[Federal Register Volume 66, Number 149 (Thursday, August 2, 2001)]
[Notices]
[Pages 40201-40208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19349]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-820]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Stainless Steel Bar From 
France

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

ACTION: Notice of preliminary determination of sales at less than fair 
value.

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SUMMARY: We preliminarily determine that stainless steel bar from 
France is being, or is likely to be, sold in the United States at less 
than fair value, as provided in section 733(b) of the Tariff Act of 
1930, as amended.
    Interested parties are invited to comment on this preliminary 
determination. Since we are postponing the final determination, we will 
make our final determination not later than 135 days after the date of 
publication of this preliminary determination in the Federal Register.

EFFECTIVE DATE: August 2, 2001.

FOR FURTHER INFORMATION CONTACT: Brian Smith or Terre Keaton, Import

[[Page 40202]]

Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone: (202) 482-1766 or (202) 482-1280, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``the Act''), are references to the provisions 
effective January 1, 1995, the effective date of the amendments made to 
the Act by the Uruguay Round Agreements Act (``URAA''). In addition, 
unless otherwise indicated, all citations to the Department of Commerce 
(``Department's'') regulations are to 19 CFR part 351 (April 2000).

Background

    Since the initiation of this investigation (Notice of Initiation of 
Antidumping Investigations: Stainless Steel Bar from France, Germany, 
Italy, Korea, Taiwan and the United Kingdom, 66 FR 7620 (January 24, 
2001) (Initiation Notice), as amended by Corrections, Notice of 
Initiation of Antidumping Investigations: Stainless Steel Bar from 
France, Germany, Italy, Korea, Taiwan and the United Kingdom, 66 FR 
14986 (March 14, 2001), the following events have occurred:
    On January 26, 2001, we solicited comments from interested parties 
regarding the criteria to be used for model-matching purposes, and we 
received comments on our proposed matching criteria on February 8, 
2001.
    On February 12, 2001, the United States International Trade 
Commission (``ITC'') preliminarily determined that there is a 
reasonable indication that imports of stainless steel bar (``SSB'') 
from France are materially injuring the United States industry (see ITC 
Investigation No. 701-TA-913-918 (Publication No. 3395)).
    On February 12, 2001, we selected the two largest producers/
exporters of SSB from France as the mandatory respondents in this 
proceeding. For further discussion, see Memorandum from the Team to 
Richard W. Moreland, Deputy Assistant Secretary for Import 
Administration entitled, ``Respondent Selection,'' dated February 12, 
2001. We subsequently issued the antidumping questionnaires to Aubert & 
Duval, S.A. (``A&D'') and Ugine-Savoie Imphy S.A. (``U-SI'') 
(collectively referred to as the respondents) on February 20, 2001.
    On February 13, 2001, U-SI requested that certain special profile 
wire product produced by its affiliate Sprint Metal, S.A. (``Sprint'') 
be excluded from the scope of this investigation. See ``Scope of 
Investigation'' section of this notice for further discussion. Also, on 
February 13, 2001, U-SI requested that it be relieved from the 
requirement to report affiliated party resales because sales of the 
foreign like product to affiliated parties during the POI constituted 
less than five percent of total sales of the foreign like product. On 
April 3, 2001, we granted U-SI's request to exclude these sales from 
reporting in accordance with 19 CFR 351.403(d). See Memorandum from the 
Team to Louis Apple, Office Director, dated April 3, 2001, for further 
details.
    In February and March 2001, the petitioner \1\ made submissions 
requesting that the Department require the respondents to report the 
actual content of the primary chemical components of SSB for each sale 
of SSB made during the period of investigation (``POI''). Also, in 
February and March 2001, the respondents in this and other concurrent 
SSB investigations requested that the Department deny the petitioners' 
request. The Department, upon consideration of the comments from all 
parties on this matter, issued a memorandum on April 3, 2001, 
indicating its decision not to require the respondents to report such 
information on a transaction-specific basis. However, the Department 
did require that the respondents report certain additional information 
concerning SSB grades sold to the U.S. and home markets during the POI. 
(For details, see Memorandum from the Stainless Steel Bar Teams to 
Louis Apple and Susan Kuhbach, Office Directors, dated April 3, 2001).
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    \1\ The petitioners in this case are Carpenter Technology Corp., 
Crucible Specialty Metals, Electralloy Corp., Empire Specialty Steel 
Inc., Slater Steels Corp., and the United Steelworkers of America.
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    On April 10, 2001, A&D requested that it be permitted to report its 
costs on a fiscal-year rather than POI basis. For the reasons outlined 
in a letter dated May 16, 2001, the Department denied this request.
    On April 27, 2001, pursuant to 19 CFR 351.205(e), the petitioners 
made a timely request to postpone the preliminary determination. We 
granted this request on May 7, 2001, and postponed the preliminary 
determination until no later than July 26, 2001. (See Notice of 
Postponement of Preliminary Determinations of Sales at Less Than Fair 
Value: Stainless Steel Bar from France, Germany, Italy, Korea, Taiwan 
and the United Kingdom, 66 FR 24114 (May 11, 2001)).
    During the period March through July 16, 2001, the Department 
received responses to Sections A, B, C, D and E of its original and 
supplemental questionnaires from A&D and U-SI. On July 13, U-SI 
submitted revised sales and cost databases on its own initiative. For 
purposes of the preliminary determination, the Department did not use 
these revised databases in its analysis because U-SI did not provide 
the Department with sufficient time to examine them prior to the 
preliminary determination. However, the Department will examine these 
databases prior to verification for the final determination.
    On July 9, 2001, the petitioners submitted comments on U-SI's 
questionnaire response for consideration in the preliminary 
determination. On July 18, 2000, U-SI submitted rebuttal comments in 
response to the petitioners' July 9, 2001, submission.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on June 4, 2001, U-SI 
requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the date of the 
publication of the preliminary determination in the Federal Register, 
and extend the provisional measures to not more than six months. In 
accordance with 19 CFR 351.210(b)(2)(ii), because (1) our preliminary 
determination is affirmative, (2) U-SI accounts for a significant 
proportion of exports of the subject merchandise, and (3) no compelling 
reasons for denial exist, we are granting the respondent's request and 
are postponing the final determination until no later than 135 days 
after the publication of this notice in the Federal Register. 
Suspension of liquidation will be extended accordingly.

Scope of Investigation

    For purposes of this investigation, the term ``stainless steel 
bar'' includes articles of stainless steel in straight lengths that 
have been either hot-rolled, forged, turned, cold-drawn, cold-rolled or 
otherwise cold-finished, or ground, having a uniform solid cross 
section along their whole length in the shape of circles, segments of 
circles, ovals, rectangles (including squares), triangles, hexagons, 
octagons, or other convex polygons. Stainless steel bar includes cold-
finished stainless steel bars that are turned or ground in straight 
lengths, whether produced from hot-rolled bar or from straightened and 
cut rod or wire, and reinforcing bars that have

[[Page 40203]]

indentations, ribs, grooves, or other deformations produced during the 
rolling process.
    Except as specified above, the term does not include stainless 
steel semi-finished products, cut length flat-rolled products (i.e., 
cut length rolled products which if less than 4.75 mm in thickness have 
a width measuring at least 10 times the thickness, or if 4.75 mm or 
more in thickness having a width which exceeds 150 mm and measures at 
least twice the thickness), products that have been cut from stainless 
steel sheet, strip or plate, wire (i.e., cold-formed products in coils, 
of any uniform solid cross section along their whole length, which do 
not conform to the definition of flat-rolled products), and angles, 
shapes and sections.
    The stainless steel bar subject to this investigation is currently 
classifiable under subheadings 7222.11.00.05, 7222.11.00.50, 
7222.19.00.05, 7222.19.00.50, 7222.20.00.05, 7222.20.00.45, 
7222.20.00.75, and 7222.30.00.00 of the Harmonized Tariff Schedule of 
the United States (``HTSUS''). Although the HTSUS subheadings are 
provided for convenience and customs purposes, the written description 
of the scope of this investigation is dispositive.
    In accordance with our regulations, we set aside a period of time 
for parties to raise issues regarding product coverage and encouraged 
all parties to submit comments within 20 calendar days of publication 
of the Initiation Notice (see 66 FR 7620-7621). The respondents in this 
and the companion SSB investigations filed comments seeking to exclude 
certain products from the scope of these investigations. The specific 
products identified in their exclusion requests are:
     stainless steel tool steel
     welding wire
     special-quality oil field equipment steel (SQOFES)
     special profile wire
    We have addressed these requests in a Memorandum to Susan Kuhbach 
and Louis Apple from the Stainless Steel Bar Team, dated July 26, 2001, 
entitled ``Scope Exclusion Requests,'' and a Memorandum to Louis Apple 
from the Stainless Steel Bar Team, dated July 26, 2001, entitled 
``Whether Special Profile Wire Product is Included in the Scope of the 
Investigation.'' Our conclusions are summarized below.
    Regarding stainless steel tool steel, welding wire, and SQOFES, 
after considering the respondents' comments and the petitioners' 
objections to the exclusion requests, we preliminarily determine that 
the scope is not overly broad. Therefore, stainless steel tool steel, 
welding wire, and SQOFES are within the scope of these SSB 
investigations. In addition, we preliminarily determine that SQOFES 
does not constitute a separate class or kind of merchandise from SSB.
    Regarding special profile wire, we have preliminarily determined 
that this product does not fall within the scope as it is written 
because its cross section is in the shape of a concave polygon. 
Therefore, we have not included special profile wire in these 
investigations.
    Finally, we note that in the concurrent countervailing duty 
investigation of stainless steel bar from Italy, the Department 
preliminarily determined that hot-rolled stainless steel bar is within 
the scope of these investigations. (See Preliminary Affirmative 
Countervailing Duty Determination and Alignment of Final Countervailing 
Duty Determination with Final Antidumping Duty Determination: Stainless 
Steel Bar from Italy, 66 FR 30414 (June 6, 2001).)

Period of Investigation

    The POI is October 1, 1999, through September 30, 2000.

Use of Facts Available

    While A&D attempted to respond to the Department's questionnaires, 
it did not provide usable data for purposes of our preliminary margin 
analysis. Specifically, the databases provided in its latest 
submissions to the Department cannot serve as an appropriate basis for 
a margin calculation. Given the time limitations between the receipt of 
A&D's last submissions to the Department and the Department's 
preliminary determination, we were unable to issue A&D a supplemental 
questionnaire requesting revised data and receive it in time for use in 
the preliminary determination.
    Given that the necessary information to calculate A&D's margin is 
not available for the preliminary determination, the Department has 
determined that facts available is warranted in accordance with section 
776(a) of the Act. Because A&D has attempted to cooperate in this 
investigation, as facts available, we have assigned A&D the simple 
average of the margins in the petition. Prior to verification, we will 
give A&D an opportunity to provide revised data for use in the final 
determination.
    Section 776(c) of the Act provides that, when the Department relies 
on secondary information (such as the petition) in using the facts 
otherwise available, it must, to the extent practicable, corroborate 
that information from independent sources that are reasonably at its 
disposal. In this case, when analyzing the petition for purposes of the 
initiation, we reviewed all of the data upon which the petitioners 
relied in calculating the estimated dumping margins, and determined 
that the margins in the petition were appropriately calculated and 
supported by adequate evidence in accordance with the statutory 
requirements for initiation. In order to corroborate the petition 
margins for purposes of using them as fact available, we re-examined 
the price and cost information provided in the petition in light of 
information developed during this investigation. (See the Memorandum to 
Louis Apple from The Team entitled ``Preliminary Determination of 
Stainless Steel Bar from France: Use of Facts Available and 
Corroboration of Petition Margins,'' dated July 26, 2001, for further 
details of our corroboration methodology.)
    In accordance with section 776(c) of the Act, we were able to 
corroborate the information in the petition using information from 
independent sources that were reasonably at our disposal. As a result, 
we have preliminarily assigned A&D the simple average of the margins 
contained in the petition, 28.07 percent.

Fair Value Comparisons

    For U-SI, to determine whether sales of SSB from France to the 
United States were made at less than fair value (``LTFV''), we compared 
the export price (``EP'') or constructed export price (``CEP'') to the 
Normal Value (``NV''), as described in the ``Export Price'' and 
``Constructed Export Price'' and ``Normal Value'' sections of this 
notice, below. In accordance with section 777A(d)(1)(A)(i) of the Act, 
we compared POI weighted-average EPs and CEPs to weighted-average NVs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by U-SI in the home market during the POI 
that fit the description in the ``Scope of Investigation'' section of 
this notice to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We compared U.S. sales 
to sales made in the home market, where appropriate. Where there were 
no sales of identical merchandise in the home market made in the 
ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade. In making the product comparisons, we matched 
foreign like products based on the physical

[[Page 40204]]

characteristics reported by the respondent in the following order of 
importance: general type of finish; grade; remelting process; type of 
final finishing operation; shape; and size.
    With respect to grade, we matched products sold in the U.S. and 
home markets on the basis of the three most similar matches proposed by 
the respondent, where possible.
    On July 10 and 13, 2001, the petitioners submitted general comments 
on product matching issues for the Department's consideration in the 
preliminary determination. These comments were not received in time to 
be fully analyzed for the preliminary determination, but will be 
considered for the final determination.

Sub-Contracted Sales By U-SI

    In its June 11, 2001, submission, U-SI indicated that it had 
contracted the services of its Italian affiliate (i.e., Trifilerie 
Bedini, S.r.l. (``Bedini'')) to process non-subject merchandise (i.e., 
stainless steel wire rod (``SSWR'') of French origin) into subject 
merchandise which U-SI then sold either through its affiliate (i.e., 
Ugine France Service/Ugine-Savoie France (``UFS/U-SF'')) in the French 
market or through its affiliate (i.e., Ugine Stainless & Alloys, Inc. 
(``US&A'')) in the U.S. market. U-SI further stated that in accordance 
with the Department's country of origin rules, it did not report these 
sales as home market and/or U.S. sales in the sales listings submitted 
in this investigation, but rather reported them in the sales listings 
submitted in the concurrent investigation of SSB from Italy. After 
further examining U-SI's claim in the context of the Department's 
tolling regulation (19 CFR 351.401(h)), and based on the limited data 
furnished in its response, it appears that although U-SI may be the 
manufacturer of these sales, the product was produced by U-SI in Italy 
and therefore, the product is subject to the LTFV proceeding involving 
SSB from Italy. Therefore, for purposes of this preliminary 
determination, the Department has not included them in its margin 
analysis.

U.S. Resales by U-SI's Affiliate

    In its June 11, 2001, supplemental questionnaire response, U-SI 
requested that it be excluded from reporting downstream sales in the 
United States made by its affiliate Techalloy (i.e., a wire products 
manufacturer). U-SI stated that the total quantity of these sales was 
insignificant in terms of the total quantity reported for U-SI's U.S. 
sales through its principal U.S. affiliate, Ugine Stainless and Alloys, 
Inc.(``US&A''), during the POI. In addition, U-SI stated that Techalloy 
only made these sales as a special accommodation for one of Techalloy's 
U.S. wire product customers. In accordance with the Department's 
practice, given the allegedly insignificant amount of these resales in 
terms of the reported total U.S. sales quantity, subject to 
verification, and given that the method by which these sales were made 
is unrepresentative of U-SI's normal U.S. sales, we did not require 
that U-SI report these sales for purposes of the preliminary 
determination (see Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Stainless Wire Rod from 
Canada, 62 FR 51572 (October 1, 1997)).

Constructed Export Price

    We calculated CEP in accordance with section 772(b) of the Act. We 
found that U-SI made CEP sales during the POI because the sales were 
made for the account of U-SI by the respondent's subsidiary in the 
United States to unaffiliated purchasers. In addition, U-SI reported 
sales of SSB which were further processed by its affiliate US&A in the 
United States. For the subject merchandise further processed in the 
United States, we used the starting price of the subject merchandise 
and deducted the costs of the further processing to determine CEP for 
such merchandise, in accordance with section 772(d)(2) of the Act.
    We based CEP on the packed CIF delivered or undelivered prices to 
unaffiliated purchasers in the United States. We identified the correct 
starting price, by adjusting for billing corrections, freight revenue 
and other revenue associated with the sale, and by making deductions 
for early payment discounts, where applicable. We also made deductions 
for movement expenses in accordance with section 772(c)(2)(A) of the 
Act; these included, where appropriate, foreign inland freight 
(including freight from the plant/warehouse to the port of 
exportation), ocean freight, marine insurance, U.S. customs duties and 
fees (including harbor maintenance fees, merchandise processing fees, 
and brokerage and handling), U.S. inland freight expenses (including 
freight from the U.S. port to the warehouse, freight between 
warehouses, and freight from the warehouse to the unaffiliated 
customer), and other U.S. transportation expenses (including brokerage 
and handling fees). In accordance with section 772(d)(1) of the Act, we 
deducted those selling expenses associated with economic activities 
occurring in the United States, including direct selling expenses 
(commissions, credit costs, warranty expenses, technical service 
expenses, and repacking expenses), and indirect selling expenses 
(including inventory carrying costs) incurred in the country of 
exportation and the United States. We recalculated US&A's reported 
warranty expenses on a customer-specific basis (rather than overall 
sales) based on the information in the record, because this 
recalculation is more specific to the sales in question. See 
Calculation Memorandum dated July 26, 2001. We also deducted an amount 
for further-manufacturing costs, where applicable, in accordance with 
section 772(d)(2) of the Act, and made an adjustment for profit in 
accordance with section 772(d)(3) of the Act.

Normal Value

A. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
whether the aggregate volume of home market sales of the foreign like 
product is equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared U-SI'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)(B) of the Act. 
Because 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 
its home market was viable.

B. Affiliated-Party Transactions and Arm's-Length Test

    The Department's standard practice with respect to the use of home 
market sales to affiliated parties for NV is to determine whether such 
sales are at arm's-length prices. Therefore, in accordance with that 
practice, we performed an arm's-length test on U-SI's sales to 
affiliates as follows.
    Sales to affiliated customers in the home market not made at arm's-
length prices were excluded from our analysis because we considered 
them to be outside the ordinary course of trade. See 19 CFR 351.102(b). 
To test whether these sales were made at arm's-length prices, we 
compared on a model-specific basis the starting prices of sales to 
affiliated and unaffiliated customers net of all movement charges, 
direct selling expenses, and packing.
    Where, for the tested models of subject merchandise, prices to the 
affiliated party were on average 99.5 percent or more of the price to 
the

[[Page 40205]]

unaffiliated parties, we determined that sales made to the affiliated 
party were at arm's length. See 19 CFR 351.403(c). In instances where 
no price ratio could be constructed for an affiliated customer because 
identical merchandise was not sold to unaffiliated customers, we were 
unable to determine that these sales were made at arm's-length prices 
and, therefore, excluded them from our LTFV analysis. See Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9, 
1993); and Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Wire Rod from Sweden, 63 FR 40449, 40454 (July 29, 
1998). Where the exclusion of such sales eliminated all sales of the 
most appropriate comparison product, we made a comparison to the next 
most similar model.
    For the preliminary determination, we disallowed U-SI's claim that 
the movement expenses (i.e., INLFTWH, WAREHSH, and INSUREH) associated 
with transferring semi-finished SSB from U-SI to UFS/US-F for further 
processing prior to the sale and/or shipment by UFS/US-F to the first 
unaffiliated customer in the home market should be deducted from gross 
unit price because we consider those expenses to be associated with the 
cost of manufacture of the finished product. Rather, we added the 
weighted-average amounts for these movement expenses to the reported 
variable overhead amounts on a control-number-specific basis in our 
calculation of COP (see ``Cost of Production Analysis'' below). With 
respect to the reported amount for U-SI's indirect selling expenses, 
inventory carrying costs, and packing expenses (i.e., INDIRS1H, 
INVCARH, and PACKH), we treated only a portion of these expenses 
reported for two distribution channels associated with sales made 
through UFS/US-F as related to the sale of the finished product (see 
further discussion below). For the portion of indirect selling and 
packing expenses we considered related to the production of the semi-
finished product, we recategorized those expenses as general and 
administrative (``G&A'') expenses and added them to the reported G&A 
expense. As for the inventory carrying expenses at issue, we do not 
consider this expense to be a production or G&A cost and therefore have 
not included it in the reported COP.

C. Cost of Production Analysis

    Based on our analysis of an allegation contained in the petition, 
we found that there were reasonable grounds to believe or suspect that 
sales of SSB in the home market were made at prices below their COP. 
Accordingly, pursuant to section 773(b) of the Act, we initiated a 
country-wide sales-below-cost investigation to determine whether sales 
were made at prices below their respective COP. See Initiation Notice, 
66 FR at 7622 (March 14, 2001)).
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus an amount for G&A expenses, interest 
expenses, and home market packing costs (see ``Test of Home Market 
Sales Prices'' section below for treatment of home market selling 
expenses). We relied on the COP data submitted by U-SI--except where 
noted below:
    We disallowed U-SI's claim that the movement expenses (i.e., 
INLFTWH, WAREHSH, and INSUREH) associated with transferring semi-
finished SSB from U-SI to UFS/US-F for further processing prior to the 
sale and/or shipment by UFS/US-F to the first unaffiliated customer in 
the home market should be deducted from gross unit price because we 
consider those expenses to be associated with the cost of manufacture 
of the finished product. Rather, we added the weighted-average amounts 
for these movement expenses to the reported variable overhead amounts 
on a control-number-specific basis.
    As explained above, we recategorized a portion of U-SI's indirect 
selling and packing expenses associated with transferring semi-finished 
SSB from U-SI to UFS/US-F for further processing as G&A expenses. See 
Calculation Memorandum dated July 26, 2001.
    We also adjusted U-SI's G&A costs to include the provision for 
material price fluctuations which U-SI excluded from its G&A expense 
calculation. Additionally, we increased the G&A expenses by the amount 
for ``exceptional items.'' While U-SI identified the ``exceptional 
items'' as income and reduced the G&A expenses by this amount, these 
items are shown as expenses on U-SI's income statement.
    We adjusted U-SI's U.S. further manufacturing costs to include the 
material yield loss for all products based on output quantity. See 
Memorandum from Michael Harrison to Neal Halper, Director Office of 
Accounting, dated July 26, 2001, Re: Cost Adjustments.
2. Test of Home Market Sales Prices
    On a product-specific basis, we compared the adjusted weighted-
average COP to the home market sales of the foreign like product, as 
required under section 773(b) of the Act, in order to determine whether 
the sale prices were below the COP. The prices were exclusive of any 
applicable movement charges, rebates, discounts, and direct and 
indirect selling expenses. In determining whether to disregard home 
market sales made at prices less than their COP, we examined, in 
accordance with sections 773(b)(1)(A) and (B) of the Act, whether such 
sales were made (1) within an extended period of time, (2) in 
substantial quantities, and (3) at prices which not permit the recovery 
of all costs within a reasonable period of time.
3. Results of the COP Test
    Pursuant to section 773(b)(1), where less than 20 percent of the 
respondent's sales of a given product are at prices less than the COP, 
we do not disregard any below-cost sales of that product, because we 
determine that in such instances the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product are at prices less than the COP, we disregard 
those sales of that product, because we determine that in such 
instances the below-cost sales represent ``substantial quantities'' 
within an extended period of time, in accordance with section 
773(b)(1)(A) of the Act. In such cases, we also determine whether such 
sales were made at prices which would not permit recovery of all costs 
within a reasonable period of time, in accordance with section 
773(b)(1)(B) of the Act.
    We found that, for certain specific products, more than 20 percent 
of U-SI's home market sales were at prices less than the COP, and in 
addition, such sales were made within an extended period of time and 
did not provide for the recovery of costs within a reasonable period of 
time. We therefore excluded these sales and used the remaining above-
cost sales as the basis for determining NV in accordance with section 
773(b)(1) of the Act.

D. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (``LOT'') as the EP or CEP. Sales are made at 
different LOTs if they are made at different marketing stages (or their 
equivalent). 19 CFR 351.412(c)(2). Substantial differences in selling

[[Page 40206]]

activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. Id.; 
see also Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 
FR 61731, 61732 (November 19, 1997). In order to determine whether the 
comparison sales were at different stages in the marketing process than 
the U.S. sales we reviewed the distribution system in each market 
(i.e., the ``chain of distribution''),\2\ including selling 
functions,\3\ class of customer (``customer category''), and the level 
of selling expenses for each type of sale.
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    \2\ The marketing process in the United States and comparison 
markets begins with the producer and extends to the sle to the final 
user or consumer. The chain of distribution between the two may have 
many or few links, and the respondents' sales occur somewhere along 
this chain. In performing this evaluation, we considered the 
narrative responses of each respondent to properly determine where 
in the chain of distribution the sale occurs.
    \3\ Selling functions associated with a particular chain of 
distribution help us to evaluate the level(s) of trade in a 
particular market. For purposes of this preliminary determinatiotn, 
we have organized the common SSB selling functions into four major 
categories: (1) Sales process and marketing support; (2) freight and 
delivery; (3) inventory and warehousing; and (4) quality assurance/
warranty services. Other selling functions unique to specific 
companies were considered, as appropriate.
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    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for EP and comparison market sales (i.e., NV based on 
either home market or third country prices),\4\ we consider the 
starting prices before any adjustments. For CEP sales, we consider only 
the selling activities reflected in the price after the deduction of 
expenses and profit under section 772(d) of the Act. See Micron 
Technology, Inc. v. United States, 243 f. 3d 1301, 1314-1315 (Fed. Cir. 
2001).
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    \4\ Where NV is based on CV, we determined the NV LOT based on 
the LOT of the sales from which we derive selling expenses, G&A 
expenses, and profit for CV, where possible.
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    When the Department is unable to match U.S. sales of the foreign 
like product in the comparison market at the same LOT as the EP or CEP, 
the Department may compare the U.S. sale to sales at a different LOT in 
the comparison market. In comparing EP or CEP sales at a different LOT 
in the comparison market, where available data make it practicable, we 
make a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, 
for CEP sales only, if a NV LOT is more remote from the factory than 
the CEP LOT and we are unable to make a LOT adjustment, the Department 
shall grant a CEP offset, as provided in section 773(a)(7)(B) of the 
Act. See Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 
FR 61731 (November 19, 1997); see also Notice of Preliminary Results 
and Partial Rescission of Antidumping Duty Administrative Review and 
Intent To Revoke Antidumping Duty Order in Part: Certain Pasta from 
Italy, 66 FR 34414 (June 28, 2001).
    We obtained information from U-SI regarding the marketing stages 
involved in making the reported home market and U.S. sales, including a 
description of the selling activities performed by the respondents for 
each channel of distribution. Upon review of this information, the 
Department found two LOTs in the home market and one LOT in the U.S. 
market. Where we matched U.S. sales to home market sales at a different 
LOT, we made a LOT adjustment in accordance with section 773(a)(7)(A) 
of the Act because we found that there was a pattern of consistent 
price differences between the two home market LOTs. Our LOT findings 
are summarized below:
    U-SI reported two customer categories (i.e., end-users and 
distributors) and three channels of distribution for its home market 
sales (i.e., direct ex-works sales, ex-inventory sales of standard SSB 
through its affiliate UFS/U-SF, and ex-inventory sales of SSB through 
its affiliate UFS/U-SF which are purchased for special applications). 
In its response, U-SI claims that the major difference between its ex-
inventory sales of standard SSB products versus its ex-inventory sales 
of SSB products used for special applications (``specialized SSB'') is 
the further manufacturing that is performed by its affiliate on the 
specialized SSB. Specifically, U-SI maintains that its affiliate 
provides the following additional services for U-SI's ex-inventory 
sales of specialized SSB: (1) Testing and certifications; (2) upgrading 
services (i.e., heat treatment, machining, drilling, grinding); and (3) 
``other special'' services (i.e., special conditioning, cutting, 
marking, and chamfering finished SSB). U-SI further maintains that 
these distinctions constitute a different LOT.
    U-SI also claims that, because its affiliate offers significantly 
different services and the orders are not limited by quantity for ex-
inventory sales of specialized SSB when compared to ex-inventory sales 
of standard SSB products, UFS/U-SF charges higher prices for its sales 
of specialized SSB products. Therefore, U-SI requests a LOT adjustment 
on this basis.
    In determining whether separate levels of trade actually existed in 
the home market, we examined whether the sales made by U-SI involved 
different marketing stages (or their equivalent) based on the channel 
of distribution, customer categories and selling functions. As noted 
above, U-SI's ex-inventory sales are made through the same affiliated 
party, the same channel of distribution, and to the same categories of 
customers (i.e., end users and distributors).
    With respect to selling activities, we note that, in some 
instances, the activities U-SI characterized as selling functions 
(e.g., upgrading and other special services) are not distinct selling 
functions which we consider to be relevant to our LOT analysis. 
Furthermore, based on our analysis, we note that while there are 
differences in selling activities between U-SI's ex-inventory sales of 
standard SSB products and ex-inventory sales of specialized SSB 
products (i.e., degree of intensity reported for sales process and 
marketing support, and quality assurance/warranty services), we do not 
find that such differences are sufficient to establish a difference in 
marketing stage (or its equivalent). As discussed in the Department's 
regulations, substantial differences in selling activities are a 
necessary, but not sufficient, condition for determining that there is 
a difference in the stage of marketing. See 19 CFR 351.412; see also 
Notice of Final Results: Antidumping Duty Administrative Review of 
Antifriction Bearings from France et al., 62 FR 2081, 2105 (January 15, 
1997). In this case, the differences in selling activities are minor in 
nature and therefore, we find that U-SI's ex-inventory sales of both 
standard and specialized SSB in the home market comprise a single LOT.
    In addition, we also examined whether U-SI's direct ex-works sales 
and ex-inventory sales of both standard and specialized SSB involved 
different marketing stages (or their equivalent) based on the channel 
of distribution, customer categories and selling functions reported for 
each claimed LOT. We note that the selling functions (i.e., sales 
process/market research, sales calls, interactions with customers, 
inventory maintenance, freight, technical advice and warranty 
servicing) that U-SI's affiliate provided for U-SI's ex-inventory sales 
were either at a higher level of intensity or greater in number than 
the selling functions (i.e., sales process/market research, interaction 
with customers, freight, technical advice, and warranty servicing) U-SI 
provided for its ex-works sales. Based on this analysis, we find that 
U-SI's ex-works and ex-inventory sales in the home market

[[Page 40207]]

constitute two distinct LOTs and that U-SI's ex-inventory sales are at 
a more advanced LOT level than U-SI's ex-works sales.
    U-SI reported only CEP sales in the U.S. market. For its U.S. 
sales, U-SI reported two channels of distribution (i.e., U-SI produced 
SSB shipped direct from France to its U.S. affiliate (i.e., US&A) and 
subject SSB that U-SI subcontracted out to its Italian affiliate (i.e., 
Bedini) for further processing which is then sold by U-SI to US&A \5\.
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    \5\ This merchandise is subject to this investigation unlike U-
SI's tolled merchandise discussed above which is included in the 
Italian SSB LTFV proceeding.
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    Based on our examination of U-SI's data, the evidence on the record 
suggests that U-SI performs the same selling functions (i.e., sales 
process/market research, customer contact, freight, technical advice 
and warranty servicing) for sales made through the two channels of 
distribution to US&A, which are associated with expenses which we did 
not deduct from the starting price. Thus, all CEP sales constitute one 
LOT.
    We then examined U-SI's submitted data to determine whether U-SI's 
U.S. sales to US&A were made at the same LOT as U-SI's direct ex-works 
sales were made in the home market. Based on our examination, the 
evidence on the record suggests, contrary to U-SI's assertion, that U-
SI performs the same selling functions (i.e., sales process/market 
research, customer contact, freight, technical advice and warranty 
servicing), at the same relative level of intensity for its sales of 
SSB to US&A and its ex-works sales in the home market. Therefore, we 
have determined that the LOT for all CEP sales is the same as the LOT 
for U-SI's ex-works sales in the home market. Accordingly, where 
possible, we matched CEP sales to home market ex-works sales and made 
no LOT adjustment because the sales were made at the same LOT. Where we 
matched CEP sales to home market ex-inventory sales, we made a LOT 
adjustment in accordance with section 773(a)(7)(A) of the Act because 
we found that there was a pattern of consistent price differences 
between the two home market LOTs.

E. Calculation of Normal Value Based on Comparison Market Prices

    We calculated NV based on delivered prices to unaffiliated 
customers or prices to affiliated customers that we determined to be at 
arm's length. We made adjustments, where appropriate, to the starting 
price for billing corrections and early payment discounts. We made 
deductions, where appropriate, from the starting price for inland 
freight (from the plant to the warehouse or plant to the customer), 
warehousing expenses, and inland insurance (see discussion above 
regarding the Department's treatment of certain movement and selling 
expenses reported for two channels of distribution associated with 
sales made through UFS/US-F).
    We made adjustments for differences in costs attributable to 
differences in the physical characteristics of the merchandise in 
accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. 
In addition, we made adjustments under section 773(a)(6)(C)(iii) of the 
Act and 19 CFR 351.410 for differences in circumstances of sale for 
imputed credit expenses and warranty expenses (i.e., WARR1H).
    We recategorized certain expenses (i.e., technical services 
(TECHSERH) and salary expenses reported as warranty expenses (WARR2H)) 
as indirect rather than direct selling expenses because it appears that 
these expenses were not directly related to the sale based on both the 
explanation given and allocation methodology used in U-SI's response.
    U-SI (through its U.S. affiliate) paid commissions to unaffiliated 
sales intermediaries on some U.S. sales of subject merchandise but did 
not pay commissions on its home market sales which were at arms-length. 
Therefore, in accordance with 19 CFR 351.410(e), we offset the 
commission incurred in the U.S. market, with indirect selling expenses 
incurred in the home market to the extent of the lesser of the 
commission or the indirect selling expenses. As indirect selling 
expenses, we used both U-SI's reported home market inventory carrying 
costs and indirect selling expenses.
    We also deducted home market packing costs and added U.S. packing 
costs in accordance with section 773(a)(6)(A) and (B) of the Act. 
Finally, we made an adjustment for differences in LOT under section 
773(a)(7)(A) of the Act and 19 CFR 351.412(b)-(e) (see ``Level of 
Trade'' section above for a complete discussion).

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act based on the exchange rates in effect on the 
dates of the U.S. sales as certified by the Federal Reserve Bank or 
reported by the Dow Jones, as appropriate.\6\
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    \6\ We normally make currency conversions into U.S. dollars in 
accordance with section 773A(a) of the Act based on the exchange 
rates in effect on the dates of the U.S. sales as certified by the 
Federal Reserve Bank. In this case, where home market prices, costs 
and expenses were reported in French francs, we made currency 
conversions based on the exchange rates in effect on the dates of 
the U.S. sales as reported by the Dow Jones because the Federal 
Reserve Bank does not track the franc-to-dollar exchange rate.
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Verification

    As provided in section 782(i) of the Act, we will verify all 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
the Customs Service to suspend liquidation of all imports of subject 
merchandise that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct the Customs Service to require a 
cash deposit or the posting of a bond equal to the weighted-average 
amount by which the NV exceeds the EP or CEP, as indicated in the chart 
below. These suspension-of-liquidation instructions will remain in 
effect until further notice. The weighted-average dumping margins are 
as follows:

------------------------------------------------------------------------
                                                               Weighted-
                                                                average
                    Exporter/manufacturer                       margin
                                                              percentage
------------------------------------------------------------------------
Aubert & Duval, S.A.........................................      28.07
Ugine-Savoie Imphy, S.A.....................................       4.30
All Others*.................................................      4.30
------------------------------------------------------------------------
 *Pursuant to section 735(c)(5)(A), we have excluded from the
  calculation of the all-others rate margins which are zero or de
  minimis, or determined entirely on facts available.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Disclosure

    We will disclose the calculations used in our analysis to parties 
in this proceeding in accordance with 19 CFR 351.224(b).

Public Comment

    Case briefs for this investigation must be submitted to the 
Department no later than November 2, 2001. Rebuttal briefs must be 
filed by November 9, 2001. A

[[Page 40208]]

list of authorities used, a table of contents, and an executive summary 
of issues should accompany any briefs submitted to the Department. 
Executive summaries should be limited to five pages total, including 
footnotes. Section 774 of the Act provides that the Department will 
hold a public hearing to afford interested parties an opportunity to 
comment on arguments raised in case or rebuttal briefs, provided that 
such a hearing is requested by an interested party. If a request for a 
hearing is made in this investigation, the hearing will tentatively be 
held on November 14, 2001, at the U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230. Parties 
should confirm by telephone the time, date, and place of the hearing 48 
hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs.
    If this investigation proceeds normally, we will make our final 
determination by no later than 135 days after the publication of this 
notice in the Federal Register.
    This determination is published pursuant to sections 733(f) and 
777(i) of the Act.

    Dated: July 26, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-19349 Filed 8-1-01; 8:45 am]
BILLING CODE 3510-DS-P