We also found significant distinctions in selling 
activities and associated expenses between the sales through channel 3 
and those through channel 1 or 2. Based on these differences, we 
concluded that two LOTs existed in the home market.
    In order to determine whether separate LOTs actually existed 
between the U.S. and home market, we reviewed the selling activities 
associated with each channel of distribution. Usinor only reported CEP 
sales in the U.S. market. Because all of Usinor's CEP sales in the U.S. 
market were made through Uginox, there was only one level of trade. For 
these CEP sales, we determined that fewer and different selling 
functions were performed for CEP sales to Uginox than for sales at 
either of the home market LOTs. In addition, we found that the home 
market sales were at a more advanced stage of distribution (to end-
users) compared to the CEP sales (to the affiliated distributor).
    We examined whether a LOT adjustment was appropriate. The 
Department makes this adjustment when it is demonstrated that a 
difference in LOTs affects price comparability. However, where the 
available data do not provide an appropriate basis upon which to 
determine a LOT adjustment, and where the NV is established at a LOT 
that is at a more advanced stage of distribution than the LOT of the 
CEP transactions, we adjust NV under section 773(a)(7)(B) of the Act 
(the CEP offset provision). We were unable to quantify the LOT 
adjustment in accordance with section 773(a)(7)(A) of the Act, as we 
found that neither of the LOTs in the home market matched the LOT of 
the CEP transactions. Because of this, we did not calculate a LOT 
adjustment. Instead, a CEP offset was applied to the NV-CEP 
comparisons. See Memorandum from Doug Campau to Roland MacDonald, dated 
December 12, 1998, on file in Import Administration's Central Records 
Unit, Room B-099, U.S. Department of Commerce, 14th and Constitution 
Avenue, N.W., Washington, D.C.

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, in accordance with section 773A of the Act.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all imports of subject 
merchandise that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct the Customs Service to require a 
cash deposit or the posting of a bond equal to the weighted-average 
amount by which the NV exceeds the CEP, 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-
                  Exporter/manufacturer                   average margin
                                                            (percentage)
------------------------------------------------------------------------
Usinor..................................................           11.73
All Others..............................................           11.73
------------------------------------------------------------------------

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 may be submitted to the 
Assistant Secretary for Import Administration no later than fifty days 
after the date of publication of this notice, and rebuttal briefs, 
limited to issues raised in case briefs, no later than fifty-five days 
after publication of this notice. 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 fifty-seven days after 
publication of this notice, 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 no later than 135 days after publication of this notice 
in the Federal Register.
    This determination is issued and published in accordance with 
sections 733(d) and 777(i)(1) of the Act.


[[Page 137]]


    Dated: December 17, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-34466 Filed 12-31-98; 8:45 am]
BILLING CODE 3510-DS-P