[Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
[Notices]
[Pages 34194-34204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16243]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-357-811, A-351-830, A-570-854, A-560-807, A-588-849, A-821-810, A-
859-801, A-791-807, A-583-834, A-549-814, A-489-808, A-307-815]


Initiation of Antidumping Duty Investigations: Certain Cold-
Rolled Flat-Rolled Carbon-Quality Steel Products From Argentina, 
Brazil, the People's Republic of China, Indonesia, Japan, the Russian 
Federation, Slovakia, South Africa, Taiwan, Thailand, Turkey, and 
Venezuela

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

EFFECTIVE DATE: June 25, 1999.

FOR FURTHER INFORMATION CONTACT: Rick Johnson (Russian Federation, 
South Africa) at (202) 482-3818; Jim Doyle (People's Republic of China) 
at (202) 482-0159; John Kugelman (Turkey) at (202) 482-0649; Linda 
Ludwig (Brazil, Venezuela), at (202) 482-3833; and Steven Presing or 
Kris Campbell (Argentina, Indonesia, Japan, Thailand, Taiwan, Slovakia) 
at (202) 482-0194 and (202) 482-3813, respectively; Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230.

Initiation of Investigations

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995,

[[Page 34195]]

the effective date of the amendments made to the Tariff Act of 1930 
(``the Act'') by the Uruguay Round Agreements Act (``URAA''). In 
addition, unless otherwise indicated, all citations to the Department's 
regulations are references to the provisions codified at 19 CFR Part 
351 (1998).

The Petitions

    On June 2, 1999, the Department of Commerce (``the Department'') 
received petitions filed in proper form by Bethlehem Steel Corporation, 
Gulf States Steel, Ispat Inland Steel, LTV Steel Company Inc., National 
Steel Corporation,1 Steel Dynamics, U.S. Steel Group (a unit 
of USX Corporation), Weirton Steel Corporation, and United Steelworkers 
of America (collectively ``petitioners''). On June 8, 1999, the 
Independent Steelworkers Union joined as a co-petitioner. The 
Department received supplemental information to the petitions since 
June 2, 1999.
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    \1\ National Steel is not a petitioner in the Japan case.
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    In accordance with section 732(b) of the Act, petitioners allege 
that imports of certain cold-rolled flat-rolled carbon-quality steel 
products (``cold-rolled steel'') from Argentina, Brazil, the People's 
Republic of China (``China''), Indonesia, Japan, the Russian Federation 
(``Russia''), Slovakia, South Africa, Taiwan, Thailand, Turkey, and 
Venezuela are being, or are likely to be, sold in the United States at 
less than fair value within the meaning of section 731 of the Act, and 
that such imports are materially injuring an industry in the United 
States.
    The Department finds that petitioners filed these petitions on 
behalf of the domestic industry because they are interested parties as 
defined in sections 771(9)(C) and (D) of the Act and they have 
demonstrated sufficient industry support with respect to each of the 
antidumping investigations they are requesting the Department to 
initiate (see Determination of Industry Support for the Petitions 
below).

Scope of Investigations

    For purposes of these investigations, the products covered are 
certain cold-rolled (cold-reduced) flat-rolled carbon-quality steel 
products, neither clad, plated, nor coated with metal, but whether or 
not annealed, painted, varnished, or coated with plastics or other non-
metallic substances, both in coils, 0.5 inch wide or wider, (whether or 
not in successively superimposed layers and/or otherwise coiled, such 
as spirally oscillated coils), and also in straight lengths, which, if 
less than 4.75 mm in thickness having a width that is 0.5 inch or 
greater and that measures at least 10 times the thickness; or, if of a 
thickness of 4.75 mm or more, having a width exceeding 150 mm and 
measuring at least twice the thickness. The products described above 
may be rectangular, square, circular or other shape and include 
products of either rectangular or non-rectangular cross-section where 
such cross-section is achieved subsequent to the rolling process (i.e., 
products which have been ``worked after rolling'')--for example, 
products which have been beveled or rounded at the edges.
    Specifically included in this scope are vacuum degassed, fully 
stabilized (commonly referred to as interstitial-free (``IF'')) steels, 
high strength low alloy (``HSLA'') steels, and motor lamination steels. 
IF steels are recognized as low carbon steels with micro-alloying 
levels of elements such as titanium and/or niobium added to stabilize 
carbon and nitrogen elements. HSLA steels are recognized as steels with 
micro-alloying levels of elements such as chromium, copper, niobium, 
titanium, vanadium, and molybdenum. Motor lamination steels contain 
micro-alloying levels of elements such as silicon and aluminum.
    Steel products included in the scope of these investigations, 
regardless of definitions in the Harmonized Tariff Schedules of the 
United States (``HTSUS''), are products in which: (1) Iron 
predominates, by weight, over each of the other contained elements; (2) 
the carbon content is 2 percent or less, by weight, and; (3) none of 
the elements listed below exceeds the quantity, by weight, respectively 
indicated:

1.80 percent of manganese, or
2.25 percent of silicon, or
1.00 percent of copper, or
0.50 percent of aluminum, or
1.25 percent of chromium, or
0.30 percent of cobalt, or
0.40 percent of lead, or
1.25 percent of nickel, or
0.30 percent of tungsten, or
0.10 percent of molybdenum, or
0.10 percent of niobium (also called columbium), or
0.15 percent of vanadium, or
0.15 percent of zirconium.

    All products that meet the written physical description, and in 
which the chemistry quantities do not exceed any one of the noted 
element levels listed above, are within the scope of these 
investigations unless specifically excluded. The following products, by 
way of example, are outside and/or specifically excluded from the scope 
of these investigations:
     SAE grades (formerly also called AISI grades) above 2300;
     Ball bearing steels, as defined in the HTSUS;
     Tool steels, as defined in the HTSUS;
     Silico-manganese steel, as defined in the HTSUS;
     Silicon-electrical steels, as defined in the HTSUS, that 
are grain-oriented;
     Silicon-electrical steels, as defined in the HTSUS, that 
are not grain-oriented and that have a silicon level exceeding 2.25 
percent;
     All products (proprietary or otherwise) based on an alloy 
ASTM specification (sample specifications: ASTM A506, A507).
    The merchandise subject to these investigations is typically 
classified in the HTSUS at subheadings:

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, 7209.18.2510, 
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, 
7211.23.6075, 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, 7225.19.0000, 7225.50.6000, 7225.50.7000, 7225.50.8010, 
7225.50.8015, 7225.50.8085, 7225.99.0090, 7226.19.1000, 7226.19.9000, 
7226.92.5000, 7226.92.7050, 7226.92.8050, and 7226.99.0000.

    Although the HTSUS subheadings are provided for convenience and 
U.S. Customs Service (``U.S. Customs'') purposes, the written 
description of the merchandise under investigation is dispositive.
    During our review of the petition, we discussed the scope with the 
petitioners to ensure that the scope in the petition accurately 
reflects the product for which the domestic industry is seeking relief. 
Moreover, as discussed in the preamble to the Department's regulations 
(62 FR 27323), we are setting aside a period for parties to raise 
issues regarding product coverage. In particular, we seek comments on 
the specific levels of alloying elements set out in the description 
above, the clarity of grades and specifications excluded by example 
from the scope, and the physical and chemical description of the 
product coverage. The Department encourages all parties to submit such 
comments by July 12, 1999. Comments should be

[[Page 34196]]

addressed to Import Administration's Central Records Unit at Room 1870, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230. The period of scope consultations is intended 
to provide the Department with ample opportunity to consider all 
comments and consult with parties prior to the issuance of the 
preliminary determination.

Determination of Industry Support for the Petitions

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) At least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The International Trade Commission (``ITC''), which is 
responsible for determining whether ``the domestic industry'' has been 
injured, must also determine what constitutes a domestic like product 
in order to define the industry. While both the Department and the ITC 
must apply the same statutory definition regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to separate and distinct authority. In addition, the 
Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
like product, such differences do not render the decision of either 
agency contrary to the law.2
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    2 See Algoma Steel Corp. Ltd., v. United States, 688 
F. Supp. 639, 642-44 (CIT 1988); High Information Content Flat Panel 
Displays and Display Glass from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product that is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    The domestic like product referred to in the petitions is the 
single domestic like product defined in the ``Scope of Investigation'' 
section, above. The Department has no basis on the record to find the 
petitioners' definition of the domestic like product to be inaccurate. 
The Department, therefore, has adopted the domestic like product 
definition set forth in the petitions.
    Moreover, the Department has determined that the petitions (and 
subsequent amendments) and supplemental information obtained through 
the Department's research contain adequate evidence of industry 
support; therefore, polling is unnecessary (see Attachment to the 
Initiation Checklist, Re: Industry Support, June 21, 1999). For 
Argentina, Brazil, China, Indonesia, Japan, Russia, Slovakia, South 
Africa, Taiwan, Thailand, Turkey, and Venezuela, petitioners 
established industry support representing over 50 percent of total 
production of the domestic like product. Accordingly, the Department 
determines that these petitions are filed on behalf of the domestic 
industry within the meaning of section 732(b)(1) of the Act.

Export Price and Normal Value

    The following are descriptions of the allegations of sales at less 
than fair value upon which our decision to initiate these 
investigations is based. Petitioners, in determining normal value 
(``NV'') for Argentina, Brazil, Indonesia, Japan, South Africa, Taiwan, 
Thailand, Turkey, and Venezuela, relied upon price data contained in 
confidential market research reports filed with the Department. At the 
Department's request, petitioners arranged for the Department to 
contact the authors of the reports to verify the accuracy of the data, 
the methodology used to collect the data, and the credentials of those 
gathering the market research. The Department's discussions with the 
authors of the market research reports are summarized in Memorandum to 
the File: Re--Foreign Market Research Reports, dated June 21, 1999. For 
a more detailed discussion of the deductions and adjustments relating 
to home market price, U.S. price and factors of production and sources 
of data for each country named in the petition, see Initiation 
Checklist, dated June 21, 1999. Should the need arise to use as facts 
available under section 776 of the Act any of this information in our 
preliminary or final determinations, we may re-examine the information 
and revise the margin calculations, if appropriate.

Argentina

    Petitioners identified Siderar Limited (``Siderar'') as the only 
producer and exporter of cold-rolled steel from Argentina. Petitioners 
based export price (``EP'') on a written price quote from a trading 
company not affiliated with Siderar. While the quote contains various 
products, petitioners chose one example, which falls within the HTSUS 
number (7209.16.00.90) that accounts for 66.57 percent of total imports 
of cold-rolled steel from Argentina during the period March 1998 
through February 1999. Because the terms of the U.S. sale included 
delivery to the United States, petitioners calculated a net U.S. price 
by subtracting estimated costs for international freight, barge 
freight, and unloading and wharfage. In addition, petitioners 
subtracted a U.S. trading company mark-up, based on an industry 
expert's affidavit, and the U.S. customs duty.
    With respect to normal value (``NV''), petitioners obtained gross 
unit prices, contemporaneous with the pricing information used as the 
basis for EP, for the products offered for sale to customers in 
Argentina that are either identical or similar to those sold to the 
United States. The prices used in the calculation of NV were ex-factory 
prices. Therefore, no adjustments for movement were required. The only 
deduction made to the starting price was for credit expense.
    The estimated dumping margin in the petition, based on a comparison 
between Siderar's U.S. prices and NV, is 24.53 percent.
Brazil
    Petitioners identified six Brazilian producers and exporters of 
cold-rolled steel. Based on their information, petitioners concluded 
that Companhia Siderurgica Nacional (``CSN''), Usinas Siderurgicas de 
Minal Gerais (``USIMINAS''), and Companhia Siderurgica Paulista 
(``COSIPA'') are the principal Brazilian producers of subject 
merchandise.3
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    \3\ The Department recently concluded that USIMINAS and COSIPA 
are affiliated and that those producers should be collapsed (see 
Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from 
Brazil, 64 FR 8299, February 19, 1999).
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    Petitioners based EP on two separate methods for both CSN and 
USIMINAS/COSIPA. First, export price was determined based on the import 
average unit value (``AUV'') for the three ten-

[[Page 34197]]

digit categories of the HTSUS accounting for 90 percent of in-scope 
imports from Brazil during the fourth quarter of 1998. Petitioners 
presumed that the customs values used to calculate the AUV for each 
HTSUS category reflect the actual ``transaction value'' of the 
merchandise being shipped by Brazilian mills. Second, export price was 
determined based on Brazilian producers' offers for sale of cold-rolled 
steel in the United States. Petitioners obtained this information from 
industry sources in the United States. Petitioners made deductions from 
each quoted offer price for movement-related charges and expenses, 
particularly international freight, international insurance, and U.S. 
import duties, based on 1998 U.S. import statistics and the 1998 HTSUS 
schedule. No adjustments were made for discounts, rebates, credit 
terms, warranties, foreign inland freight, foreign brokerage and 
handling or U.S. brokerage and handling, as there was insufficient 
information available.
    With respect to NV, petitioners used market research to determine a 
gross unit price for sales in December 1998/January 1999 to customers 
in Brazil of products that are either identical or similar to those 
sold in the United States. The home market price employed was the 
average of the range of Brazilian transaction prices reported by 
petitioners' market research report.
    Petitioners provided information demonstrating reasonable grounds 
to believe or suspect that all of the home market sales of cold-rolled 
steel provided in the petition were made at prices below the cost of 
production (``COP''), within the meaning of section 773(b) of the Act, 
and requested that the Department conduct a country-wide sales below 
cost investigation. Pursuant to section 773(b)(3) of the Act, COP 
consists of the cost of manufacturing (``COM''), selling, general, and 
administrative expenses (``SG&A'') expenses. To calculate COP, 
petitioners relied on their own production experience, adjusted for 
known differences between costs incurred to produce the merchandise in 
the United States and in the foreign market. Based upon the comparison 
of the adjusted prices of the foreign like product in the home market 
to the calculated COP of the product, we find reasonable grounds to 
believe or suspect that sales of the foreign like product were made 
below the COP within the meaning of section 773(b)(2)(A)(i) of the Act. 
Accordingly, the Department is initiating a country-wide cost 
investigation.
    Based on our analysis, all of the home market sales reported in the 
petition were shown to be made at prices below the cost of production. 
Therefore, petitioners based NV on the constructed value (``CV'') of 
the merchandise, pursuant to sections 773(a)(4) and 773(e) of the Act. 
Petitioners compared U.S. sales to the fully-absorbed cost of 
production for the product, calculated using petitioners' manufacturing 
costs, adjusted for known cost differences between the United States 
and Brazil, and non-manufacturing expenses obtained from Brazilian 
producers' financial statements. Pursuant to section 773(e) of the Act, 
CV consists of the COM, SG&A, and profit of the merchandise. To 
calculate COM and SG&A, petitioners followed the same methodology used 
to determine COP. Accordingly, we relied on this methodology after 
adjusting certain cost elements as noted above. Petitioners derived 
profit based on amounts reported in CSN's, USIMINAS' and COSIPA's 1997 
financial statements.
    Based on comparisons of import AUV to adjusted CV, estimated 
margins range from 37.53 to 63.32 percent. Based on comparisons of 
price quotes to adjusted CV, estimated margins range from 31.48 to 
56.66 percent.
China
    Petitioners identified Baoshan Iron & Steel Corporation (``Bao 
Steel'') as a possible exporter of cold-rolled steel from China, and 
stated that Bao Steel is believed to be responsible for the majority 
(65.3 percent) of Chinese exports during the period.
    Petitioners based EP on two models derived from a sales quote for 
subject merchandise from Bao Steel. However, because this sales quote 
was not within the anticipated period of investigation, the Department 
has not considered this quote for the purposes of initiation. 
Nevertheless, on June 11, 1999, petitioners submitted a calculation of 
U.S. price based on average unit values based on U.S. import 
statistics. Petitioners utilized import data from October 1, 1998 
through March 31, 1999, using HTSUS numbers 7209.16.00.90 and 
7209.17.00.90. The AUVs were calculated by dividing the free along side 
values by net tons. Petitioners made no deductions from these 
calculated AUVs.
    Petitioners asserted that China is an NME country to the extent 
that sales or offers for sale of such or similar merchandise in China 
or to third countries do not permit calculation of normal value under 
19 CFR 351.404. Petitioners, therefore, constructed a normal value 
based on the factors of production methodology pursuant to section 
773(c) of the Act. In previous investigations, the Department has 
determined that China is an NME. See, e.g., Heavy Forged Hand Tools, 
Finished or Unfinished, With or Without Handles, From the People's 
Republic of China, 64 FR 5770, 5773 (Feb. 5, 1999). In accordance with 
section 771(18)(C)(i) of the Act, the presumption of NME status remains 
in effect until revoked by the Department. The presumption of NME 
status for China has not been revoked by the Department and, therefore, 
remains in effect for purposes of the initiation of this investigation. 
Accordingly, the normal value of the product is based on factors of 
production valued in a surrogate market economy country in accordance 
with section 773(c) of the Act. In the course of this investigation, 
all parties will have the opportunity to provide relevant information 
related to the issues of China's NME status and the granting of 
separate rates to individual exporters. See, e.g., Final Determination 
of Sales at Less Than Fair Value: Silicon Carbide from the PRC, 59 FR 
22585 (May 2, 1994).
    For the normal value calculation, petitioners based the factors of 
production, as defined by section 773(c)(3) of the Act (raw materials, 
labor, and energy), for cold-rolled steel on the quantities of inputs 
used by petitioners. Petitioners asserted that detailed information is 
not available regarding the quantities of inputs used by cold-rolled 
producers in China. Thus, they have assumed, for purposes of the 
petition, that the main producer in China (Bao Steel) uses the same 
inputs in the same quantities as petitioners. Petitioners have used one 
U.S. producer's factors of production through the hot-rolled production 
stage, and another U.S. producer's factors of production for the 
additional processing stages necessary to produce cold-rolled steel. 
Petitioners argued that the use of petitioners' factors is conservative 
because the U.S. steel industry is more efficient than the Russian 
steel industry. Based on the information provided by petitioners, we 
believe that petitioners' use of their own adjusted factors of 
production represents information reasonably available to petitioners 
and is appropriate for purposes of initiation of this investigation.
    Petitioners selected India as the appropriate surrogate country. 
Petitioners stated that every antidumping determination published by 
the Department within the last twelve months involving Chinese products 
has utilized India as the surrogate country. Petitioners further cite 
to Certain Preserved Mushrooms from the PRC, 63 FR 72255 (December 31, 
1998), where the Department

[[Page 34198]]

determined that India is at a comparable level of development with 
China. Petitioners maintain that India is the most suitable surrogate 
among the potential surrogates, because: (1) It is at a comparable 
stage of economic development; (2) of the five most suitable countries, 
India is the largest producer of comparable merchandise; and (3) 
because information regarding unit factor costs in India is readily 
available. Based on the information provided by petitioners and 
Department practice, we believe that petitioners' use of India as a 
surrogate country is appropriate for purposes of initiation of this 
investigation.
    In accordance with section 773(c)(4) of the Act, petitioners valued 
factors of production, where possible, on reasonably available, public 
surrogate country data. Materials were valued based on India's import 
values, as published in the Monthly Statistics of the Foreign Trade of 
India. Labor was valued using the regression-based wage rate for the 
PRC, in accordance with 19 CFR 351.408(c)(3). Electricity was valued 
using the rate for India published in Performance Review Iron & Steel. 
Natural gas was valued using natural gas prices in India.
    For depreciation, overhead, SG&A, financial expenses and profit, 
petitioners applied rates derived from the financial statements of an 
Indian producer of subject merchandise, Steel Authority of India 
Limited (``SAIL''), and have applied these ratios to the COM derived 
for Bao Steel. Based on the information provided by petitioners, we 
believe that their surrogate values represent information reasonably 
available to petitioners and are acceptable for purposes of initiation 
of this investigation.
    Based on comparisons of EP to NV, calculated in accordance with 
section 773(c) of the Act, the calculated dumping margins for cold-
rolled steel from China range from 21.33 to 23.72 percent.
Indonesia
    Petitioners identified PT Krakatau Steel (``Krakatau'') as the 
primary producer and exporter of cold-rolled steel from Indonesia, 
accounting for virtually all exports to the United States between March 
1998 and February 1999. Petitioners based EP for Krakatau on a U.S. 
price for a sale of one product from a range of products encompassed by 
an offer from a U.S. trading company to an unaffiliated customer. They 
chose an offer for a product that falls within HTSUS category 
7209.16.00.90 (imports under this category amounted to approximately 
62.2 percent of subject imports between March 1998 and February 1999). 
Because the terms of the offer were delivered to the United States, 
petitioners calculated a net U.S. price by subtracting estimated costs 
for shipment from the factory in Indonesia to the port of export, and 
for brokerage and port charges. In addition, petitioners subtracted a 
U.S. trading company mark-up, and estimated customs duties and import 
fees, derived from the 1999 HTSUS schedule.
    Petitioners based normal value on gross unit prices, based on 
foreign market research and contemporaneous with the pricing 
information used as the basis for EP, for products offered for sale to 
customers in Indonesia that are either identical or similar to those 
products sold to the United States. They adjusted these prices by 
subtracting estimated average delivery costs. In addition, petitioners 
adjusted normal value for differences in circumstances of sale by 
subtracting average home market packing expenses and credit expenses, 
and adding average U.S. packing expenses and credit expenses.
    The estimated dumping margin in the petition, based on a comparison 
of Krakatau's U.S. price and its home market prices, is 43.90 percent.
Japan
    Petitioners identified Kawasaki Steel Corporation, Kobe Steel, 
Ltd., Nippon Steel Corporation, Nisshin Steel Co., Ltd., NKK 
Corporation, and Sumitomo Metal Industries, Ltd. (``Sumitomo'') as the 
major producers and exporters of subject merchandise from Japan to the 
United States. Petitioners based EP for Sumitomo on a November 1998 
U.S. price offering for a sale to an unaffiliated purchaser. 
Petitioners selected two products encompassed in the offer, which fall 
under HTSUS numbers (7209.16.00.90 and 7209.17.00.90) that represent 
62.6 percent of total imports of cold-rolled carbon steel flat products 
from Japan during the period March 1998 through February 1999. Because 
the prices stated in the offer are for products delivered to the United 
States, petitioners calculated a net U.S. price for each product by 
subtracting estimated costs for shipment from the factory in Japan to 
the port of export and Japanese trading company mark-ups. In addition, 
petitioners subtracted unloading and wharfage charges, ocean freight 
and insurance, and U.S. Customs duties.
    With respect to NV, petitioners obtained Sumitomo's prices from 
foreign market research, contemporaneous with the pricing information 
used as the basis for EP, for the products offered for sale to 
customers in Japan which are either identical or similar to those sold 
to the United States. Petitioners adjusted these prices by subtracting 
foreign movement charges, packaging expenses, and credit expenses.
    In addition, petitioners provided information demonstrating 
reasonable grounds to believe or suspect that sales of cold-rolled 
steel in the home market were made at prices below the fully absorbed 
COP, within the meaning of section 773(b) of the Act, and requested 
that the Department conduct a country-wide sales-below-cost 
investigation. Pursuant to section 773(b)(3) of the Act, COP consists 
of the COM, SG&A and packing. To calculate COP, petitioners based COM 
on their own production experience, adjusted for known differences 
between costs incurred to produce cold-rolled steel in the United 
States and in Japan using publicly available data. To calculate SG&A, 
including financial expenses, petitioners relied upon the fiscal year 
1998 audited financial statements of a Japanese steel producer. Based 
upon the comparison of the adjusted prices of the foreign like product 
in the home market to the calculated COP of the product, we find 
reasonable grounds to believe or suspect that sales of the foreign like 
product were made below the COP within the meaning of section 
773(b)(2)(A)(I) of the Act. Accordingly, the Department is initiating a 
country-wide cost investigation.
    Pursuant to section 773 of the Act, petitioners also based normal 
value for sales in Japan on CV. Because home market prices are 
suspected to be below COP, for this initiation, we are accepting CV as 
the appropriate basis for normal value. Petitioners calculated CV using 
the same COM and SG&A expense figures used to compute Japanese home 
market costs. Consistent with section 773(e)(2) of the Act, the 
petitioners also added to CV an amount for profit. Profit was based 
upon the aforementioned Japanese producer's fiscal year 1998 financial 
statements.
    The estimated dumping margins in the petition, based on a 
comparison between Sumitomo's U.S. prices and CV, range from 48.92 to 
53.04 percent. The estimated dumping margins, based on a comparison of 
Sumitomo's U.S. and home market prices, range from 26.60 to 28.57 
percent.
Russia
    Petitioners identified AmurSteel, Novo Lipetsk Met Kombinat 
(``Novolipetsk''), Magnitogorskiy Kalibrovochniy Zavod, Magnitogorskiy 
Metallurgischeskiy Kombinat (``Magnitogorsk''), Mechel,

[[Page 34199]]

Novosibprokat Joint-Stock Co., Severstal, St. Petersburg Steel Rolling 
Mill, and Volgograd Steel Works (``Red October'') as possible exporters 
of cold-rolled steel from Russia. Petitioners further asserted that two 
of these producers, Severstal and Magnitogorsk, are the primary 
producers of subject merchandise in Russia.
    Petitioners based EP for these two companies on two methods: (1) 
Import values declared to U.S. Customs; and (2) an actual U.S. selling 
price known to petitioners based on a sales offer from a trading 
company. In calculating import values declared to U.S. Customs, 
petitioners used the HTSUS categories which petitioners claim to 
represent the import categories with the largest volumes of imports 
from Russia, and which contained only subject merchandise (i.e., 
7209.16.0060, 7209.17.0060, and 7209.17.0090). Petitioners deducted 
foreign inland freight from the customs values in order to obtain ex-
factory prices. In order to calculate foreign inland freight, 
petitioners used transportation rates from Poland as they were the most 
appropriate public figures reasonably available to the petitioners. 
Petitioners used the Polish rail transport rate because the per-capita 
GNP of Poland is much closer to Russia's GNP than U.S. GNP, and because 
the transportation rates for Poland revealed the information needed to 
permit calculation of a rate in dollars-per-ton. Based on the 
information presented by petitioners, we believe that the use of Polish 
rail rates represents information reasonably available to petitioners 
and is acceptable for purposes of initiation of this investigation.
    In order to calculate actual U.S. selling prices known to 
petitioners, petitioners relied on a single U.S. sales offering to an 
unaffiliated purchaser in the United States. Petitioners derived a net 
U.S. price by subtracting amounts attributed to foreign inland freight 
(see paragraph above for a description of the methodology), cost-
insurance-freight (``CIF'') charges, and duties, where appropriate.
    Petitioners asserted that Russia is an NME country to the extent 
that sales or offers for sale of such or similar merchandise in Russia 
or to third countries do not permit calculation of normal value under 
19 CFR 351.404. Petitioners, therefore, constructed a normal value 
based on the factors of production methodology pursuant to section 
773(c) of the Act. In previous investigations, the Department has 
determined that Russia is an NME. See, e.g., Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled 
Carbon-Quality Steel Products From the Russian Federation (``Russian 
Hot-Rolled Steel''), 64 FR 9312 (February 25, 1999) and Ferrovanadium 
and Nitrided Vanadium From the Russian Federation: Notice of Final 
Results of Antidumping Duty Administrative Review, 62 FR 65656 
(December 15, 1997). In accordance with section 771(18)(C)(i) of the 
Act, the presumption of NME status remains in effect until revoked by 
the Department. The presumption of NME status for Russia has not been 
revoked by the Department and, therefore, remains in effect for 
purposes of the initiation of this investigation. Accordingly, the 
normal value of the product is based on factors of production valued in 
a surrogate market economy country in accordance with section 773(c) of 
the Act. In the course of this investigation, all parties will have the 
opportunity to provide relevant information related to the issues of 
Russia's NME status and the granting of separate rates to individual 
exporters. See, e.g., Final Determination of Sales at Less Than Fair 
Value: Silicon Carbide From the PRC, 59 FR 22585 (May 2, 1994).
    For the normal value calculation, petitioners based the factors of 
production, as defined by section 773(c)(3) of the Act (raw materials, 
labor, and energy), for cold-rolled steel on the quantities of inputs 
used by petitioners. Petitioners asserted that detailed information is 
not available regarding the quantities of inputs used by cold-rolled 
steel producers in Russia. Thus, they have assumed, for purposes of the 
petition, that producers in Russia use the same inputs in the same 
quantities as petitioners. The only exception to this assumption is 
that petitioners have also included an ``open hearth cost adjustment'' 
to account for the relatively poorer efficiency of the open hearth 
furnaces which are still used to some degree by Russian steel 
producers. Petitioners have used one U.S. producer's factors of 
production through the hot-rolling production stage, and another U.S. 
producer's factors of production for the additional processing stages 
necessary to produce cold-rolled steel. Petitioners argued that the use 
of petitioners' factors is conservative because the U.S. steel industry 
is more efficient than the Russian steel industry. Based on the 
information provided by petitioners, we believe that petitioners' use 
of their own adjusted factors of production represents information 
reasonably available to petitioners and is appropriate for purposes of 
initiation of this investigation. Petitioners selected Turkey as the 
primary surrogate market economy country. Petitioners assert that 
Turkey is the most suitable among the potential surrogates, because: 
(1) It is at a comparable stage of economic development; (2) the per-
capita GNP of Turkey differs only slightly from that of Russia; and (3) 
Turkey is a significant producer of comparable merchandise (in 
accordance with section 773(c)(4) of the Act). Based on the information 
provided by petitioners, we believe that petitioners' use of Turkey as 
a surrogate country is appropriate for purposes of initiation of this 
investigation.
    In accordance with section 773(c)(4) of the Act, petitioners valued 
factors of production, where possible, on reasonably available, public 
surrogate country data. Materials were valued based on Turkish import 
values reported in U.S. dollars, as published in the 1996 and 1997 
United Nations Trade Commodity Statistics (``U.N. Trade Commodity 
Statistics''), and inflated based on U.S. inflation rates. Labor was 
valued using the regression-based wage rate for Russia provided by the 
Department, in accordance with 19 CFR 351.408(c)(3). Electricity and 
natural gas were valued using the rate for Turkey published in a 
quarterly report of the OECD's International Energy Agency from the 
third quarter of 1998.
    Petitioners' calculation of scrap recovery costs at different 
stages of production included an adjustment to the surrogate value 
which was derived from petitioners' recorded scrap costs. However, 
given the statutory requirement to value, to the extent possible, all 
elements of CV using information from a country at a comparable level 
of economic development, we have rejected petitioners' calculation of 
NV with respect to scrap. Instead, we have simply applied a scrap value 
based on the 1997 U.N. Trade Commodity Statistics value for scrap from 
Turkey. For depreciation, overhead, SG&A, financial expenses, and 
profit, petitioners applied rates derived from the financial statements 
of a Turkish producer of subject merchandise, Eregli Demir ve Celik 
Fabrikalari T.A.S. (``Erdemir''), and have applied these ratios to the 
COM derived for two Russian producers, Magnitogorsk and Severstal. 
Based on the information provided by petitioners, we believe that their 
surrogate values represent information reasonably available to 
petitioners and are acceptable for purposes of initiation of this 
investigation.
    Based on comparisons of EP to NV, calculated in accordance with 
section

[[Page 34200]]

773(c) of the Act, the calculated dumping margins for cold-rolled steel 
from Russia range from 56.80 to 73.98 percent.
Slovakia
    Petitioners identified VSZ, a.s. (``VSZ'') as the only producer of 
subject merchandise in Slovakia exporting to the United States. 
Petitioners based EP on a U.S. price offering for a sale to an 
unaffiliated purchaser. Petitioners selected two products encompassed 
in the offer which fall under HTSUS numbers 7209.16.00.90 and 
7209.17.00.90. These HTSUS numbers represent 89.5 percent of total 
imports of cold-rolled carbon steel from Slovakia during the period 
September 1998 through February 1999. Petitioners calculated net U.S. 
price by taking gross price to U.S. customers, and then subtracting 
U.S. trading company mark-ups, unloading and wharfage charges, ocean 
freight and insurance, based on official U.S. import statistics, 
estimated costs for U.S. import duties and fees, and estimated costs 
for shipment from the VSZ factory in Slovakia to the port of export 
(based on a rate quote in Mexico, the petitioners' preferred surrogate 
country).
    Petitioners noted that the Department has never had occasion to 
determine whether Slovakia is an NME country to the extent that sales 
or offers for sale of such or similar merchandise in Slovakia do not 
permit calculation of NV under 19 CFR 351.404. In previous 
investigations, however, the Department has determined that 
Czechoslovakia, the predecessor of both the Czech Republic and 
Slovakia, was an NME. See e.g., Final Determination of Sales at Less 
Than Fair Value: Carbon Steel Wire Rod From Czechoslovakia, 49 FR 19370 
(May 7, 1984). In accordance with section 771(18)(C)(i) of the Act, the 
presumption of NME status remains in effect until revoked by the 
Department. The presumption of NME status for Slovakia has not been 
revoked by the Department and, therefore, remains in effect for 
purposes of the initiation of this investigation. Accordingly, pursuant 
to section 773(c) of the Act, petitioners construct NV of the product 
based on factors of production valued in a surrogate market economy 
country. In the course of this investigation, all parties will have the 
opportunity to provide relevant information related to the issues of 
Slovakia's NME status and the granting of separate rates to individual 
exporters. See e.g., Final Determination of Sales at Less Than Fair 
Value: Silicon Carbide From the PRC, 59 FR 22585 (May 2, 1994).
    Petitioners selected Mexico as the most appropriate surrogate 
market economy. Petitioners stated that: (1) The per-capita GNP of 
Mexico is virtually identical to that of Slovakia; (2) the economies of 
Mexico and Slovakia are similar in terms of GDP composition by sector, 
and that the two economies had similar rates of GDP growth in 1997 and 
1998; and (3) Mexico is a significant producer of the subject 
merchandise. Petitioners believe Mexico is a suitable surrogate because 
it is at a comparable level of economic development and is a 
significant producer of comparable merchandise (in accordance with 
section 773(c)(4) of the Act). Based on the information provided by 
petitioners, we believe their use of Mexico as a surrogate country is 
appropriate for purposes of initiation of this investigation.
    For the NV calculation, petitioners based the factors of 
production, as defined by section 773(c)(3) of the Act (raw materials, 
labor, and energy), for cold-rolled steel on the quantities of inputs 
used by the petitioners. Petitioners asserted that detailed information 
is not available regarding the quantity of inputs used by VSZ. Thus, 
they have assumed, for purposes of the petition, that VSZ uses the same 
inputs in the same quantities as petitioners. Specifically, petitioners 
have used one U.S. producer's factors of production through the hot-
rolling production stage, and another U.S. producer's factors of 
production for the additional processing stages necessary to produce 
cold-rolled steel. Petitioners contend that the use of petitioners' 
factors is conservative because the U.S. steel industry is more 
efficient than the steel industry in Slovakia.
    In accordance with section 773(c)(4) of the Act, petitioners valued 
factors of production, where possible, on reasonably available, public 
surrogate country data. Materials were valued based on Mexican import 
statistics as published in the World Trade Atlas for the period January 
1998 through November 1998 and in the 1996 reports of the United 
Nations Statistical Division (adjusted for the effects of deflation in 
the U.S. producer price index). Labor was valued using a regression-
based wage rate for Slovakia provided by the Department, in accordance 
with 19 CFR 351.408(c)(3). Electricity and natural gas were valued 
using the rates for Mexico published in a quarterly report of the 
OECD's International Energy Agency. For interest expense, depreciation, 
SG&A, and profit, petitioners applied rates derived from the 1997 
financial statements of AHMSA, a Mexican producer of the subject 
merchandise. However, claiming that AHMSA's financial statements lacked 
the specificity necessary to determine an accurate overhead rate, the 
petitioners calculated an overhead rate using information from the1997 
financial statements of Sendzimira, a Polish producer of the subject 
merchandise. (Poland, like Mexico, is at a level of economic 
development comparable to that of Slovakia.) The Petitioners applied 
this ratio to the sum of all discrete material, energy, and labor 
components included in the cost model. Based on the information 
provided by the petitioners, we believe that the surrogate values 
represent information reasonably available to the petitioners and are 
acceptable for purposes of initiation of this investigation.
    Based on comparisons of EP to NV, calculated in accordance with 
section 773(c) of the Act, the estimated dumping margins for cold-
rolled steel from Slovakia range from 61.28 to 63.45 percent.
South Africa
    Petitioners identified Iscor Limited (``Iscor'') as a producer and 
exporter of cold-rolled steel from South Africa. Petitioners based EP 
for Iscor on a U.S. price offering for the first sale to an 
unaffiliated purchaser during the period April 1, 1998 through March 
31, 1999. According to petitioners, all imports of South African cold-
rolled steel since March 1998 were produced by Iscor. The product 
encompassed in the offer falls under HTS number 7209.17.00.90, which 
represents 45 percent of total imports of cold-rolled carbon steel flat 
products from South Africa during the period April 1, 1998 through 
March 31, 1999. Petitioners calculated a net U.S. price by subtracting 
ocean freight and insurance, unloading and wharfage charges, and 
estimated costs for U.S. import duties and fees.
    With respect to NV, petitioners obtained home market prices for a 
product offered for sale in South Africa which is comparable to the 
product used as the basis for the U.S. price offer. The home market 
prices were contemporaneous with the U.S. price offer. Petitioners used 
the simple average of the range of prices to establish a normal value. 
Petitioners made several adjustments to the home market price including 
a circumstance of sale adjustment for credit expenses.
    The estimated dumping margin in the petition, based on a comparison 
between Iscor's U.S. price and NV, is 16.65 percent.

[[Page 34201]]

Taiwan
    Petitioners identified China Steel Corporation (``CSC''), Kao Hsing 
Chang Iron and Steel Corporation, Ornatube Enterprise Co. Ltd., Sheng 
Yu Steel Co. Ltd., Yieh Hsing Enterprise Co. Ltd., Yieh Loong 
Enterprise Co. Ltd., Yieh Phui Enterprise Co. Ltd., and Tung Mung 
Development Co. as possible exporters of cold-rolled steel from Taiwan. 
CSC was identified as the major producer of subject merchandise in 
Taiwan and the principal exporter of subject merchandise to the United 
States. Petitioners determined EP using two different methods. First, 
petitioners based EP on the AUV for the three HTSUS categories 
(7209.16.0090, 7209.17.0090, and 7209.18.6000) that encompass the 
largest volume of subject merchandise imports from Taiwan during the 
fourth quarter of 1998. For each of the three HTSUS categories, 
petitioners relied on official U.S. import statistics to arrive at a 
calculated import AUV using reported import quantity and value.
    Second, petitioners based EP on a U.S. price offering for a sale of 
subject merchandise to an unaffiliated purchaser in December 1998. To 
calculate an ex-factory EP for merchandise delivered to the United 
States, petitioners made deductions from the quoted price for 
international freight, international insurance, and U.S. import duties 
based on the CIF charges associated with Taiwanese imports of HTSUS 
category 7209.16.00.90, the category containing the products covered by 
the price quote, during 1998.
    With respect to NV, petitioners established a home market price by 
averaging the range of Taiwanese transaction prices, contemporaneous 
with the pricing information used as the basis for EP. The home market 
price is ex-factory and, therefore, no adjustments for movement were 
required.
    In addition, petitioners alleged pursuant to section 773(b) of the 
Act that sales in the home market were made at prices below the fully 
absorbed COP, and requested that the Department conduct a country-wide 
sales-below-cost investigation. Petitioners provided information that 
demonstrated reasonable grounds to believe or suspect that sales of 
cold-rolled steel in the home market were made at prices below the 
fully absorbed COP.
    Pursuant to section 773(b)(3) of the Act, COP includes COM, SG&A 
expenses and packing expenses. Petitioners calculated COM based on 
their own production experience, adjusted for known differences between 
costs incurred to produce cold-rolled steel in the United States and in 
Taiwan using publically available data. To calculate fixed overhead and 
SG&A, including financial expenses, the petitioners relied upon the 
1997 audited financial statements of CSC. Based upon the comparison of 
the adjusted prices of the foreign like product in the home market to 
the calculated COP of the product, we find reasonable grounds to 
believe or suspect that sales of the foreign like product were made 
below the COP within the meaning of section 773(b)(2)(A)(I) of the Act. 
Accordingly, the Department is initiating a country-wide cost 
investigation.
    In light of the above, for this initiation, we are accepting CV as 
the appropriate basis for NV. Petitioners calculated CV pursuant to 
sections 773(a)(4) and 773(e) of the Act. Petitioners calculated CV for 
Taiwanese producers based on publicly available data and the 
petitioners' own production experience, adjusted for known differences 
between costs incurred to produce cold-rolled steel in the United 
States and in Taiwan. Petitioners calculated CV using the same COM and 
SG&A expense figures used to compute Taiwanese home market costs. 
Consistent with section 773(e)(2) of the Act, the petitioners also 
added to CV an amount for profit. Profit was based upon CSC's 1997 
financial statements.
    The estimated dumping margins in the petition range from 38.20 to 
54.54 percent.
Thailand
    Petitioners identified Sahaviriya Steel Industries Public Co. Ltd., 
The Siam United Steel Co. Ltd., and BHP Steel (Thailand) Ltd. as the 
primary producers and exporters of cold-rolled steel from Thailand. 
Petitioners determined EP using two different methods. They first 
calculated EP based on the AUV for 7209.16.00.90, 7209.17.00.90 and 
7209.18.15.30, the three ten-digit categories of the HTSUS accounting 
for the largest volume of in-scope imports from Thailand during the 
fourth quarter of 1998. For each of these HTSUS categories, petitioners 
calculated the AUV using the reported quantity and customs value for 
imports as recorded in offical U.S. import statistics for the fourth 
quarter of 1998.
    Second, the petitioners determined EP based on offers for sale of 
cold-rolled steel in the United States. The petitioners obtained this 
information from industry sources in the United States. The petitioners 
made deductions for international freight, international insurance, and 
U.S. import duties based on the CIF charges associated with Thai 
imports of HTSUS category 7209.16.00.90, the category containing the 
products covered by the price quotes, derived from official U.S. import 
statistics for the fourth quarter of 1998.
    With respect to NV, petitioners obtained a home market price, 
contemporaneous with the pricing information used as the basis for EP, 
for the products offered for sale to customers in Thailand that are 
either identical or similar to those sold in the United States. This 
price was based on the average of the range of Thai transaction prices 
provided in petitioners' market research report for products offered 
for sale to customers in Thailand that are either identical or similar 
to those products sold to the United States. The price used by 
petitioners is ex-factory, exclusive of all taxes. Therefore, no 
adjustments were required.
    In addition, petitioners provided information demonstrating 
reasonable grounds to believe or suspect that sales of cold-rolled 
steel in the home market were made at prices below the fully absorbed 
COP, within the meaning of section 773(b) of the Act, and requested 
that the Department conduct a country-wide sales-below-cost 
investigation.
    Pursuant to section 773(b)(3) of the Act, COP consists of COM, SG&A 
and packing expenses. To calculate COP, petitioners based COM on their 
own production experience, adjusted for known differences between costs 
incurred to produce cold-rolled carbon steel flat products in the 
United States and in Thailand using publicly available data. To 
calculate fixed overhead and SG&A, including financial expenses, 
petitioners relied upon the 1998 audited financial statements of a Thai 
steel producer. Based upon the comparison of the adjusted price of the 
foreign like product in the home market to the calculated COP of the 
product, we find reasonable grounds to believe or suspect that sales of 
the foreign like product were made below the COP within the meaning of 
section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is 
initiating a country-wide cost investigation.
    In light of the above, and pursuant to sections 773(a)(4) and 
773(e) of the Act, petitioners based normal value for sales in Thailand 
on CV. Petitioners calculated CV using the same COM and SG&A expense 
figures used to compute Thai home market costs. Petitioners added to CV 
no amount for profit, because the Thai steel producer reported a loss 
in its 1998 financial statements.

[[Page 34202]]

    The estimated dumping margins in the petition range from 57.57 
percent to 80.67 percent.
Turkey
    Petitioners identified two firms, Eregli Demir ve Celik 
Fabrikalari, TAS (``Erdemir'') and Borusan Birlesik Boru Fabrikalari, 
AS and Borcelik Celik Sanayii ve Ticaret, AS (``Borusan''), as possible 
exporters of cold-rolled steel from Turkey. Petitioners further 
identified Erdemir as the single largest producer, accounting for 
nearly 80 percent of the production of subject merchandise in Turkey. 
EP for Erdemir was based on prices at which the merchandise was offered 
for sale by an unaffiliated trading company in the United States. The 
product selected for EP falls within HTSUS number 7209.16.0090, which 
comprised 57.07 percent of all the subject merchandise imported between 
March 1998 and February 1999. Petitioners calculated the FOB price for 
this sale by subtracting amounts for U.S. inland freight, international 
freight, wharfage and handling charges incurred in unloading the 
merchandise from the vessel to a barge and later unloading the barge 
onto a flatbed truck. Prices for U.S. inland freight, wharfage and 
handling charges were obtained from a quote provided by a freight 
forwarder. Petitioners calculated a weighted-average per-ton amount for 
international freight by comparing the total CIF value and the total 
free-along-side (``FAS'') value for the specific HTSUS item covering 
this merchandise. In addition, petitioners deducted applicable U.S. 
customs duties. To obtain the price of Erdemir's first sale in the 
United States to an unaffiliated person, i.e., the trading company, 
petitioners lowered the offered price from the trading company by three 
percent to account for the trader's mark-up.
    With respect to NV, petitioners obtained gross unit prices, based 
on foreign market research and contemporaneous with the pricing 
information used as the basis for EP, for products offered for sale in 
Turkey which were virtually identical to those upon which EP was based. 
As the price offers were on ``ex-works'' terms, petitioners made no 
adjustments to obtain NV, with the exception of circumstance-of-sale 
(``COS'') adjustments as provided under section 773(a)(6)(C) of the 
Act. Petitioners adjusted the gross home market price by deducting home 
market credit expenses and adding U.S. credit expenses.
    In addition, petitioners alleged pursuant to section 773(b) of the 
Act that sales in the home market were made at prices below the fully 
absorbed COP, and requested that the Department conduct a country-wide 
sales-below-cost investigation. Pursuant to section 773(b)(3) of the 
Tariff Act, COP includes the COM, SG&A, and packing expenses. 
Petitioners calculated COP for Turkish producers based on publicly 
available data and one petitioning company's own production experience, 
adjusted for known differences between costs incurred to produce cold-
rolled carbon steel flat products in the United States and in Turkey. 
To calculate unit factor costs for certain materials and SG&A expenses, 
petitioners relied upon Erdemir's 1997 audited financial statements. 
Petitioners adjusted all unit factor costs that were denominated in 
Turkish lira to account for the effects of inflation in Turkey. Based 
upon the comparison of the adjusted prices of the foreign like product 
in the home market to the calculated COP of the product, we find 
reasonable grounds to believe or suspect that sales of the foreign like 
product were made below the COP within the meaning of section 
773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a 
country-wide cost investigation.
    In addition to their price-to-price comparison, petitioners 
provided a CV comparison. Petitioners calculated CV for sales in Turkey 
pursuant to sections 773(a)(4) and 773(e) of the Act, using the same 
COM and SG&A expense figures used to compute Turkish home market COP. 
Consistent with section 773(e)(2) of the Act, petitioners also added to 
CV an amount for profit, using data drawn from Erdemir's 1997 financial 
statements.
    The estimated dumping margin based on a price-to-price comparison 
was 13.85 percent. Relying on a price-to-CV comparison, the resulting 
margin was 32.91 percent.
Venezuela
    Petitioners identified Siderurgica del Orinoco CA (``SIDOR'') as a 
possible exporter of cold-rolled steel from Venezuela. Petitioners 
further identified this company as the primary producer of the subject 
merchandise in Venezuela. Petitioners based EP for this company on two 
methods: (1) Two price quotes dated December 1998 and January 1999 from 
trading companies for sale to unaffiliated U.S. purchasers; and (2) 
import values declared to U.S. Customs. Because the terms for the first 
U.S. sale were delivered to the U.S. customer, petitioners calculated a 
net U.S. price by subtracting U.S. inland freight. The terms of sale 
for the second price quote were CIF, duty paid ex-dock. In addition, 
for both U.S. sales offers, petitioners subtracted ocean freight and 
insurance and estimated costs for U.S. import duties and fees. In 
calculating import values declared to U.S. Customs, petitioners used 
three HTSUS categories which accounted for all imports from Venezuela 
of the subject merchandise (i.e., 7209.16.00.90, 7209.17.00.90 and 
7209.18.15.60).
    With respect to NV, petitioners used home market ex-factory prices, 
contemporaneous with the pricing information used as the basis for EP, 
for cold-rolled steel in commercial grades in standard. Petitioners 
provided information in the petition demonstrating reasonable grounds 
to believe or suspect that sales of cold-rolled steel in the home 
market were made at prices below the COP, within the meaning of section 
773(b) of the Act, and requested that the Department conduct a sales 
below cost investigation. Because the entire range of home market 
prices was below the producer's COP, petitioners based NV on CV, 
pursuant to sections 773(a)(4) and 773(e) of the Act. Pursuant to 
section 773(e) of the Act, CV consists of the COM, SG&A, and profit. To 
calculate COM, petitioners relied on one U.S. producer's COM of 
manufacturing cold-rolled steel during calendar year 1998. The sole 
exception was for costs associated with the electric arc furnace 
(``EAF'') production of liquid steel, which were based on the costs of 
a different U.S. plant because the producer's plant does not have an 
EAF. Where appropriate, the U.S. producer's costs were adjusted for 
known differences between manufacturing costs in the United States and 
Venezuela. Petitioners valued the major inputs in cold-rolled steel 
production based on the per unit values reported in publications of 
international agencies. Whenever possible, petitioners used unit factor 
prices paid by Venezuelan producers during 1998. When these were 
unavailable, petitioners used the most recent prices available and 
adjusted them for inflation. The calculated average processing cost was 
adjusted for unique costs associated with producing different product 
categories used in the price quotes and average unit values. 
Petitioners estimated SIDOR's per-unit depreciation expense using the 
ratio of depreciation expenses to cost of goods sold (``COGS'') minus 
SIDOR's reported depreciation during 1997, as reported in the audited 
financial statements for 1997. The calculated ratio was applied to 
SIDOR's total manufacturing costs minus depreciation to arrive at the 
estimated depreciation expense. Petitioners multiplied SIDOR's ratio of

[[Page 34203]]

SG&A expenses to COGS, as reported in the audited financial statements 
for 1997, by its estimated COM inclusive of product-specific 
adjustments, period costs and depreciation to arrive at an estimate of 
per-unit SG&A expenses. Petitioners did not include financial expenses 
in COP, as SIDOR reported a net monetary gain in 1997. As SIDOR 
experienced a loss in 1997, petitioners also did not include any profit 
in the estimated CV.
    Petitioners calculated product-specific CV for matching to U.S. 
price quotes and average unit import values. The estimated dumping 
margins based on comparison of CV to U.S. price quotes is 32.23 percent 
to 52.61 percent. The estimated dumping margins based on comparison of 
CV to import average unit values is 25.54 percent to 56.72 percent.

Initiation of Cost Investigations

    As noted above, pursuant to section 773(b) of the Act, petitioners 
provided information demonstrating reasonable grounds to believe or 
suspect that sales in the home markets of Brazil, Japan, Taiwan, 
Thailand, Turkey and Venezuela were made at prices below the fully 
allocated COP and, accordingly, requested that the Department conduct a 
country-wide sales-below-COP investigation in connection with the 
requested antidumping investigations for these countries. The Statement 
of Administrative Action (``SAA''), submitted to the U.S. Congress in 
connection with the interpretation and application of the URAA, states 
that an allegation of sales below COP need not be specific to 
individual exporters or producers. SAA, H.R. Doc. No. 316 at 833 
(1994). The SAA, at 833, states that ``Commerce will consider 
allegations of below-cost sales in the aggregate for a foreign country, 
just as Commerce currently considers allegations of sales at less than 
fair value on a country-wide basis for purposes of initiating an 
antidumping investigation.''
    Further, the SAA provides that ``new section 773(b)(2)(A) retains 
the current requirement that Commerce have' reasonable grounds to 
believe or suspect' that below cost sales have occurred before 
initiating such an investigation. `Reasonable grounds' * * * exist when 
an interested party provides specific factual information on costs and 
prices, observed or constructed, indicating that sales in the foreign 
market in question are at below-cost prices.'' Id. Based upon the 
comparison of the adjusted prices from the petition for the 
representative foreign like products to their costs of production, we 
find the existence of ``reasonable grounds to believe or suspect'' that 
sales of these foreign like products in Brazil, Japan, Taiwan, 
Thailand, Turkey, and Venezuela were made below their respective COPs 
within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, 
the Department is initiating the requested country-wide cost 
investigations.

Fair Value Comparisons

    Based on the data provided by petitioners, there is reason to 
believe that imports of cold-rolled steel from Argentina, Brazil, 
China, Indonesia, Japan, Russia, Slovakia, South Africa, Taiwan, 
Thailand, Turkey, and Venezuela are being, or are likely to be, sold at 
less than fair value.

Critical Circumstances

    The petitioners have alleged that critical circumstances exist with 
regard to imports of cold-rolled steel from Brazil, Japan, Thailand and 
Venezuela, and have supported their allegations with the following 
information.
    First, the petitioners claim that the importers knew, or should 
have known, that the cold-rolled steel was being sold at less than 
normal value. Specifically, the petitioners allege that the margins 
calculated in the petition for each of the four countries exceed the 25 
percent threshold used by the Department to impute importer knowledge 
of dumping.
    The petitioners also have alleged that imports from these four 
countries have been massive over a relatively short period. Alleging 
that there was sufficient pre-filing notice of these antidumping 
petitions, the petitioners contend that the Department should compare 
imports during October-December 1998 to imports during July-September 
1998 for purposes of this determination. Specifically, petitioners 
supported this allegation with copies of news articles discussing the 
likelihood of filing antidumping complaints against producers of cold-
rolled steel. For example, petitioners cite to an international trade 
publication in September 1998 that carried an article discussing the 
likelihood that U.S. steel producers would file unfair trade cases 
related to cold-rolled steel. In addition, petitioners cite to comments 
made in September 1998 by the Chairman of Bethlehem Steel Corporation, 
who discussed the rise of cold-rolled steel imports and the possibility 
that antidumping cases would be filed. The Department concludes that 
this level of press coverage provided foreign producers of cold-rolled 
steel with prior knowledge of pending antidumping investigations. 
Therefore, the Department considered import statistics contained in the 
petition for the periods October-December 1998 and July-September 1998. 
Based on this comparison, imports of cold-rolled steel from Brazil 
increased by 150 percent, imports from Japan increased by 37 percent, 
while imports from Thailand increased by 114 percent, and imports of 
cold-rolled steel from Venezuela increased by 44 percent.
    Although the ITC has not yet made a preliminary decision with 
respect to injury, petitioners note that in the past the Department has 
also considered the extent of the increase in the volume of imports of 
the subject merchandise as one indicator of whether a reasonable basis 
exists to impute knowledge that material injury was likely. In the 
cases involving Brazil, Japan, Thailand, and Venezuela, the increases 
in imports were more than double the amount considered ``massive.'' 
Taking into consideration the foregoing, we find that the petitioners 
have alleged the elements of critical circumstances and supported them 
with information reasonably available for purposes of initiating a 
critical circumstances inquiry. For these reasons, we will investigate 
this matter further and will make a preliminary determination at the 
appropriate time, in accordance with section 735(e)(1) of the Act and 
Department practice (see Policy Bulletin 98/4 (63 FR 55364, October 15, 
1998)).

Allegations and Evidence of Material Injury and Causation

    The petitions allege that the U.S. industry producing the domestic 
like product is being materially injured, and is threatened with 
material injury, by reason of the individual and cumulated imports of 
the subject merchandise sold at less than NV. Petitioners explained 
that the industry's injured condition is evident in the declining 
trends in net operating profits, net sales volumes, profit to sales 
ratios, and capacity utilization. The allegations of injury and 
causation are supported by relevant evidence including U.S. Customs 
import data, lost sales, and pricing information. The Department 
assessed the allegations and supporting evidence regarding material 
injury and causation and determined that these allegations are 
supported by accurate and adequate evidence and meet the statutory 
requirements for initiation (see Attachments to Initiation Checklist, 
Re: Material Injury, June 21, 1999).

[[Page 34204]]

Initiation of Antidumping Investigations

    Based upon our examination of the petitions on cold-rolled steel 
and petitioners' responses to our supplemental questionnaire clarifying 
the petitions, as well as our discussions with the authors of the 
foreign market research reports supporting the petitions on June 16, 
1999 and other measures to confirm the information contained in these 
reports (see Memorandum to the File; Re: Foreign Market Research, dated 
June 21, 1999), we have found that the petitions meet the requirements 
of section 732 of the Act. Therefore, we are initiating antidumping 
duty investigations to determine whether imports of certain cold-rolled 
carbon steel flat products from Argentina, Brazil, China, Indonesia, 
Japan, Russia, Slovakia, South Africa, Taiwan, Thailand, Turkey, and 
Venezuela are being, or are likely to be, sold in the United States at 
less than fair value. Unless this deadline is extended, we will make 
our preliminary determinations no later than 140 days after the date of 
this initiation.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of each petition has been provided to the 
representatives of Argentina, Brazil, China, Indonesia, Japan, Russia, 
Slovakia, South Africa, Taiwan, Thailand, Turkey, and Venezuela. We 
will attempt to provide a copy of the public version of each petition 
to each exporter named in the petition, as appropriate.

International Trade Commission Notification

    We have notified the ITC of our initiations, as required by section 
732(d) of the Act.

Preliminary Determinations by the ITC

    The ITC will determine, by no later than July 17, 1999, whether 
there is a reasonable indication that imports of cold-rolled steel from 
Argentina, Brazil, China, Indonesia, Japan, Russia, Slovakia, South 
Africa, Taiwan, Thailand, Turkey, and Venezuela are causing material 
injury, or threatening to cause material injury, to a U.S. industry. A 
negative ITC determination for any country will result in the 
investigation being terminated with respect to that country; otherwise, 
these investigations will proceed according to statutory and regulatory 
time limits.
    This notice is published pursuant to section 777(i) of the Act.

    Dated: June 21, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-16243 Filed 6-24-99; 8:45 am]
BILLING CODE 3510-DS-P