[Federal Register Volume 66, Number 149 (Thursday, August 2, 2001)]
[Notices]
[Pages 40214-40222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19351]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-829]


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

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 Italy 
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: Jarrod Goldfeder, Melani Miller, or 
Anthony Grasso, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
0189, (202) 482-0116, or (202) 482-3853, 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

[[Page 40215]]

to the Department of Commerce (``Department'') 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, 
February 14, and February 15, 2001.
    On February 1, 2001, Acciaierie Valbruna Srl/Acciaierie Bolzano Srl 
(``Valbruna''), an Italian producer of the merchandise under 
investigation, submitted a request to the Department that the period of 
investigation (``POI'') be altered. On February 9, 2001, the 
petitioners in this case (i.e., Carpenter Technology Corp., Crucible 
Specialty Metals, Electralloy Corp., Empire Specialty Steel Inc., 
Slater Steels Corp., and the United Steelworkers of America) objected 
to this request. On March 1, 2001, the Department denied Valbruna's 
request to alter the POI. See letter from Susan Kuhbach to Valbruna 
dated March 1, 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 Italy are materially injuring the United States industry (see ITC 
Investigation No. 701-TA-913-918 (Publication No. 3395)).
    On February 21, 2001, we selected the three largest producers/
exporters of SSB from Italy (Acciaiera Foroni S.p.A. (``Foroni''), 
Valbruna, and Cogne Acciai Speciali Srl (``Cogne'')) as the mandatory 
respondents in this proceeding. For further discussion, see Memorandum 
from The Team to Richard W. Moreland, ``Respondent Selection'' dated 
February 21, 2001 (``Respondent Selection Memorandum''). We 
subsequently issued the antidumping questionnaires to Foroni, Valbruna, 
and Cogne on February 22, 2001.
    On March 1, 2001, Valbruna requested that it be allowed to report 
its costs on a fiscal-year rather than a POI basis. Valbruna submitted 
further information with respect to its cost reporting on March 9 and 
March 19, 2001. The petitioners submitted comments on this request on 
March 14, 2001. On March 20, 2001, the Department notified Valbruna 
that it would be allowed to alter its cost reporting period as 
requested. (See March 20, 2001 letter to Valbruna for further 
discussion.)
    On March 6, 2001, Trafilerie Bedini, Srl (``Bedini'') and Rodacciai 
S.p.A. (``Rodacciai'') formally requested to be treated as voluntary 
respondents in this investigation in response to the Department's 
invitation to do so in the Respondent Selection Memorandum. As 
discussed in detail below in the ``Facts Available'' section, on March 
14, 2001, Cogne, one of the mandatory respondents selected by the 
Department, notified the Department that it would not be participating 
in the investigation. Based on Cogne's failure to respond to the 
Department's questionnaire, and in accordance with the Department's 
Respondent Selection Memorandum, on March 15, 2001, both Bedini and 
Rodacciai were advised that the Department would investigate them. (See 
letters to Bedini and Rodacciai dated March 15, 2001 for further 
discussion.)
    On March 9, 2001, Acciaierie Bertoli Safau S.p.A. (``ABS'') 
submitted a request to exclude hot-rolled SSB greater than six inches 
in diameter from the scope of this investigation. On March 26, 2001, 
the petitioners submitted an objection to this request. Additionally, 
on April 6, 2001, Rodacciai submitted a request to exclude welding wire 
from the scope of this investigation. The petitioners submitted a 
response to this request on April 24, 2001. See ``Scope of 
Investigation'' section of this notice, below, for further discussion 
of these requests.
    In February and March, 2001, the petitioners 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 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 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, Directors, Office of 
AD/CVD Enforcement 1/2, dated April 3, 2001.)
    On March 28, 2001, Rodacciai requested that it be exempted from the 
requirement to report affiliated party resales even though sales of the 
foreign like product to affiliated parties during the POI constituted 
more than five percent of total sales of the foreign like product. For 
the reasons stated in a Memorandum from John Brinkmann to Susan 
Kuhbach, dated April 12, 2001, we denied Rodacciai's request. On June 
15, 2001, Bedini requested that it be exempted 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 July 6, 2001, we 
granted Bedini's request in accordance with 19 CFR 351.403(d). (See 
Memorandum from the Team to Susan Kuhbach, dated July 6, 2001 for 
further details.)
    During the period March through July 2001, the Department received 
responses to Sections A, B, C, and D of the Department's original and 
supplemental questionnaires from Valbruna, Rodacciai, Bedini, and 
Foroni. The Department also received a response to Section E from 
Bedini.
    On April 2, 2001, Rodacciai requested that it be allowed to report 
its costs on a fiscal-year rather than a POI basis. The petitioners 
submitted comments on this request on April 5, 2001. Rodacciai 
responded to these comments and submitted further information on April 
6, 2001. On April 21, 2001, the Department notified Rodacciai that it 
would not be allowed to alter its cost reporting period. (See April 21, 
2001 letter to Rodacciai for further discussion.)
    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).)
    On July 6, July 9, July 10, and July 13, the petitioner submitted 
company-specific comments with respect to the upcoming preliminary 
determination.
    Finally, on July 10, July 11, and July 13, 2001, the petitioners 
submitted

[[Page 40216]]

general and company-specific comments on product matching issues for 
the Department's consideration in the preliminary determination. 
Valbruna, Rodacciai, Bedini, Foroni, and the petitioners also submitted 
further company-specific comments on July 18, July 20, July 23, and 
July 25, 2001. These comments were not received in time to be analyzed 
fully for the preliminary determination, but will be considered for the 
final determination.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on June 4, June 5, June 
12, and July 17, 2001, respectively, Foroni, Bedini, Rodacciai, and 
Valbruna 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), because (1) our preliminary 
determination is affirmative, (2) Bedini, Rodacciai, Foroni, and 
Valbruna account for a significant proportion of exports of the subject 
merchandise, and (3) no compelling reasons for denial exist, we are 
granting the respondents' 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 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:
    A. Stainless steel tool steel
    B. Welding wire
    C. Special-quality oil field equipment steel (``SQOFES'')
    D. Special profile wire
    We have addressed these requests in Memorandum to Susan Kuhbach and 
Louis Apple from The Stainless Steel Bar Team, dated July 26, 2001, 
entitled ``Scope Exclusion Requests,'' and 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 determined 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.

Facts Available

    On February 20, 2001, we sent an antidumping questionnaire to 
Cogne. On March 14, 2001, Cogne notified the Department that it would 
not be participating in this investigation. See letter from Cogne to 
the Secretary of Commerce dated March 14, 2001.
    Section 776(a)(2) of the Act provides that, if an interested party 
(1) withholds information that has been requested by the Department, 
(2) fails to provide such information in a timely manner or in the form 
or manner requested, (3) significantly impedes a determination under 
the antidumping statute, or (4) provides such information but the 
information cannot be verified, the Department shall, subject to 
subsections 782(c)(1) and (e) of the Act, use facts otherwise available 
in reaching the applicable determination. Because Cogne failed to 
respond to our questionnaire, we must use facts otherwise available to 
calculate Cogne's dumping margin.
    Section 776(b) of the Act provides that adverse inferences may be 
used when a party has failed to cooperate by not acting to the best of 
its ability to comply with requests for information. See, also, 
Statement of Administrative Action accompanying the URAA, H.R. Rep. No. 
103-316, vol. 1, at 870 (1994). Cogne's willful failure to reply to the 
Department's questionnaire demonstrates it has failed to act to the 
best of its ability in this investigation. See Nippon Steel Corp. v. 
United States, 118 F. Supp. 2d 1366, 1379 (CIT 2000). Thus, the 
Department has determined that, in selecting among the facts otherwise 
available for Cogne, an adverse inference is warranted.

[[Page 40217]]

    In accordance with our standard practice, we determine the margin 
used as adverse facts available by selecting the higher of (1) the 
highest margin stated in the notice of initiation, or (2) the highest 
margin calculated for any respondent. See, e.g., Notice of Preliminary 
Determinations of Sales at Less Than Fair Value: Certain Large Diameter 
Carbon and Alloy Seamless Standard, Line and Pressure Pipe From Japan 
and Certain Small Diameter Carbon and Alloy Seamless Standard, Line and 
Pressure Pipe From Japan and the Republic of South Africa, 64 FR 69718, 
69722 (December 14, 1999), followed in Notice of Final Determinations 
of Sales at Less Than Fair Value: Certain Large Diameter Carbon and 
Alloy Seamless Standard, Line and Pressure Pipe From Japan and Certain 
Small Diameter Carbon and Alloy Seamless Standard, Line and Pressure 
Pipe From Japan and the Republic of South Africa, 65 FR 25907 (May 4, 
2000); and Notice of Preliminary Determination of Sales at Less Than 
Fair Value: Stainless Steel Wire Rod from Korea and Germany, 63 FR 
10826, 10847 (March 5, 1998), followed in Notice of Final Determination 
of Sales at Less Than Fair Value: Stainless Steel Wire Rod from Korea 
and Germany, 63 FR 40433 (July 29, 1998).
    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, the Department 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 AFA, we re-examined the 
price and cost information provided in the petition in light of 
information developed during the investigation. For further details, 
see the Memorandum to Richard W. Moreland, ``Preliminary Determination 
of Stainless Steel Bar from Italy: Corroboration Memorandum,'' dated 
July 26, 2001.
    In accordance with Section 776(c) of the Act, we were able to 
partially corroborate the information in the petition using information 
from independent sources that were reasonably at our disposal. Using 
this information, we were able to corroborate the price-to-price margin 
calculations in the petition, but were unable to fully corroborate the 
constructed value margin calculations in the petition. As a result, we 
have preliminarily assigned Cogne the highest price-to-price margin 
rate contained in the petition, 33.00 percent, for purposes of the 
preliminary determination.

Fair Value Comparisons

    To determine whether sales of SSB from Italy 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 NVs. Any company-specific changes to 
the EP, CEP, and NV calculations are discussed in each company's 
individual calculation memorandum.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the respondents 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 characteristics reported by 
the respondents 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 11 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 analyzed fully for the preliminary determination, but will be 
considered for the final determination.

Export Price

    We calculated EP, in accordance with section 772(a) of the Act, for 
those sales where the merchandise was sold to the first unaffiliated 
purchaser in the United States prior to importation by the exporter or 
producer outside the United States, or to an unaffiliated purchaser for 
exportation to the United States, based on the facts of record. We 
based EP on the packed duty-not-paid, or delivered price to 
unaffiliated purchasers in the United States. We identified the correct 
starting price, where appropriate, by accounting for billing 
adjustments, freight revenue, and other revenue, as well as by making 
deductions for early payment discounts and rebates, 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 (plant to port), foreign brokerage and handling, 
ocean freight, marine insurance, U.S. inland freight expenses, U.S. 
inland insurance, other U.S. transportation expenses (including U.S. 
brokerage and handling), and U.S. customs duties.

Constructed Export Price

    We calculated CEP, in accordance with subsection 772(b) of the Act, 
for those sales to the first unaffiliated purchaser that took place 
after importation into the United States. We based CEP on the packed 
FOB, CIF, direct duty paid, or delivered prices to unaffiliated 
purchasers in the United States. We identified the correct starting 
price, where appropriate, by accounting for billing adjustments, 
freight revenue, and other revenue, as well as by making deductions for 
early payment discounts and rebates, 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 (plant to port), foreign brokerage and handling, ocean 
freight, marine insurance, U.S. inland freight expenses (freight from 
port to warehouse, freight from warehouse to the customer, and freight 
from warehouse to warehouse), U.S. post-sale warehousing expenses, U.S. 
inland insurance, other U.S. transportation expenses (including U.S. 
brokerage and handling), and U.S. customs duties. 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

[[Page 40218]]

(commissions, interest revenue, credit expenses, technical service 
expenses, and warranty expenses), inventory carrying costs, U.S. 
repacking expenses, and indirect selling expenses. For Bedini, we also 
deducted an amount for further-manufacturing costs in accordance with 
section 772(d)(2) of the Act. We adjusted Bedini's U.S. further-
manufacturing costs to include the material yield loss for all products 
based on output quantity. Where applicable, we made an adjustment for 
profit in accordance with section 772(d)(3) of the Act.

Ugine-Savoie Imphy Sub-Contracted Sales

    In its June 11, 2001, submission, Bedini indicated that, during the 
POI, it processed as part of a tolling operation non-subject 
merchandise (i.e., stainless steel wire rod of French origin) that was 
owned by its French affiliate, Ugine-Savoie Imphy (``U-SI''), into 
subject merchandise. U-SI then sold this merchandise to the U.S. and 
other markets. Bedini further stated that, in accordance with the 
Department's country of origin rules, these sales were not reported as 
home market and/or U.S. sales in the sales listings submitted in the 
concurrent investigation of SSB from France, but rather were reported 
in the sales listings submitted in this investigation.
    After further examining Bedini's claim in the context of the 
Department's substantial transformation practice and tolling regulation 
(19 CFR 351.401(h)), we concluded that this merchandise must be 
considered as a product of Italy, but that Bedini, as a tolling 
operation, cannot be considered the manufacturer or producer. 
Therefore, we have removed these sales from Bedini's U.S. database. At 
this time, we are unable to determine whether any of these sales are 
included in Bedini's home market database, and will examine this issue 
further after the preliminary determination.

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 the respondents' volume of home 
market sales of the foreign like product to the volume of U.S. sales of 
the subject merchandise, in accordance with section 773(a)(1)(C) of the 
Act. Because each respondent's aggregate volume of home market sales of 
the foreign like product was greater than five percent of its aggregate 
volume of U.S. sales for the subject merchandise, we determined that 
the home market was viable for all respondents.

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 Bedini, Valbruna, and 
Rodacciai's sales to affiliates as follows.
    Sales to affiliated customers in the home market not made at arm's-
length prices (if any) were excluded from our analysis because we 
considered them to be outside the ordinary course of trade. See 19 CFR 
351.102. 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 unaffiliated parties, we 
determined that sales made to the affiliated party were at arm's 
length. See 19 CFR 351.403(c) and Antidumping Duties; Countervailing 
Duties; Final Rule, 62 FR 27296, 27355 (May 19, 1997). 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). 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.

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 cost of 
production (``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 at 66 FR 7620, 7623).
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 general and administrative 
expenses (``G&A''), 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 Foroni, Valbruna, Bedini, and Rodacciai, except where noted below.
    Valbruna. We increased Valbruna's reported total cost of 
manufacturing to reflect an unreconciled difference between the 
company's cost accounting system and its reported costs. See Memorandum 
from Robert Greger to Neal Halper, Director, Office of Accounting, 
dated July 26, 2001, Re: Cost Adjustments.
    Foroni. We adjusted Foroni's general and administrative expenses to 
include director's fees and exclude indirect selling expenses. We also 
adjusted Foroni's net financial expenses to exclude foreign exchange 
gains and losses on accounts receivable, bond interest income and 
interest income from receivables. See Memorandum from Robert Greger to 
Neal Halper, Director, Office of Accounting, dated July 26, 2001, Re: 
Cost Adjustments.
    Rodacciai. We adjusted Rodacciai's net financial expenses to 
exclude foreign exchange gains and losses on accounts receivable and 
interest income from receivables. See Memorandum from team to the file, 
``Preliminary Determination Calculation Memorandum for Rodacciai 
S.p.A.'' dated July 26, 2001.
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 inclusive of any 
applicable freight revenue and exclusive of any applicable movement 
charges, billing adjustments, discounts, rebates, commissions, interest 
revenue, warranty expenses, technical service expenses, and direct and 
indirect selling expenses. In determining whether to disregard home 
market sales made at prices less than their COP, we examined whether 
such sales were made (1) within an extended period of time, (2) in 
substantial

[[Page 40219]]

quantities, and (3) at prices which did 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 Bedini's, Valbruna's, Rodacciai's, and Foroni'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. We therefore excluded these sales and used the remaining 
above-cost sales, if any, as the basis for determining NV, in 
accordance with section 773(b)(1) of the Act.

D. Calculation of Constructed Value

    Section 773(a)(4) of the Act provides that where normal value 
cannot be based on comparison-market sales, normal value may be based 
on CV. Accordingly, for Bedini (the only company that had any sales for 
which NV was based on CV), when sales of comparison products could not 
be found, either because there were no sales of a comparable product or 
all sales of the comparable products failed the COP test, we based NV 
on CV.
    In accordance with sections 773(e)(1) and (e)(2)(A) of the Act, we 
calculated CV based on the sum of the cost of materials and fabrication 
for the foreign like product, plus amounts for selling expenses, G&A, 
interest, profit and U.S. packing costs. We calculated the cost of 
materials and fabrication based on the methodology described in the 
``Calculation of COP'' section of this notice. In accordance with 
section 773(e)(2)(A) of the Act, we based selling expenses, G&A, and 
profit on the amounts incurred and realized by Bedini in connection 
with the production and sale of the foreign like product in the 
ordinary course of trade for consumption in the foreign country.

E. 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) according to 19 CFR 351.412(c)(2). Substantial differences 
in selling 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''),\1\ including selling 
functions,\2\ class of customer (``customer category''), and the level 
of selling expenses for each type of sale.
---------------------------------------------------------------------------

    \1\ The marketing process in the United States and comparison 
markets begins with the producer and extends to the sale 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.
    \2\ 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 determination, 
we have organized the common SSB selling functions into four major 
categories: sales process and marketing support, freight and 
delivery, inventory and warehousing, and quality assurance/warranty 
services. Other selling functions unique to specific companies were 
considered, as appropriate.
---------------------------------------------------------------------------

    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 \3\), 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).
---------------------------------------------------------------------------

    \3\ Where NV is based on CV, we determine the NV LOT based on 
the LOT of the sales from which we derive selling expenses, G&A, and 
profit for CV, where possible.
---------------------------------------------------------------------------

    When the Department is unable to match U.S. sales to 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. If the comparison market sales 
are at a different LOT, and the difference affects price comparability, 
as manifested in a pattern of consistent price differences between 
sales at different LOTs in the country in which NV is determined, we 
make a level of trade 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 level of trade 
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).
    We obtained information from each respondent 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. Company-specific 
level of trade findings are summarized below. The complete level of 
trade analysis for each company is incorporated into the ``Preliminary 
Determination Calculation Memorandum'' for each company.
    Bedini. Bedini reported three channels of distribution in the home 
market, with two customer categories. With respect to the first channel 
of distribution, coded in its submissions as channel 2, we found that 
the sales were primarily produced-to-order sales which were shipped to 
distributors and end-users direct from the factory. Sales to both 
customer categories were similar with respect to sales process, freight 
services, warehouse/inventory maintenance and warranty service. We 
preliminarily determine that this channel of distribution constitutes a 
distinct LOT (``LOTH1'').
    For the remaining two channels in the home market, coded as 
channels 3 and 4, we found that they were inventory sales by an 
affiliated reseller, which only differed with respect to the source of 
the SSB. We have therefore analyzed these reported channels as a single 
channel of distribution. Within this channel, sales to distributors and 
end-users were similar with respect to sales process, freight services, 
warehouse/inventory maintenance and warranty service. We preliminarily 
determine that this channel constitutes a distinct LOT (``LOTH2'').
    We further found that LOTH1 differed significantly from LOTH2 with 
respect to sales process, freight service and warehouse/inventory 
maintenance.

[[Page 40220]]

Based upon our overall analysis in the home market, we found that LOTH1 
and LOTH2 constitute two different levels of trade.
    In the U.S. market, Bedini only reported CEP sales. Bedini's 
constructed CEP level of trade was its sales to its affiliated 
reseller, and since it performed the same selling functions for all of 
these sales, we found that these CEP sales constitute one level of 
trade. This CEP level of trade differed considerably from the home 
market level of trade LOTH2 with respect to sales process, freight 
services, warehouse/inventory maintenance, and warranty service. We 
found that LOTH1 was similar to the CEP LOT with respect to sales 
process, freight services and warehouse/inventory maintenance and 
differed only slightly with respect to warranty service.
    Although Bedini claimed a CEP offset adjustment to normal value, 
because we found the CEP LOT to be similar to home market level of 
trade LOTH1, where possible, we matched CEP sales to normal value based 
on home market sales in LOTH1 and made no CEP offset adjustment. Where 
we did not match products at the same level of trade, and there was a 
pattern of consistent price differences between different levels of 
trade, we made a level of trade adjustment. See section 773(a)(7)(A) of 
the Act. Where we did not match products at the same level of trade, 
and we were unable to make a level of trade adjustment, because the 
home market level of trade was at a more advanced stage of distribution 
than the CEP level of trade, we made a CEP offset in accordance with 
section 773(a)(7)(B) of the Act.
    Foroni. We examined the chain of distribution and the selling 
activities associated with sales reported by Foroni in the home market 
which were primarily produced-to-order sales shipped to distributors 
and end-users direct from the factory. We found the sales to both 
customer categories were similar with respect to sales process, freight 
services, warehouse/inventory maintenance and warranty service. We 
therefore preliminarily determine that these home market sales 
constitute a single level of trade.
    In the U.S. market, Foroni only reported CEP sales. Foroni's 
constructed CEP level of trade was its sales to its affiliated 
reseller, and since it performed the same selling functions for these 
sales, we found that these CEP sales constitute one level of trade. 
This CEP level of trade was similar to that of the home market with 
respect to sales process, warehouse/inventory maintenance and warranty 
service, and differed only slightly with respect to freight and 
delivery. Since we found the CEP LOT to be similar to the home market 
level of trade, we matched CEP sales to normal value based on home 
market sales and made no CEP offset adjustment.
    Rodacciai. We examined the chain of distribution and the selling 
activities associated with home market sales reported by Rodacciai from 
warehouse inventory to end-users and to distributors. We found that 
sales to each customer category were similar with respect to sales 
process, freight services, warehouse/inventory maintenance and warranty 
service and therefore Rodacciai's home market sales constituted a 
single level of trade.
    In the U.S. market, Rodacciai had both EP and CEP sales. Rodacciai 
reported EP sales to distributors through only one channel of 
distribution and one customer category, and therefore had only one 
level of trade for its EP sales. This EP level of trade differed 
considerably from the home market level of trade with respect to sales 
process, freight services and warehousing/inventory maintenance. 
Consequently, we could not match the EP level of trade to sales at the 
same level of trade in the home market. Since there was only one level 
of trade in the home market, there was no pattern of consistent price 
differences between different levels of trade in the home market, nor 
do we have any other information that provides an appropriate basis for 
determining a level of trade adjustment. Accordingly, we have not made 
a level of trade adjustment. See section 773(a)(7)(A) of the Act.
    With respect to CEP sales, Rodacciai's constructed CEP level of 
trade was sales to its affiliated reseller, and since it performed the 
same selling functions for these sales, we found that these CEP sales 
constitute one level of trade. This CEP level of trade differed 
considerably from the single home market level of trade with respect to 
sales process, freight services and warehouse/inventory maintenance. 
Consequently, we could not match to sales at the same level of trade in 
the home market. Since there was only one level of trade in the home 
market, there was no pattern of consistent price differences between 
different levels of trade in the home market, nor do we have any other 
information that provides an appropriate basis for determining a level 
of trade adjustment. Accordingly, we have not made a level of trade 
adjustment. See section 773(a)(7)(A) of the Act. We therefore 
determined NV based on the single level of trade in the home market, 
and because this home market level of trade was at a more advanced 
stage of distribution than the CEP level of trade, we made a CEP offset 
in accordance with section 773(a)(7)(B) of the Act.
    Valbruna. Valbruna reported two channels of distribution in the 
home market, with two customer categories. The first channel of 
distribution, coded in its submissions as channel 1, included sales 
made to end-users and distributors by factory headquarters. Sales to 
both customer categories in this channel were similar with respect to 
sales process, freight services, warehouse/inventory maintenance and 
warranty service. The second channel of distribution, coded in its 
submissions as channel 2, were sales made to end-users and distributors 
by service centers. We compared these two channels of distribution and 
found that, while they differed slightly with respect to warehouse/
inventory maintenance, they were similar with respect to sales process, 
freight services and warranty service. Accordingly, we preliminarily 
determine that home market sales in these two channels of distribution 
constitute a single level of trade.
    In the U.S. market, Valbruna had both EP and CEP sales. Valbruna 
reported EP sales to a master distributor through only one channel of 
distribution and one customer category, and therefore had only one 
level of trade for its EP sales. This EP level of trade differed 
considerably from the home market level of trade with respect to sales 
process and warehousing/inventory maintenance. Consequently, we could 
not match the EP level of trade to sales at the same level of trade in 
the home market. Since there was only one level of trade in the home 
market, there was no pattern of consistent price differences between 
different levels of trade in the home market, nor do we have any other 
information that provides an appropriate basis for determining a level 
of trade adjustment. Accordingly, we have not made a level of trade 
adjustment. See section 773(a)(7)(A) of the Act.
    With respect to CEP sales, Valbruna's constructed CEP level of 
trade was sales to its affiliated reseller, and since it performed the 
same selling functions for these sales, we found that these CEP sales 
constitute one level of trade. This CEP level of trade differed 
considerably from the single home market level of trade with respect to 
sales process and warehouse/inventory maintenance. Consequently, we 
could not match to sales at the same level of trade in the home market. 
Since there was only one level of trade in the home market, there

[[Page 40221]]

was no pattern of consistent price differences between different levels 
of trade in the home market, nor do we have any other information that 
provides an appropriate basis for determining a level of trade 
adjustment. Accordingly, we have not made a level of trade adjustment. 
See section 773(a)(7)(A) of the Act. We therefore determined NV based 
on the single level of trade in the home market, and because this home 
market level of trade was at a more advanced stage of distribution than 
the CEP level of trade, we made a CEP offset in accordance with section 
773(a)(7)(B) of the Act.

F. Calculation of Normal Value Based on Comparison Market Prices

    We calculated NV based on delivered, FOB, or ex-works/ex-warehouse 
prices to unaffiliated customers or prices to affiliated customers that 
we determined to be at arm's-length. To identify the correct starting 
price, we accounted for freight revenue, where appropriate, and also 
made deductions, where appropriate, for billing adjustments, early 
payment discounts, and other discounts and rebates. We also made 
adjustments for inland freight (plant to warehouse and plant/warehouse 
to customer), and warehousing expense, where appropriate, in accordance 
with section 773(a)(6)(B)(iii) of the Act. 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, where 
appropriate, we made adjustments under section 773(a)(6)(C)(iii) of the 
Act for differences in circumstances of sale for commissions, imputed 
credit expenses, interest revenue, warranty expenses, technical service 
expenses, and other direct selling expenses. We also made adjustments, 
in accordance with 19 CFR 351.410(e), for indirect selling expenses 
incurred in the comparison market or U.S. sales where commissions were 
granted on sales in one market but not in the other (the commission 
offset). We 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, where appropriate, we made an adjustment for differences 
in LOT under section 773(a)(7)(A) of the Act and 19 CFR 351.412(b)-(e). 
Additionally, for certain comparisons to CEP sales, where appropriate, 
we deducted from normal value the lesser of comparison-market indirect 
selling expenses and indirect selling expenses deducted from CEP (the 
CEP offset), pursuant to section 773(a)(7)(B) of the Act and 19 CFR 
351.412(f).

G. Calculation of Normal Value Based on Constructed Value

    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act. Where we compared CV to 
CEP, we deducted from CV the weighted-average home market direct 
selling expenses. We also made circumstances of sale adjustments. 
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).

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 reported by the Dow Jones.\4\
---------------------------------------------------------------------------

    \4\ 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 Italian lira, 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 lira-to-dollar exchange rate.
---------------------------------------------------------------------------

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, with the exception 
of Valbruna, noted below, 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 export price or constructed export price, 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
------------------------------------------------------------------------
Acciaierie Valbruna Srl/Acciaierie Bolzano Srl..............       1.75
Acciaiera Foroni SpA........................................       7.72
Trafilerie Bedini, Srl......................................       2.63
Rodacciai S.p.A.............................................       4.86
Cogne Acciai Speciali Srl...................................      33.00
All Others..................................................      7.72
------------------------------------------------------------------------
* Pursuant to 19 CFR 351.204(d)(3), we have excluded rates calculated
  for voluntary respondents from the calculation of the all-others rate
  under section 735(c)(5) of the Act.
** 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.

    For Valbruna, because its estimated weighted-average preliminary 
dumping margin is de minimis, we are not directing the Customs Service 
to suspend liquidation of Valbruna's entries.

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 5, 2001. Rebuttal briefs must be 
filed by November 13, 2001. A 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 16, 
2001 at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, N.W., Washington, D.C. 20230. Parties should confirm by 
telephone the time, date, and place of the hearing 48 hours before the 
scheduled time.

[[Page 40222]]

    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. 01-19351 Filed 8-1-01; 8:45 am]
BILLING CODE 3510-DS-P