[Federal Register Volume 65, Number 37 (Thursday, February 24, 2000)]
[Notices]
[Pages 9243-9253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-4377]



[[Page 9243]]

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-822, A-122-823]


Certain Corrosion-Resistant Carbon Steel Flat Products and 
Certain Cut-to-Length Carbon Steel Plate From Canada: Final Results of 
Antidumping Duty Administrative Reviews, and Determination Not To 
Revoke in Part

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

ACTION: Notice of Final Results of the Antidumping Duty Administrative 
Reviews of Certain Corrosion-Resistant Carbon Steel Flat Products and 
Certain Cut-to-Length Carbon Steel Plate From Canada and Determination 
Not to Revoke in Part.

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SUMMARY: On August 19, 1999, the Department of Commerce (the 
Department) published the preliminary results of its administrative 
reviews of the antidumping duty orders on certain corrosion-resistant 
carbon steel flat products and certain cut-to-length (CTL) carbon steel 
plate from Canada. These reviews cover four manufacturers/exporters of 
corrosion-resistant carbon steel and two manufacturers/exporters of CTL 
carbon steel plate), and the period August 1, 1997, through July 31, 
1998. We gave interested parties an opportunity to comment on our 
preliminary results. As a result of these comments, we have made 
certain changes in these final results. These changes are discussed in 
the section on ``Interested Party Comments'' below.

EFFECTIVE DATE: February 24, 2000.

FOR FURTHER INFORMATION CONTACT: Sarah Ellerman at (202) 482-4106 
(Continuous Colour Coat (CCC)); Michael Strollo at (202) 482-5255 
(Dofasco, Inc. and Sorevco Inc. (collectively, Dofasco)); Mark Hoadley 
at (202) 482-0666 (Gerdau MRM Steel (MRM)) and National Steel Co. 
(National); Elfi Blum at (202) 482-0197 (Stelco Inc. (Stelco)); or 
Maureen Flannery at (202) 482-3020, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

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

Background

    On September 29, 1998, we published in the Federal Register (63 FR 
51893) the notice of initiation of administrative review of the orders 
on certain CTL carbon steel plate and certain corrosion-resistant 
carbon steel flat products from Canada for the period August 1, 1997 
through July 31, 1998.
    On August 19, 1999, we published in the Federal Register (64 FR 
45228-301) the preliminary results of the administrative reviews of the 
antidumping duty orders on certain corrosion-resistant carbon steel 
flat products and certain CTL carbon steel plate from Canada. We gave 
interested parties an opportunity to comment on our preliminary 
results. For corrosion-resistant carbon steel, we received written 
comments from CCC, Dofasco, and Stelco, and from the petitioners 
(Bethlehem Steel Corporation, U.S. Steel Group (a unit of USX 
Corporation), Inland Steel Industries, Inc., AK Steel Corporation, LTV 
Steel Co., Inc. and National); for CTL carbon steel plate, we received 
comments from Stelco and the petitioners (Bethlehem Steel Corporation, 
U.S. Steel Group (a unit of USX Corporation), Inland Steel Industries, 
Inc., Gulf States Steel Inc. of Alabama, Sharon Steel Corporation, 
Geneva Steel, and Lukens Steel Company). We have now completed these 
administrative reviews in accordance with section 751(a) of the Act.

Scope of Reviews

    The products covered by these administrative reviews constitute two 
separate ``classes or kinds'' of merchandise: (1) Certain corrosion-
resistant carbon steel flat products, and (2) certain CTL carbon steel 
plate.
    The first class or kind, certain corrosion-resistant steel, 
includes flat-rolled carbon steel products, of rectangular shape, 
either clad, plated, or coated with corrosion-resistant metals such as 
zinc, aluminum, or zinc-, aluminum-, nickel-or iron-based alloys, 
whether or not corrugated or painted, varnished or coated with plastics 
or other nonmetallic substances in addition to the metallic coating, in 
coils (whether or not in successively superimposed layers) and of a 
width of 0.5 inch or greater, or in straight lengths which, if of a 
thickness less than 4.75 millimeters, are of a width of 0.5 inch or 
greater and which measures at least 10 times the thickness or if of a 
thickness of 4.75 millimeters or more are of a width which exceeds 150 
millimeters and measures at least twice the thickness, as currently 
classifiable in the Harmonized Tariff Schedule (HTS) under item numbers 
7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030, 7210.49.0090, 
7210.61.0000, 7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 
7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 
7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 
7212.50.0000, 7212.60.0000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 
7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 
7217.90.5060, and 7217.90.5090. Included in this review are corrosion-
resistant flat-rolled products of non-rectangular cross-section where 
such cross-section is achieved subsequent to the rolling process (i.e., 
products which have been ``worked after rolling'')--for example, 
products which have been beveled or rounded at the edges. Excluded from 
this review are flat-rolled steel products either plated or coated with 
tin, lead, chromium, chromium oxides, both tin and lead (``terne 
plate''), or both chromium and chromium oxides (``tin-free steel''), 
whether or not painted, varnished or coated with plastics or other 
nonmetallic substances in addition to the metallic coating. Also 
excluded from this review are clad products in straight lengths of 
0.1875 inch or more in composite thickness and of a width which exceeds 
150 millimeters and measures at least twice the thickness. Also 
excluded from this review are certain clad stainless flat-rolled 
products, which are three-layered corrosion-resistant carbon steel 
flat-rolled products less than 4.75 millimeters in composite thickness 
that consist of a carbon steel flat-rolled product clad on both sides 
with stainless steel in a 20%-60%-20% ratio.
    The second class or kind, certain CTL carbon steel plate, includes 
hot-rolled carbon steel universal mill plates (i.e., flat-rolled 
products rolled on four faces or in a closed box pass, of a width 
exceeding 150 millimeters but not exceeding 1,250 millimeters and of a 
thickness of not less than 4 millimeters, not in coils and without 
patterns in relief), of rectangular shape, neither clad, plated nor 
coated with metal, whether or not painted, varnished, or coated with 
plastics or other nonmetallic substances; and certain hot-

[[Page 9244]]

rolled carbon steel flat-rolled products in straight lengths, of 
rectangular shape, hot rolled, neither clad, plated, nor coated with 
metal, whether or not painted, varnished, or coated with plastics or 
other nonmetallic substances, 4.75 millimeters or more in thickness and 
of a width which exceeds 150 millimeters and measures at least twice 
the thickness, as currently classifiable in the HTS under item numbers 
7208.40.3030, 7208.40.3060, 7208.51.0030, 7208.51.0045, 7208.51.0060, 
7208.52.0000, 7208.53.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 
7211.13.0000, 7211.14.0030, 7211.14.0045, 7211.90.0000, 7212.40.1000, 
7212.40.5000, and 7212.50.0000. Included in this review are flat-rolled 
products of non-rectangular cross-section where such cross-section is 
achieved subsequent to the rolling process (i.e., products which have 
been ``worked after rolling'') --for example, products which have been 
beveled or rounded at the edges. Excluded from this review is grade X-
70 plate. Also excluded is CTL carbon steel plate meeting the following 
criteria: (1) 100% dry steel plates, virgin steel, no scrap content 
(free of Cobalt-60 and other radioactive nuclides); (2) .290 inches 
maximum thickness, plus 0.0, minus .030 inches; (3) 48.00 inch wide, 
plus .05, minus 0.0 inches; (4) 10 foot lengths, plus 0.5, minus 0.0 
inches; (5) flatness, plus/minus 0.5 inch over 10 feet; (6) AISI 1006; 
(7) tension leveled; (8) pickled and oiled; and (9) carbon content, 0.3 
to 0.8 (maximum).
    With respect to both classes or kinds, the HTS item numbers are 
provided for convenience and Customs purposes. The written description 
remains dispositive of the scope of these reviews.

Normal Value Comparisons

    To determine whether sales of subject merchandise from Canada to 
the United States were made at less than normal value (NV), we compared 
the Export Price (EP) or Constructed Export Price (CEP) to the NV, as 
described in the ``United States Price'' and ``Normal Value'' sections 
of the preliminary results of review notice. In accordance with section 
777A(d)(2) of the Act, we calculated monthly weighted-average prices 
for NV and compared these to individual U.S. transaction prices.

Determination Not to Revoke in Part the Order on CTL Steel Plate

    On August 21, 1998, and August 31, 1998, respectively, MRM and 
Stelco submitted requests, in accordance with section 351.222(b) of the 
Department's regulations, that the Department revoke the order covering 
CTL carbon steel plate from Canada with respect to their sales of this 
merchandise.
    In accordance with section 351.222(b)(2)(iii) of the regulations, 
these requests were accompanied by certifications from MRM and Stelco 
that they had not sold the subject merchandise at less than NV for a 
period of three consecutive reviews, which included this review period, 
and would not do so in the future. The Department conducted 
verifications of MRM's and Stelco's responses for this period of 
review. Prior to considering whether it is appropriate to revoke an 
order pursuant to section 351.222(b)(2) of the regulations, the 
Department ``must be satisfied that, during each of the three (or five) 
years, there were exports to the United States in commercial quantities 
of the subject merchandise to which a revocation or termination will 
apply.'' See 19 CFR 351.222(d)(1) (emphasis added). In other words, the 
Department must be satisfied that the company participated meaningfully 
in the U.S. market during each of the three years at issue, and that 
past margins are reflective of a company's normal commercial activity.
    On January 15, 1999, Stelco submitted comments supporting its 
revocation request. On January 19, 1999, petitioners submitted factual 
information pertaining to Stelco's performance and the data Stelco 
submitted to the Department in support of its revocation request.
    Based on the record, we find that Stelco did not sell merchandise 
in the United States in commercial quantities during the current 
(fifth) administrative review period. During the period of review (POR) 
covered by the fifth administrative review (August 1997 though July 
1998), Stelco made only a few sales in the United States. Moreover, 
Stelco's total sales volume during this POR was only 47 tons of subject 
merchandise.\1\ By contrast, during the period covered by the 
antidumping investigation, which was only six months long, Stelco made 
several thousand sales totaling approximately 30,000 tons.\2\ In other 
words, Stelco's sales for the entire year covered by the fifth review 
period were only 0.157 percent of its sales volume during the six 
months covered by the investigation. Similarly, during the fourth POR 
(covering the period August 1996 through July 1997), Stelco sold 
approximately 2,000 tons of subject merchandise in the United States. 
While this amount is small in comparison to the amount sold prior to 
issuance of the order, it is more than 40 times greater than the amount 
sold during the period covered by the fifth administrative review. 
Consequently, although Stelco received a de minimis margin in the fifth 
administrative review, this margin was not based on commercial 
quantities within the meaning of the revocation regulation. The number 
of sales and total sales volume is so small, both in absolute terms, 
and in comparison with the period of investigation and other review 
periods, that it does not provide any meaningful information on 
Stelco's normal commercial experience. In light of this fact, we cannot 
conclude that the antidumping duty is no longer necessary to counteract 
dumping. Therefore, we find that Stelco does not qualify for revocation 
from the order on steel plate under section 351.222(b)(1)(i) and 
(d)(1).
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    \1\ Stelco's response (public version) to Section A of the 
Department's questionnaire in the current administrative review of 
CTL carbon steel plate from Canada (Oct. 26, 1998) at Exhibit A-1.
    \2\ Stelco's response (public version) to Section A of the 
Department's questionnaire in the antidumping duty investigations of 
certain flat carbon steel (CTL plate) products from Canada (Sept. 
11, 1992) at Exhibit 1.
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    With respect to MRM's request for revocation, we have decided not 
to revoke the antidumping order with respect to MRM at this time. On 
May 28, 1998, the Department initiated an anti-circumvention 
investigation of MRM based upon information that MRM was circumventing 
the antidumping duty order on cut-to-length plate by adding small 
amounts of boron to plate products covered by the order. Cut-To-Length 
Carbon Steel Plate From Canada; Initiation of Anticircumvention Inquiry 
on Antidumping Duty Order, 63 FR 29179 (May 28, 1998). We find that the 
issue of whether a company is engaged in circumventing an antidumping 
duty order is relevant to whether that company has satisfied the 
criteria for revocation under section 351.222 of the Department's 
regulations. See Color Television Receivers From the Republic of Korea: 
Initiation of Changed Circumstances Antidumping Duty Administrative 
Review and Consideration of Revocation of Order (in Part), 61 FR 32426 
(June 24, 1996); see also Samsung Electronics Co., Ltd. v. United 
States, 946 F. Supp. 5, 10 (CIT 1996), aff'd, 129 F.3d 135 (Fed. Cir. 
1997) (``Commerce has initiated both anticircumvention and changed 
circumstances reviews which will address whether the antidumping duty 
order should be revoked.''). In light of the information before the 
Department concerning MRM's alleged circumvention of the order and the

[[Page 9245]]

Department's ongoing anti-circumvention investigation of MRM, we find 
that MRM has not satisfied the requirements for revocation given that 
the issue of MRM's alleged circumvention of the order remains 
unresolved. Although the Court of International Trade has issued an 
injunction with respect to the Department's anti-circumvention 
proceeding in Co-Steel Lasco and Gerdau MRM Steel v. United States, Ct. 
No. 98-08-02684, we note that the injunction is preliminary and that 
the Court has not yet finally decided the case on its merits. Because 
the Department expects to proceed with the anti-circumvention 
investigation following the litigation in this matter, and because a 
determination on circumvention is relevant to the determination of 
revocation, the Department has determined to withhold MRM's revocation 
pending resolution of the anti-circumvention investigation.

Duty Absorption

    On October 28, 1998, petitioners in the corrosion-resistant carbon 
steel case requested that the Department determine whether antidumping 
duties had been absorbed during the POR for Dofasco, CCC, and Stelco; 
and petitioners in the CTL carbon steel plate case requested that such 
a determination be made for MRM and Stelco. Section 751(a)(4) of the 
Act provides for the Department, if requested, to determine during an 
administrative review initiated two or four years after the publication 
of the order, or in 1996 or 1998 for orders in effect prior to January 
1, 1995 (transition orders), whether antidumping duties have been 
absorbed by a foreign producer or exporter, if the subject merchandise 
is sold in the United States through an affiliated importer. Because 
this review is of a transition order and was initiated in 1998, we have 
made a duty absorption determination in this segment of the proceeding.
    In this case, Dofasco sold to the United States through an 
affiliated importer and also acted as its own importer. In all other 
cases, the producer was the importer of record. Therefore, all 
companies meet the definition of affiliation within the meaning of 
section 751(a)(4) of the Act. With respect to corrosion-resistant 
carbon steel, we have determined that there is a de minimis dumping 
margin for Dofasco's sales. Therefore, we determine that no antidumping 
duties have been absorbed by Dofasco on its U.S. sales of corrosion-
resistant carbon steel during the period of review.
    For Stelco, 22.63 percent of its U.S. sales were made at positive 
dumping margins, and for CCC, 20.38 percent of its U.S. sales were made 
at positive margins. CCC and Stelco have provided evidence that they 
charged their unaffiliated customers an amount equal to the cash 
deposits required on individual sales. CCC and Stelco argue that this 
is sufficient to indicate that there has not been duty absorption. 
However, the documentation only indicates that the cash deposit rate 
was passed on to the unaffiliated customer, and no statement or 
agreement by the producer/importer and unaffiliated customer, 
indicating that the unaffiliated customer will ultimately pay all the 
antidumping duties due, was submitted. We presume that the duties will 
be absorbed for those sales which were dumped, unless there is evidence 
(e.g., an agreement between the affiliated importer and the 
unaffiliated purchaser) that the unaffiliated purchasers in the United 
States will pay the full duty ultimately assessed on the subject 
merchandise. Although in this case certain companies have provided 
invoices which separately list an amount for estimated antidumping 
duties which they are charging their unaffiliated purchasers, this is 
not evidence of payment of antidumping duties by the customer, and none 
of these companies has presented evidence of agreements with 
unaffiliated purchasers to pay ultimately assessed antidumping duties. 
Therefore, we find that the antidumping duties have been absorbed by 
the above-listed firms. (See Antifriction Bearings (Other than Tapered 
Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan, 
Romania, Singapore, Sweden and the United Kingdom: Preliminary Results 
of Antidumping Duty Administrative Reviews and Partial Termination of 
Administrative Reviews, 62 FR 31568 (June 10, 1997).)
    With respect to CTL carbon steel plate, we have determined that 
there are no dumping margins for MRM and Stelco. Therefore, we find 
that antidumping duties have not been absorbed by MRM and Stelco on 
their U.S. sales of CTL carbon steel plate.

Interested Party Comments

CCC

Comment 1: Imputed U.S. Credit
    CCC contends that, in determining the appropriate short-term 
interest rate, the Department erred in using the average U.S. prime 
rate as the basis upon which to calculate CCC's U.S. imputed credit 
expense. CCC argues that the Department's Policy Bulletin 98.2 
maintains that the Department's practice is to use the Federal 
Reserve's weighted-average rate for commercial and industrial loans 
maturing between one month and one year from the time the loan is made. 
CCC notes that the Department has used the weighted-average rate for 
commercial and industrial loans in the last two administrative reviews 
of this case. CCC states that the interest rate it provided in its 
section C response, which is based on the Federal Reserve's weighted-
average data for commercial and industrial loans for the POR, should be 
used instead of the average prime rate, in accordance with the 
Department's Policy Bulletin 98.2.
    Petitioners argue that the average prime rate used by the 
Department to value CCC's U.S. credit expense is correct. Petitioners 
cite two cases in which the Department used the prime rate for imputing 
credit expense: Industrial Phosphoric Acid from Belgium: Final Results 
of Antidumping Duty Administrative Review, 63 FR 55087 (October 14, 
1998) and Silicon Metal from Brazil: Notice of Final Results of 
Antidumping Duty Administrative Review, 64 FR 6305 (February 9, 1999). 
Petitioners also argue that the rate proposed by CCC is improper 
because it involves mainly foreign money market rates, and the 
Department's practice requires interest rates to be calculated in the 
currency in which the transaction was made.
    Department's Position: We agree with CCC. We have used the average 
short-term lending rates calculated by the Federal Reserve, as outlined 
in Policy Bulletin 98.2. Policy Bulletin 98.2 states a preference for 
the Federal Reserve's average rate on commercial loans as the basis of 
the short-term interest rate. Policy Bulletin 98.2 recognizes that, 
while using the U.S. prime rate is ``reasonable,'' it is not preferable 
because the prime rate usually represents the minimum borrowing rate 
available in the U.S. market, instead of an average, and does not 
necessarily represent a short-term borrowing rate that a respondent 
might realize in the usual course of business. Although this rate may 
include foreign money market rates, as noted by petitioners, the 
Federal Reserve collects this data by surveying 348 domestically 
chartered commercial banks and 50 U.S. branches and agencies of foreign 
banks; therefore, this data accurately reflects the experience of 
businesses for borrowing dollars in the United States. The Department's 
standard practice, as described in Policy Bulletin 98.2, in a case 
where a respondent has no short-term borrowings in the currency of

[[Page 9246]]

transaction, is the following: ``For dollar transactions, we will 
generally use the average short-term lending rates calculated by the 
Federal Reserve to impute credit expenses. Specifically, we will use 
the Federal Reserve's weighted-average rate for commercial and 
industrial loans maturing between one month and one year from the time 
the loan is made.'' (Policy Bulletin 98.2, at 7) Accordingly, we have 
applied the average short-term lending rates calculated by the Federal 
Reserve.

Dofasco

Comment 1: By-Product Offset for Industrial Coke
    Dofasco argues that the Department improperly denied an offset to 
Dofasco's cost of production (COP) for by-product profit from sales of 
industrial coke. Dofasco claims that, as an integrated producer, it 
must produce coke to produce steel. Dofasco maintains and operates 
three batteries that produce industrial coke. Dofasco asserts that, in 
order to meet its requirements for steel production, it must operate 
all three batteries since operating two batteries does not produce 
enough coke to meet its steel production requirements. Therefore, the 
production of coke is an unavoidable consequence of steel-making, and 
as such, should be treated as a by-product in the production of subject 
merchandise.
    Petitioners contend that coke is an intermediate product, not a by-
product, in the production of subject merchandise. Petitioners assert 
that, in determining whether a product should be treated as an 
intermediate product, as opposed to a by-product, the Department, as 
established in Titanium Sponge from Japan: Final Determination of Sales 
at Less Than Fair Value
    (Titanium Sponge), 49 FR 38687 (October 1, 1984), examines whether 
(1) it is manufactured in separate facilities; (2) its quantity of 
production could be determined by management and is not determined by 
the production of the subject merchandise; and (3) its production was 
not an unavoidable consequence of the manufacturing of the subject 
merchandise. Petitioners contend that Dofasco, like any coke 
manufacturer, must produce its coke in specialized coke oven batteries, 
while the subject merchandise, corrosion-resistant carbon steel, is 
produced in an entirely separate and distinct mill. Petitioners also 
argue that the amount of coke produced by Dofasco is entirely 
independent from the amount of subject merchandise produced. 
Petitioners maintain that Dofasco can manufacture coke without 
producing any corrosion-resistant carbon steel at all; conversely, 
Dofasco can manufacture corrosion-resistant carbon steel without 
producing coke. In addition, petitioners assert that, since coke is 
fully consumed in the steelmaking process, it can not be considered a 
by-product.
    Department's Position: We agree with petitioners that coke is not a 
by-product of the steel-making process. Coke is a material that goes 
into making steel, not a product that results from the same process 
that yields steel. Nor does that fact that coke is necessary to make 
steel mean that coke is produced along with steel in the same process. 
Therefore, for these final results, we continue to deny Dofasco's 
requested offset to COP for revenue from sales of industrial coke. We 
have continued to use the amount that Dofasco reported for its average, 
per-unit coke production cost as part of the cost of steel-making. 
Thus, only the cost of coke used in the production of steel is included 
in the steel cost of production. No cost of coke that was sold is 
reflected in the steel COP.
Comment 2: Foreign Exchange Gains as an Offset to COP
    Dofasco argues that the Department's denial of its foreign exchange 
gains as an offset to net interest expense is, in effect, an improper 
use of facts available. Dofasco maintains that it cooperated throughout 
the review process by answering all questions and supplemental 
questions. Dofasco also contends that it cooperated with the Department 
during verification and answered all questions asked of it. In 
addition, Dofasco argues that it reported the foreign exchange gains as 
an offset to net interest expense early in the proceeding but the 
Department never once asked Dofasco to provide any additional 
information on the offset. Therefore, Dofasco argues, the Department 
should allow the offset to net interest expense for its reported 
foreign exchange gains.
    Department's Position: We agree with Dofasco. Foreign exchange 
gains are normally taken as an offset to the elements of COP to which 
they are relevant. Since we do not know the source of these foreign 
exchange gains, we disallowed an offset in the preliminary results. 
However, because Dofasco treated these foreign exchange gains as cost-
of-sale adjustments in its business records, and because we did not 
request any information from Dofasco concerning the source of these 
foreign exchange gains, we have determined that it is appropriate to 
include them in the calculation of Dofasco's COP for these final 
results. See Certain Welded Carbon Steel Pipes and Tubes from Thailand: 
Final Results of Antidumping Duty Administrative Review, 64 FR 56759 
(October 21, 1999).
Comment 3: Offset to COP for Baycoat Profit
    Dofasco argues that the Department's failure to allow an offset to 
Dofasco's COP for profit that was remitted to Dofasco by Baycoat 
Partnership (Baycoat) is contrary to the dictates of the North American 
Free Trade Agreement (NAFTA) Panel Decision in In the Matter of 
Corrosion-Resistant Steel Flat Products from Canada, Panel No. USA-97-
1904-3, 1999 FTAPD LEXIS 2 (January 20, 1999)(NAFTA Panel Decision). 
Moreover, Dofasco contends, it is contrary to the Department's own 
remand determination in that case.
    Dofasco maintains that, in the review that was the subject of the 
NAFTA Panel Decision, respondent Stelco was charged a transfer price 
for painting services that exceeded the actual costs of Baycoat to 
provide painting services, even though Baycoat, which was 50% owned by 
Stelco, remitted 50% of its profits at the end of each year back to 
Stelco. Dofasco contends that the NAFTA Panel rejected the Department's 
decision to use the inflated transfer price rather than the actual 
cost, stating that ``{w}hen the transfer price is artificially high 
between affiliated parties, as in this case, application of the 
`highest' standard yields a result at odds with the `actual cost' 
object of the statute.''
    Dofasco maintains that, in accordance with the NAFTA Panel's 
instructions, the Department recalculated Stelco's cost of production 
by adjusting the transfer price for Baycoat services to Stelco, in 
order to account for Baycoat's profit remittances to Stelco. Dofasco 
asserts that it is the other partner in the joint venture with Stelco; 
and, like Stelco, Dofasco pays Baycoat for painting services and 
receives a share of remittance of profit at the end of the year. 
Accordingly, Dofasco argues, it is entitled to the same type of 
adjustment to the reported Baycoat transfer price that the Department 
granted to Stelco, pursuant to the NAFTA Panel remand. Specifically, 
Dofasco claims, the Department should allocate total per-unit Baycoat 
profit (Dofasco's per-unit profit, as derived by Dofasco, multiplied by 
two), by multiplying it by the ratio of the value charged to Dofasco by 
Baycoat to the total value produced by Baycoat, or simply rely on the 
cost data already submitted by Dofasco in its response to Section D of 
the Department's questionnaire.

[[Page 9247]]

    Petitioners counter that the Department properly valued the major 
inputs purchased from Baycoat at the transfer price. Petitioners cite 
subsections 773(f)(2) and (3) of the Act, which address the treatment 
of transactions between affiliated parties for the purpose of 
calculating COP or constructed value (CV). Petitioners contend that 
subsection 773(f)(2) permits the Department to disregard the transfer 
price for a transaction between a respondent and an affiliated supplier 
if, and only if, the transfer price does not fairly reflect the amount 
usually reflected in sales of merchandise under consideration in the 
market under consideration. Similarly, petitioners maintain subsection 
773(f)(3) permits the Department to disregard the transfer price (or 
market price) for a major input if it has reasonable grounds to believe 
or suspect that such price is less than the cost of production of such 
input. Accordingly, petitioners argue, the statute requires in this 
case that the Baycoat inputs be valued at the transfer price.
    Petitioners also argue that, under section 19 U.S.C. 1516a(b)(3), a 
court in the United States is not bound by a final decision of a 
binational panel. Petitioners cite Live Swine From Canada; Final 
Results of Countervailing Duty Administrative Reviews, 61 FR 52408 
(October 7, 1996) (Live Swine From Canada), to support its claim that 
panel decisions are not binding precedent on the Department, and are 
not binding on subsequent administrative determinations, but are 
binding only on the particular matters presented which are based on the 
particular administrative record subject to review. Thus, petitioners 
argue, the Department, in this review, is under no obligation with 
respect to the Binational Panel's decision in that review. Further, 
petitioners assert that it was only in order to comply with the Panel's 
instructions that the Department adjusted the Baycoat transfer price 
for remitted profits.
    Finally, petitioners maintain that, in its remand determination, 
the Department reiterated its position that because the transfer price 
is not below cost, it should be an appropriate basis for valuing the 
input provided by Baycoat.
    Department's Position: We agree with petitioners that valuing 
Baycoat coating services at the Baycoat transfer price is the correct 
method to arrive at actual cost for the producer of subject 
merchandise. As stated in the North American Free Trade Agreement-Final 
Remand Determination, Article 1904 Binational Panel Review, U.S.A.-97-
1904-3 (June 14, 1999) (Final Remand Determination), this practice is 
consistent with the Department's antidumping regulations, which require 
that the Department normally value inputs supplied by affiliated 
persons at the transfer price between the entities, provided that such 
a price reflects the price commonly charged in the market and, for 
major inputs, is not below the cost of producing the input. See 19 CFR 
351.407(b).
    Moreover, the Department's practice of using the highest of the 
market price, actual transfer price, or cost of production has been 
upheld by the CIT in Mannesmannrohren-Werke AG v. United States, Slip 
Op. 99-118 (Ct. Int'l Trade Oct. 29, 1999). In that case, the Court 
held that the plain language of the statute makes clear that ``although 
Commerce may use an affiliated party's cost-of-production to value a 
major input, it may only do so when (1) Commerce has `reasonable 
grounds to believe or suspect' that the cost-of-production exceeds the 
transaction value reported; and (2) the cost-of-production exceeds the 
market value of the input.'' Id. at 14.
    Further, as in the Final Remand Determination, the Department 
considers the factual circumstances in this case to fit neatly within 
the circumstances contemplated by sections 773(f)(2) and (f)(3) of the 
Act. That is, since (1) Baycoat is a supplier affiliated with Dofasco; 
(2) the coating services provided by Baycoat constitute a major input 
into the production of corrosion-resistant carbon steel; and (3) there 
is no market value available (Baycoat only provides coating services 
for its joint venture owners), the higher of transfer price or cost of 
production would apply. These statutory provisions ensure that 
transactions between affiliated parties occurring at less than the 
affiliate's cost of production are not used as the basis of the 
Department's calculation of cost of production of the producer of 
subject merchandise. Thus, when affiliated party transactions occur at 
invalid prices, i.e., below cost or below market value, then the 
Department may make an adjustment to the costs recorded in the books 
and records of the respondent. See also ``Department's Position'' on 
Stelco's ``Comment 3,'' below.
    Furthermore, we agree with petitioners that a NAFTA panel decision 
does not constitute binding precedent upon agency determinations in 
subsequent administrative proceedings. See Porcelain-On-Steel Cookware 
From Mexico: Notice of Final Results of Antidumping Duty Administrative 
Review, 62 FR 25908 (May 12, 1997) and Live Swine From Canada. 
Nevertheless, in determining whether to continue or modify our practice 
in any given area, we consider seriously every decision by a NAFTA 
panel and its implications in subsequent reviews. On the input 
valuation issue, as discussed above, there are split decisions from the 
CIT in Mannesman v. United States and from a NAFTA panel In the Matter 
of Corrosion-Resistant Steel Flat Products from Canada. In Mannesman v. 
United States, the Department's interpretation of the major input rule 
was upheld as a reasonable interpretation of the statute. We continue 
to believe that our interpretation of these statutory provisions is 
reasonable. Therefore, in the instant case we have continued to value 
Baycoat's painting services using the transfer price from Baycoat to 
Dofasco.
Comment 4: U.S. Credit Expenses
    Petitioners argue that the Department should recalculate Dofasco's 
U.S. credit expenses based on its practice of using the respondent's 
own weighted-average short-term borrowing rate in the currency of the 
transaction. Petitioners contend that, because Dofasco had short-term 
borrowings in U.S. dollars, Dofasco should have used that rate for 
purposes of its U.S. credit expense calculation. Petitioners cite 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Preserved Mushrooms From Chile, 63 FR 56613 (October 22, 1998) and 
Policy Bulletin 98:2, Imputed Credit Expenses and Interest Rates.
    Dofasco claims that petitioners have mischaracterized its short-
term borrowings. Dofasco argues that the situation surrounding its 
short-term borrowing was unique and not representative of its normal 
commercial practices. Dofasco contends that, in previous cases, the 
Department has excluded aberrant rates when those rates were not 
representative of normal commercial borrowings by the respondent, 
citing the Notice of Final Determination of Sales at Less Than Fair 
Value: Stainless Steel Round Wire from Korea, 64 FR 17342 (April 9, 
1999). Dofasco argues that, in this case, the loan in question was 
exceedingly rare, and did not represent normal commercial borrowing 
conditions for Dofasco. Dofasco argues that, had it financed its 
receivables through bank borrowings, it would have used the rate that 
was available to it for borrowings of a longer period of time.
    Department's Position: The Department's practice is to calculate 
the U.S. credit expense using a short-term interest rate tied to the 
currency in which the sales are denominated. This

[[Page 9248]]

interest rate should be based on the respondent's weighted-average 
short-term borrowing experience in the currency of the transaction. 
(See Policy Bulletin 98:2, Imputed Credit Expenses and Interest Rates.) 
Therefore, we have applied the various interest rates available to 
Dofasco to the sales which best reflect the terms of the rates' 
availability, respectively. For further information, see the 
proprietary Final Analysis Memorandum for Dofasco, February 15, 2000 
(Dofasco Analysis Memorandum), on file in room B-099 of the Commerce 
Department.
Comment 5: Costs for iron ore
    Petitioners argue that, pursuant to section 773(f)(2) of the Act, 
the Department should reject the transfer price for Dofasco's purchases 
of iron ore from its affiliated supplier, Wabush Mines, and revalue the 
iron ore at market price. As the basis of market price, petitioners 
cite prices paid by other steel companies to a different Dofasco 
affiliate. For further details, see Dofasco Analysis Memorandum.
    Dofasco contends that testing the transfer price from one 
affiliated supplier to Dofasco against the transfer price from another 
of Dofasco's affiliated suppliers to its unaffiliated customers is not 
a valid test of a transfer price to a market price. To make such a 
comparison, Dofasco argues, would be tantamount to concluding that 
there is only one market price for any major input, regardless of the 
economic situation of the supplier. Dofasco also argues that the market 
price petitioners suggest is actually for a different kind of pellet 
than that purchased from Wabush. Dofasco claims that this would create 
an ``apples to oranges'' comparison. Finally, Dofasco maintains that 
petitioners' attempt to inflate Dofasco's true cost for Wabush iron ore 
would be contrary to the major input rule. In support, Dofasco cites 
the NAFTA panel decision discussed above, where the Panel held that it 
was unlawful for the Department to automatically choose the inflated 
transfer price over input cost. For these reasons, Dofasco argues, the 
Department should continue to use the reported cost/transfer price in 
its calculations for the final results.
    Department's Position: In accordance with section 773(f)(2) of the 
Act, the Department determines the highest of transfer price or market 
price. As Dofasco notes, the sale that petitioners suggest indicates 
market price is, in fact, of a different type of pellet than that 
purchased by Dofasco from Wabush. Currently, we have no information on 
the record of this review whereby to assess the significance of any 
differences between the different types of pellets in terms of physical 
properties or market value. We do not consider a price between the 
companies proposed by petitioner to constitute a valid basis upon which 
to determine a market price for Dofasco's purchases from Wabush. 
Therefore, we have continued to value Dofasco's iron ore from Wabush at 
the higher of transfer price or cost, which, in this case, are 
identical.
Comment 6: Ministerial Error
    Petitioners claim that the Department, in its model match and 
margin programs, used an incorrect or partial home market data set, 
and, as a result, the Department did not perform an arm's-length test. 
Therefore, petitioners argue, the Department should base its final 
results on the complete home market data set.
    Dofasco agrees with petitioners' comments regarding ministerial 
errors.
    Department's Position: We agree with petitioners and Dofasco, and 
have corrected these errors for these final results.

Stelco

Comment 1: The Merits of Stelco's Request For Revocation--Commercial 
Quantities
    Stelco disagrees with the Department's preliminary determination 
not to revoke the order on CTL carbon steel plate with regard to 
Stelco. Stelco states that it has fulfilled all the requirements of 
section 351.222(b) of the Department's regulations for revocation of 
the antidumping duty order in part. Stelco points out that the 
Department determined that Stelco did not engage in dumping of subject 
merchandise during the third and fourth review periods (1996-96 and 
1996-1997, respectively). Stelco points out that, in the fifth review, 
the Department again preliminarily determined that Stelco did not dump 
subject merchandise. In addition, Stelco submitted the necessary 
certification in its request for revocation.
    Stelco further states that the Department denied Stelco revocation 
because it did not sell to the United States in commercial quantities 
during the current review period. Stelco argues that the term 
``commercial quantities'' has not been defined under the statute or 
regulations, and that its usage has been to confirm that sales were 
bona fide. Furthermore, Stelco suggests that the term commercial 
quantities refers to the volume of individual shipments rather than to 
the total volume of all shipments. Stelco claims that the quantity of 
each of Stelco's shipments to its U.S. customers corresponds with its 
normal individual shipments to its customers.
    Stelco asserts that it has been Department practice to consider 
even one single shipment to constitute commercial quantities, and that 
a decreased sales volume is not considered no volume at all, citing 
Brass Sheet and Strip from Germany; Final Results of Antidumping Duty 
Administrative Review and Determination Not to Revoke in Part, 61 FR 
49727, 49729 (September 23, 1996) (BSS from Germany). Stelco further 
argues that, in Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof From Italy, 60 FR 10959, 10967 (February 
28, 1995) (AFBs from Italy), the Department agreed with respondent that 
there is nothing in the Department's regulations which would preclude 
revocation even when sales are considered minimal. Stelco points out 
that the bona fide nature of its sales has not been contested. Stelco 
argues that, even when there is a severe drop in exports, the 
Department does not automatically terminate its revocation analysis. 
(See Pure Magnesium from Canada; Preliminary Results of Antidumping 
Administrative Review and Notice of Intent Not To Revoke Order in Part, 
63 FR 26147 (May 12, 1998) (Pure Magnesium from Canada; Preliminary 
Results 96/97) at 26148-9.)
    Petitioners state that the Department was correct in finding Stelco 
ineligible for revocation. Petitioners argue that Stelco failed to 
demonstrate that it shipped CTL carbon steel plate in commercial 
quantities during the fifth administrative review and, therefore, 
failed to demonstrate that it was able to obtain zero or de minimis 
margins while selling at normal commercial levels in the U.S. market 
for all three consecutive years. Consequently, petitioners argue, 
Stelco does not qualify for revocation under sections 351.222(b) and 
(d)(1) of our regulations.
    Petitioners point out that section 351.222(b)(2) of the 
Department's regulations requires that, to establish eligibility for 
revocation, a company must meet two threshold requirements: (1) [o]ne 
or more exporters or producers covered by the order have sold the 
merchandise at no less than NV for a period of at least three years, 
and (2) it is not likely that those persons will in the future sell the 
subject merchandise at less than NV. Petitioners contend that it is the 
Department's longstanding practice to consider whether sales have been 
made in commercial quantities in making its revocation decision. (See 
Steel Wire Rope From the Republic of

[[Page 9249]]

Korea; Final Results of Antidumping Duty Administrative Review and 
Revocation in Part of Antidumping Duty Order, 63 FR 17986, 17989 (April 
13, 1998) (Steel Wire Rope from Korea).)
    Petitioners point out that Stelco made only a few sales, totaling 
47 tons, during the fifth administrative review period, whereas Stelco 
made several thousand sales totaling approximately 30,000 tons during 
the six-month period of the antidumping investigation; that is, the 
volume sold during the fifth review period is only 0.157 percent of the 
sales volume during the period of the antidumping investigation. In 
addition, the sales quantity of the fifth administrative review period 
was very small in comparison with the sales quantity of the fourth 
review period. Petitioners point out that the Department rejected 
Stelco's revocation request in the fourth administrative review, 
because the total sales volume during the second administrative review 
(one of the three periods considered for a potential fourth 
administrative review revocation) amounted to only 36 tons, and thus 
did not constitute commercial quantities. (See Certain Corrosion-
Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon 
Steel Plate from Canada, 64 FR 2173, 2175 (January 13, 1999) (Fourth 
Review Final Results).) Petitioners argue that the above comparisons 
demonstrate that the sales volume in the fifth administrative review 
does not give any meaningful information on Stelco's normal commercial 
experience. Therefore, petitioners state, the zero margin does not 
credibly indicate that Stelco can export to the United States at not 
less than NV in the absence of an antidumping duty order.
    Petitioners challenge Stelco's argument that commercial quantities 
constitute bona fide sales in quantities typical for shipments to 
individual customers. Petitioners note that the Department rejected 
this argument in Pure Magnesium From Canada; Final Results of 
Antidumping Duty Administrative Review and Determination Not To Revoke 
Order in Part, 64 FR 12977 (March 16, 1999) (Pure Magnesium From 
Canada; Final Results 96/97), stating that, despite the bona fide 
nature of sales, the abnormally small aggregate quantity did not 
constitute sales in commercial quantities and thus could not provide a 
basis for revocation. (See Pure Magnesium From Canada; Final Results 
96/97, at 12979.) Petitioners additionally point out that in Pure 
Magnesium From Canada; Final Results of Antidumping Duty Administrative 
Review and Determination Not to Revoke Order in Part, 64 FR 50489 
(September 17, 1999) (Pure Magnesium From Canada; Final Results 97/98) 
the Department determined that the commercial quantities requirement in 
the regulations would be redundant if commercial quantities would 
pertain to the bona fide nature of sales. (See Pure Magnesium From 
Canada; Final Results 97/98, at 50492.)
    Petitioners further state that Stelco mischaracterizes the 
Department's decision in BSS from Germany, when it argues that one bona 
fide shipment could constitute commercially significant quantities. In 
that case, petitioners state, the Department did not revoke the 
antidumping duty order because it concluded that the sharp decline in 
shipping volume after the imposition of the order indicated that 
respondent in that case had problems selling subject merchandise above 
NV. (See BSS from Germany, at 49729.)
    Petitioners disagree with Stelco's reference to AFBs from Italy, to 
support Stelco's claim that minimal sales are sufficient to obtain 
revocation. Petitioners state that in those final results the 
Department agreed with respondent that, although the quantities could 
be considered minimal, the fact that they were significantly greater 
than the quantity of sales on which the Department based its 
determination in the less-than-fair-value (LTFV) investigation, 
constitutes an acceptable level on which to base revocation. This, 
petitioners state, greatly differs from Stelco's sales record. 
Therefore, petitioners conclude that Stelco's zero margin for the POR 
was not reflective of its normal commercial experience.
    Department's Position: We disagree with Stelco on the 
interpretation of the term ``commercial quantities,'' namely, that in 
the absence of any definition in the law of the Department's 
regulations, the term commercial quantities should be interpreted as 
the volume of individual shipments. On the contrary, it has long been 
the Department's practice to examine the aggregate volume of total 
sales to the United States in determining whether sales have been made 
in commercial quantities. In addition, it has been the position of the 
Department that, relating commercial quantities to whether sales are 
bona fide would make the commercial quantities requirement in our 
regulations redundant. (See Pure Magnesium From Canada; Final Results 
96/97, at 12979, and Pure Magnesium From Canada; Final Results 97/98, 
at 50492.) Commercial quantities and bona fide sales are two distinct 
and separate concepts under the law. In this case we examined whether 
Stelco's sales were made in commercial quantities, which is necessary 
to support a determination to revoke, and not whether these sales 
constitute bona fide transactions for the purpose of calculating 
dumping margins.
    Furthermore, the two cases Stelco relies upon to build its 
argument, BSS from Germany and AFBs from Italy, are inapposite because 
the Department in those cases did not consider whether sales were made 
in commercial quantities as a threshold matter for purposes of 
revocation until its new regulations came into effect. In BSS from 
Germany, the Department specifically declined to consider commercial 
quantities in making its determination regarding revocation.
    We agree with petitioners that Stelco has not sold subject 
merchandise in commercial quantities at not less than NV for three 
consecutive years, as required by sections 351.222(b)(2)(i) and (d)(1) 
of the Department's regulations. A few sales totaling 47 tons of CTL 
carbon steel plate is so insignificant in comparison with the volume of 
sales prior to the imposition of the antidumping order, as well as in 
comparison with subsequent review periods, as to fail to constitute a 
commercial quantity. Therefore, we do not consider Stelco sales to have 
been made in normal commercial quantities. Accordingly, we are not 
revoking the antidumping order on CTL carbon steel plate with respect 
to Stelco. For further details, see the ``Determination Not to Revoke'' 
section above.
Comment 2: The Merits of Stelco's Request For Revocation--Unusual 
Occurrences
    Stelco states that, in 1997-98, its plate mill underwent major 
modernization and upgrading, which was accompanied by planned shutdowns 
as well as by ``substantial unanticipated and unrelated mill 
shutdowns.'' Stelco claims that such a magnitude of plate mill 
shutdowns has never occurred at Stelco. These unusual occurrences, 
Stelco states, severely impacted its production capacity. Stelco claims 
that there was a severe reduction in production from the fourth to the 
fifth POR due to these ``unusual occurrences'' which resulted from the 
plate mill modernization. Stelco further points out that it is company 
policy to support the domestic market, and that the company under these 
unusual circumstances did make all the sales that it could to its U.S. 
customers. Stelco distinguishes its situation from that which occurred 
in the Pure Magnesium reviews, claiming that its

[[Page 9250]]

level of sales in each review was the result of ``normal commercial 
behavior.''
    Petitioners contend that mill upgrades as undertaken by Stelco do 
not constitute an unusual occurrence as defined in the Department's 
Notice of Proposed Rules, namely, that the Department will take into 
consideration natural disasters and other unusual occurrences that have 
an impact on a company's capacity utilization. (See Notice of Proposed 
Rules, 61 FR 7308 (February 27, 1996), at 7320.) Petitioners argue that 
it is not uncommon for companies to periodically upgrade a mill and to 
have planned shutdowns during the upgrade process. Petitioners also 
state that a planned upgrade, as undertaken by Stelco, must be 
distinguished from the permanent shifting of production to the United 
States that characterized the case in Notice of Preliminary Results of 
Antidumping Duty Administrative Review and Intent to Revoke Order: 
Brass Sheet and Strip from the Netherlands, 64 FR 48760, 48765 
(September 8, 1999) (BSS from the Netherlands-Preliminary Results), 
because it was not a permanent change in the company's commercial 
behavior.
    Petitioners further argue that Stelco itself did not appear to 
consider the plate mill upgrade an unusual occurrence up to the point 
that it sought revocation, because, for example, Stelco did not report 
any closure or restructuring costs in its original section D 
questionnaire response with respect to a question on plant closures, 
shut-downs, or restructuring costs during the POR. (See Stelco's 
Section D Questionnaire Response (Public Version) (November 23, 1998), 
at D-27 & D-49.) Petitioners note that Stelco should have reported 
these additional costs as part of its cost of production, as required 
in the Department's questionnaire.
    Petitioners point out that, although Stelco refers to major 
unexpected and unrelated mill shut-downs as unusual occurrences, in 
fact unanticipated delays and shut-downs are not unusual, but are 
instead a common part of the maintenance and operation of steel mills. 
In support of this argument petitioners cite Notice of Final 
Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled 
Carbon-Quality Steel Products From Japan, 64 FR 24329, 24355 (May 6, 
1999), where the Department determined that the loss from a one-time 
blast furnace accident was not an unusual occurrence.
    Petitioners state that Stelco cannot establish a causal 
relationship between the planned and unplanned mill stoppages and the 
major reduction in shipments to the United States. Petitioners note 
that, in BSS from the Netherlands-Preliminary Results, the Department 
found it very important that the unusual occurrence was the immediate 
cause of the decline or cessation of shipments. Petitioners argue that 
there is no objective information which demonstrates that the reduction 
in shipments is due to the plate mill shutdowns in the two documents 
that Stelco cites: the company's letter of January 15, 1999, requesting 
revocation, and the cost verification exhibit depicting Stelco's plate 
mill capacity in a chart from 1994 to 1998. Petitioners further argue 
that the plate mill capacity utilization chart constitutes unverifiable 
information, and is not probative.
    Department's Position: We agree with petitioners that Stelco's mill 
upgrade does not qualify as an unusual occurrence within the meaning of 
the Notice of Proposed Rules. (See Notice of Proposed Rules, at 7320.) 
Mill modernizations, such as that of Stelco's plate mill, and 
accompanying plant stoppages, are not unusual, infrequent, or 
extraordinary events. Companies can plan in advance how to pursue their 
business during such times of temporary stoppages.
    The severe decrease in Stelco's shipments to the United States 
during the fifth review period was not an unavoidable consequence of 
Stelco's mill modernization, but, rather, the result of Stelco's choice 
to give priority to the Canadian market. Had it so chosen, Stelco could 
have participated more fully in the U.S. market, just as it continued 
to participate in the Canadian market. For further information see the 
February 15, 2000 proprietary memorandum to the file regarding Stelco's 
participation in the U.S. market.
    In order for us to determine that there is an unusual occurrence, 
there should be a permanent change that is not based on an easily-
altered decision. For example, in BSS from the Netherlands-Preliminary 
Results, where the company's commercial practices were preliminarily 
considered to have permanently changed by shifting production of 
subject merchandise to the United States. (See BSS from the 
Netherlands-Preliminary Results, at 48765 & 48766.) (In that case the 
Department ultimately determined that the change in the company's 
commercial behavior was not permanent, and, therefore, the calculated 
margins were not reflective of the company's normal commercial 
activity.) In contrast, Stelco's plate mill modernization and its 
accompanying planned and unplanned production stoppages are temporary 
changes. We cannot conclude that the reduction in shipments to the 
United States is a permanent change, and therefore representative of 
normal commercial activity from this time forward.
    Since the small quantity of Stelco's sales of subject merchandise 
to the United States during the POR cannot be attributed to an unusual 
occurrence, we must consider it in the context of Stelco's historical 
sales to the United States. Considered in this context, the small 
quantity of merchandise sold during this POR does not meet the 
commercial quantities requirement of the revocation provisions of the 
Department's regulations.
Comment 3: The Merits of Stelco's Request For Revocation--The 
Likelihood of Dumping After Revocation
    Stelco states that, because it has met all the requirements of 
section 351.222(b)(2) of the Commerce regulations, including a 
demonstration that it is not likely to dump in the future, and because 
the Department has not made a determination to the contrary, the 
Department must revoke the order with respect to Stelco.
    Petitioners argue that Stelco failed to address factors such as 
domestic and home market industries, currency movements, and Stelco's 
competitiveness in the U.S. market in its case brief. In addition, 
petitioners state that Stelco did not discuss the issues of price and 
cost trends, investments and production capacity in its case brief.
    Petitioners contend that it is likely that Stelco would sell at 
dumped prices upon revocation of the order because it has substantially 
increased its plate mill capacity due to its modernization project.
    Department's Position: Respondents must meet the threshold 
criterion of three consecutive years of sales in commercial quantities 
at not less than NV in order to be eligible for revocation. When that 
criterion has been met, the Department makes a determination regarding 
the likelihood of resumption of dumping based on the evidence on the 
record. (See, e.g., BSS Germany and Brass Sheet and Strip from Canada: 
Preliminary Results of Antidumping Duty Administrative Review and 
Notice of Intent to Revoke Order in Part, 63 FR 6519 (February 9, 1998) 
(BSS from Canada).) Because we have determined that Stelco's POR sales 
were not made in commercial quantities, Stelco is not eligible for 
revocation. Therefore, we have not considered the likelihood

[[Page 9251]]

criterion. (See Pure Magnesium from Canada; Final Results 97/98, at 
50491.)
    Stelco is ineligible for revocation under section 351.222(b)(2)(i), 
based on the fact that it has not had three consecutive years of sales 
in commercial quantities at not less than NV; therefore, we need not 
address U.S. or Canadian market conditions, or Stelco's mill expansion 
in process.
Comment 4: Major Input Rule--Corrosion-Resistant Carbon Steel
    Stelco states that the Act requires the Department to use actual 
costs in the calculation of the cost of production, citing sections 
773(b)(3) and 773(f)(1) of the Act. Stelco claims that, by using 
Baycoat's transfer price to determine Stelco's cost of coating 
services, the Department arrives at a cost in excess of Stelco's actual 
cost of production in violation of the statute. Stelco maintains that, 
based on the remittance of Baycoat profits to Stelco, Stelco's true 
costs of production will not be the same as the face value of the 
invoice price received from its affiliated supplier. Stelco notes that, 
in its cost accounting system, it records the estimated costs for 
coating services by Baycoat, which it adjusts based on the actual sum 
of all invoices. At the end of each month, Stelco adjusts its gross 
income by reducing its cost of sales to account for the income 
recognized by Baycoat. This income, Stelco explains, constitutes 
Stelco's 50% share of Baycoat's returned profits. Stelco explains that 
Baycoat is a 50/50 partnership with Dofasco, with the sole purpose of 
providing coating services to its owners. Therefore, Stelco maintains, 
valuing coating services of Baycoat without taking into account the 
Baycoat profits returned to Stelco, would result in a calculated cost 
in excess of actual cost.
    Stelco further states that, with regard to the second review, the 
Binational Panel has ruled that the Department failed to follow the 
requirements of the statute by overvaluing Stelco's painting costs, 
noting that the Department must be mindful that the amounts used to 
value an input may not exceed ``the costs associated with the 
production and sale of the merchandise.'' (See In the Matter of Certain 
Corrosion-Resistant Carbon Steel Flat Products from Canada, North 
American Free Trade Agreement Article 1904 Binational Panel Review, USA 
97-1904-03 (June 4, 1998).) On September 13, 1999, Stelco states, the 
Binational Panel issued its decision on the second remand 
determination, affirming the Department's remand determination 
concerning its compliance with the Binational Panel's instructions. 
Stelco argues that the Department completely disregarded the Binational 
Panel's ruling in the preliminary results of the current review (1997-
98), and artificially inflated the value of Baycoat's painting costs.
    Petitioners state that the Department correctly valued the input 
purchase from Stelco's affiliate Baycoat at transfer price. Petitioners 
cite section 773(f) of the Act as the Department's legal basis for its 
applied methodology. Petitioners state that under subsection (f)(1), 
cost calculations for the merchandise should be based on the 
exporter's/producer's records, and that subsections (f)(2) and (f)(3) 
address inputs purchased from an affiliated party. According to 
petitioners, subsection (f)(2) states that the transfer price, i.e., 
the price generally maintained in the producer's books and records, may 
be disregarded if it does not reflect market value. Subsection (f)(3) 
states that the Department may disregard the value of a major input in 
favor of the cost of production if such amount is less than cost of 
production or market value. Petitioners argue that these subsections, 
read together, provide that the Department can only reject the transfer 
price of a major input when such price is less than the cost of 
production or market value. Based on the statutory requirements, 
petitioners state, the Department had to use transfer price for the 
major input in question, since the prices Stelco paid for the painting 
services received from Baycoat for this major input were higher than 
Baycoat's cost of production.
    Petitioners contend that Stelco erred when it asserted that the use 
of transfer price was not consistent with the statute, because the 
Department should have utilized the most accurate cost available in 
valuing such a major input. Petitioners state that Stelco ignored 
subsections (f)(2) and (f)(3) which regulate how ``actual costs'' are 
calculated when a major input is supplied by an affiliate. Petitioners 
argue that the Department used the actual cost, which is the transfer 
price recorded in Stelco's own books and records. Petitioners further 
assert that Stelco confuses its investment interest in Baycoat with its 
commercial relationship, which would not have any bearing on the price 
of the services rendered by Baycoat.
    Petitioners question Stelco's assertion that its cost for Baycoat 
painting services should be adjusted downward for Baycoat investment 
profits remitted. Petitioners state that Stelco ignores the 
instructions of subsections (f)(2) and (f)(3) of the Act, which require 
the use of transfer price in transactions between affiliated parties, 
unless the transfer price is below the usual market price or the 
transfer price is below the affiliated supplier's cost of production. 
Petitioners further point out that these profits remitted are not 
attributable to individual sales and could be earned from services 
performed for either of the two partners. Rather, these profits are 
unrelated in volume and value to coating services performed for Stelco, 
petitioners say. Additionally, petitioners argue that adjusting 
transfer price by the Baycoat profits remitted would render subsections 
(f)(2) and (f)(3) of the Act ineffective because the adjustment for 
profit would convert the transfer price to Baycoat's cost of 
production. Petitioners further add that market value generally 
includes an element of profit.
    Petitioners contend the Binational Panel's decision is not binding 
on subsequent administrative reviews. In support of their argument they 
cite Live Swine from Canada, at 52424, and Porcelain-on-Steel Cookware 
from Mexico; Final Results of Antidumping Duty Administrative Review, 
62 FR 25908-01, 25914 (May 12, 1997) (Porcelain Cookware from Mexico). 
Further, petitioners point out that the Department, contrary to 
Stelco's assertion, did not act contrary to its own determination in 
the Second NAFTA Binational Panel Remand, when adjusting for Baycoat 
transfer price in the current review. See Final Remand Determination. 
Rather, the Department followed the decision of the Binational Panel in 
the second administrative review when adjusting the transfer price as 
instructed, while at the same time maintaining the position that the 
profit remitted by Baycoat would not constitute an element of cost and 
should be viewed as a return on investment.
    Department's Position: We agree with petitioners that valuing 
Baycoat coating services at the Baycoat transfer price is the correct 
method to value this major input. As stated in the Final Remand 
Determination, this practice is consistent with the Department's 
antidumping regulations, which require that the Department normally 
value inputs supplied by affiliated persons at the transfer price 
between the entities, provided that such a price reflects the price 
commonly charged in the market and, for major inputs, is not below the 
cost of producing the input. See 19 CFR 351.407(b).
    Moreover, the Department's practice of using the highest of the 
market price, actual transfer price, or cost of production has been 
upheld by the CIT in Mannesmannrohren-Werke AG v. United States, Slip 
Op. 99-118 (Ct. Int'l Trade Oct. 29, 1999). In that case, the

[[Page 9252]]

Court held that the plain language of the statute makes clear that 
``although Commerce may use an affiliated party's cost-of-production to 
value a major input, it may only do so when (1) Commerce has 
'reasonable grounds to believe or suspect' that the cost-of-production 
exceeds the transaction value reported; and (2) the cost-of-production 
exceeds the market value of the input.'' Id. at 14.
    Further, as stated in the Final Remand Determination, the 
Department considers the factual circumstances in this case to fit 
squarely within the circumstances contemplated by sections 773(f)(2) 
and (f)(3) of the Act. That is, since (1) Baycoat is a supplier 
affiliated with Stelco; (2) the coating services provided by Baycoat 
constitute a major input into the production of corrosion-resistant 
carbon steel; and (3) there is no market value available (Baycoat only 
provides coating services for its joint venture owners), the higher of 
transfer price or cost of production would apply. These statutory 
provisions ensure that transactions between affiliated parties 
occurring at less than the affiliate's cost of production are not used 
as the basis of the Department's calculation of cost of production of 
the producer of subject merchandise. Thus, when affiliated party 
transactions occur at invalid prices, i.e., below cost or below market 
value, then the Department may make an adjustment to the costs recorded 
in the books and records of the respondent.
    Finally, as Stelco's books and records use transfer price in 
recording cost of manufacturing (COM), and the transfer price is not 
below cost, it is an appropriate basis for valuing the input provided 
by Baycoat.
    In addition to the propriety of using transfer price in valuing 
Baycoat's coating services, the Department's previous decision not to 
adjust transfer price to account for profit remittances was based upon 
the Department's finding that profit was not an element of cost. In 
this regard, the profit recognized by Stelco resulted from its 
investment in Baycoat and served to increase Stelco's equity interest 
in its affiliate. Baycoat's distributions to its joint venture partners 
are directly proportional to their ownership interests, and do not 
serve as price adjustments that reduce the cost of manufacturing 
subject merchandise. It would be inappropriate for the Department to 
adjust transfer prices between affiliates by the return on investment 
recognized due to the affiliated supplier operating at a profit or 
making a cash contribution. Thus, the Department would not consider 
this investment income to constitute an element of cost that must be 
accounted for in the context of section 773(f)(1)(A) of the Act. 
Moreover, where and to what extent affiliated companies choose to 
recognize profit or loss on investments is a separate and distinct 
business decision from the value these companies place on the inputs at 
issue. Affiliated companies may choose to recognize profits through one 
corporate entity over another for a variety of reasons, such as tax 
advantages, or the ability to write down losses against profits. These 
considerations, and the business decisions that result, however, do not 
alter the value of the inputs established between the parties. Our 
interpretation of the major input rule is that Congress intended the 
Department to use the transaction price between affiliated parties as 
the value of the input, unless that value is below cost or market 
price. In our view, Congress clearly did not intend that the Department 
examine every transfer of money between affiliated parties to determine 
whether the transfer price for an input is a valid reflection of its 
transaction value. Accordingly, we have not engaged in an examination 
of any money transfers between Stelco and its affiliated suppliers for 
purposes of valuing major inputs.
    We also agree with petitioners that the final ruling of the 
Binational Panel applies to Stelco's 1994/95 administrative review and 
does not establish precedent for any subsequent cases. As stated in 
Live Swine from Canada, ``panel decisions are binding only on the 
particular matters presented which are based on the particular 
administrative record subject to appellate review. Live Swine from 
Canada, 14 ITRD 2388, 2404-04 (1992). Second, the Courts have 
recognized that collateral estoppel is inapplicable when the 
Department's determinations are based on different administrative 
records. See PPG Industries v. United States, 746 F. Supp. 119, 133-34 
(CIT 1990).'' (See Live Swine from Canada, at 52424, and Porcelain 
Cookware from Mexico.) Therefore, we are not bound by panel decisions 
on previous reviews.
Comment 5: Adjustment for G&A
    Stelco asserts that, in adjusting Stelco's reported cost for 
Baycoat coating services up to the Baycoat transfer price, the 
Department double counted Baycoat's interest and general and 
administrative expenses (G&A), as those are already included in 
Stelco's consolidated financial statements. Stelco states that this is 
inconsistent with the Department's Final Remand Determination, where 
the Department, in its adjustment, as ordered by the Binational Panel, 
subtracted Baycoat profit and interest and G&A from Stelco's cost for 
coating services by Baycoat.
    Petitioners argue that Stelco's reliance on any adjustments to the 
Baycoat transfer price pursuant to the NAFTA Binational Panel ruling is 
misplaced, because in that case the adjustment was ordered by the NAFTA 
Binational Panel. In contrast, in the current review, the Department is 
not bound by any restrictions in utilizing the full transfer price, 
which, by its nature would include interest and G&A.
    Department's Position: We agree with petitioners that the 
Department is not bound in its adjustment of Stelco's coating costs to 
transfer price. (See Live Swine from Canada, at 52424.)
    Stelco reported two categories of coating services. In the 
preliminary results, we adjusted Stelco's reported costs for Baycoat 
coating services so that they accurately reflected the transfer price 
for each category of services. In calculating Stelco's COP and CV, we 
used this transfer price rather than Baycoat's actual costs in 
accordance with section 773(f)(2) of the Act. However, in our COP and 
CV calculations for Stelco, we inadvertently added in Baycoat's 
interest and G&A because Stelco submitted consolidated financial 
statements only, which include Baycoat's and Stelco's interest and G&A 
combined. To avoid such double counting, we must adjust Stelco's COP 
and CV for G&A expenses already accounted for in our adjustments made 
to Baycoat coating services.
    We agree with Stelco's assertion that we double counted interest 
and G&A expenses for the second category of coating services. For this 
category of merchandise, Stelco reported Baycoat's cost. In making our 
adjustments to Baycoat's cost as reported by Stelco in order to arrive 
at Baycoat's transfer price, we added in Baycoat's total profit, 
without adjusting for interest and G&A, which is included in the 
transfer price. The double counting occurred due to Stelco's 
consolidation of its affiliates' expenses in its financial statements, 
as reported to the Department.
    With respect to the first category of coating services, we disagree 
with Stelco's comment that the Department double counted interest and 
G&A expenses by not subtracting these expenses from our adjustments to 
Stelco's costs in order to arrive at Baycoat's transfer price. In its 
section D questionnaire response of November 23, 1998, Stelco stated it 
reported the higher of Baycoat's actual cost of coating, or Stelco's 
net acquisition cost, which is

[[Page 9253]]

the ``transfer prices minus or plus Stelco's share of Baycoat's income 
or loss.'' (See Stelco's Section D response of November 23, 1998, at D-
61.) Stelco did not report the actual transfer price, but only reported 
transfer price adjusted for profit and interest and G&A. (See 
Verification Exhibit C-16.) In making our adjustments to the cost 
reported by Stelco to obtain the transfer price, we added the 
difference between the transfer price and Stelco's reported cost. We 
did not adjust this difference for any amount of interest or G&A, 
because Stelco had adjusted transfer price for profit, interest and 
G&A.
    Because we are subtracting Baycoat's G&A from Stelco's consolidated 
G&A in our COP and CV calculation in the final results, we must include 
it in our adjustments to Stelco's reported cost. We are correcting our 
calculations by adding the amount of Baycoat's interest and G&A to our 
adjustment of the first category coating services to arrive at an 
adjusted transfer price. We then subtract Baycoat's G&A per net ton for 
all Control Numbers (CONNUM) which obtained coating services.

Additional Changes to Final Results

    Due to a clerical error in the preliminary results of this review, 
certain sales of CCC were not considered in the preliminary results 
calculation. For these final results of review, the Department has 
rectified this error and these sales have been included. For more 
information, please see the Memorandum to the File Through Maureen 
Flannery from Sarah Ellerman; Analysis for Continuous Colour Coat, Ltd. 
for the Final Results of the Fifth Administrative Review of Corrosion-
Resistant Carbon Steel from Canada for the period August 1, 1997 
through July 31, 1998, dated February 15, 2000.

Final Results of Reviews

    As a result of our reviews, we determine the dumping margins (in 
percent) for the period August 1, 1997 through July 31, 1998 to be as 
follows:

------------------------------------------------------------------------
                                                                 Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Corrosion-Resistant Carbon Steel Flat Products:
  CCC........................................................       1.01
  Dofasco....................................................       0.16
  National...................................................       5.65
  Stelco.....................................................       0.68
Cut-to-Length Carbon Steel Plate:
  MRM........................................................       0.00
  Stelco.....................................................       0.00
------------------------------------------------------------------------

    The Department will determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with section 351.212(b), we calculated importer-specific ad valorem 
duty assessment rates for each class or kind of merchandise based on 
the ratio of the total amount of antidumping duties calculated for the 
examined sales to the total customs value of the sales used to 
calculate those duties. This rate will be assessed uniformly on all 
entries of that particular importer for that class or kind of 
merchandise made during the POR. The Department will issue appraisement 
instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of these final results for all shipments of the 
subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the publication date as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for each reviewed 
company will be the rate stated above (except that no deposit will be 
required for firms with zero or de minimis margins, i.e., margins less 
than 0.5 percent); (2) for exporters not covered in this review, but 
covered in the LTFV investigation or a previous review, 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 previous review, or the original LTFV investigation, 
but the manufacturer is, the cash deposit rate will be the rate 
established for the most recent period for the manufacturer of the 
merchandise; and (4) the cash deposit rate for all other manufacturers 
or exporters will continue to be the all others rates established in 
the LTFV investigations, which were 18.71 percent for corrosion-
resistant steel products and 61.88 percent for CTL carbon steel plate 
(see Amended Final Determinations of Sales at Less Than Fair Value and 
Antidumping Orders: Certain Corrosion-Resistant Carbon Steel Flat 
Products and Certain Cut-to-Length Carbon Steel Plate From Canada, 60 
FR 49582 (September 26, 1995)). These deposit requirements, when 
imposed, shall remain in effect until publication of the final results 
of the next administrative reviews.

Notification of Interested Parties

    This notice also serves as a final reminder to importers of their 
responsibility under section 351.402(f) of our regulations to file a 
certificate regarding the reimbursement of antidumping duties prior to 
liquidation of the relevant entries during this review period. Failure 
to comply with this requirement could result in the Secretary's 
presumption that reimbursement of the antidumping duties occurred and 
the subsequent assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with section 353.34 (1997). Timely written 
notification of the return/destruction of APO materials or conversion 
to judicial protective order is hereby requested. Failure to comply 
with the regulations and the terms of an APO is a sanctionable 
violation.
    These administrative reviews and this notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and sections 
351.213 and 351.221(b)(5) of our regulations.

    Dated: February 15, 2000.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 00-4377 Filed 2-23-00; 8:45 am]
BILLING CODE 3510-DS-P