[Federal Register Volume 64, Number 50 (Tuesday, March 16, 1999)]
[Notices]
[Pages 12927-12951]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6279]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-580-815 & A-580-816]


Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat 
Products From Korea: Final Results of Antidumping Duty Administrative 
Reviews

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

ACTION: Final results of antidumping duty administrative reviews.

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SUMMARY: On September 9, 1998, the Department of Commerce (``the 
Department'') published the preliminary results of the administrative 
reviews of the antidumping duty orders on certain cold-rolled and 
corrosion-resistant carbon steel flat products from Korea. These 
reviews cover three manufacturers/exporters of the subject merchandise 
to the United States and the period 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 changed the results from those presented in the preliminary 
results of review.

EFFECTIVE DATE: March 16, 1999.

FOR FURTHER INFORMATION CONTACT: Juanita Chen (Dongbu), Becky Hagen 
(POSCO), Cindy Sonmez (Union), Steve Bezirganian, or James Doyle, AD/
CVD Enforcement Group III--Office 7, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230, telephone 
202/482-0409 (Chen), 202/482-1102 (Hagen), 202/482-0961 (Sonmez), 202/
482-0162 (Bezirganian), or 202/482-0159 (Doyle), fax 202/482-1388.

SUPPLEMENTARY INFORMATION:

Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 1930 
(``the Act'') are references to the provisions effective January 1, 
1995, the effective date of the amendments made to the Act

[[Page 12928]]

by the Uruguay Round Agreements Act (``URAA''). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the regulations at 19 CFR Part 351 (1998).

Background

    The Department published antidumping duty orders on certain cold-
rolled and corrosion-resistant carbon steel flat products from Korea on 
August 19, 1993 (58 FR 44159). The Department published a notice of 
``Opportunity to Request Administrative Review'' of the antidumping 
duty orders for the 1996/97 review period on August 4, 1997 (62 FR 
41925). On August 29, 1997, respondents Dongbu Steel Co., Ltd. 
(``Dongbu'') and Union Steel Manufacturing Co., Ltd. (``Union'') 
requested that the Department conduct an administrative review of the 
antidumping duty order on corrosion-resistant carbon steel flat 
products from Korea, and Pohang Iron and Steel Co., Ltd. (``POSCO'') 
requested that the Department conduct administrative reviews of the 
antidumping duty orders on cold-rolled and corrosion-resistant carbon 
steel flat products from Korea. On September 2, 1997, petitioners in 
the original less-than-fair-value (``LTFV'') investigations (AK Steel 
Corporation; Bethlehem Steel Corporation; Inland Steel Industries, 
Inc.; LTV Steel Company; National Steel Corporation; and U.S. Steel 
Group--A Unit of USX Corporation) requested that the Department conduct 
administrative reviews of the antidumping duty orders on cold-rolled 
and corrosion-resistant carbon steel flat products from Korea with 
respect to all three of the aforementioned respondents. We initiated 
these reviews on September 19, 1997 (62 FR 52092--September 25, 1997).
    On August 31, 1998, the Department issued the preliminary results 
of the these administrative reviews. See Certain Cold-Rolled and 
Corrosion-Resistant Carbon Steel Flat Products From Korea: Preliminary 
Results of Antidumping Duty Administrative Reviews, 63 FR 48173 
(September 9, 1998) (``Korean Flat-Rolled 4th Reviews Prelim.''). The 
Department has now completed these administrative reviews in accordance 
with section 751 of the Act.

Scope of the Review

    The review of ``certain cold-rolled carbon steel flat products'' 
covers 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, 7217.90.5090. Included in this review are 
flat-rolled products of nonrectangular 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, is of 0.003 to 0.012 inch in thickness, 15 to 30 inches 
in width, and has an ultra flat, isotropic surface.
    The review of ``certain corrosion-resistant carbon steel flat 
products'' covers flat-rolled carbon steel products, of rectangular 
shape, either clad, plated, or coated with corrosion-resistant metals 
such as zinc, aluminum,  or   zinc-, aluminum-, nickel- or iron-based 
alloys, whether or not corrugated or painted, varnished or coated with 
plastics or other nonmetallic substances in addition to the metallic 
coating, 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 HTS under item numbers 7210.30.0030, 7210.30.0060, 
7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000, 
7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000, 
7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 
7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 
7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 
7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090. 
Included in this review are flat-rolled products of nonrectangular 
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 are flat-rolled steel products 
either plated or coated with tin, lead, chromium, chromium oxides, both 
tin and lead (``terne plate''), or both chromium and chromium oxides 
(``tin-free steel''), whether or not painted, varnished or coated with 
plastics or other nonmetallic substances in addition to the metallic 
coating. Also excluded from this review are clad products in straight 
lengths of 0.1875 inch or more in composite thickness and of a width 
which exceeds 150 millimeters and measures at least twice the 
thickness. Also excluded from this review are certain clad stainless 
flat-rolled products, which are three-layered corrosion-resistant 
carbon steel flat-rolled products less than 4.75 millimeters in 
composite thickness that consist of a carbon steel flat-rolled product 
clad on both sides with stainless steel in a 20%-60%-20% ratio.
    These HTS item numbers are provided for convenience and U.S. 
Customs purposes. The written descriptions remain dispositive.
    The period of review (``POR'') is August 1, 1996 through July 31, 
1997. These reviews cover sales of certain cold-rolled and corrosion-
resistant carbon steel flat products by POSCO and the companies 
collapsed with POSCO (referred to collectively as ``the POSCO Group''), 
Dongbu, and Union.

[[Page 12929]]

Fair-Value Comparisons

    To determine whether sales of the subject merchandise from Korea to 
the United States were made at less than fair value, we compared the 
export price (``EP'') or constructed export price (``CEP'') of the 
merchandise to normal value (``NV''), as described in Korean Flat-
Rolled 4th Reviews Prelim., modified as noted in this notice.

Verification

    We verified information provided by the POSCO Group with respect to 
its costs, including on-site inspection of facilities, the examination 
of relevant accounting and financial records, and selection of original 
documentation containing relevant information. Our verification results 
are outlined in the cost verification report. See Cost Verification 
Report--Pohang Iron and Steel Company, Ltd., from Bill Jones and Symon 
Monu to Christian Marsh (August 5, 1998).

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments and rebuttal comments from 
the POSCO Group, Dongbu, Union, and petitioners. The POSCO Group and 
petitioners requested a public hearing, which was held on October 29, 
1998.

Comment 1: Home Market Credit Days

    While the Department's preference is to calculate shipment-specific 
credit days based on the difference between shipment date and payment 
date, when actual payment dates are not readily accessible in 
respondents' accounting systems the Department may accept calculations 
based on the average age of accounts receivable. In these reviews, as 
in prior reviews of these antidumping duty orders, respondents' 
calculations of customer-specific credit days are based on the average 
age of receivables during the POR. Specifically, credit days for each 
customer equals average monthly POR receivables for the customer 
divided by average daily POR sales to the customer.
    Petitioners argue that respondents' methodology is inherently 
flawed because it includes accounts receivable from prior periods as 
well as from the POR, and allocates those receivables only over sales 
made during the POR. Petitioners note that unless the volumes of sales 
and payments are stable over time, this method will distort the 
calculation of the credit period. Petitioners state that the potential 
for manipulation is particularly high when the calculation of credit 
expenses for U.S. sales is based on actual rather than estimated credit 
periods.
    Petitioners argue that it is appropriate to analyze several years' 
worth of accounts receivable and sales data to determine whether the 
estimates are consistent with historical experience and, therefore, 
accurate. Petitioners note that such analysis is typical for 
calculations of warranty expenses, which are generally estimates of 
actual warranty expenses. Petitioners state that for Dongbu and Union 
the overall average credit period across all home market customers for 
two years' worth of aggregate data on accounts receivable and sales 
varied significantly from the overall average credit period across all 
home market customers for just one years' worth of such data.
    Regarding the POSCO Group specifically, petitioners note that 
despite POSCO's statements before the U.S. Securities Exchange 
Commission regarding the importance of POSCO's stated credit terms, the 
Department neither utilized those stated credit terms for its credit 
days calculations nor explained why it did not. Petitioners argue that, 
contrary to POSCO's statements, POSCO did not charge and receive 
interest revenue in cases where customers substantially exceeded normal 
payment terms.
    Petitioners argue that the Department should base the calculation 
of credit days on one of two alternative methodologies proposed by 
petitioners prior to the issuance of the preliminary results of these 
reviews: (1) calculating the credit periods as done by respondents but 
using several years' worth of data on accounts receivable and sales 
rather than just the data for the POR; or (2) using the POR accounts 
receivable and sales data, but excluding the accounts receivable 
resulting from prior periods' sales. Petitioners also note that the 
Department, in its preliminary results, rejected POSCO's arbitrary 
selection of credit days for several customers, but did not make any 
adjustments either for other aberrant calculations of credit days for 
POSCO customers or those for Union and Dongbu customers. Petitioners 
argue that if the Department chooses not to apply either of 
petitioners' proposed methodologies, it should at the very least reject 
calculated credit expenses based on aberrationally high credit days.
    The POSCO Group argues that its reported home market credit 
expenses were based on the same methodology used for the calculation of 
credit days in prior reviews. The POSCO Group argues that it did not 
know the date of payment for each transaction, and that its credit days 
methodology does not yield systematically overstated or aberrant 
results. The POSCO Group argues that most customers maintain a fairly 
constant level of sales and accounts receivable activity. Regarding 
petitioners' allegations pertaining to the POSCO Group's stated credit 
terms, the POSCO Group states that the record indicates that the use of 
promissory notes for payment in Korea typically adds up to 30 
additional days to a customer's payment terms and that, in any case, 
the POSCO Group's transaction-specific payment terms are merely 
guidelines and do not represent the actual payment dates for specific 
transactions. The POSCO Group states that it is a commercial reality 
that a company may not be able to charge, let alone collect, interest 
revenue from all of its customers for late payment. The POSCO Group 
notes that the Department's rejection of credit expenses for several 
customers does not indicate that the POSCO Group's entire home market 
credit methodology should be rejected.
    Dongbu and Union argue that the existence of long credit periods 
for certain customers does not render their credit calculations 
distortive and unreliable, and state that they reported home market 
credit expenses based on the same credit days methodology in prior 
reviews. Dongbu and Union note that receivables balances during the POR 
may include unpaid balances from sales before the POR but, similarly, 
there will be sales during the POR with outstanding receivables after 
the POR. Dongbu and Union conclude that the balances brought into the 
POR from sales prior to the POR will not be markedly dissimilar from 
the balances carried forward from sales during the POR. Dongbu and 
Union argue that while the Department has, at times, used historical 
warranty figures because of the often periodic and intermittent nature 
of those expenses, credit, by contrast, is extended to one degree or 
another to most customers, and the Department does not compare POR 
credit expenses to prior experience. Dongbu and Union argue that the 
Department correctly noted, in its preliminary results, that the sample 
of customers it analyzed included aberrationally high credit days, and 
correctly did not apply a shorter period for those customers. Unlike 
for the POSCO Group, for which the Department rejected certain 
calculated credit days because they were arbitrarily selected by the 
POSCO Group, all of the calculated credit days for Dongbu and Union 
were based on the methodology as stated. Contrary to petitioners'

[[Page 12930]]

assertion, argue Dongbu and Union, there is no significant variation in 
the average credit periods across all home market customers using two 
years' worth of aggregate data on accounts receivable and sales 
compared to just one years' worth of such accounts receivable and sales 
data.
    Department's Position: In its preliminary results, the Department 
recognized that respondents' methodology included accounts receivable 
from prior periods as well as from the POR, and allocated those 
receivables only over sales made during the POR. However, the 
Department agrees with Dongbu and Union that this methodology also 
includes sales during the POR with outstanding receivables after the 
POR. Petitioners implicitly accept this point in their argument that 
the methodology distorts the calculation of the credit period unless 
the volumes of sales and payments are stable over time. While it is 
certainly possible that for some customers the balances brought into 
the POR from sales prior to the POR will be ``markedly dissimilar'' 
from the balances carried forward from sales during the POR, it is not 
clear that any systematic credit-reporting distortion exists for the 
respondents in these reviews. The Department requested documentation 
from respondents supporting seemingly aberrant results for those 
customers with particularly long credit periods. The information 
provided by respondents, with one exception, indicates that respondents 
utilized the methodology as stated in their initial questionnaire 
responses and as employed in prior reviews. The only exception involved 
those few customers for which the POSCO Group arbitrarily set credit 
days equal to 365 days, in contradiction to its stated calculation 
methodology as described above.
    Furthermore, the variation in average credit days for all customers 
based on one years' worth of data versus two years' worth of data was 
not significant enough to call into question the general reasonableness 
of the methodology utilized. That variation also does not justify using 
a non-customer specific calculation of credit days, given the 
preference of the Department to calculate imputed credit on as specific 
a basis as possible.
    Variation between POSCO's stated credit terms and the actual 
calculated credit days for its customers may, and in fact did, provide 
a basis for analyzing the nature of POSCO's relationships with its 
customers. However, such variation does not justify using its credit 
policy as the basis for the calculation of credit days, given that the 
Department has accepted the inherent reasonableness of the respondents' 
methodology and the accuracy (with the exception noted above) of the 
data used as the basis for the calculation of credit days.
    For its final results, the Department has continued to utilize the 
respondents' home market imputed credit expense methodology, and has 
also continued to deny any credit expense for sales by the POSCO Group 
to customers for which the POSCO Group arbitrarily assigned credit days 
of 365.

Comment 2: Interest Expenses as Part of Indirect Selling Expenses

    Petitioners argue that the Department should deduct from CEP the 
interest expenses incurred by the U.S. selling affiliates of the POSCO 
Group, Union, and Dongbu. The statute requires that the Department 
deduct from CEP all selling expenses, including indirect selling 
expenses, defined as ``any selling expenses'' not deducted as 
commissions, direct selling expenses, or selling expenses that the 
seller pays upon behalf of the purchaser. See section 772(d) of the 
Act. The Statement of Administrative Action explains further that 
indirect selling expenses are expenses that ``would be incurred by the 
seller regardless of whether the particular sales in question are made, 
but reasonably may be attributed (at least in part) to such sales.'' 
See URAA Statement of Administrative Action, H.R. Doc. No. 103-316, at 
824 (1994) (``SAA''). Petitioners argue that because a company incurs 
interest expenses to finance its selling activities (separate from the 
financing of accounts receivable), including interest expenses in the 
indirect selling expenses calculation is appropriate. Petitioners cite 
several cases in which the Department deducted from CEP interest 
expenses incurred by U.S. sales affiliates. See Porcelain-on-Steel 
Cookware from Mexico: Final Results of Antidumping Duty Administrative 
Review, 63 FR 38373, 38381 (July 16, 1998) (``Cookware from Mexico''); 
Certain Fresh Cut Flowers from Colombia; Final Results and Partial 
Recission of Antidumping Duty Administrative Review, 62 FR 53287, 53294 
(October 14, 1997); Certain Cold-Rolled Carbon Steel Flat Products from 
Germany; Preliminary Results of Antidumping Duty Administrative Review, 
60 FR 39355 (August 2, 1995), unchanged in Certain Cold-Rolled Carbon 
Steel Flat Products from Germany; Final Results of Antidumping Duty 
Administrative Review, 60 FR 65264, 65281 (December 19, 1995) (``Cold-
Rolled from Germany''); and Notice of Amended Final Results of 
Antidumping Duty Administrative Reviews: Certain Cold-Rolled Carbon 
Steel Flat Products from Korea; Certain Corrosion-Resistant Carbon 
Steel Flat Products from Korea, 63 FR 20572, 20573 (April 27, 1998). In 
Cookware from Mexico, 63 FR at 38381, the Department noted its practice 
of deducting respondent's depreciation, financial and bad debt 
expenses, which are considered related to respondent's sales of the 
subject merchandise and thus deducted from CEP pursuant to section 
772(d)(1)(D). In Cold-Rolled from Germany, 60 FR at 39355, petitioners 
note, the Department included that portion of the interest expense 
attributable to the U.S. selling affiliate in calculating the U.S. 
indirect selling expense adjustment. In the present reviews, according 
to petitioners, the respondents sold subject merchandise in the United 
States through affiliated entities that performed various U.S. selling 
functions and, in addition to incurring expenses that the Department 
normally treats as indirect selling expenses, these affiliated entities 
incurred interest expenses that were related to these selling 
functions.
    Petitioners argue that respondents have not demonstrated how the 
inclusion of interest expenses in indirect selling expenses would 
``double-count'' the credit or inventory carrying cost deductions. 
Petitioners state that respondents simply assert that because most, if 
not all, of their U.S. affiliates' borrowing was short-term, their 
loans cover the financing of in-transit inventory and accounts 
receivable as well as activities unrelated to the sale of the subject 
merchandise. Petitioners argue that respondents did not demonstrate 
that the affiliates' borrowings covered such financing. Because money 
is fungible, petitioners argue, these borrowings could have been used 
for other purposes (e.g., payment of salaries of those involved with 
U.S. sales of subject merchandise).
    Petitioners argue that the imputed credit expense and the interest 
expenses of the affiliates are not equivalent because the imputed 
credit expense adjustment is made to account for the time value of 
money between shipment and payment independent of whether or not a 
company incurs non-imputed interest expenses. Therefore, petitioners 
argue, the interest expense figure cannot be automatically attributed 
to the imputed credit expense, nor can the inclusion of interest 
expenses in indirect selling expenses automatically be deemed to 
constitute double-counting. Petitioners provide

[[Page 12931]]

calculations of the adjustments they claim are appropriate for the 
POSCO Group, Dongbu, and Union, based on the assumption that the 
interest expenses in total should be included in the calculation of the 
indirect selling expenses deducted from CEP. Petitioners also state 
that if the Department wrongly determines that some portions of these 
interest expenses relate to the financing of accounts receivable or to 
non-subject merchandise, then the Department must for each respondent 
deduct from CEP the portion of the interest expenses that do not relate 
to financing of accounts receivable or to non-subject merchandise. 
Petitioners provide estimates for such alternative adjustments to the 
reported indirect selling expenses of the U.S. affiliates of the POSCO 
Group, Dongbu, and Union.
    The POSCO Group argues that the Department's standard practice is 
not to include interest expenses in indirect selling expenses because 
such inclusion would constitute double-counting. The POSCO Group cites 
several cases, including Final Determination of Sales at Less Than Fair 
Value: New Minivans from Japan, 57 FR 21937, 21956-57 (May 26, 1992) 
(``Minivans from Japan''), which the POSCO Group states articulate the 
Department's policy of not deducting U.S. affiliates' interest expenses 
from CEP. The POSCO Group cites several other cases, including Certain 
Cold-Rolled Carbon Steel Flat Products from the Netherlands: Final 
Results of Antidumping Duty Administrative Review, 63 FR 13204, 13205 
(March 18, 1998) (``Cold-Rolled from the Netherlands''), in which the 
Department did not in fact deduct such expenses from CEP. The POSCO 
Group argues that such a deduction would constitute double-counting, 
given that imputed credit expenses are deducted from CEP. The POSCO 
Group cites Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From the Federal Republic of Germany; Final Results 
of Antidumping Duty Administrative Review, 56 FR 31692, 31721 (July 11, 
1991) (``AFBs from Germany'') as an example where the Department 
reduced interest expenses from indirect selling expenses to account for 
the portion of those expenses related to imputed credit and inventory 
carrying cost.
    The POSCO Group characterizes the cases cited by petitioners as 
``aberrant'' ones in which the direct issue of whether interest expense 
should be deducted from the price in the United States was apparently 
never briefed or litigated, or in which the deduction of interest 
expenses involved use of facts available. Furthermore, the POSCO Group 
notes that the Department determined in its preliminary results that 
the interest expenses should not be included in indirect selling 
expenses because virtually all of those interest expenses relate to the 
financing of receivables or to borrowings involving non-subject 
merchandise. The POSCO Group states that the interest rates it used to 
calculate the imputed credit expenses for sales by the U.S. sales 
affiliates reflect all of the short-term borrowings of the affiliates. 
The POSCO Group states that the long-term interest expenses of POSAM 
relate to enterprises not involved with entries of subject merchandise, 
such as its joint venture with U.S. Steel. Furthermore, the POSCO Group 
argues, the sales of such enterprises, contrary to petitioners' 
assertion, are not included in the denominator used for the calculation 
of the indirect selling expenses factor. Finally, the POSCO Group 
argues that inclusion of the interest expenses of the U.S. affiliates 
in indirect selling expenses would constitute double-counting because 
POSAM's interest expenses are reflected both in POSCO's cost of 
production (``COP'') and in the calculated total profit which is used 
as a basis for the determination of CEP profit.
    Union argues that it demonstrated that the majority of the interest 
expenses of its U.S. affiliate, DKA, are incurred on behalf of non-
subject merchandise, and that the remainder relate to the financing of 
accounts receivable for subject merchandise. Union notes that there is 
very little activity at DKA, beyond the inventory carrying and credit 
periods that are separately included in the CEP calculation, that is 
related to subject merchandise which could have been financed through 
borrowings. Union argues that in Cookware from Mexico, the U.S. 
affiliate only performed activities related to the sale of subject 
merchandise, but that DKA was engaged in numerous other activities, 
including exporting merchandise purchased in the United States. Union 
argues that in its preliminary results the Department followed its 
consistent practice, articulated in Minivans from Japan and reflected 
in prior reviews of the order on certain corrosion-resistant carbon 
steel flat products from Korea, of not including interest expenses when 
calculating indirect selling expenses. Union argues that it has 
demonstrated that DKA's interest expenses are primarily related to non-
subject merchandise and long-term interest, and that including the 
remaining, small portion of U.S. interest expenses attributable to 
financing accounts receivable would double-count these expenses as the 
Department's imputed credit expense has already accounted for them.
    Dongbu argues that the interest rate used for the calculations of 
imputed credit and inventory carrying cost were based on the interest 
expenses incurred by Dongbu USA on its short-term borrowings in the 
POR. Dongbu indicates that these expenses were incurred for financing 
receivables and inventory, and that deductions from CEP for these 
expenses were made through the imputed credit and the inventory 
carrying cost variables.
    Department's Position: The Department disagrees with respondents' 
assertions that the Department's policy is to exclude interest expenses 
of U.S. sales affiliates from U.S. indirect selling expenses because 
imputed credit and inventory carrying cost expenses are already 
deducted from the U.S. starting price. As noted by petitioners, there 
are various cases in which the Department has stated explicitly that it 
was deducting both an amount of actual interest expenses and imputed 
expenses. Furthermore, petitioners are correct in stating that the 
Department deducts imputed credit expenses whether or not a company 
incurs non-imputed interest expenses. This practice accords with 
section 772(d)(1)(D) of the Act, which dictates that the Department 
deduct from the CEP starting price ``any'' indirect selling expenses 
associated with the sale of the subject merchandise in the United 
States.
    The Department's decision in Minivans from Japan is consistent with 
a general principle that the deduction of imputed and certain actual 
interest expenses may constitute double-counting. However, interest 
expenses incurred by sales affiliates may relate to activity other than 
the financing of inventory or accounts receivable, and still be 
associated with sales of subject merchandise. In AFBs from Germany, 
cited by the POSCO Group, the Department indicated that it ``reduced 
interest expenses on the firm's books for a portion of the expense 
related to these activities {imputed credit and inventory carrying 
cost} to avoid double-counting'' (emphasis added), as those imputed 
credit and inventory carrying costs were being deducted from U.S. 
starting price. See 56 FR at 31721. This indicates that any reduction 
to actual interest expenses to avoid double-counting would not exceed 
the amount of the imputed expenses. As we stated in the final results 
of the prior reviews, ``{w}e do not agree with {respondent's}

[[Page 12932]]

argument that an imputed credit figure covering the entire credit 
period inherently includes all credit/financing expenses.'' See Certain 
Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from 
Korea: Final Results of Antidumping Duty Administrative Reviews, 63 FR 
13170, 13175 (March 18, 1998) (``Korean Flat-Rolled 3rd Reviews 
Final'').
    The Department under appropriate circumstances excludes some 
portion or all of a U.S. sales affiliate's interest expenses in its 
calculation of indirect selling expenses (as, for example, in Cold-
Rolled from the Netherlands, 63 FR at 13205, which neither provides, 
nor was meant to provide, an exhaustive list of what may be included in 
indirect selling expenses). To the extent that a U.S. affiliate's 
interest expenses are associated with non-subject merchandise, the 
Department does not deduct them from the CEP starting price. We also 
note that, because the activities of U.S. sales affiliates differ 
considerably across cases, the Department must determine the 
appropriate universe of CEP deductions on a case-by-case basis. In this 
case, we excluded interest expenses associated with non-subject 
merchandise. Further, we reduced the remaining amount of interest 
expenses for an amount attributable to financing accounts receivable 
and inventory, leaving nothing left to include in the calculation of 
indirect selling expenses.

Comment 3: Movement Expenses and the Calculation of CEP Profit

    Petitioners argue that the Department must implement the Court of 
International Trade (``CIT'') decision in U.S. Steel Group--A Unit of 
USX Corp. v. United States, Slip Op. 98-96 (Ct. Int'l Trade, July 7, 
1998) by excluding movement expenses from the total expenses 
denominator used for the calculation of the CEP profit ratio. 
Petitioners argue that the total expenses denominator, like the U.S. 
expenses numerator of the CEP profit ratio, should only include 
expenses pertaining to the production and sale of the subject 
merchandise. Petitioners state that the calculation should not include 
movement expenses, which are neither production expenses nor sales 
expenses. Petitioners argue that this interpretation is consistent with 
the statute (see sections 772(f)(2)(B) and (C) of the Act) and 
supported by the legislative history (see SAA at 824) and the Senate 
Report, S. Rep. No. 103-412 at 66 (1994). Petitioners indicate that the 
very structure of the statute distinguishes between movement expenses 
(see section 772(c)(2)(A)), selling expenses (see section 772(d)(1)), 
and manufacturing expenses (see section 772(d)(2)).
    Petitioners cite several cases in which movement expenses are 
distinguished from selling expenses. See, e.g., Notice of Final Results 
of Antidumping Duty Administrative Review: Furfuryl Alcohol from the 
Republic of South Africa, 62 FR 61084, 61091 (November 14, 1997). 
Petitioners note that the Department, consistent with longstanding 
practice, recognized these distinctions in these very reviews of steel 
from Korea when defining groups of reported expenses for the sales 
databases as movement or as selling expenses.
    Petitioners argue that the inclusion of movement expenses in the 
total expenses denominator is unreasonable for the same reasons that 
the CIT indicated in U.S. Steel Group: it conflicts with past 
Department practice of distinguishing between movement expenses and 
production or selling expenses; it does not provide proportionality 
between the numerator and the denominator in the CEP profit ratio; and 
it is unnecessary because the Department has never explained why total 
actual expenses for determining total actual profit (the amount by 
which the CEP profit ratio is multiplied to determine total CEP profit) 
must be defined in the same manner as total expenses used in the 
denominator of the CEP profit ratio.
    Finally, petitioners note that the Department deducts movement 
expenses from net price in calculating the gross amount of constructed 
value (``CV'') profit, but does not include movement expenses either in 
total COP (by which CV profit is divided to arrive at the CV profit 
ratio) or in total CV (by which the CV profit ratio is multiplied to 
arrive at the CV profit amount). Accordingly, petitioners note, the 
treatment of movement expenses in the derivation of the CV profit 
amount is in fact entirely consistent with the treatment of movement 
expenses in the calculation of CEP profit mandated by U.S. Steel Group.
    The POSCO Group argues that the single CIT case that petitioners 
rely on is not binding on the Department, and is apparently wrongly 
decided. The POSCO Group asserts that it is the Department's consistent 
and standard policy to include movement expenses in the total U.S. 
expenses denominator of the CEP profit ratio. The POSCO Group states 
that the statute requires that all expenses be used in the ``total 
expenses'' calculations, and that the term ``production and sale'' is 
not a limiting term because no broader term could have been used. The 
POSCO Group argues that the U.S. Congress would have explicitly 
excluded movement expenses from the total expenses definition if it had 
intended that such a radical reading be given to the term ``total 
expenses.'' The POSCO Group states that, given that the subject 
merchandise must be moved to the United States in order to be sold, it 
makes sense to include those movement expenses in the CEP calculation.
    Union and Dongbu argue that neither the statute nor the legislative 
history defines ``total expenses.'' Union and Dongbu note that the CIT, 
in U.S. Steel Group, held that the language defining total expenses is 
not entirely clear as to whether movement expenses should be included 
in the ``total expenses'' denominator. Union and Dongbu argue that if 
the Department seeks to determine what percent of ``total expenses'' is 
represented by the U.S. expenses, that total expenses amount must 
include all expenses, and not some subset of expenses. Union and Dongbu 
argue that the plain language of section 772(f)(2)(C) of the Act 
defines ``total expenses'' as ``all expenses,'' and that the statute 
assigns the profit to the additional CEP expenses only. Union and 
Dongbu note that petitioners do not object to other elements of cost, 
such as cost of manufacture (``COM'') and pre-import selling expenses, 
bearing their share of profit. Union and Dongbu state that movement 
expenses, like these other elements of cost (e.g., COM and pre-import 
selling expenses), should not be assigned the CEP profit. In other 
words, Union and Dongbu reiterate, the statute seeks to deduct profit 
from the U.S. starting price only on those expense components that it 
has defined as additional CEP expenses. Union and Dongbu argue that the 
fact that the ``total expenses'' denominator is not defined 
specifically by the statute indicates that the prescription to include 
``all expenses'' should be interpreted to mean just that. Furthermore, 
Union and Dongbu argue, the plain reading of ``all expenses * * * with 
respect to the production and sale'' would certainly include movement 
expenses, since transport of the merchandise is part of the sale.
    Finally, Union and Dongbu state that the Department recognizes 
movement expenses as a cost in the calculation of CV profit, by either 
reducing the sales revenue by the amount of the freight and not 
including freight in the cost, or by leaving the sales price untouched 
and including freight in the COP. Union and Dongbu argue that the same 
principle applies to the calculation of CEP profit: movement expenses 
must

[[Page 12933]]

either be deducted from the sales prices in both markets or added to 
the COP in both markets.
    Department's Position: We agree with respondents. The Department is 
currently appealing the CIT's decision in U.S. Steel Group, and will 
continue to follow its policy of including movement expenses in the 
denominator of the CEP profit ratio in accordance with its 
interpretation of section 772(f) of the Act. See Policy Bulletin 97.1, 
``Calculation of Profit for Constructed Export Price Transactions'' 
(Sept. 4, 1997).
    Nothing in the statute or its legislative history requires the 
Department to calculate a CEP profit ratio in the manner suggested by 
petitioners (i.e., a ratio of total United States expenses to total 
expenses). 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 (d)(1) and (2) of the Act. Because movement expenses 
may only be deducted from the U.S. starting price pursuant to section 
772(c)(2)(A), the statute effectively prohibits their inclusion in the 
buildup of total United States expenses for purposes of the CEP profit 
ratio. The statute similarly excludes other types of expenses (e.g., 
U.S. import duties) from the total United States expenses numerator 
because they are deducted under section 772(c) rather than section 
772(d). See section 772(c)(2)(A) of the Act.
    Unlike the definition of ``total United States expenses,'' the 
statute does not further define ``total expenses'' (the denominator) 
incurred in the production and sale of the merchandise. In fact, the 
CIT specifically 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, Slip 
Op. 98-96, at 14. However, section 772(f) of the Act requires the 
Department to use ``total actual profit'' in calculating the total CEP 
profit amount. Thus, to the extent that a producer/exporter and its 
U.S. affiliate 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. Accordingly, petitioners' 
argument that the Department distinguishes between movement and selling 
expenses in other aspects of the antidumping analysis is not 
persuasive. In short, all movement expenses incurred by the seller must 
be included in total expenses in order to calculate total profit 
accurately.
    Petitioners' argument that including movement expenses in the 
denominator of the CEP profit ratio is unreasonable because it does not 
provide ``proportionality'' has no merit. The ratio is by definition 
the proportion of total expenses represented by total U.S. expenses, a 
subset of total expenses. In fact, the Department has properly 
calculated this proportion.
    Further, we do not believe it is reasonable, as petitioners 
suggest, to interpret ``total expenses'' one way in calculating a 
respondent's actual profit, and another way in summing expenses for the 
denominator of the CEP profit ratio. Rather, the more reasonable 
approach is a unified reading of the CEP profit provisions in which the 
meaning of ``total expenses'' does not vary. Finally, petitioners' 
comparison of the Department's CV profit methodology with their 
proposed interpretation of the CEP profit calculation is unavailing. 
These calculations are performed under entirely different statutory 
provisions that involve different definitions. The essential question 
here is how reasonably to interpret the definition of total expenses 
for purposes of the CEP profit calculation. Because the statutory goal 
of accurately calculating total profit and 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 4: U.S. Date of Sale

    The Department noted in its preliminary results that while it may 
use as date of sale a date other than the invoice date if it is 
satisfied that a different date better reflects the date on which the 
exporter or producer establishes the material terms of sale, it 
preliminarily determined that there is no reason to depart from the 
Department's normal practice of using the invoice date. Accordingly, 
the Department used as date of U.S. sale the reported date of invoice 
from the U.S. sales affiliate to the first unaffiliated U.S. customer, 
and characterized this as typical for CEP sales. See Korean Flat-Rolled 
4th Reviews Prelim., 63 FR at 48176.
    Petitioners argue that the Department should determine that the 
contract date was the date of sale because the material terms of sale 
became final at that date. Petitioners also argue that the Department 
was incorrect in indicating that it has a distinct CEP date of sale 
methodology.
    Petitioners state that the Department should not accept the 
separate date-of-sale methodology for EP and CEP sales urged by Union 
and Dongbu in its earlier responses (which was to adopt date of invoice 
to the U.S. affiliate as date of sale if the sale was classified as an 
EP transaction, and to adopt date of invoice by the U.S. affiliate to 
the unaffiliated U.S. customer if the sale was classified as a CEP 
transaction). Petitioners note that, in the third administrative 
reviews of these antidumping duty orders, the Department indicated that 
changing the classification of U.S. sales from EP to CEP transactions 
had no effect on the date of sale, and that there is no EP date-of-sale 
methodology, as claimed by respondents. See Korean Flat-Rolled 3rd 
Reviews Final, 63 FR at 13174.
    Petitioners note that CEP sales can be made either before or after 
the date of importation (see section 772(b) of the Act). As such, 
petitioners state, there is no reason to assume that the CEP sale was 
made after importation. Petitioners also state that assuming that the 
CEP sale was made after importation would violate the rule that the 
date of sale cannot occur after the date of shipment to the ultimate 
customer. Petitioners assert that the Department's general preference 
for using the invoice date as the date of sale is predicated on the 
assumption that the invoice date falls close to the date of shipment. 
In fact, in the third reviews of these orders, the Department 
determined that the shipment date relevant in this regard was the date 
of shipment from the factory in Korea, and not shipment from the U.S. 
port.
    Petitioners state that the Department recently exercised its 
discretion to use a date other than invoice date as the date of sale in 
a case where the respondents' home market and U.S. sales processes 
appear to have been the same as those of Union, Dongbu, and the POSCO 
Group in these reviews. With regard to the appropriate date of sale for 
these sale processes, the Department stated:

``invoice'' dates in both markets, while the same in name, are 
materially quite different for purposes of determining price 
discrimination simply because the sales processes for the two 
markets are quite different. If we were to use invoice date as the 
date of sale for both markets, we would effectively be comparing 
home market sales in any given month to U.S. sales whose

[[Page 12934]]

material terms were set months earlier--an inappropriate comparison 
for purposes of measuring price discrimination in a market with less 
than very inelastic demand.

See Circular Welded Non-Alloy Steel Pipe from the Republic of Korea; 
Final Results of Antidumping Duty Administrative Review, 63 FR 32833, 
32835-6 (June 16, 1998) (``Pipe from Korea''). As in that case, 
petitioners argue, the Department should determine that for the POSCO 
Group, Dongbu, and Union the only dates which are substantively 
equivalent for purposes of measuring price discrimination are the 
invoice date in the home market and the contract date in the U.S. 
market. All three respondents reported that their U.S. sales are made 
to order, and that once the order is confirmed, the U.S. affiliate 
issues a sales contract or order confirmation setting forth the 
essential terms of sale. The merchandise is then produced to order and 
shipped to the U.S. customer. For all three respondents, there are 
typically delays of several months between the contract date and the 
date of invoice to the unaffiliated U.S. customer. The sample sales 
documents in the responses indicate that there were no material changes 
to the terms of sale after issuance of the sales contract. In the home 
market, however, as with the respondent in Pipe from Korea, the sales 
of Union and Dongbu are from inventory, and once the order is received 
the merchandise is shipped and the invoice issued almost immediately.
    Petitioners argue that because the respondents did not report the 
contract date for their U.S. sales, the Department should resort to 
facts available to estimate a contract date. Petitioners state that for 
all three respondents the reported date of shipment from Korea is 
generally the closest reported date to the contract date.
    The POSCO Group notes that the Department used date of invoice as 
date of sale in the final results of the third reviews of these orders, 
that petitioners stated explicitly on the record of the fourth reviews 
that they were not questioning POSCO's date of sale methodology in the 
fourth reviews, and at no time in these fourth reviews did the 
Department or petitioners suggest that POSCO should report the 
contract/order confirmation as date of sale. The POSCO Group argues 
that use of invoice date as date of sale is consistent with Department 
regulations. The POSCO Group argues that the Department's proposed 
regulations (see Antidumping Duties; Countervailing Duties: Notice of 
Proposed Rulemaking and Request for Public Comments, 61 FR 7308, 7330-1 
(February 27, 1996) (``Proposed Regulations'')) and the Department's 
original questionnaire in these fourth reviews (at page 4 of Appendix 
I) indicate there are generally two exceptions to the Department's 
preference for invoice date as date of sale: (1) if a sale is made 
pursuant to a long-term contract; and (2) if an exceptionally long 
period of time passes between the invoice date and shipment date. The 
POSCO Group notes that the Department applies a different date of sale 
in such cases only when the different date of sale ``better reflects 
the date on which the exporter or producer establishes the material 
terms of sale.'' See 19 CFR 351.401(i).
    The POSCO Group also argues that use of invoice date as date of 
sale is consistent with Department practice. In addition to the 
Department's use of invoice date as date of sale in the third reviews 
of these orders, the Department also used invoice date in other recent 
cases where various petitioners argued that agreement dates were more 
appropriate: Brass Sheet and Strip from the Netherlands: Notice of 
Preliminary Results of Antidumping Duty Administrative Review, 63 FR 
25821, 25822 (May 11, 1998) (``Brass from the Netherlands''); Certain 
Welded Carbon Steel Pipes and Tubes from Thailand: Final Results of 
Antidumping Duty Administrative Review, 63 FR 55578, 55588 (October 16, 
1998) (``Pipe from Thailand''); Certain Steel Wire Rope from Mexico; 
Final Results of Antidumping Duty Administrative Review, 63 FR 46753, 
46755 (September 2, 1998) (``Wire Rope from Mexico''); Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Fresh Atlantic Salmon from Chile, 
63 FR 2664, 2667 (January 16, 1998) (``Salmon from Chile''); and 
Certain Stainless Steel Wire Rod from India; Final Results of New 
Shipper Antidumping Duty Administrative Review, 62 FR 38976, 38978-89 
(July 21, 1997) (``Wire Rod from India'').
    The POSCO Group argues that the Department cannot use facts 
available against a respondent where the Department never requested the 
information, and that it would be unfair to POSCO to seek a change in 
the date of sale for the first time as a result of arguments in 
petitioners' brief because there is not adequate time for POSCO to 
provide information in order for the Department to fully analyze this 
issue. For these reasons alone, the POSCO Group argues, petitioners' 
arguments on date of sale should be rejected.
    The POSCO Group argues that petitioners' apparent proposal to use 
two different dates of sale for the two markets would directly 
contradict the Department's finding in a recent case, in which the 
Department rejected petitioners' argument for use of confirmation date 
as U.S. date of sale because to do so would have established different 
bases for date of sale in the U.S. and home markets, and because the 
terms of sale in the United States could change after the order 
confirmation date. See Small Diameter Circular Seamless Carbon and 
Alloy Steel Standard, Line and Pressure Pipe from Germany: Final 
Results of Antidumping Duty Administrative Review, 63 FR 13217, 13226 
(March 18, 1998) (``Small Pipe from Germany''). For one of the U.S. 
sales for which the POSCO Group provided sales documentation, the POSCO 
Group notes that the quantity ultimately shipped to the customer varied 
enough from the originally ordered quantity to reflect a change in the 
terms of sale. This distinguishes these reviews from the sole precedent 
cited by petitioners, Pipe from Korea.
    Finally, the POSCO Group agrees with petitioners that there is no 
CEP date of sale methodology, but notes there is no evidence that the 
Department used any such methodology in its preliminary results. 
Rather, the POSCO Group argues, the Department simply followed its 
normal practice of using invoice date as date of sale, a practice 
developed to foster predictability of outcomes and ease in reporting 
and verifying information.
    In their rebuttal briefs, Union and Dongbu state that in the third 
reviews of these orders the Department ``used the date of invoice to 
the first unaffiliated purchaser in the United States as the date of 
sale,'' and that in the preliminary results of these fourth reviews the 
Department again decided to use the date of invoice from the U.S. sales 
affiliate to the first unaffiliated U.S. customer. Union and Dongbu 
argue that the preamble to the Department's final regulations note that 
this date-of-sale methodology promotes predictability of outcomes, and 
that invoice date is the best indicator of the date of sale because the 
terms are fixed when the seller demands payment (i.e., when the sale is 
invoiced). Union and Dongbu argue that the fact that sales terms are 
rarely altered after the initial agreement is quite distinct from a 
finding that they are ``finally established'' at that date. Whether 
they are rarely or frequently changed does not diminish the fact that 
they could, and sometimes do, change, which means that they are not 
finally established as of the date of contract. Furthermore, Union and 
Dongbu argue,

[[Page 12935]]

it is burdensome to both respondents and the Department to report and 
verify contract dates.
    Union and Dongbu argue that if the Department follows the precedent 
of Pipe from Korea because the sales processes in that case were 
comparable to those in these reviews, then it should also classify the 
U.S. sales of the three respondents in these reviews as EP sales, given 
that the U.S. sales of the respondent in the pipe case were classified 
as EP sales. Furthermore, Union and Dongbu note that the Department 
only requested that Union provide contract dates in its sales 
databases. Union notes that use of these dates would contradict the 
date of sale methodology used in the final results of the prior review, 
where the same fact pattern existed. Dongbu notes that facts available 
cannot be used for its date of sale because the Department did not ask 
it to report contract dates.
    Finally, Union and Dongbu argue that the Department did not employ 
a new CEP date of sale methodology in its preliminary results but, 
rather, simply noted that it was typical for the date of sale of CEP 
sales to be the date of the invoice to the unaffiliated U.S. customers.
    Department's Position: While we agree with respondents that it is 
the Department's normal practice to use invoice date as date of sale, 
we disagree with the respondents' assertions regarding the 
circumstances in which the Department is to resort to use of invoice 
date as date of sale. Long-term contracts and exceptionally long 
periods of time between invoice date and shipment date are examples of 
situations where reliance upon invoice date as date of sale would be 
inappropriate as date of sale, regardless of convenience. In most of 
the cases cited by the POSCO Group (Brass from the Netherlands, 63 FR 
at 25822; Pipes from Thailand, 63 FR at 55587-88; Wire Rope from 
Mexico, 63 FR at 46755; and Wire Rod from India, 62 FR at 38979), the 
Department indicated that it was using invoice date as date of sale 
because it had no reason to believe that the terms of sale were 
established on some other date. In Salmon from Chile, no clear reason 
for use of date of invoice is indicated, but it is evident that use of 
the date of invoice was in accordance with policy, and no party 
suggested otherwise.
    Nevertheless, even if documentation from a few sample U.S. sales 
suggests that essential terms of sale did not change after initial 
contract date, this does not demonstrate that essential terms of sale 
were not subject to change after initial contract date, or that 
essential terms of sale did not in fact change after initial contract 
date for significant numbers of sales. The Department has no basis to 
conclude that essential terms of sale were set and not subject to 
change at the initial contract date. Consequently, we do not agree with 
petitioners' assertion that the appropriate U.S. date of sale, for 
these reviews, is contract date. While we agree with petitioners that 
the Department has no CEP-specific date-of-sale methodology, and that 
the determination that the U.S. sales were CEP sales does not preclude 
a date of sale prior to invoice date to the unaffiliated U.S. customer, 
we have determined that it would not be appropriate to consider 
contract date as U.S. date of sale for the reasons noted above.
    However, it is clear that for U.S. sales, unlike home market sales, 
a significant amount of time may elapse between shipment from Korea and 
invoicing of the unaffiliated customer. There is also nothing on the 
record to suggest that terms of sale were subject to change after the 
merchandise was shipped from Korea. Neither petitioners nor respondents 
have asserted that the essential facts relating to date of sale have 
changed between the third and fourth administrative reviews of these 
orders, and respondents in fact refer to the appropriateness of the 
Department's U.S. date-of-sale determination in the third reviews in 
their arguments pertaining to the fourth reviews. The Department stated 
in its final results for the third reviews that ``we used the date of 
the invoice to the first unaffiliated purchaser in the United States as 
the date of sale, except for transactions where the date of invoice 
occurred after the date of shipment, in which case we used the date of 
shipment as the date of sale'' (see Korean Flat-Rolled 3rd Reviews 
Final, 63 FR at 13172-73). This methodology was consistent with the 
Department's general use of invoice date as date of sale, and its 
recognition that both the setting of essential terms of sale and the 
amount of time between shipment and invoicing are also relevant. There 
is no evidence on the record that terms of sale were subject to change 
after the invoicing of the U.S. customers by the U.S. affiliates, but 
this date in certain instances can be considerably later than the 
shipment date from Korea. Therefore, in these final results we have 
followed the Department's methodology from the final results of the 
third reviews, and have based date of sale on invoice date from the 
U.S. affiliate, unless that date was subsequent to the date of shipment 
from Korea, in which case that shipment date is the date of sale. 
Consistent with this approach, we have calculated imputed credit for 
U.S. sales based on the length of time between shipment from Korea and 
payment by the unaffiliated U.S. customer.

Comment 5: Exporter Price (``EP'') vs. Constructed Export Price 
(``CEP'')

    The POSCO Group argues that the Department erred in categorizing 
its U.S. sales as CEP sales. The POSCO Group argues that such 
classification is unsupported by the record evidence and contrary to 
consistent Department practice. The POSCO Group indicates that the 
functions of the U.S. affiliates were limited to those of processors of 
sales-related documentation and communications links with the 
unaffiliated U.S. buyers, and that their role was only ancillary in the 
sales process. The POSCO Group argues that POSCO and POCOS approved or 
disapproved primary terms of sale for U.S. customers, and that the U.S. 
affiliates did not set prices with those unaffiliated U.S. customers. 
The POSCO Group argues that the Department's findings in the second 
reviews of these orders, in which the Department treated its U.S. sales 
as EP sales, are consistent with this description of the limited role 
of the U.S. affiliates.
    The POSCO Group states that its U.S. sales meet the three-part 
criteria considered by the Department in classifying transactions as EP 
sales: (1) the merchandise was shipped directly from the manufacturer 
to the unaffiliated U.S. customer; (2) this was the customary 
commercial channel of trade between the parties involved; and (3) the 
U.S. sales affiliates were mere processors of sales related 
documentation and communications links with unaffiliated customers in 
the United States. The POSCO Group argues that since they have met the 
Department's three-part test, there is a long line of Department and 
court precedent classifying these transactions as EP sales and the 
Department should reclassify POSCO's and POCOS's U.S. sales as EP 
sales. The POSCO Group cites Independent Radionic Workers of America v. 
United States, 19 CIT 375 (1995); Zenith Electronics Corp v. United 
States, 18 CIT 870, 873-75 (1994); Industrial Phosphoric Acid from 
Belgium, 63 FR 25830, 25831 (May 11, 1998); and Circular Welded Non-
Alloy Steel Pipe from Korea, 62 FR 55574, 55579 (October 27, 1997).
    While the POSCO Group acknowledges that the Department found the 
U.S. sales of its affiliates to be CEP sales in the final results of 
the third

[[Page 12936]]

reviews of these orders, the POSCO Group contends that finding was 
incorrect. Furthermore, the POSCO Group states that the fourth reviews 
are distinguished from the third reviews in that sample documentation 
for a fourth review period POSCO U.S. sale indicates that the customer 
contacted POSCO directly, and that POSCO itself rejected price terms. 
The POSCO Group also notes that sample documentation for a fourth 
review period POCOS U.S. sale indicates that the sale did not proceed 
until POCOS's confirmation of the customer's inquiry. The POSCO Group 
also argues that there is no evidence in the fourth reviews indicating 
that the U.S. affiliates had any input on the price charged to U.S. 
customers, which the Department incorrectly asserted did exist in the 
record of the third reviews (see Korean Flat-Rolled 3rd Reviews Final, 
63 FR at 13183). The POSCO Group also notes that, unlike in the third 
reviews, in the fourth reviews it provided all of the direct and 
indirect selling expenses incurred by the U.S. sales affiliates, and 
the POSCO Group argues that these expenses clearly show that the levels 
of SG&A attributable to sales of subject merchandise through those 
affiliates are an insignificant portion of total SG&A of those 
affiliates.
    The POSCO Group notes that the Department treated as EP 
transactions sales made by POSAM in Notice of Final Determination of 
Sales at Less than Fair Value: Stainless Steel Wire Rod from Korea, 63 
FR 40404 (July 29, 1998) (``Wire Rod from Korea''). In that case, the 
Department found: that ``POSAM had no substantial involvement in the 
sales process, such as sales negotiation, providing technical support, 
or handling warranty claims, with respect to subject merchandise;'' 
that ``POSAM does not negotiate sales terms with U.S. customers, but 
rather relays pricing information'' between the Korean producer and the 
U.S. customer; that for each sale examined at verification the Korean 
producer ``ultimately accepted or rejected the sales price;'' and 
evidence of indirect contact between the Korean producer and the U.S. 
customer (see id. at 40419). The Department found that the functions 
performed by POSAM, ``document processing and other ancillary 
activities related to the sales of subject merchandise to the U.S. 
customer (e.g., clearing customs, arranging for U.S. transportation, 
issuing invoices, and collecting payment),'' were consistent with a 
classification of sales as EP sales, and that ``POSAM had no 
substantial involvement in the sales process.'' Id. The POSCO Group 
argues that this analysis is consistent with that for the U.S. 
affiliates in these reviews, given that they did not negotiate prices 
but merely relayed pricing information, and that they did not provide 
technical support, handle warranty claims, or accept or reject the 
price for all sales of subject merchandise.
    The POSCO Group also notes that the Department treated as EP 
transactions sales made under similar circumstances in Certain Welded 
Stainless Steel Pipe from Taiwan; Final Results of Administrative 
Review, 63 FR 38382 (July 16, 1998) (``Pipe from Taiwan''). In that 
case, the POSCO Group notes, the U.S. affiliate did not play a major 
role in the sales negotiation process or the selling activities, was 
not responsible for setting the prices of U.S. sales, and did not 
control the markup it earned on the resale of the goods purchased in 
back-to-back deals for the foreign parent (id. at 38385). The 
Department found that the functions performed by the U.S. affiliate in 
that case, ``issuing invoices, collecting payment, paying antidumping 
duty deposits, and taking title to the subject merchandise after entry 
into the United States' (id. at 38386) were consistent with the 
classification of the sales as EP sales, and these functions were the 
same as those performed by the U.S. affiliates in these fourth reviews.
    Finally, the POSCO Group cites several cases in which it claims 
that the U.S. affiliates were more involved in the sales process than 
the affiliates in these fourth reviews, but for which the U.S. sales 
were classified as EP sales. Some of the additional functions performed 
by the affiliates in those cases included limited advertising, 
processing certain warranty claims, warehousing, and provision of 
technical services.
    Union argues that the facts surrounding the activities undertaken 
by Union's U.S. affiliate have not changed from the third reviews and 
are not in dispute. Union attached to its brief pages from the third 
review verification reports as evidence of the limited role played by 
its U.S. affiliate, noting that verifications were not conducted for 
the fourth reviews. Union disagrees with the Department's decision in 
the final results of the third reviews to treat its U.S. sales as CEP 
sales, and argues that the Department must reclassify its fourth review 
U.S. sales as EP sales.
    Dongbu argues that the facts surrounding the activities undertaken 
by its U.S. affiliate have not changed from the third reviews. Dongbu 
attached to its brief pages from the third review verification reports 
as evidence of the limited role played by its U.S. affiliate. Dongbu 
argues that should the CIT agree that the Department erred in its 
classification of Dongbu's sales in the third review as CEP sales, the 
Department will likewise have to reclassify its fourth review U.S. 
sales as EP sales.
    Petitioners note that Union and Dongbu present no new argument why 
their U.S. sales should be treated as EP sales rather than CEP sales, 
and that they accept that the nature of the transactions in this regard 
was the same as in the third reviews, in which the Department found 
that the U.S. sales were in fact CEP sales.
    Regarding the POSCO Group, petitioners note that the Department 
found its U.S. sales in the third reviews to have been CEP sales, and 
that the POSCO Group, like Union and Dongbu, had stated affirmatively 
on the record of the fourth reviews that its U.S. affiliates performed 
the same functions during the fourth review period as they did during 
the third review period. Furthermore, the Department had conceded as 
erroneous its determination in the second reviews that the POSCO 
Group's U.S. sales were EP sales rather than CEP sales in the appeal 
process before the CIT. Petitioners note that the Department even prior 
to its preliminary determinations in these fourth reviews, in its April 
10, 1998, supplemental questionnaire, had instructed the POSCO Group to 
report its U.S. sales as CEP transactions.
    Petitioners argue that the POSCO Group misstates the Department's 
CEP test when it implies that its U.S. sales are EP because its 
affiliates do not independently negotiate or approve sales to 
unaffiliated customers. Rather, the Department analyzes whether or not 
the role played by the U.S. affiliates was ``ancillary'' in the sales 
process. As long as the U.S. affiliate plays an active role in bringing 
about the U.S. sale, that sale will be classified as a CEP transaction 
even if the foreign parent does play some role in the sales process. 
Petitioners note that even if POSCO had some contact with a U.S. 
customer in a particular sale, which they assert is not established by 
the record, it does not demonstrate that POSAM was not involved in 
negotiating price terms for the underlying sale, or that POSAM was not 
involved in the sales process in more than an ``ancillary'' way more 
generally for U.S. sales. Petitioners note that the POSCO Group does 
not even argue that POCOS had direct contact with any of its customers.
    Petitioners distinguish between the sales processes in these 
reviews and those in the other cases cited by the

[[Page 12937]]

POSCO Group. Petitioners note that in Wire Rod from Korea, 63 FR at 
40418, the Department indicated that the Korean exporter had direct and 
substantive contact with U.S. customers (export strategy meetings 
wherein substantive terms of sale, payment and delivery terms were 
discussed and from which the exporter established its quarterly price 
lists). Petitioners note that in Pipe from Taiwan, 63 FR at 38385-6, 
the Department indicated that the respondent's customers had frequent 
direct contact with the producer in Taiwan, and that the producer 
itself responded directly to customers' price inquiries. Petitioners 
state that these aspects of the aforementioned two cases were not 
present in the reviews at issue here.
    Petitioners argue that the level of general expenses incurred for 
subject vs. non-subject merchandise is not relevant for determining the 
importance of the U.S. affiliates in the sales process for subject 
merchandise and, given that the POSCO Group reported indirect selling 
expenses by dividing all such expenses by total sales, the percentage 
of indirect selling expenses borne by all of the affiliates' U.S. 
sales, subject or non-subject, will be the same. Furthermore, the 
functions performed by the U.S. sales affiliates for non-subject 
merchandise sales are not relevant in this context, either. Rather, the 
more appropriate comparison would be of indirect selling expenses 
incurred by POSCO and POCOS vs. those incurred by the U.S. affiliates 
for the same sales.
    Department's Position: We agree with petitioners that the U.S. 
sales of Dongbu, the POSCO Group, and Union during the POR should be 
classified as CEP, rather than EP, transactions.
    As noted by petitioners and all three respondents, the essential 
facts surrounding the activities of respondents' U.S. sales affiliates 
did not change from the third to the fourth administrative review 
periods. In the third reviews, based in part upon extensive 
verifications of the U.S. sales affiliates of Dongbu, POCOS, POSCO, and 
Union, the Department determined that U.S. sales for these companies 
were properly classified as CEP, rather than EP, transactions. 
Specifically, the Department concluded:

    In these cases, the record clearly establishes that the 
respondents' affiliates in the United States were in most instances 
the parties first contacted by unaffiliated U.S. customers desiring 
to purchase the subject merchandise and also that the sales 
affiliates in question signed the sales contracts and engaged in 
other sales support functions. These facts indicate that the subject 
merchandise is first sold in the United States by or for the account 
of the producer or exporter, or by the affiliated seller, and that 
the sales in question are therefore CEP transactions.

Korean Flat-Rolled 3rd Reviews Final, 63 FR at 13172.
    In continuing to find that CEP classification is appropriate, and 
as petitioners note, U.S. sales affiliates need not be determined to 
have independently set U.S. prices and other terms of sale for those 
affiliates' involvement to be deemed more than ancillary. Rather, the 
Department must examine the totality of the circumstances surrounding 
the U.S. sales process, and assess whether the reviewed sales were 
effectively made ``in the United States'' for purposes of section 
772(b) of the Act. Accordingly, in this analysis, neither the magnitude 
of indirect selling expenses incurred, nor the performance of a 
specific sales function--such as actual negotiation--is controlling. We 
stress that the Department's approach does not constitute a departure 
from its practice, or abandonment of the three-part sales 
classification test. Rather, this approach gives effect to the third 
prong of the test--whether the U.S. affiliate is more than a mere 
processor of sales-related documentation and communication link.
    Turning to the evidence in this case, the U.S. affiliates: (1) Take 
title to the subject merchandise; (2) invoice and receive payment from 
their unaffiliated U.S. customers; (3) arrange for other aspects of the 
transactions, including Customs clearance, brokerage, and freight; and 
(4) serve as a source of information about the producer/exporters' 
products.
    More specifically, the POSCO Group notes that its U.S. sales 
affiliates assist in the negotiations between the manufacturer and the 
unaffiliated U.S. customers, and U.S. customers contact POSAM to 
initiate discussions concerning the base price and total quantity. 
POSCO and POCOS provide the U.S. affiliates quarterly base prices for 
U.S. sales. The POSCO Group's U.S. sales affiliates also arrange for 
various functions related to transporting the merchandise to the 
unaffiliated U.S. customer. While those U.S. sales affiliates may not 
incur expenses for the publication of product brochures/catalogues, 
those items are made available to U.S. customers at the offices of the 
U.S. affiliates. Additionally, POSAM performs certain unspecified 
procurement services in the United States for certain specialized 
purchases. As we stated in the final results of the previous reviews, 
``it is POSCO's and POCOS's roles that may be ancillary to the sales 
process . . ., and that in any case the record does not demonstrate 
that the U.S. affiliates' involvement in making the sales were 
incidental or ancillary.'' Id. at 13183.
    With respect to Dongbu, the organizational structure of its U.S. 
affiliate, Dongbu USA, indicates that Dongbu USA staff are involved 
with selling subject merchandise. Dongbu USA issues sales contracts to 
the U.S. customers. Dongbu USA also processes shipment-related 
documentation and arranges for the U.S. broker to enter the 
merchandise, thereby incurring costs associated with these functions. 
It is also solely responsible for payment of antidumping and 
countervailing duty deposits. While Dongbu Steel may arrange for 
publication of product brochures and other company literature, these 
items are available at Dongbu USA. As we stated in the final results of 
the previous reviews, ``the totality of the evidence regarding Dongbu's 
sales process demonstrates that {Dongbu USA's} role is more than 
ancillary to the sales process.'' Id. at 13177.
    With respect to Union, its U.S. affiliate, Dongkuk International 
(``DKA''), arranges with commissioned agents in the United States to 
refer customers to DKA. The initial discussion regarding customer 
orders is generally conducted over the phone between DKA and the 
customers. DKA advises the U.S. customers about Union prices based on 
information DKA receives from Union. Union employees at DKA may also 
offer comments to Union in Korea about the circumstances relevant to a 
particular sale. DKA issues sales contracts to the U.S. customers. DKA 
also arranges for banking services that relate to the U.S. sales 
process. Furthermore, DKA processes warranty claims, arranges 
warehousing and transportation at the customer's request, and prepares 
for the release of the merchandise to the customer when it arrives at 
the U.S. port. As we stated in the final results of the previous 
reviews, ``{t}he totality of the evidence regarding Union's sales 
process demonstrates it is Union's role that is ancillary to the sales 
process, and not that of {DKA}.'' Id. at 13190.
    Importantly, no record evidence shows that the Korean 
manufacturers/exporters in this case were involved in the U.S. sales 
processes to the extent the respondents were in cases in which we have 
found EP treatment appropriate. See, e.g., Pipe from Taiwan, 63 FR at 
38386 (unaffiliated U.S. customers maintained direct contact with the 
foreign exporter or producer); Wire Rod from Korea, 63 FR at 40418 
(producer held an export strategy meeting with its

[[Page 12938]]

U.S. customers wherein substantive terms of sale, payment, and delivery 
terms were discussed, and during which the producer established its 
pricing policy based on quarterly price lists); and Korean Flat-Rolled 
3rd Reviews Final, 63 FR at 13183 (POSCO had substantive direct 
involvement in the sales to one U.S. customer, while POSAM's role was 
very limited). Rather, the only inference supported by the record is 
that, in virtually all instances, the producer/exporters' export 
departments merely approved sales offers forwarded by their U.S. 
affiliates. That the Korean export departments theoretically could have 
intervened to a greater extent does not alter the conclusion that, 
during the POR, a substantial portion of the sales process occurred in 
the United States. Therefore, U.S. sales during the fourth POR are 
properly treated as CEP sales.

Comment 6: U.S. Sales Universe

    Dongbu contends that the Department incorrectly excluded certain 
U.S. sales made outside the POR, but entered during the POR, from its 
margin calculation. Dongbu argues that the Department requested all of 
Dongbu's U.S. sales entered during the POR and thus should include all 
reported sales in its final margin calculation. Dongbu argues that the 
CIT has upheld the practice of reviewing and assessing dumping duties 
on all entries of the merchandise made during the POR, regardless of 
when the entered merchandise was sold, in Helmerich & Payne, Inc. v. 
United States, Slip Op. 98-134 (Ct. Int'l Trade Sept. 17, 1998). Dongbu 
notes that while the Department will only use sales within the POR to 
calculate dumping duties in CEP situations where sales cannot be tied 
to entries, this situation does not exist in this case as Dongbu can 
tie its U.S. sales to entries. Dongbu also argues that consistency in 
the Department's reporting requirements will avoid confusion in the 
fifth administrative review.
    Petitioners state that they take no position on the issue. However, 
petitioners argue that if the Department decides to include all of 
Dongbu's U.S. entries for the POR, the Department must do the same for 
the POSCO Group and Union as well. Petitioners assert that while the 
POSCO Group has reported the necessary information for such an 
analysis, Union has not. Petitioners note that Union has not provided 
contemporaneous home market sales for most of the U.S. sales of 
merchandise that entered during the POR which had a date of sale after 
the POR. In such an instance, the Department would be required to use 
facts available for all of Union's unmatched U.S. sales. Petitioners 
argue that if the Department decides to review all entries during the 
POR, then the Department should resort to adverse facts available for 
Union and apply the 10.74 percent rate assigned to Union in the first 
administrative review. Certain Corrosion-Resistant Carbon Steel Flat 
Products from Korea, 61 FR 18457, 18568 (April 26, 1996).
    Department's Position: We agree with Dongbu that we should base our 
analysis on entries during the POR, although we note that the CIT 
decision in Helmerich & Payne does not mandate such a methodology. 
Rather, that decision stands for the proposition that the Department 
has discretion in EP situations to review and assess duties on entries 
within the POR, regardless when the corresponding sales occurred. 
Helmerich & Payne, Slip Op. 98-134, at 18-21. We also agree with 
petitioners that we should apply this methodology to the analysis for 
all respondents in these reviews. Where it is possible, and not 
excessively burdensome to respondents, to tie sales made prior to entry 
to entries, as in these reviews, the Department generally prefers to 
conduct its reviews based on POR entries, even if this means reviewing 
some sales made outside the POR.
    Furthermore, we reject petitioners' contention that facts available 
must be applied for Union in this context. Given the date-of-sale 
methodology outlined earlier in this notice, there are no U.S. sales 
for which Union has failed to report contemporaneous home market sales.

Comment 7: Overruns

    Petitioners argue that the Department should exclude certain low-
priced home market sales of Dongbu in the final results as overruns. 
Petitioners argue that although Dongbu did not identify its overrun 
sales, it essentially admitted that it has such sales in correspondence 
to the Department in a letter from Dongbu's attorneys dated March 9, 
1998. Petitioners argue that while Dongbu had notice that the 
Department requires overrun information, Dongbu intentionally failed to 
provide overrun information by eliminating its ability to identify 
overruns when installing its new computer system during the prior POR. 
In support of this argument, petitioners cite to Dongbu's May 18, 1998 
submission, in which Dongbu states that it eliminated its overrun 
indicator because it felt the figure was not commercially significant 
and had no purpose.
    Petitioners argue that the Department is required by the statute to 
rely on facts available when necessary or requested information is 
missing from the record. Petitioners argue that because Dongbu failed 
to report its overrun sales, which are necessary for proper price 
comparisons and analysis, the Department should rely on the facts 
available to calculate a figure for Dongbu's overruns. Petitioners note 
that the Department has previously used partial facts available where 
Dongbu has failed to report the necessary data. Petitioners reference 
the third administrative review where, when Dongbu reported the bill of 
lading date instead of the required date of shipment from the factory, 
the Department used a date closer to the date of shipment from the 
factory, rather than the date offered by Dongbu. See Korean Flat-Rolled 
3rd Reviews Final, 63 FR at 13178. Petitioners suggest that the 
Department categorize a percentage of Dongbu's lowest-priced home 
market sales as overruns, and base that percentage upon the percentage 
of POSCO's total sales that were classified as overruns, and exclude 
those newly classified overrun sales as outside the ordinary course of 
trade. Petitioners note that the Department excluded other sales 
because they ``resemble sales excluded by the Department in prior 
reviews as overruns'' (see the August 31, 1998 Memorandum from Lisette 
Lach to the File (``Dongbu Prelim. Analysis Memo'') and Certain Cold-
Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: 
Final Results of Antidumping Duty Administrative Reviews, 62 FR 18404, 
18441 (April 15, 1997) (``Korean Flat-Rolled 2nd Reviews Final'').
    In rebuttal, Dongbu argues that the Department correctly rejected 
petitioners' request to exclude certain Dongbu sales as overruns. 
Dongbu argues that the statement from the Department's preliminary 
determination relied upon by petitioners, stating that the Department 
had in past reviews excluded overruns for Dongbu, is factually 
incorrect. Dongbu asserts that the Department has never excluded 
Dongbu's prime grade overruns as outside Dongbu's ordinary course of 
trade. Dongbu argues that Petitioners have no legal support for 
suggesting that the Department similarly exclude overrun sales for 
Dongbu as it has excluded overrun sales for POSCO and Union. Dongbu 
argues that the Department's ordinary course of trade analysis focuses 
on the particular company. See Gray Portland Cement and Clinker from 
Mexico: Final Results

[[Page 12939]]

of Antidumping Duty Administrative Review, 63 FR 12764, 12772 (March 
16, 1998) (``Cement from Mexico--March 1998''). Dongbu also argues that 
determinations on overrun sales for other companies have no bearing on 
the determination for Dongbu. See 19 CFR 351.102 (definition of 
ordinary course of trade).
    Dongbu asserts that it produces almost exclusively for inventory in 
the home market, and, therefore, the only possible overruns arise from 
made-to-order production for export. Dongbu argues its product coding 
system has never had an overrun category. Dongbu explains that its 
previous product coding included a digit identifying the market for 
which unpainted galvanized products were produced, making it possible 
to identify which ones were produced for export that were sold in the 
home market. However, Dongbu argues that identification of overrun 
sales of these products had no bearing on the sales, because it was the 
quality and condition of the merchandise that was significant with 
respect to the conditions under which they were sold. Dongbu claims 
that the Department acknowledged this by never excluding Dongbu's sales 
of prime grade unpainted galvanized product overruns. In 1995, Dongbu 
eliminated the digit because it found the digit served no useful 
commercial purpose and the quantities involved did not justify the cost 
of tracking the information. Dongbu argues that petitioners' claim that 
Dongbu deliberately eliminated the digit to avoid having to report 
overrun sales is unsupported, as the Department has always determined 
that Dongbu's prime grade sales of overrun material were within 
Dongbu's ordinary course of trade.
    Dongbu points out that even without an overrun category, the 
information needed to code home market sales of export specification 
material is on the record. Dongbu explains that if the second digit of 
the code is other than K or D, the sale of unpainted galvanized product 
is of export specification material. Dongbu states that there is no 
overlap between such sales and the ones petitioners request to be 
excluded. Dongbu also argues it has shown such sales are within the 
ordinary course of trade by demonstrating that: (1) with few exceptions 
the same customers purchased sales of export and domestic specification 
material; (2) the average quantity of the sale of export material was 
the same or higher than the quantity of domestic specification 
material; and (3) there is no definitive trend in the prices and profit 
ratios for domestic specification versus export specification material. 
See Dongbu's Supplemental Response, B-2 and B-3, and Attachment B-34 
(May 18, 1998). Dongbu argues that this three-step analysis must be 
followed if the Department intends to exclude Dongbu's sales of overrun 
material. Laclede Steel Co. v. United States, 18 CIT 965 (Ct. Int'l 
Trade 1994).
    Department's Position: We have determined that none of Dongbu's 
sales should be classified as overruns for purposes of the Department's 
analysis in these reviews. We find no basis for excluding a block of 
home market sales from the analysis simply because they are the lowest 
priced sales, and petitioners have not presented sufficient reasons for 
determining any of the sales in question were overruns, and therefore 
excludable as outside the ordinary course of trade. In its May 18, 1998 
submission, Dongbu indicated that it did not have a separate 
classification for overrun material, and that the eliminated indicator 
presumably recorded whether or not the product was originally produced 
for the export market. Even if the information that Dongbu eliminated 
from its coding system might have enabled an educated guess as to what 
home market sales were of overruns, which has not been established by 
the record, there is no evidence on the record that Dongbu changed its 
coding system to avoid having to report overruns.

Comment 8: Certain Sales Outside the Ordinary Course of Trade

    Petitioners argue that if the Department does not exclude Dongbu's 
low-priced sales as overruns, it should exclude what petitioners have 
identified as Dongbu's aberationally priced sales. Petitioners state 
that in its preliminary results, the Department excluded certain Dongbu 
home market sales as outside the ordinary course of trade, based on two 
factors: (1) the sales were made at aberrational prices; and (2) Dongbu 
characterized the sales as insignificant quantities and related to slow 
moving merchandise. See Korean Flat-Rolled 4th Reviews Prelim, 63 FR at 
48174-75. Based on these two factors, petitioners identified over one 
thousand Dongbu home market sales with prices which petitioners argue 
are significantly less than Dongbu's POR weighted-average sales price. 
Petitioners state that the Department only excluded a few of these 
aberrational sales even though Dongbu itself, in its July 6, 1998 
submission, identified the sales as ``insignificant quantities'' of 
``slow moving prime grade material.'' Petitioners argue that, based on 
the Department's factors for exclusion of home market sales, and based 
on Dongbu's own characterization of the sales, all of the over one 
thousand sales in question should be excluded from the analysis.
    Dongbu argues that the Department was correct not to exclude the 
other home market sales identified by petitioners as outside the 
ordinary course of trade. Dongbu argues that the Department has already 
concluded that it would be inappropriate to remove a broad portion of 
Dongbu's low-priced sales from the dumping analysis (see Korean Flat-
Rolled 4th Reviews Prelim, 63 FR at 48174). Dongbu argues that price 
alone cannot be the dispositive factor. Dongbu points out that in 
petitioners' example, where the Department excluded certain low-priced 
sales for Union, such exclusions were of sales which Union made in 
place of a credit adjustment. Dongbu argues that Dongbu's low-priced 
sales were not made in place of a credit adjustment. Dongbu also argues 
that if Dongbu's low-priced sales are to be excluded, then so must its 
high-priced sales, as they also deviate from Dongbu's average home 
market price. Finally, Dongbu argues that exclusion of home market 
sales identified by petitioners as aberrationally low-priced amounts to 
rejection of the sales-below-cost test.
    Dongbu applies a similar rationale in arguing that the Department 
erred in its exclusion of four sales from its preliminary analysis. 
Dongbu takes issue with the Department excluding four of its home 
market sales as outside the ordinary course of trade. Dongbu argues 
that the sales were identical in nature to over one thousand home 
market sales that petitioners suggest should be excluded but which the 
Department chose not to exclude in its preliminary results. Dongbu 
argues that the four sales failed neither the cost test nor the arm's-
length test. Dongbu also argues that the excluded sales do not fall 
under the other circumstances in which the Department has excluded 
sales as outside the ordinary course of trade (such as overruns, 
different types of product, or unusual or unique sales). Laclede Steel 
Co. v. United States, 19 CIT 1076 (1995); Cement from Mexico--March 
1998, 63 FR 12770-72; Thai Pineapple Public Co. v. United States, 946 
F. Supp. 11, 15-17 (Ct. Int'l Trade 1996). Dongbu argues that the 
purpose of the ordinary course of trade provision was to prevent 
unrepresentative or irrational dumping margins. SAA at 834. While 
Dongbu concedes that the four exclusions are significant for Dongbu 
because, as a result of the exclusion, the weighted-average dumping 
margin increased to above de

[[Page 12940]]

minimis, Dongbu argues that the roughly one percentage point increase 
is neither an unrepresentative nor an irrational result.
    Dongbu argues that the four excluded sales were not of overrun 
material nor similar to overrun sales, stressing that overrun material 
is basically excess material produced as part of a specific order. 
Dongbu asserts that the excluded sales consist of material with Korean, 
not U.S., specifications, and were produced for inventory, not to 
order. Dongbu argues that, contrary to the Department's comparison in 
its analysis memorandum, such sales do not compare with low-priced 
sales excluded for another respondent in an earlier review. See Dongbu 
Prelim. Analysis Memo at 9-10. In that earlier review, the merchandise 
was found to be obsolete, thinner than planned, or priced especially 
low to compensate a customer for previous payments. See Korean Flat-
Rolled 2nd Reviews Final, 62 FR at 18441. Dongbu argues that the 
Department's comparison fails because Dongbu's sales do not have any of 
said characteristics, and thus the sales should not be excluded. Dongbu 
argues that, furthermore, a determination of what is outside the 
ordinary course of trade for another respondent is irrelevant in 
analyzing Dongbu's sales because the Department has stated that ``[i]n 
an ordinary course of trade inquiry, the pertinent issue is whether the 
conditions and practices are normal for the company in question.'' See 
Cement from Mexico--March 1998, 63 FR at 12772.
    Dongbu also argues that merely because the sales were below the 
average per unit price and below the cost of production (see Dongbu 
Prelim. Analysis Memo at 10) does not make them aberrational; the low-
priced sales merely reflect an unremarkable statistical fact. Dongbu 
argues that the sales already survived the cost test in section 
773(b)(1) of the Act, which identifies sales below cost. Under the cost 
test, the sales were not disregarded as below COP because they were not 
made in substantial quantities (20 percent or more of Dongbu's home 
market sales of the product). Dongbu complains that the Department 
cannot then apply a second cost test which excludes sales for being 
made in insignificant volumes.
    Dongbu argues that the Department has never rejected Dongbu's 
classification system, which classified the sales at issue as prime 
merchandise. Dongbu further asserts that it demonstrated, in its July 
6, 1998 submission, that the merchandise sold had no defects, and that 
the merchandise was not overrun material. Dongbu argues that the 
merchandise was slow-moving because of its color, that it is common 
business practice to sell the merchandise at a reduced price, and that 
such transactions are not extraordinary. Dongbu argues that both the 
Department and petitioners acknowledged that there were over one 
thousand of these sales during the POR. Dongbu argues that while the 
Department concluded that it would be inappropriate to exclude such a 
broad portion of relatively low-priced Dongbu home market sales as 
overruns, neither could such a large number of sales be excluded as 
outside the ordinary course of trade other than by failing the cost 
test. Dongbu complains that the Department concluded that the four 
sales used by petitioners as examples were made under unusual 
circumstances, when over one thousand sales were made under the same 
circumstances. Dongbu argues that in doing so, the Department is 
following the petitioners' agenda for arbitrary margin creation.
    Dongbu argues that there are sales which are the same percentage 
above the average price as the excluded sales are below the average 
price. Dongbu asserts that if petitioners' argument--that the low-
priced sales should be excluded because they are likely matches for 
U.S. sales--is accepted by the Department, then the Department should 
also exclude Dongbu's high-priced sales as well as they are also likely 
matches for U.S. sales. Dongbu notes that the Department has declined 
to exclude high-priced sales in the past, because the respondents 
therein did not explain the unique, unusual or extraordinary 
circumstances placing the sales outside the ordinary course of trade. 
See Industrial Nitrocellulose from France: Final Results of Antidumping 
Duty Administrative Review, 63 FR 49085, 49087 (September 14, 1998); 
Notice of Final Results of Antidumping Duty Administrative Review: 
Granular Polytetrafluoroethylene Resin from Italy, 63 FR 49080, 49082 
(September 14, 1998). In applying the same standard to its low-priced 
sales, Dongbu argues that the over one thousand sales cited by 
petitioners, including the four excluded by the Department in its 
preliminary analysis, are not extraordinary or unique under common 
sense and ordinary business practice. In arguing that the Department 
has taken two different standards for excluding low and high-priced 
sales, Dongbu notes that the CIT has stated that the Department may not 
impose arbitrary standards in its ordinary course of trade analysis. 
Koenig & Bauer-Albert v. United States, Slip Op. 98-83, at 40, n. 8 
(Ct. Int'l Trade June 23, 1998). Dongbu argues that by ignoring 
Dongbu's classification of the four sales as prime grade material, the 
Department has created an artificial category of only the four sales. 
Dongbu argues that by doing so, the Department is establishing a 
precedent under which parties can cherry-pick a database to identify 
sales that create or eliminate margins.
    In their rebuttal, petitioners state that the Department correctly 
excluded four of Dongbu's low-priced sales as outside the ordinary 
course of trade. Petitioners argue that the Department made the 
exclusions in accordance with the law. Petitioners assert that the SAA 
and legislative history support a finding that Congress and the 
Administration intended for the ordinary course of trade provision to 
apply to more than just below cost sales. SAA at 834; H.R. Rep. No. 
103-826(I), at 76 (1994); S. Rep. No. 103-412, at 61 (1994); Gray 
Portland Cement and Clinker from Mexico: Final Results of Antidumping 
Duty Administrative Review, 62 FR 17148, 17153 (April 9, 1997) 
(``Cement from Mexico--April 1997''). Petitioners argue that Dongbu 
incorrectly limits the scope of the ordinary course of trade provision 
to below-cost sales and affiliated customer sales. Petitioners argue 
that, unlike Dongbu, the Department properly applied the legal standard 
providing for exclusion of transactions sold at aberrational prices in 
order to avoid basing normal value on sales which are extraordinary for 
the market in question, particularly when the use of such sales would 
lead to irrational or unrepresentative results. SAA at 834; S. Rep. No. 
103-412, at 61 (1994); and Cement from Mexico--April 1997 at 17154.
    Petitioners also argue that Dongbu fails to address, or addresses 
in an insufficient context, many of the factors on which the Department 
based its decision. The Department excluded Dongbu's sales because the 
sales: (1) were aberrationally low-priced compared to other sales of 
the same CONNUMH; (2) were made at prices comparable to Dongbu's non-
prime merchandise; (3) were made at prices below the average cost of 
Dongbu's steel inputs; (4) had characteristics similar to overruns; and 
(5) were of insignificant quantities and involved slow moving 
merchandise. See Korean Flat-Rolled 4th Reviews Prelim, 63 FR at 48175.
    Petitioners disagree with Dongbu's claim that the Department 
created an artificial category in order to make the exclusions. 
Petitioners argue that the Department merely found the low-

[[Page 12941]]

priced sales to have characteristics similar to overruns excluded in 
prior reviews. Petitioners also argue that Dongbu mistakes a factor in 
the Department's ordinary course of trade analysis as a second cost 
test. Petitioners argue that the Department did not create a second 
cost test, but, rather, the Department merely considered the sales of 
merchandise at below substrate costs as one factor in the total 
circumstances considered under the ordinary course of trade provision. 
Petitioners argue that Dongbu's blank assertion that the excluded sales 
were in its ordinary course of trade is unsupported by the evidence on 
the record and identified by the Department. Petitioners also argue 
that rather than ignoring Dongbu's classification system of prime and 
non-prime merchandise, the Department followed the classifications in 
finding that the price of the excluded prime sales were comparable to 
prices of Dongbu's sales of non-prime merchandise. Petitioners argue 
that such comparable pricing supports a finding that the sales were 
aberrational and properly determined to be outside the ordinary course 
of trade.
    Petitioners take issue with Dongbu's accusation that petitioners 
are margin shopping, and note that aberrationally low-priced home 
market sales of Dongbu were in months which affect the matching to U.S. 
sales. Petitioners argue that excluding the sales follows Congressional 
intent and avoids irrational or unrepresentative results. Petitioners 
note that Dongbu had more than one hundred thousand home market sales 
of corrosion-resistant merchandise, yet exclusion of only four such 
sales raised the dumping margin from 0.13 percent to 1.47 percent. 
Thus, petitioners argue, the inclusion of such sales in the margin 
calculation would lead to unrepresentative results.
    Petitioners also assert that Dongbu incorrectly states that the 
Department excluded only the four sales used by petitioners as examples 
when, in fact, petitioners did not identify one of the four sales 
excluded by the Department (see petitioners' August 7, 1998 submission 
at 2-6). Additionally, Petitioners argue that Dongbu fails to support 
its argument that if the Department excludes low-priced sales, it 
should similarly exclude high-priced sales. Petitioners argue that 
Dongbu did not identify the sales to be excluded and that no evidence 
exists to show that any high-priced sales were made outside the 
ordinary course of trade.
    While Dongbu takes the position that the four sales were improperly 
excluded when there were over one thousand similarly low-priced sales 
which were not excluded, petitioners, as noted above, argue that the 
four sales were properly excluded and that the Department should 
exclude the other approximately one thousand sales as well. Petitioners 
note that those additional sales represent less than one percent of 
Dongbu's total home market sales. Petitioners also note that while 
Dongbu claims that the Department concluded that it would be 
inappropriate to exclude such a broad portion of relatively low-priced 
Dongbu home market sales as overruns, the referenced statement had 
nothing to do with the Department's exclusion of Dongbu's 
aberrationally low-priced sales. See Korean Flat-Rolled 4th Reviews 
Prelim, 63 FR at 48174. For these reasons, petitioners argue that 
Dongbu fails to address and refute the facts relevant to the 
Department's proper determination that the sales were outside Dongbu's 
ordinary course of trade.
    Department's Position: We agree with petitioners that the four 
sales the Department excluded from its preliminary analysis should 
continue to be excluded because they were outside the ordinary course 
of trade. However, we disagree with petitioners regarding the 
additional approximately one thousand sales.
    As an initial matter, contrary to claims of both Dongbu and 
petitioners, the four sales in question are not comparable to the other 
approximately one thousand sales cited by petitioners because there is 
significantly greater information on the record regarding the unusual 
nature of the four sales than there is regarding the approximately one 
thousand other sales. Petitioners asserted in their case brief that 
these other sales, like the four sales in question, involved 
insignificant quantities of slow-moving merchandise sold at 
aberrational prices, but in fact the Department's analysis of the four 
sales in question, both in Dongbu Prelim. Analysis Memo and as noted 
below, went beyond those factors, in part because of the greater 
information on the record for those four sales. Similarly, while Dongbu 
in its case brief proposed equivalent treatment between the four low-
priced sales and an unspecified group of high-priced sales, we note 
that the paucity of information on the record regarding the claimed 
high-priced sales would have precluded any analysis of whether those 
sales were outside the ordinary course of trade. Our analysis in the 
preliminary results focused on more than just relative prices, as does 
the additional analysis provided below.
    We also disagree with Dongbu's assertion that the Department's 
preliminary analysis applied a second cost test. The analysis below 
also clearly accounts for costs in a way consistent with other ordinary 
course of trade analyses that is independent of the Department's cost 
test and, furthermore, it clearly examines several factors in addition 
to cost considerations. Also, contrary to Dongbu's assertions, our 
analysis was specific to Dongbu's circumstances and not based on any 
conclusion that the four sales in question constituted non-prime 
merchandise or overrun merchandise. The analysis below is comparable in 
these respects and in accordance with the the Department's regulation 
pertaining to ordinary course of trade, which indicates that examples 
of sales that the Department might consider as being outside the 
ordinary course of trade are sales or transactions sold at aberrational 
prices. See 19 CFR 351.102.
    In reviewing our preliminary conclusions for the final 
determination, we have analyzed factors we presented in detail in 
Korean Flat-Rolled 2nd Reviews Final, 62 FR at 18437 with respect to 
sales outside the ordinary course of trade. That analysis specifically 
related to production overruns and the determination of whether sales 
identified as overruns were outside the ordinary course of trade, and 
was based on various precedents. See, e.g., Certain Corrosion-Resistant 
Carbon Steel Flat Products From Australia; Final Results of Antidumping 
Duty Administrative Reviews, 61 FR 14049, 14050-51 (March 29, 1996) 
(``Australian Corrosion-Resistant Steel''), and Certain Welded Carbon 
Steel Standard Pipes and Tubes From India, Final Results of Antidumping 
Duty Administrative Reviews, 56 FR 64753, 64755 (December 12, 1991).
    Although that analysis concerned production overruns, this test is 
also useful in evaluating the fact pattern for the four Dongbu sales in 
question because the test provides objective factors which are 
revealing as to whether certain sales are so unusual as to be outside 
the ordinary course of trade. Those factors are: (1) whether the home 
market sales in question did in fact consist of production overruns; 
(2) whether differences in physical characteristics, product uses, or 
production costs existed between overruns and ordinary production; (3) 
whether the price and profit differentials between sales of overruns 
and ordinary production were dissimilar; and (4) whether the number of 
buyers of overruns in the home-

[[Page 12942]]

market and the sales volume and quantity of overruns were similar or 
dissimilar in comparison to other sales. Again, while we have not 
concluded that the four Dongbu sales in question were overruns, in this 
instance there cannot be any ``overruns'' per se because of the 
limitations of Dongbu's internal classification system. In any case, 
though, the statute does not require that sales be categorized as 
overruns, or any other particular designation, in order to be found as 
outside the ordinary course of trade. Therefore, we examined the last 
three of the critical factors noted above.
    Regarding differences between the four Dongbu sales in question and 
Dongbu's other sales with respect to physical characteristics, product 
uses, or production costs, Dongbu has clearly indicated that it was an 
unpopular paint color that distinguished these sales from other sales 
of painted corrosion-resistant merchandise. Paint color is obviously a 
physical characteristic, though not one acknowledged in the 
Department's model matching hierarchy. Furthermore, if the color were 
so unpopular that Dongbu had to price the merchandise at extremely low 
prices in order to find buyers, it is reasonable to presume that the 
buyer intended to use the product in a way that differed from that of 
the vast majority of customers who were not interested in that color. 
Furthermore, in regard to price and profit differentials, the prices of 
the four sales were: (1) Well below those of other home market prime 
sales of the CONNUMs in question; (2) comparable to prices of Dongbu's 
non-prime merchandise, which by definition possessed some type of 
physical imperfections; and (3) well below even the cost of Dongbu's 
hot-rolled steel inputs, which, to be transformed into the painted 
corrosion-resistant merchandise had to undergo various costly 
processes, including cold-rolling, coating with metal, and painting 
(which are the most important product characteristics in the 
Department's model matching hierarchy for corrosion-resistant carbon 
steel flat products). Consequently, consistent with the detailed 
analysis in the Dongbu Prelim. Analysis Memo at 9-10, very large price 
and profit differentials exist between the sales in question and other 
prime sales of the CONNUMs in question. Finally, the quantity of sales 
and number of customers in question constitute a small fraction of the 
corresponding totals for Dongbu's sales as a whole. Regarding the four 
Dongbu sales in question, the unpopularity of the paint color is itself 
an indication of how such merchandise, even at rock-bottom prices, 
could only attract limited customers.
    In conclusion, the fours sales in question were sufficiently 
unusual, according to the standards indicated above, to be 
characterized as outside the ordinary course of trade. Consequently, 
the Department has continued to exclude them from its analysis.

Comment 9: Dongbu Express Home Market Freight Expense

    Dongbu reported the amount it is charged by its affiliate, Dongbu 
Express Co., Ltd. (``Dongbu Express''), as home market freight expense. 
Petitioners point out that this amount includes not only the 
unaffiliated trucking companies' charge to Dongbu Express, but also a 
markup of Dongbu Express' estimated overhead and profit. Petitioners 
point out that the Department made an adjustment for such a markup in 
the previous administrative review by deducting the markup from 
Dongbu's reported home market freight expense. Petitioners point out 
that the Department did not make such an adjustment in this 
administrative review when calculating its preliminary results. 
Petitioners assert that the Department should make an adjustment in its 
final determination in order to be consistent with the prior review. 
Petitioners suggest that the Department divide Dongbu's reported home 
market freight expense by one plus a factor reflecting the markup.
    Dongbu argues that the Department was correct not to adjust 
Dongbu's inland freight cost for the markup of Dongbu Express. While 
Dongbu recognizes the Department made adjustments in the third 
administrative review, Dongbu states that the circumstances in the 
third review do not exist in the fourth review. Dongbu points out that 
in the third review, the Department was concerned that similar mark-ups 
for services on export sales were excluded from the analysis. Dongbu 
argues that the Department has determined in this fourth review that 
all relevant mark-ups were included. Dongbu also points out that the 
Department made no such adjustment for the first or second 
administrative reviews. Dongbu notes that in those reviews, Dongbu 
Express worked only for Dongbu. Because Dongbu could not show 
transactions with unaffiliated customers, Dongbu compared Dongbu 
Express' mark-up for export sales to those for domestic sales to show 
the affiliated party transactions were at arm's length. In the third 
review, Dongbu was able to provide evidence, along with the mark-up 
data, that Dongbu and unaffiliated customers pay the same price to 
Dongbu Express. However, Dongbu felt that the focus remained 
``inexplicably'' on the mark-up.
    In the fourth review, Dongbu asserts that it has again presented 
evidence that it pays Dongbu Express the same price for freight as 
unaffiliated companies. Dongbu's November 14, 1997 Response at 27 and 
Attachment B-9. Dongbu notes that a preferred method of the Department 
in testing the arms-length nature of transactions is comparing prices 
charged to affiliated and unaffiliated parties. While Dongbu feels the 
relevance of the mark-up is moot, Dongbu nevertheless argues that the 
mark-up data affirms an arms-length transaction, as the mark-up on 
export transactions is higher than the mark-up for domestic 
transactions. Dongbu's March 9, 1998 Supplemental Response at 
Attachment B-30. Dongbu also argues that all similar mark-ups have been 
included in the deductions to CEP. For these reasons, Dongbu argues 
that the Department properly deducted the total freight cost reported 
by Dongbu for home market and export sales.
    Department's Position: While it is true that Dongbu Express is 
affiliated with Dongbu, the reported Korean inland freight expenses for 
both home market and U.S. sales include the Dongbu Express markups. In 
response to a Department request for additional information, Dongbu 
provided markup data in its March 9, 1998, supplemental questionnaire 
response. That information suggests that the markups for export sales 
were not significantly lower than those for domestic sales, and that on 
a percentage basis they were higher for export sales than for domestic 
sales. To the extent, if any, that Dongbu Express' markups were not at 
arm's-length, it appears that the magnitude of the markups were 
comparable for both home market and U.S. sales. Consequently, it does 
not appear that the magnitude of the markups has a systematically 
biased effect on the results, and we have not adjusted our calculations 
of the home market freight expenses.

Comment 10: Inventory Carrying Costs

    Petitioners argue that the Department inadvertently set its margin 
program to read inventory carrying costs as zero, which resulted in a 
program failure to deduct inventory carrying costs from the calculation 
of net U.S. price. Dongbu argues that the costs at issue arise from 
holding the merchandise between production in Korea and shipment to the 
U.S., and from when the merchandise was on the water. Dongbu states 
that it reported these expenses as

[[Page 12943]]

inventory carrying costs incurred in the country of exportation, as 
required by the Department.
    Department's Position: We agree with the respondent that the 
inventory carrying costs in question relate to time prior to entry into 
the United States, and are not to be deducted from the CEP starting 
price. However, as noted elsewhere in this notice, the period in 
question (e.g., between shipment from Korea and entry into the United 
States) is treated as part of the period in which imputed credit costs 
are incurred. As stated at 19 CFR 351.402(b), the Department ``will not 
make an adjustment for any expense that is related solely to the sale 
to an affiliated importer in the United States.''

Comment 11: U.S. Indirect Selling Expenses

    Petitioners argue that the Department incorrectly applied an 
adjustment designed to revise the reported indirect selling expenses 
for U.S. sales incurred in the United States (variable ``INDIRSU'') to 
the reported indirect selling expenses for U.S. sales incurred in 
Korea. Petitioners also argue that the allocation used to determine the 
amount of U.S. indirect selling expenses does not appear to be derived 
from any specific source, and petitioners propose a corrected revised 
ratio based on their August 7, 1998 submission at 22. Petitioners also 
argue that the denominator of the correction factor used by the 
Department in its preliminary results is not consistent with the data 
that were reported in the Dongbu's U.S. sales database; petitioners 
cite the factor that was actually used by respondent for the reported 
INDIRSU, and state that the Department should incorporate this factor 
as part of the basis for the recalculation of INDIRSU.
    Dongbu agrees with the petitioners that the Department did not 
apply the adjustment to INDIRSU, but, rather, to indirect selling 
expenses incurred in Korea. Dongbu states that the latter expenses are 
incurred by Dongbu in selling to its subsidiary and should not be 
deducted from the U.S. starting price, as such expenses are not related 
to the economic activity in the United States (see Antifriction 
Bearings (Other Than Tapered Roll Bearings) and Parts Thereof from 
France, Germany, Italy, Japan, Singapore and the United Kingdom; Final 
Results of Antidumping Duty Administrative Reviews, 62 FR 54043, 54054 
(October 17, 1997)). Dongbu also agrees with petitioner that the 
denominator of the correction factor used by the Department in its 
preliminary results was not consistent with the data that were reported 
in its U.S. sales database, and Dongbu agrees with petitioners on the 
actual correct factor.
    In any case, though, Dongbu states that no adjustment to INDIRSU 
should have been made. Dongbu notes that the Department decided an 
adjustment was required because it believed certain expenses, such as 
freight, should be deducted from the denominator used to derive the 
portion of common expenses to be allocated to subject merchandise. 
Dongbu argues that these expenses, such as the salaries of people 
arranging freight, are included in the common expense salaries, and 
that the fact that these expenses related in large part to products 
other than flat-rolled does not take away from the fact that the common 
expenses related to these categories.
    Furthermore, Dongbu argues that petitioners' proposed change to the 
allocation ratio used to determine the total amount of U.S. indirect 
selling expenses reflects petitioners' desire to calculate the indirect 
selling expense ratio solely on the basis of sales value. Dongbu argues 
that using a straight sales value approach, which would assign expenses 
solely on the basis of price, is not indicative of the efforts made by 
Dongbu USA for the merchandise in question, and that the Department has 
recognized that when it is necessary to split common expenses among 
products that the allocation key should be in relation to the expenses 
being allocated (see Pipe from Korea, 63 FR at 32846-47.
    In rebuttal, petitioners argue that Dongbu has shown no correlation 
between direct expenses and indirect expenses such that direct expenses 
incurred should serve as an allocation methodology for common indirect 
selling expenses related to all products. Petitioners also argue that, 
were there such a correlation, such expenses would not be indirect 
selling expenses as they could be assigned to products based on a 
direct identification methodology. Petitioners also argue that Dongbu's 
assertion that the common expenses being allocated by the derived ratio 
relate in part to these direct expenses is unsupported. Petitioners 
argue that Dongbu USA's financial statements do not provide any 
description about the majority of the common indirect selling expenses 
at issue.
    Department's Position: We agree with both petitioners and 
respondent that the incorrect denominator was used for the adjustment 
factor developed by the Department for its preliminary results and that 
the Department applied the adjustment factor to the wrong variable in 
its preliminary results. We agree with Dongbu that we should not have 
deducted indirect expenses incurred in Korea from U.S. starting price. 
We have corrected our programming accordingly.
    Regarding the calculation of the numerator of the adjustment 
factor, the Department presented its methodology in the Dongbu Prelim. 
Analysis Memo at 3 and in the two pages of the ``Worksheet for DONGBU 
USA Indirect Selling Expense Ratio'' attachment to that memorandum. The 
Department used Dongbu's basic methodological approach, as outlined in 
Exhibit C-37 of its May 18, 1998 submission, which accounted for 
portions of total expenses it characterized as indirect selling 
expenses that could be assigned to flat-rolled steel (including subject 
merchandise), those that could be assigned to other products, and those 
which were common to all products. We disagree with petitioners' 
assertion that an ability to attribute certain expenses to a type of 
product implies that such expenses must be direct, rather than 
indirect, expenses; for example, the salary of a secretary devoted only 
to work pertaining to subject merchandise could be attributed to 
subject merchandise, but would not under normal circumstances be 
categorized as a direct expense. However, as discussed below, the 
Department excluded certain expenses (``freight-out,'' ``warehousing,'' 
``packing,'' and ``insurance (Transportation)'') from the calculations 
of flat-rolled indirect expenses and of other product indirect 
expenses. Those expenses are typically categorized by the Department as 
other than indirect selling expenses, and it is not clear from the 
record the extent to which a portion of those costs cited by Dongbu 
reflect expenses that could be categorized as indirect selling expenses 
(e.g., salaries of those arranging for freight). As a result, the 
Department derived a different factor than Dongbu to use as the basis 
for allocating a portion of total common expenses to flat-rolled 
products.
    Dongbu did not demonstrate that there are expenses associated with 
the excluded categories, such as for salaries of personnel arranging 
freight, in the common expenses. Dongbu had not reported INDIRSU in its 
November 14, 1997 questionnaire response, and in response to the 
Department's supplemental follow-up question regarding indirect selling 
expenses, Dongbu indicated that it provided worksheets for the 
additional expenses, but did not elaborate on the content of those 
worksheets (see page A-7 of Dongbu's May 18, 1998 submission). The 
worksheets did not indicate any

[[Page 12944]]

common expenses associated with the expenses in question (e.g., 
freight-out, etc.), and Dongbu did not demonstrate that there is any 
correlation between the direct expenses in question and common indirect 
selling expenses related to all products. Consequently, we are 
continuing to exclude those expenses not appropriately characterized as 
indirect expenses from the calculations, and thus have continued to use 
the numerator of the adjustment factor that we calculated in our 
preliminary results.

Comment 12: Depreciation

    Union argues that the Department should accept Union's reported 
depreciation expenses based on net asset value (original acquisition 
cost less accumulated depreciation), as this is in accordance with 
Korean GAAP. Regarding the method of depreciation, Union argues that 
the Department retroactively applied the straight-line method to the 
original acquisition cost less salvage value, which resulted in a 
distortion of the depreciation expense for the current POR. Union 
further explains that the Department's present application of the 
straight-line method is distortive in that the Department double-counts 
a portion of the previously recognized depreciation. Union asserts that 
unlike Final Determination of Sales at Less than Fair Value: Dynamic 
Random Access Memory Semiconductors of One Megabit and Above from the 
Republic of Korea, 58 FR 15467, 15470 (March 23, 1993) (``DRAMs from 
Korea''), the Department in this proceeding captured a higher 
depreciation expense in the first and second reviews resulting from 
Union's use of double-declining balance method in those two reviews. 
For this reason, Union argues, the Department should accept Union's 
reported depreciation expense with net asset value (original 
acquisition cost less accumulated depreciation to date) as a 
depreciable base. By accepting Union's reported depreciation expense, 
the Department avoids double-counting and only accounts for 
depreciation that has not been formerly recognized in previous reviews.
    Second, Union asserts that the only plausible reason for the 
Department to reject Union's reported depreciation costs is the 
nonconformance of Union's treatment of depreciation to U.S. GAAP. Union 
disputes the Department's possible stand on this issue by claiming that 
the determining factor for acceptance of a cost accounting methodology 
is whether the methodology is in accordance with local GAAP, even if 
the local GAAP proves to be at times contradictory to the U.S. GAAP.
    Finally, Union asserts that the Department's treatment of Union's 
depreciation is also not in accordance with U.S. GAAP, as it creates 
inconsistency between the balance sheet and income statement. In 
applying a straight-line methodology to Union's asset values, the 
Department increased Union's assets without a simultaneous adjustment 
to Union's income statement. Therefore, in order to maintain 
consistency with the balance sheet and income statement under the 
present approach, the Department should perform an upward adjustment to 
Union's stated income (an adjustment equal to the sum effects of the 
restatements of depreciation from double-declining balance to straight-
line depreciation).
    Petitioners assert that the Department should sustain its 
preliminary determination on this issue of depreciation in the final 
results, as the Department properly adjusted Union's reported 
depreciation expenses in those preliminary results. Petitioners state 
that the Department's adjustments in the preliminary results were made 
in a way consistent with its adjustments in Korean Flat-Rolled 3rd 
Reviews Final. Petitioners note that in the third reviews, the 
Department rejected Union's methodology because of its distortive 
effect on the margin analysis. See Korean Flat-Rolled 3rd Reviews 
Final, 63 FR at 13191. Petitioners allude to ``Use and Measurement of 
Costs Under U.S. Antidumping Law,'' International Trade Resources, 24 
(1995), by Christian Marsh and John Miller in support of their position 
that the Department relies on U.S. GAAP when evaluating exporter's 
reported costs to determine whether these costs truly reflect costs 
associated with the production and sale of the merchandise. Petitioners 
further argue that the Department should reject Union's application of 
the straight-line methodology on its face, as this accounting 
methodology uses the net value of the asset rather than the original 
acquisition cost as the depreciable base, resulting in an inconsistency 
with U.S. GAAP.
    Petitioners cite the similar fact pattern in DRAMs from Korea as a 
basis for rejecting Union's claimed depreciation expenses. Petitioners 
state that the Department's method does not count depreciation expenses 
reported in previous reviews in the present review but, rather, it 
accurately measures the current period's depreciation expenses based on 
the original cost of assets and their useful lives.
    Department's Position: We agree with petitioners that Union's 
change in depreciation methods from double-declining to straight-line 
understates overhead and distorts our margin analysis. As in Korean 
Flat-Rolled 3rd Reviews Final and in the preliminary results of these 
reviews, we continue to reject Union's use of a straight-line method of 
depreciation using the net asset value as the depreciable base. Union's 
1996 financial statements include a special note referring to the shift 
to straight-line depreciation, indicating that it constitutes an 
explicit change to Union's depreciation methodology rather than a 
development of its pre-existing depreciation methodology. See Exhibit 
A-11 of Union's October 8, 1997 Section A response at 16. Even if a 
change in depreciation methodology is consistent with local accounting 
standards, the Department may reject the change due to its distorting 
effect in our margin analysis. In regard to Union's argument that an 
offset be made to the Union income statement, see Comment 14, below.

Comment 13: Restatement of the Useful Lives of Certain Assets

    Union argues that the Department should accept the longer useful 
lives of its certain assets for the calculation of depreciation 
expense, as such a change is in accordance with the Korean GAAP and the 
company's actual financial structure. Union claims that by not 
recognizing the longer useful lives of assets, the Department uses a 
``front-loaded'' depreciation calculation methodology in which the 
Department attributes a higher depreciation expense to the current POR 
rather than attributing those very depreciation expenses to later years 
when Union actually incurs them. Union argues that Department's non-
recognition of Union's extended useful lives of its assets leads to a 
distortion as the Department deviates from the use of respondent's 
financial statements and rather establishes a methodology applicable 
only for purposes of the antidumping order.
    Petitioners argue that the Department properly rejected Union's 
estimates of the useful lives of assets. According to the petitioners, 
respondents failed to justify the change in the useful lives of assets 
other than to state that the change in question is in accordance with 
the relevant provisions of the Korean Corporate Tax Law. Petitioners 
noted similar cases in which the Department found this justification 
meager in nature (see, e.g., 64K Dynamic Random Access Memory 
Components (64K DRAM's)

[[Page 12945]]

from Japan: Final Determination of Sales at Less Than Fair Value, 51 FR 
15943, 15944 (April 29, 1986)); and, Erasable Programmable Read Only 
Memories (EPROMs) from Japan; Final Determination of Sales at Less than 
Fair Value, 51 FR 39680, 39684-86 (Oct. 30, 1986)). Finally, 
petitioners argue that the number of years for which assets are 
depreciated under specific tax purposes may not accurately reflect the 
actual useful lives of the assets in question.
    Department's Position: We agree with petitioners. We decline 
Union's revised useful lives of its assets in the absence of sufficient 
justification for the extension in the useful lives of Union's assets 
other than that the change in the useful lives of assets is in 
accordance with the Korean tax laws. The Department considers Union's 
original useful lives of its assets to be the proper estimation of 
Union's useful lives of its assets and therefore continues to calculate 
Union's depreciation costs on the basis of Union's original useful 
lives of assets.

Comment 14: G&A and Financing Expenses Reflecting Depreciation 
Adjustment

    Union argues that if the Department intends to use its current 
depreciation methodology in its final margin calculations, then the 
Department should make a corresponding reduction to the G&A and 
financing expense ratios to reflect the greater COM that results from 
the increased depreciation expense. In doing so, the Department should 
change the G&A and financial expense ratios calculated from the 
financial statements by increasing the COM denominator by the 
percentage increase in the unit COMs. Petitioners did not comment on 
this issue.
    Department's Position: We agree with respondents that an adjustment 
to the COM value used to calculate G&A and interest expenses is 
required for consistency with the depreciation methodology followed by 
the Department in its preliminary results. G&A and interest expenses 
are calculated by multiplying COM by distinct G&A and interest expense 
factors. Those factors, in turn, are based on the expenses in question 
(G&A or interest) divided by cost of goods sold (``COGS''). For Union 
for the final results of these reviews, we have implemented Union's 
suggestion by using the unrevised Union COM values as the basis for 
calculation of G&A and interest expenses. Alternatively, we could have 
used the adjusted COM values (reflecting the recalculation of 
depreciation) and attempted a corresponding upward adjustment to the 
COGS denominator of the factors, but the effects of such adjustments 
would be offsetting. The Department's methodology is simpler, and the 
effects are comparable to those of the more complicated alternative 
approach just described.

Comment 15: Home Market Warehousing Expense

    Union argues that the Department should treat home-market 
warehousing as a movement expense rather than an indirect selling 
expense. In this current review, Union states that it reported 
warehousing expenses in a single field in accordance with the 
Department's questionnaire instructions, rather than in separate fields 
as pre-sale and post-sale warehouse which would have been consistent 
with the first and second reviews. Union asserts that the Department 
should follow its practice in the former review and its intended policy 
as contemplated in the URAA by deducting warehousing expenses from 
home-market price rather than performing a circumstance of sale 
adjustment. See SAA at 827.
    Petitioners also state that the home market warehousing is properly 
treated as a movement expense rather than as an indirect selling 
expense. Petitioners assert that it is the Department's longstanding 
practice to differentiate among expenses related to production, selling 
and movement expenses. Therefore, for the above stated reason, 
warehousing expenses categorized as movement expenses should not be 
included in the total expense denominator of the Department's CEP 
profit calculation.
    Department's Position: Dongbu indicated in its November 14, 1997 
Section B response at 24 that for most home market sales involving 
warehousing, the customers would request that a shipment from the Pusan 
factory be temporarily stored at the warehouse. While for some sales 
the warehousing appears to have been prior to sale, the Department's 
original questionnaire did not distinguish pre-sale from post-sale 
warehousing, and the Department did not subsequently request additional 
information in this regard. We have determined that the warehousing 
expenses in question are best characterized as post-sale movement 
expenses, and have adjusted our programming to reflect this 
determination. Regarding petitioners' arguments pertaining movement 
expense and CEP profit, this issue is addressed elsewhere in this 
notice (see Comment 3).

Comment 16: POSCO Representative Product Group (``RPG'') Costs and Use 
of Facts Available

    While petitioners agree with the Department's preliminary 
conclusion that the POSCO Group's submitted costs should be rejected, 
they argue that the Department incorrectly relied on a non-adverse 
approach to apply facts available in deriving its COM. Petitioners 
argue that, given the POSCO Group's repeated false and misleading 
statements regarding its cost and production records, the Department 
should have applied an adverse inference in its selection of facts 
available. Petitioners claim that the Department should use as total 
adverse facts available the highest rates previously calculated for 
this respondent, 17.70 percent and 14.44 percent ad valorem for 
corrosion-resistant and cold-rolled products, respectively.
    Petitioners assert that the POSCO Group failed to act to the best 
of its ability and, pursuant to Department practice, it is irrelevant 
whether or not the POSCO Group intended to mislead the Department. See 
Elemental Sulphur from Canada: Final Results of Antidumping Duty 
Administrative Review, 62 FR 37958, 37968 (July 15, 1997) (``Sulphur 
from Canada''). In the cited case, the Department made no pronouncement 
on respondent Mobil's intentions while assigning adverse facts 
available for respondent's failure to cooperate to the best of its 
ability. Petitioners claim that the following statements made by the 
POSCO Group were misleading: (1) That its submitted costs reflect 
actual production quantities; (2) that it lacks and does not maintain 
production data necessary to allocate POSCO production quantities to a 
single, specific control number (``CONNUM''); (3) that it may not 
retain detailed production data once production is completed, and (4) 
that its production records do not identify all relevant product 
characteristics and thus do not allow production quantities to be 
assigned to single specific CONNUMs. Petitioners claim that the 
Department's cost verification report provides evidence that these 
POSCO Group statements were inaccurate. Petitioners argue that the 
POSCO Group impeded the Department's ability to conduct this review by 
not disclosing until verification that it generated and maintained 
detailed production records. Petitioners claim that the POSCO Group's 
failure to inform the Department of its detailed production data 
prevented the Department from obtaining the correct weighting factors

[[Page 12946]]

for POSCO's RPG costs, and properly requesting and then verifying 
revised costs based on the correct weighting factors. Petitioners argue 
that the situation in the instant case is analogous to that encountered 
by the Department in Sulphur from Canada and Certain Cut-to-Length 
Carbon Steel Plate from Mexico: Preliminary Results of Antidumping Duty 
Administrative Review, 63 FR 48181, 48182 (September 9, 1998) (``Steel 
Plate from Mexico''). In both of those cases, petitioners note, the 
respondent withheld critical information until verification, which 
prevented the Department from performing adequate testing and 
quantifying the magnitude of any distortion present in the reported 
costs.
    Petitioners argue that the three reasons cited by the Department 
for using a non-adverse approach are all fatally flawed, and not 
supported by substantial evidence. First, petitioners claim that, 
contrary to the Department's conclusion, POSCO's submitted costs have 
never been reconciled to its books and records. Petitioners argue that 
the Department reconciled POSCO's RPG costs, rather than the submitted 
costs, to the company's financial statements. As a result, petitioners 
argue, the submitted costs could be significantly understated because 
of the distortive weight-averaging methodology employed by the POSCO 
Group to report costs. Second, petitioners argue that POSCO's 
methodology results in a systematic overstatement of POSCO's production 
quantities, relative to its affiliates, and thus resulting in an 
understatement of reported costs for the POSCO Group. Petitioners also 
argue that, by assigning the total production quantity of certain RPGs 
to multiple CONNUMs, the POSCO Group's submitted costs are understated 
because the weighting of RPGs within a CONNUM is distorted. Third, 
petitioners argue that the allocation methodology relied upon for facts 
available by the Department (``the matrix'') is demonstrably distorted 
and incorrect. Petitioners note that the allocation methodology of the 
matrix excluded sales to the United States and third countries, and 
thus the sales quantities used in the matrix for weighting did not 
approximate actual production. Finally, petitioners argue, the 
Department must find another source of facts available for POSCO's 
affiliated companies. The costs of manufacturing for these affiliates 
are based in large part on POSCO's costs, which the Department has 
rejected, and the allocation methodology used for the preliminary 
results did not adjust these costs.
    The POSCO Group argues that its submitted cost methodology is 
reasonable and that the Department properly rejected petitioners' 
arguments to use adverse facts available in the preliminary results. 
The POSCO Group asserts that its methodology is neutral, mechanical, 
objective, and reports costs to the greatest level of detail permitted 
by the RPG system, the company's normal cost accounting system. The 
POSCO Group argues that its submitted cost methodology was used and 
verified by the Department, without exception, in all prior 
administrative reviews. The POSCO Group also claims that neither 
petitioners nor the Department have ever raised any question with 
regard to the POSCO Group's weighting methodology in prior reviews. The 
POSCO Group notes that its methodology was necessary since the RPG 
physical characteristics do not correspond exactly to those in the 
Department's questionnaire.
    The POSCO Group claims that it cooperated fully with the Department 
during this review and that adverse facts available is not warranted. 
The POSCO Group argues that its initial submission accurately described 
its reporting methodology and its use of actual production quantities 
to calculate CONNUM-specific costs. The POSCO Group claims that it 
properly informed the Department that its records would not allow it to 
comply with the Department's request to allocate production quantities 
to a single, specific CONNUM. The POSCO Group argues that its statement 
that actual production data do not identify all physical 
characteristics referred to its production records maintained in the 
ordinary course of business (i.e., its mill certificate database). The 
POSCO Group claims that, as the Department verified, it was unable to 
use raw production data in its existing form due to the massive size of 
the database which is in storage on computer tape. The POSCO Group 
asserts that raw production data are only maintained for use in the 
rare instances that a warranty claim is made, and that such data are 
generally not accessed even in those instances. The POSCO Group 
reiterates that it would be practically impossible to use its raw 
production data to identify CONNUM characteristics and calculate 
relevant production quantities. Because of the enormous burden of work 
that would be required to use raw production data, the POSCO Group 
argues, it has answered truthfully that its production records do not 
allow it to assign production quantities to specific CONNUMs.
    The POSCO Group argues that the cases cited by petitioners are 
inapposite and that the respondents in those cases withheld from the 
Department the existence of actual substantive cost data and entire 
cost systems upon which a cost response could be constructed. In this 
case, the POSCO Group claims, the Department properly found that the 
POSCO Group cooperated and acted to the best of its ability in 
supplying information requested by the Department. In the case of 
Sulphur from Canada, the POSCO Group asserts that the respondents 
therein failed to disclose critical facts regarding the existence of an 
entire cost system that could have been used to calculate costs. 
Moreover, the POSCO Group states that the Department concluded that the 
respondents' data ``did not verify,'' while claiming that its own data 
were fully verified. In the case of Steel Plate from Mexico, the POSCO 
Group argues that the respondent failed to provide cost data from its 
normal accounting system, failed to include significant costs for 
various cost centers, and failed to reconcile submitted costs to its 
financial accounting system. The POSCO Group argues that none of these 
deficiencies applies in the instant case. The POSCO Group also notes 
that it, by contrast, included all relevant production costs, 
reconciled its submitted costs to its financial accounting system, and 
the Department was able to fully verify its submitted information. 
Because the facts in the cited cases are so different from those in the 
instant case, the POSCO Group argues that adverse facts available is 
not appropriate.
    In addition, the POSCO Group claims that the matrix prepared before 
the cost verification addressed and resolved the problem of POSCO's 
costs being overstated relative to its affiliates. The POSCO Group 
argues that petitioners' criticisms of the matrix are groundless. The 
POSCO Group asserts that the matrix methodology was designed by the 
petitioners to ensure that each ton of production would only receive a 
weight of one, even though an individual RPG was assigned to multiple 
CONNUMs. The POSCO Group claims that the matrix methodology meets that 
objective and ensures that POSCO is not given undue weight in averaging 
its production costs with those of its affiliates. The POSCO Group 
asserts that the fact that the matrix methodology produces results 
entirely consistent with its submitted methodology confirms that there 
is no distortion arising from any differential in costs among the POSCO 
Group companies. The POSCO Group argues that, in preparing the matrix, 
the use of

[[Page 12947]]

home market sales is more than representative, since the home market 
constitutes more than seventy percent of total company sales. The POSCO 
Group asserts that the submitted matrix provides an accurate analysis 
of the distribution of production quantities relative to CONNUMs. The 
POSCO Group argues that the inclusion of third country sales in the 
matrix would have presented a massive burden on POSCO that the 
Department could not reasonably expect POSCO to bear. The POSCO Group 
also claims that the inclusion of U.S. sales would not have changed the 
results of the matrix in a meaningful way.
    Department's Position: We have reconsidered our position in the 
preliminary results and, in accordance with section 776(b) of the Act, 
we have applied adverse facts available to calculate the POSCO Group's 
COM in these final results. We agree with petitioners that the POSCO 
Group failed to act to the best of its ability by making misleading 
statements and by failing to cooperate fully with the Department during 
this proceeding. The most critical instance of this occurred when the 
POSCO Group, in response to a specific and direct question, did not 
reveal its ability to report production quantities on a CONNUM-specific 
basis. As a result, the Department did not learn until the cost 
verification that POSCO generates and maintains detailed production 
records which identify all relevant product characteristics. 
Furthermore, we agree with petitioners that if the availability of this 
data had been disclosed by the POSCO Group when the Department inquired 
as to its availability, the Department would have had the opportunity 
to request that the POSCO Group provide corrected COP and CV data.
    In reconsidering our position in the preliminary results, we have 
performed a more detailed analysis to measure the potential distortion 
inherent in the POSCO Group's submitted cost methodology. We have now 
concluded that the POSCO Group's reported costs could potentially be 
understated by a substantial amount and the amount of this potential 
understatement cannot be estimated with much precision.
    Section 776(a)(2)(A) of the Act directs the Department to apply 
facts available in instances where the respondent has withheld 
information requested by the Department. In a supplemental 
questionnaire issued by the Department on March 13, 1998, we did not 
restrict our inquiry to POSCO's mill test certificate database, but 
rather stated, ``[e]xplain whether POSCO's production records allow 
production quantities to be assigned to a single specific CONNUM, as 
defined by the Department'' (emphasis added). We also asked, ``[a]re 
POSCO production quantities available at a greater level of detail than 
the level at which costs are maintained in the* * *RPG cost accounting 
systems?'' We then requested that the POSCO Group use such detailed 
production quantities, if available, to recalculate its COP and CV. In 
response to these inquiries, the POSCO Group stated in its May 8, 1998 
submission that ``while a company such as POSCO may have data on 
certain product characteristics during the production process itself, 
once production is completed, all of the detailed data may no longer be 
retained. Finally, not all of the product characteristics required by 
the Department may be identified by using actual production data.'' 
See, cost supplemental response at 10. Also, the POSCO Group stated on 
page 11 of that response that the company ``is unable to report 
production quantities on a CONNUM-specific basis.'' The direct, 
specific responses above indicated that POSCO does not generate, and 
does not have in its possession, any records which would allow it to 
identify production quantities using the Department's selected product 
characteristics (i.e., on a CONNUM-specific basis). At the cost 
verification, however, the POSCO Group revealed that such records are 
actually generated at the time of production and these detailed records 
are retained on computer tape after they are downloaded from POSCO's 
production control computer system. As noted in the Department's cost 
verification report from Bill Jones and Symon Monu to Christian B. 
Marsh, dated August 5, 1998: ``Company officials explained that the 
production database maintains production data at a very detailed level, 
including all of the physical characteristics identified by the 
Department.'' See, cost verification report at 9. When Department 
verifiers inquired as to why such information had not been used to 
report costs, POSCO officials stated that it was not possible to access 
production data for the entire 12-month review period due to capacity 
limits on their computer systems. In its case brief, the POSCO Group 
asserts that the Department verified its inability to use raw 
production data in its existing form, due to the size of the stored 
database. This, however, is an incorrect statement. Because we did not 
learn of the existence of POSCO's detailed production data before 
verification, we were unable to design verification procedures to 
determine whether or not the company was capable of accessing and using 
such data to report costs.
    The detailed production data are of major importance in this case 
because they could have been used to allocate the company's production 
costs, which are maintained at the RPG level, to the CONNUMs that are 
determined using the Department's selected physical characteristics. 
Products recorded within an RPG often have different physical 
characteristics and therefore would be classified under multiple 
CONNUMs. We noted that the average costs of different RPGs within a 
single CONNUM can vary by a substantial amount, and therefore the 
weighting of RPGs can have a material impact on the company's reported 
costs.
    We agree with petitioners' claim that the matrix, or allocation 
methodology relied upon by the Department for the preliminary results, 
is substantially flawed and therefore should not be relied upon for the 
final results. As noted by petitioners, the matrix prepared by the 
POSCO Group did not use worldwide sales quantities to allocate its RPG 
costs to CONNUMs; instead, the POSCO Group used only home market sales 
quantities to prepare the matrix. As a result, sales to the United 
States and third countries were not used in any way to allocate RPG 
costs. While POSCO claims that it does not have shipment quantities for 
sales to third countries, and therefore was not able to include such 
sales in preparing the matrix, nonetheless the absence of these sales 
renders the matrix unusable. As noted by POSCO, nearly thirty percent 
of company sales were made outside the home market and the exclusion of 
such sales means that the shipment quantities used in the matrix are 
not a reasonable surrogate for total production quantities.
    We agree with petitioners that the determining factor in our 
assignment of adverse facts available should be the POSCO Group's 
failure to act to the best of its ability. As we stated in Sulphur from 
Canada, 62 FR at 37968, our application of adverse facts available is 
``not based in any manner on any belief in this company's intentions.'' 
The POSCO Group claims that it was referring to the production records 
maintained in the ordinary course of business, such as the mill 
certificate database, when it stated that actual production data did 
not identify all physical characteristics. Such a qualifying statement, 
however, was not present in the POSCO Group's response and, thus, we 
believe it was impossible

[[Page 12948]]

to know or assume that the POSCO Group's response was limited in the 
manner described. As noted, the supplemental cost questions posed by 
the Department did not indicate that we were referring only to the mill 
certificate database and detailed production data are, in fact, 
maintained by the company.
    We disagree, however, with petitioners' assertion that we should 
apply total adverse facts available in calculating the POSCO Group's 
dumping margin. Aside from its misleading statements relating to the 
existence of detailed production records, the POSCO Group appears to 
have been cooperative with the Department throughout the rest of the 
proceeding. We disagree with petitioners' assertion that the Department 
never reconciled POSCO's submitted costs to its books and records. With 
the exception of the weight-averaging problem identified by the 
Department, POSCO's RPG costs reconciled to its books and records. The 
purpose of our reconciliation procedures is to ensure that all costs 
from the company's normal accounting system have been captured in the 
company's reported costs. As outlined in the cost verification report 
and noted in the preliminary results, we performed verification testing 
to satisfy ourselves that this objective was met. The issue at hand 
relates specifically to the weight-averaging of these costs in deriving 
CONNUM-specific costs. Although we agree with petitioners' assertion 
that the POSCO Group's reporting methodology results in an 
overstatement of POSCO's production quantities, relative to its 
affiliates, we do not agree that this necessarily results in a 
systematic understatement of costs. This would only be the case if, for 
each CONNUM, POSCO's costs were lower than its affiliates' costs, and 
we found that this is not true in every instance. Moreover, the POSCO 
Group is correct in that the submitted allocation methodology had been 
used by the POSCO Group and accepted by the Department in previous 
reviews. For the above reasons, we have concluded that adverse facts 
available should be used, but total adverse facts available is not 
warranted.
    To apply adverse facts available to the weight-averaging problem, 
we calculated adjustments to the COM for CONNUMs for which we have 
detailed RPG data, and then applied those adjustment factors to the 
COMs for the rest of the CONNUMs in the COP and CV databases. For the 
CONNUMs for which we have detailed RPG detail, although we do not know 
POSCO's third country sales quantities, the company's POR home market 
and U.S. sales quantities are on the record. The combined sales of each 
CONNUM to the home market and the United States during the POR 
represents the minimum quantity produced by POSCO of that CONNUM. We 
assigned the most costly RPGs to the weighted-average cost calculation 
of each CONNUM to the extent of home market and U.S. sales quantities. 
We then re-weighted POSCO's costs with the other producers using 
POSCO's home market and U.S. sales quantity. The resulting adjusted 
COMs for those CONNUMs, compared to the reported COMs for them, result 
in adjustment factors that we applied to the COMs for the remaining 
CONNUMs in the COP and CV databases. See the March 8, 1999, Final Cost 
Calculation Memorandum from William Jones to Neal Halper.

Comment 17: Major Input Rule

    Petitioners argue that the Department inappropriately failed to 
apply the major input rule (section 772(f)(3) of the Act) to 
transactions between POSCO and its affiliated parties. Petitioners 
state that the Department, in its antidumping duty questionnaire, asked 
POSCO to provide information on transfer price, cost of production, and 
fair value for major inputs transferred between affiliated parties. 
Petitioners note that two of POSCO's affiliates, POCOS and PSI, 
purchased major inputs from POSCO during the review period, and thus 
the major input rule must be applied to these transfers. Petitioners 
also argue that, since the POSCO Group failed to provide the requested 
information, the Department should use facts available to value 
transfers between POSCO and its affiliates.
    The POSCO Group argues that, in this and the two prior reviews, the 
Department has already rejected petitioners' arguments to apply the 
major input rule. See, e.g., Korean Flat-Rolled 3rd Reviews Final. The 
POSCO Group states that the Department has ``collapsed'' POSCO, POCOS, 
and PSI into a single entity for the third successive review, 
indicating that it is now well-settled Department practice to not apply 
the major input rule to transactions within a single collapsed entity. 
The POSCO Group argues that, in such circumstances, it is consistent 
with the statute to not apply the major input rule because the statute 
requires application of the rule only to transactions between persons.
    Department's Position: We agree with the POSCO Group. It is now 
well-settled Department practice not to apply section 773(f) to 
transfers within a collapsed entity. Rather, because we are treating 
POSCO and its affiliated producers as a single producer for purposes of 
the antidumping analysis, we find it appropriate to value the substrate 
inputs at issue according to POSCO Group-wide weighted-average costs, 
just as we attribute all POSCO Group home market and U.S. sales to the 
entity as a whole. As the Department stated in the third reviews, ``the 
decision to treat affiliated parties as a single entity necessitates 
that transactions among the parties also be valued based on the group 
as a whole and, as such, among collapsed entities the fair-value and 
major-input provisions are not controlling.'' Korean Flat-Rolled 3rd 
Reviews Final, 63 FR at 13185. See also Stainless Steel Wire Rod from 
Korea; Final Determination of Sales at Less Than Fair Value, 63 FR 
40408, 40419-21 (July 29, 1998). The POSCO Group did not provide the 
data related to the major input issue in response to the Department's 
original generic questionnaire, and the Department did not request that 
information in its supplemental questionnaires, consistent with the 
Department's determination in Korean Flat-Rolled 3rd Reviews Final that 
such information was not needed. The CIT recently affirmed this 
practice, holding that ``Commerce reasonably determined that it should 
act consistently with its collapsing determination and not apply 
inconsistent solitary provisions, thereby arbitrarily increasing 
respondents' liability.'' AK Steel Corp. et al. v. United States, Slip 
Op. 98-159 (Ct. Int'l Trade Nov. 23, 1998), at 28.

Comment 18: Arm's Length Nature of Post-Sale Warehousing

    The POSCO Group argues that the Department erred in reducing 
POSCO's post-sale warehousing expenses for certain home market sales. 
The POSCO Group states that the Department incorrectly concluded that 
the rental payments made to an affiliated party for use of a warehouse 
owned by that party were not at arm's length. The POSCO Group argues 
that it did provide specific evidence that said rental payments were at 
arm's length.
    Petitioners argue that the Department appropriately reduced the 
POSCO Group's reported post-sale warehousing expense, as the POSCO 
Group never provided the underlying studies upon which its claim was 
based. Therefore, the Department had no choice but to adjust the 
submitted expense.
    Department Position: We agree with petitioners that the POSCO Group 
did not establish that the payments in question were at arm's length. 
In its July 31, 1998 supplemental questionnaire

[[Page 12949]]

response, the POSCO Group stated that in establishing charges for the 
facility, the owner considered such factors as rental rates charged at 
similar facilities (as identified from government studies); however, 
the POSCO Group did not provide the information from those government 
studies. The POSCO Group also stated in that response that Exhibit S-11 
contains internal documentation identifying the factors used to 
establish the rental rates for the facility, documentation supporting 
the relevant criteria considered, and the relevant pages of the written 
rental contract between POSCO and the affiliated party in question. 
However, it is not clear how the information in the exhibit relates to 
the establishment of arm's-length prices or what the relevant criteria 
are; furthermore, the POSCO Group failed to provide translations for 
large portions of the submitted contract. As a consequence, we sustain 
our preliminary determination that the POSCO Group has failed to 
adequately support its claim that the warehousing payments in question 
were at arm's length.

Comment 19: Adjustments to Costs for Coating Weight and Quality

    The POSCO Group argues that the Department erred in adjusting its 
reported costs to account for differences in product coating weight and 
substrate quality. The POSCO Group claims that, consistent with its 
normal cost accounting system, POSCO submitted costs that reflect the 
average costs for products with different coating weights. Similarly, 
the POSCO Group states, POCOS submitted costs that reflect the average 
costs for products with different substrate qualitites, consistent with 
its normal accounting records. The POSCO Group argues that the 
Department should accept the averaging of coating weight and substrate 
quality costs since general and administrative costs are applied as an 
average and the labor and overhead costs for POCOS and PSI are 
calculated as an average, and these methodologies are accepted by the 
Department. The POSCO Group argues that the Department inappropriately 
applied facts available simply because POSCO and POCOS do not maintain 
records that account for the specific differences in coating weight and 
substrate quality, respectively. The POSCO Group cites a previous case 
in which the Department declined to penalize a company for failing to 
maintain its accounting records in a particular manner. See Certain 
Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-
Length Carbon Steel Plate from Canada; Final Results of Antidumping 
Duty Administrative Reviews, 61 FR 13815, 13820 (March 28, 1996). In 
the cited case, the Department allowed the respondent to report costs 
for one production location as a proxy for costs at a different 
location. The POSCO Group argues that the same factors which led the 
Department to accept that respondent's costs, including that 
respondent's verified inability to determine specific costs, are 
present in the instant case. The POSCO Group argues that the Department 
has previously adjusted a respondent's submitted costs, based on its 
normal accounting practices, only where the Department has determined 
that such normal practices resulted in an unreasonable allocation of 
production costs. See DRAMs from Korea at 15472.
    Petitioners argue that the Department properly adjusted the POSCO 
Group's submitted costs to account for differences in coating weight 
and substrate quality. Petitioners state that the POSCO Group's 
arguments regarding this issue are essentially identical to those 
raised in prior reviews. See Korean Flat-Rolled 3rd Reviews Final, 63 
FR at 13201. Petitioners argue that, as in the prior reviews, the 
Department should reject the POSCO Group's claims and adjust the 
submitted costs to account for cost differences associated with these 
physical characteristics.
    Department's Position: We agree with petitioners. It is appropriate 
for the Department to account for significant cost differences 
associated with differences in physical characteristics. The coating 
weight and quality characteristics are relatively high in the 
Department's model-matching hierarchy, and the POSCO Group companies 
distinguish these characteristics in their selling practices. Although 
the POSCO Group suggested an alternative methodology at verification, 
its submitted costs did not reflect the differences associated with 
these two characteristics. The adjustments made by the Department for 
coating weight and quality reflect a methodology comparable to that 
used in the final results of the second and third administrative 
reviews. Furthermore, regardless of the POSCO Group's characterization 
of this adjustment as adverse facts available, we have simply adjusted 
the POSCO Group's reported costs to more accurately reflect the costs 
of producing the products. As in the previous two reviews, the 
Department has relied upon the respondent's normal accounting systems, 
except to the extent that doing so would result in an unreasonable 
allocation of production costs and a possible distortion of the dumping 
margin. The non-adverse nature of these adjustments is demonstrated by 
the fact that the methodology results in a decrease in the costs of 
some products, while increasing the costs of other products. 
Furthermore, the use of POCOS data to adjust the costs of POSCO 
production for coating weight, and the use of POSCO data to adjust the 
costs of POCOS production for quality, is reasonable because they are 
sister companies within the same collapsed group.
    We note that we have made a slight adjustment to our recalculations 
of these adjustments to reflect the fact that we are no longer using 
the matrix utilized to adjust POSCO costs. See the March 8, 1999, Final 
Cost Calculation Memorandum from William Jones to Neal Halper.

Comment 20: Startup Adjustment

    The POSCO Group claims that the Department erroneously failed to 
grant, or even to consider, its requested startup adjustment because 
the Department claimed its effect was insignificant. The POSCO Group 
argues that the Department should address the merits of its startup 
adjustment claim and should grant its request. The POSCO Group argues 
that record evidence supports its assertion that it has satisfied the 
requirements for a startup adjustment, as defined in section 
773(f)(1)(C)(ii) of the Act. Specifically, the POSCO Group claims that 
abnormally high production costs were incurred at a new facility during 
the review period due to startup operations, and that these higher 
costs resulted from production levels that were limited by technical 
factors associated with the initial phase of commercial production. The 
POSCO Group claims that establishing its new production line required 
substantial effort and investment, and that the new line was still in 
the startup phase from July through October 1996. The POSCO Group 
asserts that the new production line enabled it to produce merchandise 
in new dimensions, and alluded to the Department's alleged awareness of 
width as one of the most important characteristics of flat-rolled steel 
products. During this initial phase, the POSCO Group argues that it was 
necessary to carefully monitor and analyze the output from its new line 
to ensure that quality standards were met, before increasing to 
commercial production levels. The POSCO Group notes that it limited 
production well below the line's normal capacity during the startup 
period to permit such monitoring and to allow calibration of

[[Page 12950]]

the new equipment to avoid output variations. According to the POSCO 
Group, this limiting of production levels reflects the impact of 
technical factors as defined in the Act. The POSCO Group claims that 
record evidence also demonstrates that the new line's production levels 
were not limited by any factors other than startup, since demand for 
its products was strong, no chronic production difficulties were 
experienced, and operating performance on the new line improved 
steadily throughout and subsequent to the startup period. Finally, the 
POSCO Group argues that the effect of its requested startup adjustment 
was not ``insignificant,'' as characterized by the Department in its 
preliminary results. The POSCO Group argues that the Department's 
regulations define an insignificant adjustment as, ``any individual 
adjustment having an ad valorem effect of less than 0.33 percent* * *of 
the export price, constructed export price, or normal value, as the 
case may be.'' See 19 CFR 351.413. Therefore, the POSCO Group claims, 
the Department erred when it measured the startup adjustment's impact 
on the overall dumping margin. The POSCO Group points out that the 
Department's cost verification report indicates that the startup 
adjustment would reduce submitted normal values by more than 0.33 
percent. The POSCO Group further notes that the Department allowed 
adjustments in this instant case with an even smaller impact than the 
requested startup adjustment.
    Petitioners argue that the Department properly rejected the POSCO 
Group's startup adjustment claim in its preliminary results. 
Petitioners assert that the startup adjustment claim should continue to 
be rejected because the Department rejected the POSCO Group's startup 
adjustment claim in the prior review for the very same production line, 
finding that the startup adjustment requirements had not been met, and 
because the POSCO Group has not submitted any new evidence to support 
its claim in the instant review. Petitioners further argue that the 
POSCO Group has admitted to beginning commercial production before the 
current review period and that, according to the legislative history, 
the startup period ends when commercial production begins.
    Department's Position: We have conducted an analysis of the POSCO 
Group's startup adjustment claim for the final results. In its 
preliminary results, the Department asserted that the startup claim 
would have an insignificant impact on the dumping margin and, 
therefore, it was not necessary to consider the startup adjustment 
claim. We agree with the POSCO Group that this conclusion was 
inappropriate because, as POSCO notes, our regulations define an 
insignificant adjustment as, ``having an ad valorem effect of less than 
0.33 percent* * *of the export price, constructed export price, or 
normal value, as the case may be.'' See 19 CFR 351.413. Since the 
startup adjustment would, if granted, reduce the COM for certain 
products by more than 0.33 percent, we have considered the 
appropriateness of the POSCO Group's startup adjustment claim.
    We have determined, however, that the statute's requirements for 
granting a startup adjustment have not been met by the POSCO Group, and 
we therefore have not applied the startup adjustment to calculate the 
POSCO Group's COP and CV. In this case, the POSCO Group has claimed 
that the installation of a new production line at one of its two works 
constitutes a new facility at which new products are manufactured, and 
that the claimed startup adjustment should be applied to products 
manufactured on this new line. The POSCO Group also claimed a startup 
adjustment for this same production line in the previous review. As in 
that review, we find that this new line does not produce a ``new 
product,'' and does not constitute a ``new production facility,'' as 
required by the startup adjustment provision. See section 
773(f)(1)(C)(ii)(I) of the Act.
    The line produces merchandise similar to that manufactured on 
numerous other lines by the POSCO Group. Contrary to the POSCO Group's 
claim that the Department is aware that width is one of the most 
important characteristics of flat-rolled steel products, width is not 
among the most important characteristics indicated in the Department's 
product characteristic hierarchy. More importantly, POSCO Group product 
brochures, submitted in Exhibit 8A in its October 10, 1997 Section A 
response, indicate a similar range of widths produced on other lines. 
Furthermore, virtually all of the alleged addition in width range 
provided by the new line falls within a single broader width range 
defined by the Department's product characteristic hierarchy and in 
which most of the overall width range of the lines in question fall. 
Finally, we disagree with the POSCO Group's assertion that the output 
of the line in question constitutes a new product even in the POSCO 
Group's narrow definition of the term, given that the POSCO Group 
already possessed the capability of slitting wider coils to the 
allegedly narrower widths that can be processed on the line in 
question.
    As to a new production line constituting a new facility, the SAA 
sets a high standard for startup adjustment claims when it states that, 
`` `New production facilities' includes the substantially complete 
retooling of an existing plant. Substantially complete retooling 
involves the replacement of nearly all production machinery or the 
equivalent rebuilding of existing machinery.'' SAA at 836 (emphasis 
added). The SAA clearly states, therefore, that the startup adjustment 
should only be applied when substantial modifications have been made to 
an entire production plant. When determining whether substantial 
modifications have been made the Department must consider, along with 
other factors, the extent to which the improvements relate to the total 
production process. In the instant case, the new line is but one of 
many processing steps necessary to produce corrosion-resistant products 
performed by the POSCO Group. We also note that, although the equipment 
in question is large and expensive, its relative size to the other 
production equipment involved in the production of corrosion-resistant 
products at the POSCO Group is small. Therefore, we do not believe that 
the installation of this equipment constitutes the substantial 
retooling of one of the POSCO Group's facilities and, therefore, does 
not meet the standard established in the SAA.
    Regarding the second prong of the startup test (see section 
773(f)(1)(C)(ii)(I) of the Act), we note that POSCO officials did, as 
revealed in the cost verification report, discuss alleged technical 
factors associated with the initial phase of commercial production. 
However, because the POSCO Group did not satisfy the first prong of the 
statutory test, we are precluded from granting the claimed startup 
adjustment.

Final Results of Reviews

    As a result of these reviews, we have determined that the following 
margins exist for the period August 1, 1996 through July 31, 1997:

------------------------------------------------------------------------
                                                              Weighted-
               Producer/manufacturer/exporter                  average
                                                                margin
------------------------------------------------------------------------
             Certain Cold-Rolled Carbon Steel Flat Products
------------------------------------------------------------------------
Dongbu.....................................................      No U.S.
                                                              entries in
                                                                     POR
POSCO......................................................         0.00

[[Page 12951]]

 
Union......................................................      No U.S.
                                                              entries in
                                                                     POR
------------------------------------------------------------------------
         Certain Corrosion-Resistant Carbon Steel Flat Products
------------------------------------------------------------------------
Dongbu.....................................................         1.49
POSCO......................................................         0.16
Union......................................................         0.14
------------------------------------------------------------------------

    The Department shall determine, and the U. S. Customs Service shall 
assess, antidumping duties on all appropriate entries. We have 
calculated an importer-specific duty assessment rate based on the ratio 
of the total amount of antidumping duties calculated for the examined 
sales to the total entered value of the same sales. The rate will be 
assessed uniformly on all entries of that particular company made 
during the POR. The Department will issue appraisement instructions 
directly to the U.S. Customs Service.
    Furthermore, the following deposit requirements shall be effective 
upon publication of this notice of final results of review for all 
shipments of certain cold-rolled and corrosion-resistant carbon steel 
flat products from Korea 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 cash deposit rates for the 
reviewed companies named above will be the rates for those firms as 
stated above, except for POSCO (and its collapsed affiliates) and 
Union, which had de minimis margins, and whose cash deposit rates are 
therefore zero; (2) for previously investigated companies not listed 
above, the cash deposit rate will continue to be the company-specific 
rate published for the most recent period; (3) if the exporter is not a 
firm covered in these reviews, or the original LTFV investigations, 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 
(4) if neither the exporter nor the manufacturer is a firm covered in 
these reviews, the cash deposit rate will continue to be 14.44 percent 
(for certain cold-rolled carbon steel flat products) and 17.70 percent 
(for certain corrosion-resistant carbon steel flat products), which 
were the ``all others'' rates in the LTFV investigations. See Final 
Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled 
Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat 
Products, Certain Corrosion-Resistant Carbon Steel Flat Products, and 
Certain Cut-to-Length Carbon Steel Plate From Korea, 58 FR 37176 (July 
9, 1993), as amended by Amendment of Final Determinations of Sales at 
Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products, 
Certain Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-
Resistant Carbon Steel Flat Products, and Certain Cut-to-Length Carbon 
Steel Plate From Korea, 58 FR 41083 (August 2, 1993).
    Article VIpara. 5 of the GATT (cited earlier) provides that ``[n]o 
product * * * shall be subject to both antidumping and countervailing 
duties to compensate for the same situation of dumping or export 
subsidization.'' This provision is implemented by section 772(d)(1)(D) 
of the Act. Since antidumping duties cannot be assessed on the portion 
of the margin attributable to export subsidies, there is no reason to 
require a cash deposit or bond for that amount. Accordingly, the level 
of export subsidies as determined in Final Affirmative Countervailing 
Duty Determinations and Final Negative Critical Circumstances 
Determinations; Certain Steel Products from Korea, 58 FR 37328, 37350 
(July 9, 1993) will be subtracted from the cash deposit rate for 
deposit purposes.
    The deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
reviews.
    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR 351.402(f) 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 in accordance with section 351.306 of the Department's regulations. 
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.
    These administrative reviews and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: March 8, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-6279 Filed 3-15-99; 8:45 am]
BILLING CODE 3510-DS-P