[Federal Register Volume 64, Number 46 (Wednesday, March 10, 1999)]
[Notices]
[Pages 11825-11834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5945]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-421-804]


Certain Cold-rolled Carbon Steel Flat Products from the 
Netherlands: Final Results of Antidumping Duty Administrative Review

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

ACTION: Notice of Final Results of Antidumping Duty Administrative 
Review.

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SUMMARY: On September 4, 1998, the Department of Commerce (the 
Department) published the preliminary results of the administrative 
review of the antidumping duty order on certain cold-rolled carbon 
steel flat products from the Netherlands (63 FR 47227). This review 
covers one manufacturer/exporter of the subject merchandise to the 
United States during the period of review (POR), August 1, 1996, 
through July 31, 1997. We gave interested parties an opportunity to 
comment on our preliminary results. Based on our analysis of the 
comments received, we have not changed the results from those presented 
in the preliminary results of review.

EFFECTIVE DATE: March 10, 1999.

FOR FURTHER INFORMATION CONTACT: Helen Kramer or Linda Ludwig, 
Enforcement Group III, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0405 or (202) 482-3833, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On September 4, 1998, the Department published in the Federal 
Register (63 FR 47227) the preliminary results of the administrative 
review of the antidumping duty order on certain cold-rolled carbon 
steel flat products from the Netherlands (58 FR 44172, August 19, 
1993), as amended pursuant to Court of International Trade (CIT) 
decision (61 FR 47871, September 11, 1996). The Department has now 
completed this administrative review in accordance with section 751 of 
the Tariff Act of 1930, as amended.

Applicable Statute and Regulations

    Unless otherwise stated, all citations to the Tariff Act of 1930, 
as amended (the Act) are references to the provisions effective January 
1, 1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to 19 CFR 
Part 351 (1998).

Scope of this Review

    The products covered by this review include cold-rolled (cold-
reduced) carbon steel flat-rolled products, of rectangular shape, 
neither clad, plated nor coated with metal, whether or not painted, 
varnished or coated with plastics or other nonmetallic substances, in 
coils (whether or not in successively superimposed layers) and of a 
width of 0.5 inch or greater, or in straight lengths which, if of a 
thickness less than 4.75 millimeters, are of a width of 0.5 inch or 
greater and which measures at least 10 times the thickness or if of a 
thickness of 4.75 millimeters or more are of a width which exceeds 150 
millimeters and measures at least twice the thickness, as currently 
classifiable in the Harmonized Tariff Schedule (HTS) under item numbers 
7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0090, 7209.17.0030, 
7209.17.0060, 7209.17.0090, 7209.18.1530, 7209.18.1560, 7209.18.2550, 
7209.18.6000, 7209.25.0000, 7209.26.0000, 7209.27.0000, 7209.28.0000, 
7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.23.1500, 7211.23.2000, 
7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060, 7211.23.6085, 
7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030, 7211.29.6080, 
7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7215.50.0015, 
7215.50.0060, 7215.50.0090, 7215.90.5000, 7217.10.1000, 7217.10.2000, 
7217.10.3000, 7217.10.7000, 7217.90.1000, 7217.90.5030, 7217.90.5060, 
and 7217.90.5090. Included in this review are flat-rolled products of 
non-rectangular cross-section where such cross-section is achieved 
subsequent to the rolling process (i.e., products which have been 
``worked after rolling'')--for example, products which have been 
beveled or rounded at the edges. Excluded from this review is certain 
shadow mask steel, i.e., aluminum-killed, cold-rolled steel coil that 
is open-coil annealed, has a carbon content of less than 0.002 percent, 
of 0.003 to 0.012 inch in thickness, 15 to 30 inches in width, and has 
an ultra flat, isotropic surface. These HTS item numbers are provided 
for convenience and Customs purposes. The written description remains 
dispositive.
    The POR is August 1, 1996, through July 31, 1997. This review 
covers entries of certain cold-rolled carbon steel flat products from 
the Netherlands by Hoogovens Staal B.V. (Hoogovens).

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received case briefs on October 13, 1998, and 
rebuttal briefs on October 19, 1998, from the respondent (Hoogovens) 
and petitions (Bethlehem Steel Corporation, U.S. Steel Company (a Unit 
of USX Corporation), Inland Steel Industries, Inc., Geneva Steel, Gulf 
States Steel Inc. of Alabama, Sharon Steel Corporation, and Lukens 
Steel Company).

Comment 1: Classifying U.S. Sales as EP or CEP Sales

    Petitioners urge the Department to reclassify sales that Hoogovens 
reported as Export Price (EP) sales as Constructed Export Price (CEP) 
sales. Petitioners argue that all of Hoogoven's direct sales should be 
treated as CEP sales because the role of Hoogovens' U.S. affiliate, 
HSUSA, in the sales process was allegedly more than merely incidental 
or ancillary. Petitioners cite U.S. Steel Group--a Unit of USX 
Corporation v. United States, Slip Op. 98-96 (U.S. Court of 
International Trade (CIT), 1998) (``U.S. Steel Group'') and Certain 
Cold-

[[Page 11826]]

Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea; 
Final Results of Antidumping Duty Administrative Reviews, 63 FR at 
13182 (March 18, 1998) (``Korean Flat Products''), as supporting CEP 
treatment of sales treated as EP in previous reviews.
    Petitioners argue that the Department has previously found that 
contacting customers and soliciting orders are selling functions that 
are more than merely incidental or ancillary to U.S. sales, citing 
Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Wire Rod from Spain, 63 FR 40391, 40395 (July 29, 1998) 
(``Spanish Wire Rod''); Certain Porcelain-on-Steel Cookware from 
Mexico; Final Results of Antidumping Duty Administrative Review, 63 FR 
at 38377 (July 16, 1998); and Notice of Final Determination of Sales at 
Less Than Fair Value: Stainless Steel Wire Rod from Italy, 63 FR 40422 
(July 29, 1998) (``Italian Wire Rod''). Petitioners claim that HSUSA 
officials participate in contract discussions between Hoogovens and 
customers, sometimes negotiate contract terms without any Hoogovens 
officials being present, and do not receive price guidelines from 
Hoogovens. Petitioners cite the Department's verification report, which 
stated that HSUSA informs Hoogovens whether price quotes received from 
U.S. customers are reasonable based on its research into market prices. 
Vertification at Hoogovens Steel USA, Inc., July 15, 1998 (July 21, 
1998) at 3 (Public Version). Petitioners argue that the Department and 
the CIT have found that negotiating sale terms with U.S. customers is a 
substantive sales function supporting CEP treatment of U.S. sales. 
Koenig & Bauer-Albert v. United States, Consol, Ct. Slip Op. 98-83 
(CIT, June 23, 1998); Notice of Final Determination of Sales at Less 
Than Fair Value: Stainless Steel Wire Rod from Korea, 63 FR 40404, 
40418 (July 29, 1998) (``Korean Wire Rod''); Italian Wire Rod, 63 FR 
40422. Petitioners refer to a statement in the Department's 
verification report that HSUSA is always involved with the service 
technician's visits to U.S. customers. Verification of Sales at 
Hoogovens Staal B.V., Beverwijk and IJmuiden, the Netherlands, June 8-
12, 1998 at 9. Petitioners argue that HSUSA provides significant other 
after-sale support functions which are more than incidental or 
ancillary, including quarterly sales visits to U.S. customers, and 
troubleshooting performance problems, both in product quality and 
delivery services.
    Petitioners allege that Hoogovens' claim that it has to approve all 
contract terms negotiated by HSUSA is unsubstantiated, and that during 
the POR Hoogovens never rejected any contract term, including price. 
Petitioners therefore urge the Department to ignore Hoogovens' claim. 
Petitioners further argue that even if the claim that Hoogovens has to 
approve all prices were substantiated, under Department practice this 
would not mean that HSUSA's role was incidental or ancillary (citing 
Korean Flat Products, 63 FR at 13177).
    Petitioners cite the CIT's decision in U.S. Steel Group, where the 
court held that the U.S. affiliate was more than a mere processor of 
sales-related documentation and a communications link, despite the fact 
that the foreign producer set minimum prices above which the U.S. 
affiliate could negotiate. On this basis, petitioners argue that the 
case for reclassifying Hoogovens' sales as CEP is even stronger, 
because Hoogovens does not give HSUSA any price guidelines, except the 
U.S. Steel price list, which is used to determine the prices for 
extras. See Vertification of Sales at Hoogovens Staal B.V. at 4. 
Petitioners claim that the absence of a set minimum price shows that 
HSUSA's negotiating authority is broader than that of the U.S. 
affiliate in U.S. Steel Group, where the CIT upheld CEP treatment 
because of the U.S. affiliate's activities, even though the foreign 
producer responded to customer inquiries with a price quote and 
provided daily guidance to its U.S. affiliate regarding prices and 
product specifications.
    Hoogovens argues that reclassification of its sales reported as EP 
is unwarranted because there have been no changes in the facts or law 
and regulations, pointing out that in the investigation and three prior 
administrative reviews the Department has consistently treated 
Hoogovens' direct U.S. sales as EP sales. Furthermore, Hoogovens cites 
the Statement of Administrative Action (SAA) accompanying the Uruguay 
Round Agreements Act, which states that no change is intended in the 
circumstances under which EP or CEP is used. SAA at 822-23. Petitioners 
rejoin that in other cases where the facts on the record of a 
particular review showed that the U.S. affiliate's role was more than 
incidental or ancillary, the Department reclassified U.S. sales as CEP 
despite having treated those sales as EP in prior reviews. Petitioners 
cite the decision in Asociacion Colombiana de Exportadores de Flores v. 
United States, 6 F. Supp. 2d 865 (CIT, 1998), in which the court held 
that ``Commerce has the flexibity to change its position providing that 
it explain[s] the basis for its change and providing that the 
explanation is in accordance with law and supported by substantial 
evidence.''
    Although in Hoogovens' view the Department appears recently to have 
applied a lower threshold for the number and level of services required 
for a CEP finding, even under the standards articulated in Certain Cut-
to-Length Carbon Steel Plate from Germany; Final Results of Antidumping 
Duty Administrative Review, 62 FR 18390 (April 15, 1997) (``German 
Plate'') and in Korean Flat Products, 63 FR at 13182-83 (March 18, 
1998), Hoogovens argues that its sales should still be classified as 
EP. In the cited German Plate and Korean Flat Products cases, Hoogovens 
points out that the Department paid particular attention to the 
respective levels of involvement in the sales negotiation process of 
the U.S. affiliate and the foreign exporter. In both cases, Hoogovens 
argues, the U.S. affiliate had significant, and almost exclusive, 
responsibility for both the setting and negotiation of prices. 
Hoogovens cites the Department's conclusion in Korean Flat Products 
that respondent's U.S. customers ``seldom have contact'' with the 
foreign exporter in Korea, and the CIT's affirmance of the Department's 
CEP classification in the German Plate case on the grounds that the 
U.S. affiliate had flexibility to make decisions on its own as to 
price, and that communication regarding prices between respondent and 
the U.S. affiliate was not on a continuous basis. Hoogovens points to 
the Department's decision in Certain Welded Stainless Steel Pipe from 
Taiwan; Final Results of Antidump Duty Administrative Review, 63 FR 
38382, 38385 (July 16, 1998) (``Pipe from Taiwan'') that mere 
participation by a U.S. affiliate in sales-related communication does 
not justify CEP classification. In that case, the Department concluded 
that EP classification is appropriate where there is no record evidence 
to indicate that the U.S. affiliate has any independent authority to 
negotiate or set prices for direct sales in the United States. 
According to Hoogovens, the Department concluded that the fact that the 
U.S. affiliate has no say whatever in the profitability of its own 
sales of the subject merchandise by determining the amount of a price 
markup was further evidence that the entire sales process is controlled 
by the producer in Taiwan. Hoogovens contrasts this to the German Plate 
case, where the U.S. affiliate could negotiate above a minimum price

[[Page 11827]]

established by the foreign exporter. Finally, Hoogovens notes, in Pipe 
from Taiwan the Department pointed to the fact that unaffiliated U.S. 
customers maintain direct contact with the foreign exporter as an 
indicator that the U.S. affiliate was not involved in negotiations, 
further distinguishing the case from Korean Flat Products and German 
Plate.
    Hoogovens argues that the record in this review is replete with 
evidence that, as in Pipe from Taiwan, Hoogovens' U.S. affiliate has no 
independent negotiating authority, no incentive to increase 
profitability, and serves only as a facilitator in the sales process, 
thus distinguishing this case from German Plate and Korean Flat 
Products. Hoogovens further maintains that the record clearly 
establishes that it maintains direct communications links with its U.S. 
customers and engages in continuous and frequent communications with 
these customers without the involvement of HSUSA, pointing out that 
such contact was infrequent or non-existent in German Plate and Korean 
Flat Products.
    Hoogovens insists that the Department's statement in the 
preliminary results of review in this case that ``Hoogovens has stated 
that HSUSA negotiates prices with U.S. customers, subject to Hoogovens' 
approval'' is without foundation, and that nowhere in the record or any 
of the verification reports or memoranda filed in this case is there 
any evidence to support such a statement. While Hoogovens acknowledges 
that HSUSA communicates offers and quotes back and forth between 
Hoogovens and its customers, it insists that the record supports the 
conclusion that HSUSA does not have authority to engage in negotiations 
of prices or any other terms of sale with Hoogovens' U.S. customers.
    According to Hoogovens, the Department did not reach its CEP 
finding in German Plate and Korean Flat Products based on an isolated 
examination of the U.S. affiliate's participation in sales 
negotiations, but rather on the totality of sales services performed by 
the affiliate, which in each case were substantial. In their case brief 
in German Plate, petitioners enumerated the U.S. affiliate's sale 
activities they considered to be appropriate grounds for reclassifying 
sales as CEP. In addition to setting and negotiating of prices, these 
activities included purchasing and reselling the subject merchandise, 
bearing risk of loss, holding itself out as the seller of the 
merchandise, financing the sale to the unaffiliated U.S. customer, and 
creating and maintaining extensive sales documentation. According to 
Hoogovens, the evidence on the record of this case makes clear that 
HSUSA performs none of those functions.
    Hoogovens contrasts its circumstances to Korean Wire Road, 63 FR 
40418-19 (July 29, 1998), where the U.S. affiliate took title to the 
merchandise in back-to-back transactions, whereas Hoogovern's sales are 
made directly to the U.S. customer, and HSUSA never takes title to the 
subject merchandise. In Korean Wire Rod, the Department classified 
respondent's sales as EP in circumstances where the sales process was 
allegedly similar to Hoogovens', but the U.S. affiliate was more 
involved in the sale process than was HSUSA. Hoogovens also 
distinguishes its situation from the circumstances in Spanish Wire Rod, 
in which the Department reclassified sales the respondent reported as 
EP as CEP. Hoogovens argues that in Spanish Wire Rod the key factors in 
the Department's decision were that the U.S. affiliate could accept the 
customer's order for certain sales without seeking the approval of the 
foreign producer/exporter, and that there was no evidence of direct 
contact between the foreign producer/exporter and the unaffiliated U.S. 
customer. Hoogovens claims that HSUSA had no independent negotiating 
authority and that the record is replete with evidence of direct 
contact between Hoogovens and its unaffiliated U.S. customers, 
including contacts that do not involve HSUSA. Hoogovens cites HSUSA 
Verification Exhibit 4 at 27, which refers to a price agreed to in the 
Netherlands between Hoogovens' sales director and the president of 
Hoogovens' largest U.S. customer for the subject merchandise. Hoogovens 
argues that the Department's use of the word ``negotiate'' in its 
verification report, where it stated that ``HSUA needs final approval 
from Hoogovens on sales details it negotiates with the customers,'' 
does not undermine the extensive evidence indicating that HSUSA's role 
in the sales process is limited to relaying price offers back and forth 
between Hoogovens and the customers and that HSUSA has no independent 
authority to negotiate sales on behalf of Hoogovens. Hoogovens rejects 
petitioners' claim that HSUSA solicits orders, pointing out that there 
has been no expansion in the U.S. customer base during this or previous 
PORs, and that the sole basis for this claim is the legal authority to 
solicit sales in the Amended Agency Agreement, which also specifies 
that HSUSA has no legal authority to act on behalf of Hoogovens. 
Hoogovens argues that petitioners have misconstrued the Department's 
statement in the HSUSA verification report that Hoogovens does not 
provide price guidelines to be used by HSUSA in negotiating prices as 
meaning that HSUSA has unfettered negotiating authority. On the 
contrary, according to Hoogovens, the Department made this statement to 
highlight the fact that Hoogovens does not set parameters within which 
HSUSA may then independently negotiate. Rather, Hoogovens states, it 
sets prices itself and does not grant HSUSA any negotiating authority 
whatever, but uses HSUSA to relay price offers back and forth to its 
customers. Hoogovens claims that the record of this review is replete 
with evidence that Hoogovens sets the terms for its U.S. sales and 
communicates this information to its customers either directly or 
through HSUSA. Accordingly, Hoogovens asserts that it does not reject 
prices ``negotiated'' by HSUSA, but rather its normal sales process 
does not provide HSUSA with the opportunity to agree to prices with the 
customer and submit them to Hoogovens for final approval. Consequently, 
Hoogovens argues, petitioners are misinterpreting the relevance of the 
CIT's decision in U.S. Steel Group to this case.
    Hoogovens claims that petitioners have failed to demonstrate how 
the exchange of market information between HSUSA and Hoogovens 
constitutes negotiations with the unaffiliated customer, arguing that 
HSUSA's activities represent a communications link. Similarly, 
Hoogovens rejects petitioners' contention that HSUSA negotiates or 
drafts contracts, citing the Department's finding at verification that 
HSUSA prepares the contract forms after price and quantity have been 
agreed upon between Hoogovens and the U.S. customer as a customary 
practice carried over from an earlier corporate structure predating the 
formation of NVW, HSUSA's predecessor affiliated company. HSUSA 
Verification Report at 3.
    Hoogovens rebuts petitioners' claim that HSUSA provides technical 
services by noting that their argument involves a misreading of a 
statement in the Department's verification report that HSUSA ``is 
always involved'' with the technician's visits to U.S. customers. 
Hoogovens points out that this involvement consisted primarily of 
arranging the logistics of these service visits. Hoogovens argues 
further that in the cases cited by petitioners in which after sales 
services were at issue, the U.S. affiliate took sole responsibility 
for, and performed substantial services on

[[Page 11828]]

behalf of, the foreign producer, and these services were only a small 
part of the wide array of services provided by the U.S. affiliate. 
Hoogovens asserts that whatever services HSUSA performed were at most 
incidental.
    Department's Position: We agree with Hoogovens and have continued 
to treat its direct U.S. sales as EP for purposes of the final results 
of review. To ensure proper application of the statutory definitions of 
EP and CEP, where a U.S. affiliate is involved in making a sale, we 
consider the sale to be CEP unless the record demonstrates that the 
U.S. affiliate's involvement in making the sale is incidental or 
ancillary. Thus, whenever sales are made prior to importation through 
an affiliated sales agent in the United States, the Department 
determines whether to characterize the sales as EP sales based upon the 
following criteria: (1) Whether the merchandise was shipped directly to 
the unaffiliated buyer, without being introduced into the affiliated 
selling agent's inventory; (2) whether this procedure is the customary 
sales channel between the parties; and (3) whether the affiliated 
selling agent located in the United States acts only as a processor of 
documentation and a communications link between the foreign producer 
and the unaffiliated buyer. See e.g., Notice of Final Determination of 
Sales at Less Than Fair Value: Newspaper Printing Presses From Germany, 
61 FR 38175 (July 23, 1996); Certain Corrosion Resistant Carbon Steel 
Flat Products From Korea: Final Results of Antidumping Administrative 
Review, 61 FR 18547, 18551 (April 26, 1996); Certain Cut-To-Length 
Carbon Steel Plate From Germany: Final Results of Antidumping Duty 
Administrative Review, 62 FR 18390 (April 15, 1997); Certain Cold-
Rolled and Corrosion Resistant Carbon Steel Flat Products From Korea: 
Final Results of Antidumping Duty Administrative Reviews, 63 FR 13170, 
13177 (March 18, 1998).
    In the preliminary results, we considered this issue and concluded 
that Hoogovens' U.S. sales through HSUSA satisfied at least two out of 
the three criteria the Department uses to determine whether sales are 
EP, i.e., method of shipment and customary channel of trade. In regard 
to the third criterion, the affiliate's role in the sales process, we 
determined that HSUSA did not engage in the types of activities the 
Department considers in classifying U.S. sales as CEP, such as: taking 
title to the subject merchandise, maintaining inventory, conducting 
customer credit checks, financing sales, providing technical service, 
receiving compensation based on price or quantity, and issuing order 
confirmations and invoices. In addition, HSUSA received payments from 
customers only in exceptional circumstances, i.e., when customers lack 
the capacity to make wire transfers. The Department invited additional 
information on whether the U.S. affiliate acts only as a processor of 
documentation and a communications link between the foreign producer 
and the unaffiliated buyer in the United States. See Preliminary 
Results, 63 FR at 47228-29.
    In the instant review, the sales in question were made prior to 
importation to unaffiliated customers in the United States. The fact 
that the subject merchandise was shipped directly from Hoogovens to the 
unaffiliated U.S. customers and that this was the customary commercial 
channel between these parties is not disputed. The issue is whether 
HSUSA's role in the sales process was incidental or ancillary to the 
sale, i.e., limited to that of a processor of sales-related 
documentation and a communications link.
    The record in this case shows that HSUSA was involved in the sales 
process as a facilitator, processor of documentation and a 
communications link, and that the preponderance of selling functions 
involved in U.S. sales occurred in the Netherlands. This finding is 
consistent with the Department's practice in other cases cited by 
petitioners. In contrast with the respective roles of the producer and 
its U.S. affiliate in Spanish Wire Rod, HSUSA has no authority to 
negotiate prices, nor did it initiate contact with the U.S. customers 
on its own authority. In addition, we note that the petitioners' 
citation to Korean Flat Products is not relevant here. In Korean Flat 
Products, one of the U.S. affiliates had the authority to write and 
sign sales contracts, while another performed significant after-sale 
support functions. Neither of these conditions applies in this case.
    While HSUSA writes contracts on behalf of Hoogovens, it merely 
records the agreement reached between Hoogovens and its customer. It 
has no authority to approve the terms. Although the Department's 
verification report paraphrased a Hoogovens official as stating that 
``HSUSA is the primary contact with Hoogovens' customers but needs 
final approval from Hoogovens on sales details it negotiates with the 
customers,'' (Hoogovens Verification Report at 4) a preponderance of 
the evidence nevertheless shows that HSUSA is a facilitator and 
communications link between U.S. customers and Hoogovens in negotiating 
sales contract terms.
    Hoogovens sales representatives visited U.S. customers at least 
once a year, accompanied by HSUSA officials, who arranged the visits. 
U.S. customers visited Hoogovens either annually or biannually. 
Hoogovens concluded annual contracts with its U.S. customers in October 
or November, setting base prices for the first quarter or half of the 
coming year and annual quantities. These negotiations usually occurred 
in the United States, and occasionally in the Netherlands, depending on 
the schedule of customer visits to Hoogovens. HSUSA served as the 
intermediary between U.S. customers and Hoogovens, relaying customer 
price quotes and quantities to the Netherlands and advising Hoogovens 
whether the quotes were reasonable on the basis of HSUSA's research 
into market conditions. HSUSA then transmitted Hoogovens' replies to 
the customer. The record shows that HSUSA was in constant daily 
communication with Hoogovens. HSUSA had no independent authority to set 
prices or accept orders. When agreement was reached between Hoogovens 
and the customer, HSUSA drew up and signed the sales contract on behalf 
of Hoogovens. Hoogovens issued an order confirmation to the customer. 
Customers indicated by facsimile the schedule of desired delivery 
dates, either directly to Hoogovens or through HSUSA. Hoogovens 
arranged for shipment to the United States. HSUSA processed the U.S. 
Customs declarations. During the POR, HSUSA acted as the importer of 
record for some shipments, while for others Hoogovens was the importer. 
In those cases in which the terms of sale required arranging for U.S. 
internal freight, HSUSA made the arrangements with freight forwarders. 
Hoogovens issued the invoices, performed credit checks, financed 
customer credit, and recorded the sales in its accounts. Most customers 
paid Hoogovens directly by wire transfers. HSUSA received payments by 
check in a small number of instances from customers lacking wire 
transfer facilities, and remitted payment to Hoogovens by wire after 
the checks cleared.
    Although the agency agreement authorizes HSUSA to solicit new 
customers and orders, there is no indication that this was a 
substantial function during this review, as Hoogovens correctly pointed 
out that its U.S. customer base for the subject merchandise has not 
changed between this review and the preceding ones.

[[Page 11829]]

    Second, HSUSA's role in after-sale support functions is limited to 
facilitating visits by Hoogovens' service technician and serving as a 
communications link to relay complaints. If there were any problems 
with the quality of the merchandise, HSUSA relayed customer complaints 
to Hoogovens. HSUSA sales representatives discussed quality issues with 
customers during their quarterly vists. HSUSA made arrangements for 
U.S. technical service visits by the technician based in the 
Netherlands. All technical services were provided by Hoogovens. U.S. 
customers communicated directly with Hoogovens regarding post-sale 
price adjustments for quality defects or unacceptable variances in coil 
weights. U.S. customers also communicated directly with Hoogovens 
regarding new applications and trial runs.
    Based upon the functions performed by Hoogovens and HSUSA, we 
conclude that HSUSA's role in the sales process was to act as a 
processor of documentation and a communications link. Therefore we have 
continued to treat Hoogovens' sales as EP sales in this case.

Comment 2: Deduct Indirect Selling Expenses

    Petitioners point out that Hoogovens reported the indirect selling 
expenses (ISE) incurred by HSUSA in the field for ISE incurred in the 
Netherlands (DINDIRSU), and ask the Department to deduct DINDIRSU in 
calculating CEP if the Department reclassifies the U.S. sales that were 
reported as EP.
    Hoogovens responds that if the Department deducts HSUSA's ISE, it 
should take care not to deduct ISE incurred in the Netherlands from the 
CEP, in accordance with the Department's practice of deducting only 
expenses associated with economic activity in the United States.
    Department's Position: As we have not reclassified EP sales, these 
arguments are moot.

Comment 3: Level of Trade of CEP Sales

    Hoogovens argues that if the Department reclassifies the sales 
reported as EP as CEP, it must reconsider its determination that all of 
the sales were at the same level of trade (LOT), and should either make 
a CEP offset to normal value or it should not deduct certain expenses 
incurred in the Netherlands from CEP in its margin calculations.
    Department's Position: As we have not reclassified EP sales, these 
arguments are moot.

Comment 4: Date of Sale

    Petitioners argue that the Department should use the invoice date 
as the date of sale for all of Hoogovens' home market sales. For most 
of its home market sales, Hoogovens reported the date of long-term 
contracts as the date of sale. Petitioners argue that the record shows 
that these contracts did not contain binding quantities, and that the 
sales database shows that the quantities sold sometimes deviated from 
the amount specified in the contracts.
    Hoogovens responds that the Department should continue to use the 
reported dates of sale for the final results, pointing out that at 
verification the Department found no discrepancies in Hoogovens' 
reported date of sale and verified that the price and quantity were 
established in the contract for all relevant home market sales 
examined, taking into account that deviations in quantity up to ten 
percent are considered normal in the steel industry. Hoogovens 
considers it ironic that petitioners are now making this argument, when 
in the previous review they made the opposite argument in objecting to 
Hoogovens' initial use of the invoice date as the date of sale (a 
change from previous practice in response to the Department's new 
regulations, which was reversed in a supplemental response). Hoogovens 
also reports that in responding to petitioners' comments, it found an 
error in coding the date of sale for one quarter of a customer's 
contracts.
    Department's Position: We agree with Hoogovens. Its methodology for 
determining the date of sale in this review is consistent with the 
three previous reviews. Further, in this review the Department verified 
that long-term contracts established the prices and quantities.
    In regard to the clerical error reported by Hoogovens in its 
rebuttal brief, in light of the decision of the United States Court of 
Appeals for the Federal Circuit (CAFC) in NTN Bearing Corp. v. United 
States, Slip. Op. 94-1186 (Fed. Cir. 1995) (NTN), we have adopted the 
following policy for correcting clerical errors of respondents brought 
to our attention after the preliminary results. We accept corrections 
of such errors if all of the following conditions are satisfied: (1) 
the error in question must be demonstrated to be a clerical error, not 
a methodological error, an error in judgment, or a substantive error; 
(2) the Department must be satisfied that the corrective documentation 
provided in support of the clerical error allegation is reliable; (3) 
the respondent must have availed itself of the earliest reasonable 
opportunity to correct the error; (4) the clerical error allegation, 
and any corrective documentation, must be submitted to the Department 
no later than the due date for the respondent's administrative case 
brief; (5) the clerical error must not entail a substantial revision of 
the response; and (6) the respondent's corrective documentation must 
not contradict information previously determined to be accurate at 
verification. See Roller Chain, Other Than Bicycle From Japan: Final 
Results and Partial Rescission of Antidumping Duty Administrative 
Review, 63 FR 63671 (November 16, 1998); Certain Fresh Cut Flowers From 
Colombia; Final Results of Antidumping Duty Administrative Reviews, 61 
FR 42833, 42834 (August 19, 1996).
    In this case, conditions two, three and four are not met. Hoogovens 
did not avail itself of the earliest reasonable opportunity to correct 
the error. In its corrections letter submitted at the beginning of 
verification (Verification Exhibit 1), Hoogovens reported an error in 
the date of sale for some of the sales in question here, but gave the 
wrong date as the correction. In addition, the corrections at issue 
were submitted in the rebuttal brief, rather than the case brief, and 
are thus too late. Moreover, while the number of shipments reported on 
both occasions as having incorrect dates of sale is the same, there are 
some differences between the two lists in which sales are included. We 
therefore conclude that the later corrections list is not reliable. 
Consequently, we have not made these corrections to the date of sale.

Comment 5: Exclude Movement Expenses from CEP Profit Calculation

    Petitioners state that the Department should exclude movement 
expenses from the denominator of the ratio used to determine the profit 
to be deducted from CEP sales, on the grounds that in U.S. Steel Group, 
the CIT held that ``movement expenses may not be included in the 
denominator of the ratio to be applied to actual total profit.''
    Hoogovens rejoins that pending the resolution of the remand in U.S. 
Steel Group, the Department should not depart from the methodology used 
in the preliminary results. Hoogovens submits that the statutory 
reference to all expenses incurred in the production and sale of the 
subject merchandise must be read to include movement expenses, which 
are an essential element of making any sale. In addition, Hoogovens 
notes, the court appeared concerned that the numerator in the 
allocation of total profit to CEP sales, CEP selling expenses 
(``CEPSELL''),

[[Page 11830]]

should be in symmetry with the denominator, total selling expenses 
(``TOTEXP''). Hoogovens argues that it is not clear that the statute 
requires such symmetry, pointing out that the purpose of the CEP profit 
calculation is to determine the amount of profit allocable to selling 
activities in the United States, which is then deducted from the U.S. 
price. Hoogovens contends it is reasonable for the Department to 
conclude that the statute does not intend to allocate profit to the 
cost of moving goods within the United States, even though such 
movement costs are included in the calculation of the respondent's 
total expenses in both markets. Thus, Hoogovens concludes, symmetry in 
mathematical calculations does not comport with or serve the statutory 
goal, and the Department should not revise it methodology for the final 
results in this review.
    Department's Position: We agree with Hoogovens. The Department is 
currently appealing the CIT decision in U.S. Steel Group, and will 
continue to follow its policy of including movement expenses in the 
denominator of the CEP profit calculation in accordance with the 
Department's interpretation of section 772(f) of the Act. See Policy 
Bulletin 97.1, ``Calculation of Profit for Constructed Export Price 
Transactions,'' (September 4, 1997).
    Nothing in the statute or its legislative history requires that the 
Department include exactly the same kinds of expenses in total United 
States expenses as it includes in total expenses for purposes of 
allocating an amount of profit for constructing an export price. To the 
contrary, the statute narrowly defines ``total United States expenses'' 
(the numerator) to include only commissions, direct and indirect 
selling expenses, expenses assumed by the seller on behalf of the 
purchaser, and the cost of further manufacturing. See sections 
772(f)(2)(B) and 772(d)(1) and (2). Thus, the statute prohibits the 
inclusion of movement expenses in the calculation of total United 
States expenses. In our view, the exclusion of express language on 
movement expenses demonstrates that Congress did not intend that 
Commerce deduct any profit allocated to the cost of moving goods for 
purposes of constructing an export price. Furthermore, the statute 
cannot be interpreted to require symmetry in the CEP profit ratio 
(i.e., that the same types of expenses be included in both the 
numerator and denominator) because the statute provides that other 
expenses, other than movement expense, shall be included in the total 
expenses denominator, but does not require inclusion of such expenses 
in the U.S. expense numerator (e.g., U.S. import duties and export 
taxes; see sections 772(c)(2)(A) and (B)).
    Unlike the definition of ``total United States expenses,'' the 
statute does not further define ``total expenses'' incurred in the 
production and sale of the merchandise. In fact, the CIT acknowledged 
that ``the language defining total expenses is not entirely clear as to 
whether movement expenses should be included in the total expenses 
denominator.'' U.S. Steel Group, at 3. However, section 772(f) of the 
Act requires the Department to use ``total actual profit'' in 
calculating the CEP profit deduction. To the extent that the producer/
exporter and its U.S. affiliates incur movement expenses to deliver the 
merchandise to customers, these expenses must be included in total 
expenses in order to calculate actual profit. Indeed, this 
interpretation is based on the axiom that total profit equals total 
revenue minus total expenses, and resolves any confusion surrounding 
the definition of total expenses in favor of the inclusion of movement 
expenses. Furthermore, we do not believe it is reasonable to interpret 
the term ``total expenses'' one way in calculating a respondent's total 
actual profit, and another way in summing expenses for the denominator 
of the CEP profit ratio. Rather, a reasonable interpretation requires a 
unified reading and application of the CEP profit provisions in which 
the meaning of ``total expenses'' does not vary.
    To calculate the profit to be allocated to CEP sales, total actual 
profit is multiplied by the ratio of total United States expenses to 
total expenses. Thus, no portion of total profit is allocated to U.S. 
movement expenses for purposes of calculating the CEP, but all movement 
expenses, like any other expense incurred by the seller, must be 
included in total expenses in order to calculate total profit 
accurately. Because the statutory goal of accurately calculating total 
profit and reasonably allocating a portion of the total profit to CEP 
sales is served by the Department's current CEP profit methodology, we 
have continued to apply the methodology established in Policy Bulletin 
97.1.

Comment 6: Offset for Cost of Financing Cash Deposits

    Hoogovens claims that the Department's decision in the previous 
review to deny an offset to its reported U.S. indirect selling expenses 
(ISE) for the cost of financing cash deposits of estimated antidumping 
duties during the POR is incorrect, and that the Department should 
grant this adjustment for the reasons stated in the bearings 
determinations. See Tapered Roller Bearings and Parts Thereof, Finished 
and Unfinished, from Japan, and Tapered Roller Bearings, Four Inches or 
less in Outside Diameter, and Components Thereof, from Japan; Final 
Results of Antidumping Duty Administrative Reviews and Termination in 
Part, 62 FR 11825, 11826-30 (March 13, 1997).
    Hoogovens submits that the CIT has consistently upheld the 
Department's exercise of its discretion to make this adjustment, citing 
Timken Company v. United States, Ct. No. 97-04-00562, Slip. Op. 98-42 
at 4-10 (CIT, July 2, 1998); Timken Company v. United States, 989 F. 
Supp. 234, 250-55 (CIT 1997). Finally, Hoogovens claims this adjustment 
can be readily calculated using data already on the record.
    Petitioners urge the Department to adhere to its decision to deny 
this adjustment, citing Antifriction Bearings (Other than Tapered 
Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan, 
Romania, Singapore, Sweden and the United Kingdom; Final Results of 
Antidumping Duty Administrative Review, 63 FR 3320, 33348 (June 18, 
1998) (``AFBs'') and Tapered Roller Bearings and Parts Thereof, 
Finished and Unfinished, from Japan; Final Results of Antidumping Duty 
Administrative Review, 63 FR 20585, 20595 (April 27, 1998). Petitioners 
point out that Hoogovens does not address any of the Department's 
reasons for denying offsets for the cost of financing cash deposits, 
and instead cities one of the older cases whose methodology the 
Department has rejected. Petitioners conclude that the request for an 
adjustment should be denied because Hoogovens provides no reason for 
the Department to change its policy.
    Department's Position: We agree with petitioners that we should 
continue to deny an adjustment to Hoogovens' U.S. ISE for expenses 
which Hoogovens claims are related to the financing of cash deposits. 
The statute does not contain a precise definition of what constitutes a 
selling expense. Instead, Congress granted the administering authority 
broad discretion in this area. It is a matter of policy whether we 
consider there to be any financing expenses associated with cash 
deposits. We recognize that we have, to a limited extent, allowed 
deductions of such expenses in past reviews of the orders on 
antifriction bearings. However, we have reconsidered our position on 
this matter and have concluded that this practice is inappropriate.

[[Page 11831]]

    We have long maintained, and continue to maintain, that antidumping 
duties, and cash deposits of antidumping duties, are not expenses that 
we should deduct from U.S. price. To do so would involve a circular 
logic that could result in an unending spiral of deductions for an 
amount that is intended to represent the actual offset for the dumping. 
We have also declined to deduct legal fees associated with 
participation in an antidumping case, reasoning that such expenses are 
incurred solely as a result of the existence of the antidumping duty 
order. Antifriction Bearings (Other Than Tapered Roller Bearings) and 
Parts Thereof from France, et al.; Final Results of Antidumping Duty 
Administrative Reviews, 57 FR 28360 (June 24, 1992). Underlying our 
logic in both these instances is an attempt to distinguish between 
business expenses that arise from economic activities in the United 
States and business expenses that are direct, inevitable consequences 
of the antidumping duty order.
    Financial expenses allegedly associated with cash deposits are not 
a direct, inevitable consequence of an antidumping duty order. Money is 
fungible within a corporate entity. Thus, if an importer acquires a 
loan to cover one operating cost, that may simply mean that it will not 
be necessary to borrow money to cover a different operating cost. 
Companies may choose to meet obligations for cash deposits in a variety 
of ways that rely on existing capital resources or that require raising 
new resources through debt or equity. For example, companies may choose 
to pay deposits by using cash on hand, obtaining loans, increasing 
sales revenues, or raising capital through the sale of equity shares. 
In fact, companies face these choices every day regarding all their 
expenses and financial obligations. There is nothing inevitable about a 
company having to finance cash deposits and there is no way for the 
Department to trace the motivation or use of such funds even if it were 
inevitable.
    So, while under the statute we may allow a limited exemption from 
deductions from U.S. price for cash deposits and legal fees associated 
with participants in dumping cases, we do not see a sound basis for 
extending this exemption to expenses allegedly associated with 
financing cash deposits. By the same token, for the reasons stated 
above, we would not allow an offset for financing the payment of legal 
fees associated with participants in a dumping case.
    Finally, we have previously determined that we should not use an 
imputed amount theoretically associated with financing of cash 
deposits. There is no real opportunity cost associated with cash 
deposits when the paying of such deposits is a precondition for doing 
business in the United States. Like taxes, rent, and salaries, cash 
deposits are simply a financial obligation of doing business. Companies 
have no choice about paying cash deposits if they want to import nor 
can they dictate the terms, conditions, or timing of such payments. By 
contrast, we impute credit and inventory carrying costs when companies 
do not show an actual expense in their records, because companies have 
it within their discretion to provide different payment terms to 
different customers and to hold different inventory balances for 
different markets. We impute costs in these circumstances as a means of 
comparing different conditions of sale in different markets.

Comment 7: Interest Rate for Imputed U.S. Credit Expenses

    Hoogovens states that in all previous reviews, the Department 
calculated Hoogovens' U.S. imputed credit expenses using the weight-
averaged interest rate on Hoogovens' dollar-denominated short-term 
loans in the Netherlands to finance U.S. sales. Accordingly, Hoogovens 
used the same methodology in this review, and the Department verified 
the interest rate used. However, in the preliminary results the 
Department recalculated U.S. credit expenses using the interest rate 
paid by HSUSA on loans used for another purpose. Hoogovens claims that 
the Department's determination is illogical, inconsistent with the 
purposes of its policy, and directly contradicts past practice.
    Hoogovens argues that when an exporter incurs credit expenses for 
sales to U.S. customers in dollars, in effect it is extending credit to 
its purchasers on dollar terms, citing Mitsubishi Heavy Industries, 
Ltd. v. United States, Slip. Op. 98-82 (CIT, June 23, 1998) and Oil 
Country Tubular Goods from Austria, 60 FR 33551, 33555 (June 28, 1995). 
Accordingly, Hoogovens argues, the Department uses the actual dollar-
based interest rate of the exporter as the best measure of the 
exporter's imputed credit expenses, and only uses publicly available 
information to establish an appropriate rate when the exporter does not 
have dollar-denominated borrowings.
    Hoogovens states there is no reason to use HSUSA's loans made for 
other purposes, which represent a theoretical cost of borrowing, when 
the actual cost of extending credit on U.S. sales is available on the 
record. Hoogovens notes that the Department has previously rejected the 
methodology it advances here, citing Certain Corrosion-Resistant Carbon 
Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate from 
Canada; Final Results of Antidumping Duty Administrative Reviews, 63 FR 
12725, 12742 (March 16, 1998) (``Steel from Canada''), in which the 
U.S. affiliate maintained a dollar-denominated line of credit, but the 
Department rejected the interest rate on this credit in favor of a 
surrogate rate.
    Petitioners support the Department's determination on the grounds 
that loans incurred in the United States best reflect the cost of 
selling to U.S. customers. They point out that in the current review of 
Steel from Canada, the Department instructed the respondent to 
recalculate credit expenses using the interest rate at which the U.S. 
affiliate actually borrowed the funds.
    Department's Position: We agree with Hoogovens that, in accordance 
with the Department's established policy and practice, we should have 
accepted the interest rate on its short-term dollar-denominated loans 
taken out by Hoogovens rather than the rate received by HSUSA. 
Accordingly, for the final results we have used the reported imputed 
U.S. credit expenses.

Comment 8: Credit Expenses on Unshipped Sales

    Hoogovens argues that the Department should have deducted credit 
expenses on unshipped home market sales on the grounds that these sales 
are included in the calculation of the dumping margin. Hoogovens claims 
there is no logical reason for imputing these expenses on shipped sales 
but not on unshipped sales. Further, Hoogovens argues that its method 
of reporting these expenses using the average days to payment on a 
customer-specific basis has been previously accepted by the Department 
and is reasonable.
    Petitioners point out that there is no actual credit expense 
incurred on unshipped sales. They argue that if the Department accepts 
Hoogovens' claim and allows an adjustment for credit expense, then it 
must also increase the gross price of unshipped sales to account for 
freight revenue on them. Petitioners note that such an adjustment would 
be consistent with Department practice.
    Department's Position: We agree with Hoogovens. The Department 
recalculated Hoogovens' reported credit expenses on home market sales 
in order to correct the payment dates for some sales. To calculate 
imputed credit expenses on receivables, we take the

[[Page 11832]]

difference between the date of payment and the date of shipment and 
multiply by the daily short-term interest rate and the gross price, 
obtaining the per unit expense. However, in the case of unshipped 
quantities, there is neither a shipment date nor a payment date. In 
previous reviews the Department accepted Hoogovens' claimed credit 
expenses on unshipped sales, calculated on the basis of the customer-
specific average number of days between shipment and payment. Since we 
are including these sales in the margin calculation, it is reasonable 
to make a deduction for imputed credit expenses. This is consistent 
with the Department's practice in Final Determination of Sales at Less 
Than Fair Value: Certain Pasta from Italy, 61 FR 30324 (June 14, 1996).
    We disagree with petitioners that inland freight should be added to 
the reported gross price. We verified that the reported price already 
includes freight in those cases where the terms of sale include inland 
freight.

Comment 9: Correction of Ministerial Error

    Petitioners point out that an error found at verification in 
reporting international freight and brokerage expense for one U.S. sale 
was not corrected in the preliminary results. Hoogovens responds that 
the freight expense by petitioners is incorrect, and provides the 
figures calculated by the Department at verification. Hoogovens 
Verification Report at 20.
    Department's Position: We agree with petitioners that an error 
found at verification was not corrected in the preliminary results 
through an oversight. However, the international freight charge 
suggested by petitioners is inconsistent with the amount calculated by 
the Department at verification. See Verification Exhibit 27. We have 
corrected the international freight and brokerage expenses for this 
sale in the final results of this review.

Comment 10: Reimbursement

    Petitioners argue that the Department should apply its 
reimbursement regulation. They note that during part of the POR, HSUSA 
was the importer of record and was reimbursed by Hoogovens for cash 
deposits paid against antidumping duties to be assessed. Petitioners 
claim that the restructuring of Hoogovens' U.S. operations was in 
essence financial intermingling aimed at avoiding the application of 
the reimbursement regulation.
    During the remainder of the POR, Hoogovens served as the importer 
of record. Petitioners claim that from a commercial standpoint, there 
has been no substantive change, and that the subject merchandise is 
still being sold to U.S. customers at unremediated dumped prices. 
Petitioners point out that in previous reviews of this proceeding, the 
Department has required the importer to demonstrate that it has the 
financial resources to pay antidumping duties. See Certain Cold-Rolled 
Carbon Steel Flat Products from the Netherlands; Final Results of 
Antidumping Duty Administrative Review, 63 FR at 13214 (March 18, 
1998). Petitioners argue that these resources must be acquired for 
legitimate business needs rather than for the purpose of paying 
antidumping duties, and that all of the Department's prior work will 
have been for naught if a remibursement finding can be avoided simply 
by listing the foreign producer as the importer of record. 
Consequently, petitioners conclude, the Department should find that 
reimbursement is occurring whenever the foreign producer is also the 
importer of record. Petitioners claim that the Department recognized 
that the reimbursement regulation may be interpreted to apply in such 
situations in Circular Welded Non-Alloy Steel Pipe and Tube from 
Mexico; Final Results of Antidumping Duty Administrative Review, 63 FR 
33041, 33044 (June 17, 1998). They also cite the statement in the SAA 
that ``Commerce has full authority under its current regulations (19 
CFR 353.26) to increase the duty when an exporter directly pays the 
duties due, or reimburses the importer, whether independent or 
affiliated, for the importer's payment of duties.'' SAA at 886. 
Petitioners conclude that the interpretation that sales for which 
Hoogovens acted as the importer of record fall within the reimbursement 
regulation is the only interpretation that will prevent the remedial 
effects of the antidumping law from being frustrated.
    Hoogovens replies that the Department lacks the statutory authority 
to apply the reimbursement regulation on the basis of affiliated party 
transactions. While Hoogovens acknowledges that the CIT rejected this 
argument in Hoogovens' appeal of the final results of the first review, 
Hoogovens believes that the correct interpretation of the Department's 
authority is that expressed by the Court of Appeals in footnote 2 of 
its opinion in The Torrington Co. v. United States, 127 F.3d 1077, 
where it stated, ``the statute does not seem to authorize a further 
assessment of duty to the same importer on the theory that a foreign 
supplier may have helped an importer with its duty burden.''
    Hoogovens argues there is substantial verified evidence on the 
record in this review to support the Department's decision not to apply 
the reimbursement regulation in the preliminary results. This evidence 
includes the Agency Agreement, the refund by HSUSA to Hoogovens of the 
amount of antidumping duties calculated by the Department in its final 
results in the 1993/94, 1994/95 and 1995/96 administrative reviews, and 
HSUSA's assumption of liability for antidumping duties for the period 
1993-96, as shown in its audited 1997 financial statements. 
Accordingly, Hoogovens argues, the Department should not apply the 
regulation to sales for which HSUSA was the importer of record.
    Hoogovens notes that the CIT recently affirmed the Department's 
decision not to apply the reimbursement regulation in the final results 
of the second administrative review (1994/95). Bethlehem Steel Corp. v. 
United States, Slip Op. 98-145 at 13-17 (October 14, 1998), and argues 
that petitioners have failed to advance any argument or evidence that 
would support a different outcome in this review, continuing to raise 
the same arguments regarding the restructuring of Hoogovens' U.S. 
operations that they raised unsuccessfully in previous reviews.
    Hoogovens points out that it has entered into a joint venture with 
Weirton Steel Company to build a galvanizing plant in Indiana, which 
was a major element of Hoogovens' restructuring, which also included 
the transfer of HSUSA of the Rafferty-Brown companies. As a result, 
HSUSA's consolidated sales revenues have substantially increased. 
Hoogovens argues that this restructuring was intended to organize its 
U.S. holdings in the same manner as in other countries, and are 
legitimate business arrangements which do not constitute any basis to 
double its antidumping duty liability.
    Hoogovens argues further that applying the reimbursement regulation 
in situations where the exporter acted as importer of record would mean 
treating those duties as a cost, and double-counting those duties in 
the calculation of a respondent's antidumping duty liability, which is 
contrary to the Department's longstanding policy. Hoogovens rejects 
petitioners' interpretation of the SAA at 886, pointing out that they 
fail to explain why this reference to an exporter who ``directly pays 
the duties due'' necessarily refers to an exporter who is also the 
importer. Hoogovens claims

[[Page 11833]]

there is nothing in the SAA to suggest such a reading, and points out 
that the SAA states that the Department ``intends no change in its 
practice in this area.'' SAA at 886. Hoogovens states its is unaware of 
any instance prior to the SAA in which the Department applied the 
regulation where the exporter was the importer of record, and concludes 
there is no basis for petitioners' argument that their interpretation 
was ``the very one adopted'' by the Congress and the administration in 
the SAA. Moreover, Hoogovens points out, the SAA expressly rejects the 
concept of duty as a cost (SAA at 885), suggesting that this undermines 
petitioners' interpretation. Finally, Hoogovens notes that petitioners 
appear to argue that the Department should apply the reimbursement 
regulation simply because it has found reimbursement in a previous 
review, and asserts that Hoogovens is entitled to take steps to reduce 
its antidumping duty liability from review to review.
    Department's Position: We disagree with petitioners that the 
Department should invoke 19 CFR 351.401(f), the reimbursement 
regulation, in this case. Consistent with our findings in the previous 
review, we find in the current review that the amended agency agreement 
between HSUSA and Hoogovens continues in force, and that HSUSA, 
pursuant to its contractual obligations, continues to repay advances 
for antidumping duty deposits. Further, for those sales in which HSUSA 
was the importer of record, we find that HSUSA (1) continues to be 
solely responsible for the payment of the antidumping duties in this 
review, and (2) is able to generate sufficient income to pay the 
antidumping duties to be assessed in this review. See Exhibit A-30 
(Agency Agreements) of Hoogovens' January 30, 1998, supplemental 
response (Proprietary Version); HSUSA's audited financial statements in 
Exhibit A-11 (Hoogovens Steel Division Audited Financial Statements) of 
Hoogovens' Section A response (Proprietary Version, October 6, 1997) 
and in Verification Exhibit 2 of the verification at HSUSA on July 15, 
1998; and Exhibit B-31 (Refund of Duties) in Hoogovens' May 6, 1998 
supplemental response (Proprietary Version). Further, the corporate 
restructuring of HSUSA entailed entering into a joint venture with 
Weirton Steel Company and the transfer of the Rafferty-Brown companies 
to HSUSA. As the Department has recognized, and the Courts have 
affirmed, affiliated companies can transfer funds for a variety of 
reasons, unrelated to reimbursement of antidumping duties. See 
Torrington Co. v. United States, 127 F.3d 1077 (Fed. Cir. 1997). As in 
the previous review, the Department does not construe this 
restructuring to be inappropriate financial intermingling or 
reimbursement within the meaning of 351.402(f) as petitioners suggest. 
In the present case, the facts and circumstances surrounding the 
corporate restructuring are clear and consistent with the purposes of 
the regulation.
    Finally, we disagree with petitioners that the reimbursement 
regulation is applicable where the importer and exporter are the same 
corporate entity. Our decision as to reimbursement is based upon our 
regulatory interpretation of 19 CFR 351.401(f), which is that two 
separate corporate entities must exist in order for the Department to 
invoke the reimbursement regulation. See Circular Welded Non-Alloy 
Steel Pipe and Tube from Mexico; Final Results of Antidumping Duty 
Administrative Review, 63 FR 33041, 33044 (June 17, 1998). While we 
recognize that petitioners' position may be a permissible 
interpretation of the regulation, the Department continues to believe 
that our interpretation is more appropriate. Accordingly, for these 
final results, we have not invoked the Department's reimbursement 
regulation with respect to Hoogovens.

Comment 11: Level of Trade

    Hoogovens urges the Department to maintain its conclusion in the 
preliminary results that there are no level of trade (LOT) differences 
for any sales. Hoogovens points out that this conclusion was based on 
an exhaustive investigation of Hoogovens' selling functions and 
channels of distribution in both the U.S. and home markets. The LOT 
issue was addressed in the original and two supplemental 
questionnaires, and the Department conducted extensive interviews with 
sales personnel and technical service and research managers during its 
verifications in both IJmuiden and Scarsdale. Hoogovens notes that the 
Department reviewed the record evidence with respect to nine different 
selling functions and activities performed by Hoogovens: (1) Strategic 
and economic planning; (2) market research; (3) advertising; (4) 
inventory maintenance; (5) post-sale warehousing; (6) freight and 
delivery arrangements; (7) technical support services, warranty 
services and customer-specific R&D support; (8) computer, legal, and 
accounting assistance; and (9) procurement services. The only 
observations the Department noted were: (1) Larger customers received 
more frequent visits from sales personnel, and (2) home market 
automotive customers received a higher level of service than other end 
users, though sales are at the same stage of marketing as all other 
home market sales.
    Hoogovens argues that the record evidence does not even approach a 
showing of the level of differences in selling functions performed for 
different customers required for a finding of different LOTs under 
existing practice; citing AFBs at 33331; Certain Stainless Steel Wire 
Roads from France; Final Results of Antidumping Duty Administrative 
Review, 63 FR 30185 at 30190 (June 3, 1998), and Pipe from Taiwan at 
1439.
    Department's Position: Based on our examination of the selling 
functions performed for U.S. and home market ales, we agree Hoogovens 
that all sales are made at the same level of trade. Although in the 
preliminary results of review the Department invited the filing of 
additional information and comment on this issue, petitioners did not 
comment.

Final Results of Review

    As a result of our review, we determine that the following 
weighted-average margin exists:

------------------------------------------------------------------------
                                                                Margin
          Manufacturer/exporter            Period of review   (percent)
------------------------------------------------------------------------
Hoogovens Staal B.V.....................     8/1/96-7/31/97         0.92
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. For assessment 
purposes, the duty assessment rate will be a specific amount per metric 
ton. The Department will issue appraisement instructions directly to 
the Customs Service.

[[Page 11834]]

    Furthermore, the following deposit requirements will be effective 
upon publication of this notice of final results of review for all 
shipments of cold-rolled carbon steel flat products from the 
Netherlands entered, or withdrawn from warehouse, for consumption on or 
after the publication date, as provided for by section 751(a)(1) of the 
Act: (1) the cast deposit rate for the reviewed company will be the 
rate for that firm as stated above; (2) if the exporter is not a firm 
covered in this review, or the original less than fair value (LTFV) 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (3) if neither the exporter nor the manufacturer 
is a firm covered in this review, the cast deposit rate will be 19.32 
percent. This is the ``all others'' rate from the amended final 
determination in the LTFV investigation. See Amended Final 
Determination Pursuant to CIT Decision: Certain Cold-Rolled Carbon 
Steel Flat Products from the Netherlands, 61 Fed. Reg. 47871 (September 
11, 1996). These deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    This notice serves as a final reminder to importers of their 
responsibility under section 353.26 of the Department's regulations to 
file a certificate regarding the reimbursement of antidumping duties 
prior to liquidation of the relevant entries during this review period. 
Failure to comply with this requirement could result in the Secretary's 
presumption that reimbursement of antidumping duties occurred and the 
subsequent assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO. Timely notification of return/destruction of APO materials or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and the terms of an APO is a sanctionable 
violation.
    This administrative review and this notice are in accordance with 
sections 751(a)(1) and 771(i)(1) of the Act and sections 351.213 and 
351.221 of the Department's regulations.

    Dated: March 3, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-5945 Filed 3-9-99; 8:45 am]
BILLING CODE 3510-DS-M