[Federal Register Volume 64, Number 173 (Wednesday, September 8, 1999)]
[Notices]
[Pages 48778-48783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23326]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-201-802]


Gray Portland Cement and Clinker From Mexico; Preliminary Results 
of Antidumping Duty Administrative Review and Extension of Final 
Results of Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review and extension of final results of administrative 
review.

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SUMMARY: In response to requests from interested parties, the 
Department of Commerce is conducting an administrative review of the 
antidumping duty order on gray portland cement and clinker from Mexico. 
The review covers exports of subject merchandise to the United States 
during the period August 1, 1997, through July 31, 1998, and one firm, 
CEMEX, S.A. de C.V., and its affiliate, Cementos de Chihuahua, S.A. de 
C.V. The results of this review indicate the existence of dumping 
margins for the period.
    We invite interested parties to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with the argument (1) a statement of the issues, and (2) a 
brief summary of the argument.
    In addition, we are extending the period for issuing the final 
results of this review. Our final results will be issued no later than 
180 days after the date of publication of these preliminary results of 
review.

EFFECTIVE DATE: September 8, 1999.

FOR FURTHER INFORMATION CONTACT: Davina Hashmi, Anne Copper, or George 
Callen, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, DC 20230; telephone (202) 482-5760, (202) 482-0090, (202) 
482-0180, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

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

Background

    On August 11, 1998, the Department published in the Federal 
Register a Notice of Opportunity to Request Administrative Review 
concerning the antidumping duty order on gray portland cement and 
clinker from Mexico (63 FR 42821). In accordance with 19 CFR 351.213, 
the petitioner, the Southern Tier Cement Committee (STCC), requested a 
review of CEMEX, CEMEX's affiliate, Cementos de Chihuahua, S.A. de C.V. 
(CDC), and Apasco, S.A. de C.V. (Apasco). In addition, CEMEX and CDC 
requested review of their own entries. Apasco subsequently reported, 
and the Department confirmed with U.S. Customs, that Apasco did not 
have any U.S. sales or shipments during the period of review. On 
September 29, 1998, the Department published a Notice of Initiation of 
Antidumping and Countervailing Duty Administrative Reviews (63 FR 
51894) initiating this review. The period of review is August 1, 1997, 
through July 31, 1998. The Department is now conducting a review of 
CEMEX and CDC pursuant to section 751 of the Act.

Scope of Review

    The products covered by this review include gray portland cement 
and clinker. Gray portland cement is a hydraulic cement and the primary

[[Page 48779]]

component of concrete. Clinker, an intermediate material product 
produced when manufacturing cement, has no use other than of being 
ground into finished cement. Gray portland cement is currently 
classifiable under the Harmonized Tariff Schedule (HTS) item number 
2523.29 and cement clinker is currently classifiable under HTS item 
number 2523.10. Gray portland cement has also been entered under HTS 
item number 2523.90 as ``other hydraulic cements.'' The HTS subheadings 
are provided for convenience and customs purposes only. Our written 
description of the scope of the proceeding is dispositive.

Verification

    As provided in section 782(i) of the Act, we verified sales 
information provided by CEMEX and CDC using standard verification 
procedures, including an examination of relevant sales and financial 
records, selection of original documentation containing relevant 
information, and an on-site tour of one of CDC's manufacturing 
facilities. Our verification results are outlined in public versions of 
the verification reports.

Extension of Final Results

    We have determined that it is not practical to complete our final 
results within 120 days of the date of publication of this notice of 
preliminary results. To allow time to obtain, analyze, and verify new 
cost information which we requested late in this review, we are 
extending the deadline for our final results of review, pursuant to 19 
CFR 351.213(h)(2), from 120 to 180 days after publication of this 
notice. Memorandum from Richard W. Moreland to Robert S. LaRussa, 1997-
1998 Administrative Review of the Anti-Dumping Order on Gray Portland 
Cement and Clinker from Mexico-Extension of Final Results, August 31, 
1999. (Public versions of all referenced memoranda are on file in Room 
B-099 of the Department's main building.)

Collapsing

    Section 771(33) of the Act defines when two or more parties will be 
considered affiliated for purposes of an antidumping analysis. 
Moreover, section 351.401(f) of the regulations describes when we will 
treat two or more affiliated producers as a single entity (i.e., 
``collapse'' the firms) for purposes of calculating a dumping margin. 
In the three previous administrative reviews of this order, we analyzed 
whether we should collapse CEMEX and CDC in accordance with our 
regulations. Gray Portland Cement and Clinker from Mexico; Final 
Results of Antidumping Duty Administrative Review, 64 FR 13148 (March 
17, 1999).
    The regulations state that the Department will treat two or more 
affiliated producers as a single entity where those producers have 
production facilities for similar or identical products that would not 
require substantial retooling of either facility in order to 
restructure manufacturing priorities and the Department concludes that 
there is a significant potential for the manipulation of price or 
production. In identifying a significant potential for the manipulation 
of price or production, the factors the Department may consider include 
the following: (i) the level of common ownership; (ii) the extent to 
which managerial employees or board members of one firm sit on the 
board of directors of an affiliated firm; and (iii) whether operations 
are intertwined, such as through the sharing of sales information, 
involvement in production and pricing decisions, the sharing of 
facilities or employees, or significant transactions between the 
affiliated producers.
    A North American Free Trade Agreement Binational Panel upheld our 
decision in the 1994/95 administrative review to collapse CEMEX and 
CDC. Article 1904 Binational Panel Review Pursuant To The North 
American Free Trade Agreement opinion of the Panel, Secretariat File 
No. USA-97-1904-01 (June 18, 1999). We found that, in each of the 
subsequent administrative reviews, the factual information underlying 
our original decision to collapse these two entities did not change 
and, accordingly, we continued to treat these two entities as a single 
entity.
    Having reviewed the current record, we find, once again, that the 
factual information underlying our original decision to collapse these 
two entities has not changed during the instant administrative review 
period. CEMEX's indirect ownership of CDC exceeds five percent, such 
that these two companies are affiliated pursuant to section 771(33)(E) 
of the Act. In addition to their affiliation, we find that CEMEX and 
CDC have similar production processes. Finally, interlocking boards of 
directors and significant transactions between the companies give rise 
to a significant potential for the manipulation of price or production. 
Accordingly, we preliminarily conclude that these affiliated producers 
should be treated as a singly entity and that we should calculate a 
single, weighted-average margin for these companies. Therefore, 
throughout this notice, references to ``respondent'' should be read to 
mean the collapsed entity. Memorandum from Analyst to Joseph A. 
Spetrini, 1996/1997 Administrative Review of Gray Portland Cement and 
Clinker from Mexico (August 31, 1998), and Memorandum from Analyst to 
File, Collapsing CEMEX, S.A. and Cementos de Chihuahua for the Current 
Administrative Review (April 6, 1999).

Export Price and Constructed Export Price

    We used export price (EP), in accordance with section 772(a) of the 
Act, where the subject merchandise was sold to the first unaffiliated 
purchaser in the United States prior to importation and constructed 
export price (CEP) was not otherwise warranted based on the facts in 
the record. We used CEP in accordance with section 772(b) of the Act 
for those sales to the first unaffiliated purchaser that took place 
after importation into the United States. CEMEX made CEP sales during 
the period of review, while CDC made both CEP and EP sales during the 
period of review.
    We calculated EP based on delivered prices to unaffiliated 
customers in the United States. Where appropriate, we made adjustments 
from the starting price for early payment discounts, foreign inland 
freight, U.S. inland freight, U.S. brokerage and handling, and U.S. 
duties. We also adjusted the starting price for billing adjustments to 
the invoice price.
    We calculated CEP based on delivered prices to unaffiliated 
customers. Where appropriate, we made adjustments to the starting price 
for discounts and billing adjustments to the invoice price. In 
accordance with section 772(d) of the Act, we deducted those selling 
expenses, including inventory carrying costs, that were related to 
economic activity in the United States. We also made deductions for 
foreign brokerage and handling, foreign inland freight, U.S. inland 
freight and insurance, U.S. brokerage and handling, U.S. duties, and 
direct selling expenses. Finally, we made an adjustment for CEP profit 
in accordance with section 772(d)(3) of the Act.
    With respect to subject merchandise to which value was added in the 
United States prior to sale to unaffiliated U.S. customers (e.g., 
cement that was imported and further-processed into finished concrete 
by U.S. affiliates of foreign exporters), we preliminarily determine 
that the special rule under section 772(e) of the Act for merchandise 
with value added after importation is applicable.
    Section 772(e) of the Act provides that, where the subject 
merchandise is

[[Page 48780]]

imported by an affiliated person and the value added in the United 
States by the affiliated person is likely to exceed substantially the 
value of the subject merchandise, we shall determine the CEP for such 
merchandise using the price of identical or other subject merchandise 
if there is a sufficient quantity of sales to provide a reasonable 
basis for comparison and we determine that the use of such sales is 
appropriate. Section 351.402(c)(2) of the regulations provides that the 
Department normally will determine that the value added in the United 
States by the affiliated person is likely to exceed substantially the 
value of the subject merchandise if the Department estimates the value 
added to be at least 65 percent of the price charged to the first 
unaffiliated purchaser for the merchandise as sold in the United 
States. We normally will estimate the value added based on the 
difference between the price charged to the first unaffiliated 
purchaser for the merchandise as sold in the United States and the 
price paid for the subject merchandise by the affiliated person. The 
Department normally will base this determination on averages of the 
prices and the value added to the subject merchandise. If there is not 
a sufficient quantity of such sales or if we determine that using the 
price of identical or other subject merchandise is not appropriate, we 
may use any other reasonable basis to determine the CEP.
    During the course of this administrative review, the respondent 
submitted, and we verified, information which allowed us to determine 
whether, in accordance with section 772(e) of the Act, the value added 
in the United States by its U.S. affiliates is likely to exceed 
substantially the value of the subject merchandise. To determine 
whether the value added is likely to exceed substantially the value of 
the subject merchandise, we estimated the value added based on the 
difference between the averages of the prices charged to the first 
unaffiliated purchaser for the merchandise as sold in the United States 
and the averages of the prices paid for subject merchandise by the 
affiliated person. Based on this analysis, we estimate that the value 
added was at least 65 percent of the price the respondent charged to 
the first unaffiliated purchaser for the merchandise as sold in the 
United States. Therefore, we preliminarily determine that the value 
added is likely to exceed substantially the value of the subject 
merchandise. Also, the record indicates that there is a sufficient 
quantity of subject merchandise to prove a reasonable and appropriate 
basis for comparison. Accordingly, for purposes of determining dumping 
margins for these sales, we have used the weighted-average margin of 
45.39 percent calculated on sales of identical or other subject 
merchandise sold to unaffiliated purchasers.
    No other adjustments to EP or CEP were claimed or allowed.

Normal Value

A. Comparisons

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating 
normal value (NV), we compared the respondent's volume of home-market 
sales of the foreign like product to the volume of U.S. sales of the 
subject merchandise in accordance with section 773(a)(1)(C) of the Act. 
Since the respondent's aggregate volume of home-market sales of the 
foreign like product was greater than five percent of its aggregate 
volume of U.S. sales for the subject merchandise, we determined that 
the home market was viable. Therefore, we have based NV on home-market 
sales.
    During the period of review, CEMEX and CDC sold two types of cement 
in the United States--Type V LA and Type II, respectively. The statute 
expresses a preference for matching U.S. sales to identical merchandise 
in the home market. However, in situations where identical product 
types cannot be matched, the statute expresses a preference for basing 
NV on sales of similar merchandise (sections 773(a)(1)(B) and 771(16) 
of the Act). Because we have preliminarily determined that Type V and 
Type V LA sold in the home market by CEMEX are outside the ordinary 
course of trade (see the ``Ordinary Course of Trade'' section of this 
notice) and CDC had no sales to unaffiliated customers of either Type 
II LA or Type V LA in the home market, we did not find identical 
matches in the home market to which we could match sales of the subject 
merchandise. Accordingly, we based NV on sales of similar merchandise.
    During the period of review, CEMEX sold four basic types of gray 
portland cement in Mexico--Type I, Type V, Type V LA, and pozzolanic. 
During the same period, CDC sold two types of gray portland cement in 
Mexico--Type I and Type II. The history of this order demonstrates 
that, of the various types of cement which may reasonably be compared 
to imports of cement from Mexico, Type I cement is most similar to the 
Type V LA cement sold in the United States. On June 2, 1999, we 
determined that, while pozzolanic cement is covered by the scope of 
this order, it is not comparable to Types II and V under sections 
771(16)(B) or (C) of the Act and, thus, we did not require CEMEX to 
report its home-market sales of pozzolanic cement for this review. See 
Memorandum from Laurie Parkhill to Richard W. Moreland, Gray Portland 
Cement and Clinker from Mexico-Sales of Pozzolanic Cement (June 2, 
1999).
    On June 18, 1999, the North American Free Trade Agreement 
Binational Panel reviewing the final results of the 1994/1995 
administrative review found that CEMEX's and CDC's Type I bagged cement 
should not have been combined with sales of Type I cement sold in bulk 
to the United States in the calculation of normal value. In other 
words, the Panel found that sales of Type I cement in bags should not 
be included in the universe of home-market sales available for 
comparison to bulk sales to the United States. Rather, the Panel 
concluded, only sales of Type I cement in bulk should serve as the 
basis for determining NV for Type II and Type V cement sold in the 
United States, and it remanded the results of the 1994/1995 review to 
the Department for a recalculation of the margin. Those proceedings 
have not yet been completed. In this review, the record supports the 
continued practice of finding CEMEX's and CDC's sales of Type I cement 
in bags in the home market as sales comparable, within the meaning of 
section 771(16)(B) of the Act, to U.S. sales. Specifically, in 
accordance with section 771(16)(B) of the Act, we find that both bulk 
and bagged Type I cement are produced in the same country and by the 
same producer as Type V LA or Type II, both bulk and bagged Type I 
cement are like Type V LA in component materials and in the purposes 
for which used, and both bulk and bagged Type I cement are 
approximately equal in commercial value to Type II or Type V LA cement. 
Questionnaire responses from both CEMEX and CDC indicate that, with the 
exception of packaging, Type I cement sold in bulk and Type I cement 
sold in bags are physically identical and both are used in the 
production of concrete. Also, since there is no difference in cost 
between cement sold in bulk or in bag (again with the exception of 
packaging), both are approximately equal in commercial value. See CEMEX 
response to Section A of the Department's Questionnaire, Volume 1, 
November 12, 1998, pgs. A-28-30, Section B, December 4, 1998, pg. B-51, 
and CDC response to Section A, A-44-47, November. 12, 1998, and Section 
B, December 2, 1998, pg. B-31.

[[Page 48781]]

B. Ordinary Course of Trade

    Section 773(a)(1)(B) of the Act requires the Department to base NV 
on ``the price at which the foreign like product is first sold (or in 
the absence of sales, offered for sale) for consumption in the 
exporting country, in the usual commercial quantities and in the 
ordinary course of trade.'' Ordinary course of trade is defined as 
``the conditions and practices which, for a reasonable time prior to 
the exportation of the subject merchandise, have been normal in the 
trade under consideration with respect to merchandise of the same class 
or kind.''
    Apart from identifying certain sales that are below cost (section 
773(b)(1) of the Act) or between affiliated persons (section 773(f)(2) 
of the Act), Congress has not specified any criteria that the 
Department should use in determining the appropriate ``conditions and 
practices'' which are ``normal in the trade under consideration.'' 
Therefore, ``Commerce, in its discretion, chooses how best to analyze 
the many factors involved in a determination of whether sales are made 
within the ordinary course of trade.'' Thai Pineapple Public Co. v. 
United States, 946 F. Supp. 11, 14-17 (CIT 1996).
    The Department's ordinary-course-of-trade inquiry is far-reaching. 
It evaluates not just ``one factor taken in isolation but rather all 
the circumstances particular to the sales in question.'' Murata Mfg. 
Co. v. United States, 820 F. Supp. 603, 607 (CIT 1993). In short, we 
examine the totality of the facts in each case to determine if sales 
are being made for ``unusual reasons'' or under ``unusual 
circumstances.'' Electrolytic Manganese Dioxide from Japan; Final 
Results of Antidumping Duty Administrative Review, 58 FR 28551, 28552 
(May 14, 1993).
    In the 1991/1992 administrative review of this order, the 
Department determined that CEMEX's home-market sales of Type II and 
Type V cement were outside the ordinary course of trade and, therefore, 
could not be used in the calculation of NV (then referred to as 
``foreign market value''). Gray Portland Cement and Clinker from 
Mexico: Final Results of Antidumping Duty Administrative Review, 58 FR 
47253, 27254 (Sept. 8, 1993). In making this determination, the 
Department considered, inter alia, shipping distances and costs, sales 
volume, profit levels, sales history, home-market demand and the 
promotional aspect of sales. See Decision Memorandum to Joseph A. 
Spetrini, August 31, 1994, and Memorandum from Holly A. Kuga to Joseph 
A. Spetrini, August 31, 1993. Based upon similar facts and using a 
similar analysis, the Department reached the same conclusion in the 
final results of the 1994/1995, 1995/1996, and 1996/1997 administrative 
reviews for certain sales of Type II and Type V cement by CEMEX in 
Mexico. Gray Portland Cement and Clinker from Mexico: Final Results of 
Antidumping Duty Administrative Review, 62 FR 17148, 17151 (April 9, 
1997), Gray Portland Cement and Clinker from Mexico: Final Results of 
Antidumping Duty Administrative Review, 63 FR 12764, 12768 (March 16, 
1998); Gray Portland Cement and Clinker from Mexico: Final Results of 
Antidumping Duty Administrative Review, 64 FR 13148 (March 17, 1999).
    In the instant review, CEMEX claims that its sales of Type V LA 
cement in the home market are within the ordinary course of trade. 
Pursuant to section 773(a)(1)(B) of the Act, the Department has 
examined the totality of the circumstances surrounding CEMEX's sales of 
cement in Mexico that are produced as Type V and Type V LA cement and 
marketed as Type I, Type II LA, Type V, and Type V LA (Type V LA is 
identical in physical characteristics to the cement that CEMEX sells in 
the United States). Based on the current record, which reflects similar 
findings in prior reviews (see, for example, Decision Memorandum to 
Joseph A. Spetrini, August 31, 1998), the Department has preliminarily 
determined that CEMEX's home-market sales of Type V and Type V LA 
cement during the review period were outside the ordinary course of 
trade.
    CEMEX sells, in Mexico, Type V and Type V LA cement produced at its 
Campana and Yaqui plants. The facts established in the record of this 
review with respect to sales from these plants are very similar to the 
facts which led the Department to determine in the 1991/1992, 1994/
1995, 1995/1996, and 1996/1997 reviews that home-market sales of Type 
V, including Type V LA, cement were outside the ordinary course of 
trade. The determination involving the 1991/1992 review, as noted 
above, was affirmed by the Court of International Trade (CIT) in CEMEX 
v. United States, Slip Op. 95-72 at 14. Specifically, as in previous 
reviews, we examined shipping distances and costs, sales volume, profit 
levels, sales history, home-market demand and the promotional aspect of 
sales. We found that, while there has been some change from findings in 
previous reviews, changes have been relatively minor and do not affect 
the overall conclusion that sales of Type V and Type V LA cement from 
the Campana and Yaqui plants are outside of the ordinary course of 
trade.
    With respect to sales of Type V LA cement from CEMEX's Hidalgo 
plant, we have determined that these sales are also outside the 
ordinary course of trade. CEMEX notes that only the Campana and Yaqui 
plants produce Type V LA on a consistent basis, but it has produced 
Type V LA on ``occasion'' at its Hidalgo plant. In addition, CEMEX has 
stated that production of cement meeting the ASTM specifications of 
Type V LA at the Hidalgo plant was unintentional. In fact, CEMEX 
itself, in prior submissions, has indicated that production and sales 
of cement meeting ASTM standards for Type V LA at the Hidalgo plant 
were unusual in that they attempted to produce another type of cement. 
Moreover, none of the Type V LA production from the Hidalgo plant was 
sold as Type V LA and the profit-level pattern was similar to the 
pattern at Campana and Yaqui for sales of cement produced as Type V LA 
and sold as Type I. A complete discussion of our preliminary 
conclusions on sales of cement from the Campana, Yaqui, and Hidalgo 
plants, requiring reference to proprietary information, is contained in 
a memorandum in the official file for this case. Memorandum from 
Analyst to Laurie Parkhill, Gray Portland Cement and Clinker from 
Mexico--Ordinary Course of Trade (August 31, 1999).
    In conclusion, the decision to exclude sales of Type V and Type V 
LA cement from the calculation of NV centers around the unusual nature 
and characteristics of these sales compared to the vast majority of 
CEMEX's other home-market sales. Based upon these differences, the 
Department has preliminarily determined that they are not 
representative of CEMEX's home-market sales, i.e., these sales were not 
within the ordinary course of trade.

C. Arm's-Length Sales

    Consistent with 19 CFR 351.403, we excluded sales to affiliated 
customers in the home market which were not made at arm's-length prices 
from our analysis. Because we could not test whether sales of Type II 
cement by CDC were made at arm's-length prices, we excluded such sales 
from our analysis. To test whether other sales to affiliated customers 
were made at arm's length for which we could test the prices, we 
compared the prices of sales to affiliated and unaffiliated customers, 
net of all movement charges, direct selling expenses, discounts, and 
packing. Where the price to the affiliated party was on average 99.5 
percent or more of the price to the unaffiliated parties, we

[[Page 48782]]

determined that the sales made to the affiliated party were at arm's 
length.

D. Cost of Production

    The petitioner alleged, on May 11, 1999, that CEMEX and its 
affiliate, CDC, sold gray portland cement and clinker in the home 
market at prices below their cost of production (COP). Based on these 
allegations, the Department determined, on July 15, 1999, that it had 
reasonable grounds to believe or suspect that CEMEX and CDC had sold 
the subject merchandise in the home market at prices below the COP. 
Therefore, pursuant to section 773(b)(1) of the Act, we initiated a COP 
investigation in order to determine whether CEMEX and CDC made home-
market sales during the period of review at below-cost prices. See 
Memorandum from Laurie Parkhill to Richard W. Moreland, Gray Portland 
Cement and Clinker from Mexico: Amended Request to Initiate Cost 
Investigation (July 15, 1999). Because of time constraints, we could 
not incorporate the collapsed respondent's cost and constructed value 
data into the margin calculation for the preliminary results of review. 
However, we will incorporate such data into the margin calculation for 
the final results of review. Accordingly, to calculate NV for these 
preliminary results, we used all comparison-market sales to 
unaffiliated and affiliated customers that passed the arm's-length test 
and that were made within the ordinary course of trade.

E. Adjustments to Normal Value

    Where appropriate, we adjusted home-market sales of Type I cement 
for discounts, rebates, packing, handling and interest revenue, and 
billing adjustments to the invoice price. In addition, we adjusted the 
starting price for inland freight, inland insurance, and pre-sale 
warehousing expenses. For comparisons to EP transactions, we made 
adjustments to the home-market starting price for differences in direct 
selling expenses in the two markets. For comparisons to CEP sales, we 
deducted home-market direct selling expenses from the home-market 
price. We also deducted home-market indirect selling expenses as a CEP-
offset adjustment (see F. Level of Trade/CEP Offset section below). In 
addition, in accordance with section 773(a)(6) of the Act, we deducted 
home-market packing costs and added U.S. packing costs.
    Section 773(a)(6)(C)(ii) of the Act directs us to make an 
adjustment to NV to account for differences in the physical 
characteristics of merchandise where similar products are compared. 
Section 351.411(b) of the regulations directs us to consider 
differences in variable costs associated with the physical differences 
in the merchandise. For CDC's sales, we calculated a difference-in-
merchandise adjustment using appropriate plant-specific variable cost 
data CDC reported.
    For CEMEX, although the company provided information pertaining to 
the cost of production for Type I and Type V LA cement, it was unable 
to segregate specific costs attributable to differences in physical 
characteristics other than costs attributable to the addition of 
kaolin. However, the Department has determined that the existing data 
and product information from previous reviews, on the record of the 
instant review, indicate that there are differences in the physical 
characteristics of Type I cement and Type V LA cement. Thus, we 
conclude that a difference-in-merchandise adjustment is appropriate. 
Section 776(a) of the Act authorizes the Department to use facts 
otherwise available when necessary information is not on the record. 
Therefore, for sales made by CEMEX, we preliminarily determine, in 
accordance with section 776 of the Act, that the use of partial facts 
available for calculating the difference-in-merchandise adjustment is 
appropriate. We have preliminarily determined that the most appropriate 
basis for calculating the difference-in-merchandise adjustment is the 
actual variable cost differences in producing Type I cement and Type V 
LA cement at CEMEX's Hidalgo plant, which is CEMEX's only plant that 
produced both types of cement during the period of review. Although we 
have not yet verified CEMEX's variable cost information, we intend to 
verify the cost information for the Hidalgo plant and will make any 
necessary changes based on verification prior to the issuance of the 
final results of review. A discussion of our preliminary conclusions on 
differences in merchandise is contained in a memorandum in the official 
file for this case. Memorandum from Analyst to Laurie Parkhill, Gray 
Portland Cement and Clinker from Mexico--Difference in Merchandise 
(August 31, 1999).

F. Level of Trade/CEP Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the home market at the 
same level of trade as the EP or CEP. The NV level of trade is that of 
the starting-price sales in the home market or, when NV is based on 
constructed value (CV), that of sales from which we derive selling, 
general and administrative (SG&A) expenses and profit. For EP, the U.S. 
level of trade is also the level of the starting-price sale, which is 
usually from the exporter to the importer. For CEP, it is the level of 
the constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different level of trade 
than EP or CEP, we examine stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different level of trade, and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales on which NV is based and comparison-
market sales at the level of trade of the export transaction, we make a 
level-of-trade adjustment under section 773(a)(7)(A) of the Act. 
Finally, for CEP sales, if the NV level is more remote from the factory 
than the CEP level and there is no basis for determining whether the 
difference in the levels between NV and CEP affects price 
comparability, we adjust NV under section 773(a)(7)(B) of the Act (the 
CEP offset provision). Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South 
Africa, 62 FR 61971 (November 19, 1997).
    Based on our analysis, we conclude that the respondent's home-
market sales to various classes of customers which purchase both bulk 
and bagged cement constituted one level of trade. We based our 
conclusion on our analysis of its selling functions and their sales 
channels. We found that, with some minor exceptions, CEMEX and CDC 
performed the same selling functions to varying degrees in similar 
channels of distribution. We also concluded that the variations in 
selling functions were not substantial when all selling expenses were 
considered as a whole. Memorandum to Laurie Parkhill, Level of Trade 
(Level of Trade Memorandum), August 30, 1999.
    With respect to U.S. sales, we found that CEMEX's and CDC's home-
market sales occur at a different and more advanced stage of 
distribution than their sales to their respective U.S. affiliates. We 
also determined that the data available does not permit us to calculate 
a level-of-trade adjustment. See the Level of Trade Memorandum. 
Therefore, in accordance with section 773(a)(7)(B) of the Act, we 
granted a CEP offset for the CEP sales made by CEMEX and CDC. CDC also 
reported that it sold cement to EP customers (end-users) and listed the 
selling functions performed for EP customers. We determined that CDC's 
EP sales are at a different level of trade as compared to CEMEX's and

[[Page 48783]]

CDC's home-market sales. However, because there is only one level of 
trade in the home market, available data did not permit a level-of-
trade adjustment.

Inflation

    In the previous administrative review of this proceeding, we found 
that Mexico experienced significant inflation and we adjusted our 
dumping margin analysis to account for the effects of high inflation on 
prices in order to avoid the distortions caused by such inflation. In 
this review period, we found that Mexico experienced less than 5 
percent inflation during each month of the period of review with an 
annual inflation rate of less than 16 percent. Because we did not find 
these inflation rates to be so significant that they cause distortions 
in our analysis, we have not adjusted our antidumping margin analysis 
to account for inflation during the instant period.

Currency Conversion

    We made currency conversions in accordance with section 773A of the 
Act based on rates certified by the Federal Reserve Bank in effect on 
the dates of U.S. sales.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the dumping 
margin for CEMEX and CDC for the period August 1, 1997, through July 
31, 1998, to be 45.39 percent.
    The Department will disclose calculations performed in connection 
with these preliminary results to parties within five days of the date 
of publication of this notice. Interested parties may request a hearing 
by November 1, 1999. The Department will notify interested parties of 
the date of any requested hearing and the briefing schedule.
    Upon completion of this review, the Department shall determine, and 
the Customs Service shall assess, antidumping duties on all appropriate 
entries. The Department will issue appropriate appraisement 
instructions directly to the Customs Service upon completion of this 
review. The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
the determination and for future deposits of estimated duties. We will 
base the assessment of antidumping duties on the per-unit assessment 
amount for subject merchandise.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of review, as provided by section 751(a)(1) of the Act: 
(1) The cash deposit rate for the reviewed company will be the rate 
determined in the final results of review; (2) for previously reviewed 
or investigated companies not mentioned 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 this 
review, a prior review, or in the original less-than-fair-value (LTFV) 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacture of 
the merchandise; and (4) the cash deposit rate for all other 
manufacturers or exporters will be 61.85 percent, the all-others rate 
from the LTFV investigation. These deposit requirements, when imposed, 
shall remain in effect until publication of the final results of the 
next administrative review.
    This notice also serves as a preliminary 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 dumping duties.
    We are issuing and publishing this notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: August 31, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-23326 Filed 9-7-99; 8:45 am]
BILLING CODE 3510-DS-P