[Federal Register Volume 66, Number 195 (Tuesday, October 9, 2001)]
[Notices]
[Pages 51385-51391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-25270]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-829]


Stainless Steel Wire Rod From the Republic of Korea: Preliminary 
Results of Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: In response to requests from U.S. producers of the subject 
merchandise, the Department of Commerce (the Department) is conducting 
an administrative review of the antidumping duty order on stainless 
steel wire rod (SSWR) from the Republic of Korea (Korea). The review 
covers two manufacturers/exporters of subject merchandise to the United 
States during the period of review (POR), September 1, 1999 through 
August 31, 2000. Based upon our analysis, the Department has 
preliminarily determined that dumping margins exist for both 
manufacturers/exporters. If these preliminary results are adopted in 
our final results of administrative review, we will instruct the United 
States Customs Service (Customs) to assess antidumping duties as 
appropriate. Interested parties are invited to comment on these 
preliminary results. Parties who submit arguments in this proceeding 
are requested to submit with the argument (1) a statement of the issue, 
and (2) a brief summary of the argument.

EFFECTIVE DATE: October 9, 2001.

FOR FURTHER INFORMATION CONTACT: Alexander Amdur or Karine Gziryan, AD/
CVD Enforcement, Office IV, Group II, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
and Constitution Avenue, NW., Washington, D.C. 20230; telephone: (202) 
482-5346 or (202) 482-4081, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise stated, all citations to the Tariff Act of 1930, 
as amended (the Act), are references to the provisions as of 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 references to the regulations of the Department are to 
19 CFR part 351 (2000).

Background

    On September 15, 1998, the Department published in the Federal 
Register the antidumping duty order on SSWR from Korea. See Notice of 
Amendment of Final Determination of Sales at Less Than Fair Value and 
Antidumping Duty Order: Stainless Steel Wire Rod From Korea, 63 FR 
49331 (September 15, 1998). On September 20, 2000, the Department 
published a notice of ``Opportunity to Request an Administrative 
Review'' of the antidumping duty order on SSWR from Korea. See 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity to Request Administrative Review, 65 FR 
56868 (September 20, 2000). On September 29, 2000, the petitioners, 
Carpenter Technology Corp., Empire Specialty Steel, and the United 
Steel Workers of America, AFL-CIO/CLC, requested an administrative 
review of Changwon Specialty Steel Co., Ltd. (Changwon) and Dongbang 
Specialty Steel Co., Ltd. (Dongbang) (collectively, respondents) for 
the period September 1, 1999 through August 31, 2000. On October 24, 
2000, the Department initiated an administrative review of Changwon and 
Dongbang.\1\
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    \1\ The Department inadvertently omitted this case from the 
initiation notice published on October 30, 2000. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews, Requests 
for Revocation in Part and Deferral of Administrative Reviews, 65 FR 
64662 (October 30, 2000). However, a correction in the subsequent 
initiation notice was published on November 30, 2000. See Initiation 
of Antidumping and Countervailing Duty Administrative Reviews, 65 FR 
71299 (November 30, 2000).
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    On October 20, 2000, we issued an antidumping questionnaire to 
Changwon and Dongbang. The Department received Changwon's and 
Dongbang's responses in December 2000. We issued supplemental 
questionnaires to Changwon and Dongbang in February and May 2001, and 
received responses from Changwon and Dongbang in March and June 2001.
    On June 11, 2001, the Department published in the Federal Register 
a notice extending the deadline for issuing the preliminary results in 
this case until no later than October 1, 2001. See Stainless Steel Wire 
Rod From the Republic of Korea: Extension of Time Limit for Preliminary 
Results of Antidumping Duty Administrative Review, 66 FR 31210 (June 
11, 2001).

Scope of the Review

    For purposes of this review, SSWR comprises products that are hot-
rolled or hot-rolled annealed and/or pickled and/or descaled rounds, 
squares,

[[Page 51386]]

octagons, hexagons or other shapes, in coils, that may also be coated 
with a lubricant containing copper, lime or oxalate. SSWR is made of 
alloy steels containing, by weight, 1.2 percent or less of carbon and 
10.5 percent or more of chromium, with or without other elements. These 
products are manufactured only by hot-rolling or hot-rolling annealing, 
and/or pickling and/or descaling, are normally sold in coiled form, and 
are of solid cross-section. The majority of SSWR sold in the United 
States is round in cross-sectional shape, annealed and pickled, and 
later cold-finished into stainless steel wire or small-diameter bar. 
The most common size for such products is 5.5 millimeters or 0.217 
inches in diameter, which represents the smallest size that normally is 
produced on a rolling mill and is the size that most wire-drawing 
machines are set up to draw. The range of SSWR sizes normally sold in 
the United States is between 0.20 inches and 1.312 inches in diameter.
    Two stainless steel grades are excluded from the scope of the 
review. SF20T and K-M35FL are excluded. The chemical makeup for the 
excluded grades is as follows:

SF20T

Carbon  0.05 max
Manganese  2.00 max
Phosphorous  0.05 max
Sulfur  0.15 max )
Silicon  1.00 max
Chromium  19.00/21.00
Molybdenum  1.50/2.50
Lead-added  (0.10/0.30)
Tellurium-added  (0.03 min)

K-M35FL

Carbon  0.015 max
Silicon  0.70/1.00
Manganese  0.40 max
Phosphorous  0.04 max
Sulfur  0.03 max
Nickel  0.30 max
Chromium  12.50/14.00
Lead  0.10/0.30
Aluminum  0.20/0.35

    The products subject to this review are currently classifiable 
under subheadings 7221.00.0005, 7221.00.0015, 7221.00.0030, 
7221.00.0045, and 7221.00.0075 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 review is dispositive.

Verification

    As provided in section 782(i) of the Act, on July 17 to 27, 2001 
and August 2 to 3, 2001, we verified sales and cost information 
provided by Changwon and sales information provided by Dongbang, using 
standard verification procedures, including an examination of relevant 
sales and financial records. Our verification results are outlined in 
the public version of the verification report and are on file in the 
Central Records Unit (CRU) located in room B-099 of the main Department 
of Commerce Building, 14th Street and Constitution Avenue, NW., 
Washington, DC.

Duty Absorption

    On November 14, 2000, the petitioners requested that the Department 
determine whether antidumping duties had been absorbed during the POR 
by the respondents. Section 751(a)(4) of the Act provides for the 
Department, if requested, to determine during an administrative review 
initiated two or four years after the publication of the order, whether 
antidumping duties have been absorbed by a foreign producer or 
exporter, if the subject merchandise is sold in the United States 
through an affiliated importer. Because the collapsed entity Pohang 
Iron and Steel Co., Ltd. (POSCO)/Changwon/Dongbang (see ``Affiliation 
and Collapsing'' section of this notice) sold to unaffiliated customers 
in the United States through an importer that is affiliated, and 
because this review was initiated two years after the publication of 
the order, we will make a duty absorption determination in this segment 
of the proceeding within the meaning of section 751(a)(4) of the Act.
    On February 16, 2001, the Department requested evidence from each 
respondent to demonstrate that U.S. purchasers will pay any ultimately 
assessed duties charged to them. The Department requested that this 
information be provided no later than March 2, 2001. No respondent 
provided such evidence. Consequently, we have preliminarily determined 
that duty absorption by all respondents has occurred in this 
administrative review. As our analysis of the dumping margins may be 
modified in our final results, if interested parties wish to submit 
evidence that the unaffiliated purchasers in the United States will pay 
any ultimately assessed duty charged to affiliated importers, they must 
do so no later than 15 days after publication of these preliminary 
results. Any such information will be considered by the Department if 
we determine in our final results that there are dumping margins on the 
respondents' U.S. sales.

Affiliation and Collapsing

A. Changwon, POSCO, and Dongbang

    During the less than fair value (LTFV) investigation, POSCO was the 
sole supplier to Dongbang of black coil (unfinished SSWR). See Notice 
of Final Determination of Sales at Less than Fair Value: Stainless 
Steel Wire Rod from Korea, 63 FR 40404, 40410 (July 29, 1998) (Final 
Determination). Based on this fact, and the fact that Dongbang was not 
able to obtain suitable black coil from alternative sources, the 
Department determined that POSCO and its wholly-owned subsidiary, 
Changwon, were affiliated with Dongbang through a close supplier 
relationship pursuant to section 771(33)(G) of the Act and 
Sec. 351.102(b) of the Department's regulations. See id. The 
Department, in the investigation stage, also collapsed Changwon, POSCO, 
and Dongbang as a single entity for purposes of the dumping analysis in 
accordance with Sec. 351.401(f) of the Department's regulations. See 
id.
    Because neither POSCO, Changwon, nor Dongbang has provided any new 
evidence showing that this finding no longer holds true, we have 
continued to find that POSCO and Changwon are affiliated with Dongbang 
through a close supplier relationship.\2\ Further, we have continued to 
treat POSCO, Changwon, and Dongbang as a single entity and to calculate 
a single margin for them. (See, e.g., Frozen Concentrated Orange Juice 
from Brazil; Preliminary Results and Partial Rescission of Antidumping 
Duty Administrative Review, 66 FR 29930, 29931 (June 4, 2001), citing 
Certain Welded Carbon Steel Pipes and Tubes from Thailand: Preliminary 
Results of Antidumping Duty Administrative Review, 64 FR 17998, 17999 
(April 13, 1999) (unchanged by the final results)).
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    \2\ During the POR, Changwon, and not POSCO, was Dongbang's sole 
supplier of black coil. However, since we continue to treat POSCO 
and Changwon as a single entity (as we did in the LTFV 
investigation), this does not change our determination that POSCO/
Changwon are affiliated with Dongbang through a close supplier 
relationship.
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B. Affiliation Between Changwon, Dongbang and U.S. Trading Company 
Customers

    Changwon and Dongbang \3\ reported U.S. sales to trading companies 
whom they classified as unaffiliated parties in their December 11 and 
December 20, 2000 section A and C questionnaire

[[Page 51387]]

responses. The petitioners contend that Changwon and Dongbang are 
affiliated with these trading company customers through a principal/
agent relationship. Under section 771(33)(G) of the Act, principals and 
agents are affiliated because, ``by definition, a principal controls 
its agent.'' See Notice of Final Determination of Sales at Less than 
Fair Value: Engineered Process Gas Turbo-Compressor Systems, Whether 
Assembled or Unassembled, and Whether Complete or Incomplete, from 
Japan, 62 FR 24394, 24403 (May 5, 1997) (Turbo-Compressors from Japan). 
In determining whether a principal/agent relationship exists, the 
Department first examines whether an explicit agreement exists from the 
alleged principal, authorizing the agent to act on its behalf in a 
specified context. This agreement must not only state that such a 
relationship exists, but the alleged agent must expressly consent to 
such representation on behalf of the principal. However, the Department 
also recognizes that while agency relationships are ``frequently 
established by a written contract, this is not essential.'' See id. at 
24402-24403 (expressing the principal/agent test); see also Stainless 
Steel Sheet and Strip in Coils From Taiwan: Preliminary Results and 
Partial Rescission of Antidumping Duty Administrative Review, 66 FR 
41509, 41512 (August 8, 2001).
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    \3\ Although, as discussed above, we are treating POSCO, 
Changwon, and Dongbang, as a single entity, we may, in certain 
instances, refer to POSCO, Changwon, and Dongbang separately to 
distinguish the information separately reported by these companies.
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    In the absence of an agency contract, ``the analysis of whether a 
relationship constitutes an agency is case-specific and can be quite 
complex; there is no bright line test.'' See Turbo-Compressors from 
Japan, 62 FR at 24403. The Department's examination of allegations of 
an agency relationship has focused on a range of criteria, including 
(but not limited to) the following: (1) The foreign producer's role in 
negotiating price and other terms of sale; (2) the extent of the 
foreign producer's interaction with the U.S. customer; (3) whether the 
agent/reseller maintains inventory; (4) whether the agent/reseller 
takes title to the merchandise and bears the risk of loss; and (5) 
whether the agent/reseller further processes or otherwise adds value to 
the merchandise. Id.
    In the instant case, based on the totality of the circumstances, we 
believe that Changwon's and Dongbang's trading company customers are 
independent, unaffiliated resellers, and that a principal/agent 
relationship does not exist between Changwon, Dongbang, and their 
respective trading company customers. The record evidence indicates 
that, even though most of Changwon's and Dongbang's sales and order 
documentation on the record indicates the name of the ultimate end 
user, and Changwon's and Dongbang's identity presumably was disclosed 
to most of the end user customers, Changwon and Dongbang negotiated the 
terms of sales and set the prices with their trading company customers, 
and did not market to the trading companies' end user customers. See, 
e.g., Changwon sales verification exhibits 11 to 18; Dongbang sales 
verification exhibits 8, 9, 10, 11 and 20; and Pohang Steel America 
Corp. Verification exhibits 7 and 8. Furthermore, Changwon and 
Dongbang, except in very limited instances, did not interact directly 
with the ultimate end users. The sales documentation in the 
questionnaire responses and verification exhibits also shows that 
trading company customers take title to the inventory and bear the risk 
of loss.
    We also note that the facts in this case differ from those in 
Turbo-Compressors from Japan, where the Department determined that a 
principal/agent relationship existed based upon the fact that the 
respondent effectively controlled the price, among other terms of sale, 
in the transaction with the ultimate U.S. end user, and conducted some 
marketing of its product to the end user in the pre-sale period. See 
Turbo-Compressors from Japan, 62 FR at 24403. In the present case, the 
record does not contain any of these same facts. Furthermore, we also 
note that Turbo-Compressors from Japan involved a single sale through a 
single trading company, while the present case involves numerous sales 
to multiple trading companies, as well as more complex and varied fact 
patterns.
    Because of the proprietary nature of this issue, for further 
discussion, see Memorandum from Holly Kuga to Bernard Carreau on 
Whether Changwon and Dongbang are Affiliated With Certain U.S. 
Customers Under Section 771(33) of the Act, dated October 1, 2001.

Normal Value Comparisons

    To determine whether the respondents' sales of SSWR from Korea to 
the United States were made at less than normal value, we compared the 
export price (EP) and constructed export price (CEP), as appropriate, 
to the normal value (NV), as described in the ``Export Price,'' 
``Constructed Export Price'' and ``Normal Value'' sections of this 
notice, below. We first attempted to compare contemporaneous U.S. and 
comparison market sales of products that are identical with respect to 
the following characteristics: grade, diameter, further processing and 
coating. Where we were unable to compare sales of identical 
merchandise, we compared U.S. sales to comparison market sales of the 
most similar merchandise based on the above characteristics, which are 
listed in order of importance for matching purposes. Where we were 
unable to find appropriate comparison market sales made in the ordinary 
course of trade, of comparable merchandise for the merchandise sold in 
the United States, we made comparisons to constructed value (CV).

Export Price

    For Dongbang's reported sales, in calculating U.S. price, the 
Department used EP, as defined in section 772(a) of the Act, because 
the merchandise was sold, prior to importation, by Dongbang to an 
unaffiliated purchaser in the United States, or to an unaffiliated 
purchaser for exportation to the United States, and CEP methodology was 
not otherwise warranted based on the facts on the record. We calculated 
EP based on the packed, delivered prices charged to unaffiliated 
customers in the United States or to unaffiliated customers for 
exportation to the United States. In accordance with section 
772(c)(2)(A) of the Act, we made deductions from the starting price, 
where applicable, for foreign movement expenses (including brokerage 
and handling and inland freight), international freight, and marine 
insurance. We added duty drawback received on imported materials, 
pursuant to section 772(c)(1)(B) of the Act, as recalculated pursuant 
to corrections presented at verification.

Constructed Export Price

    Changwon reported its sales as EP sales. However, after an analysis 
of Changwon's information on the record, we preliminarily determine 
that Changwon's sales should be classified as CEP sales. The record in 
this case shows that Changwon's U.S. sales during the POR were made 
through two of its affiliates: POSCO Steel Sales & Service Co., Ltd. 
(POSTEEL) in Korea and Pohang Steel America Corporation (POSAM) in the 
United States. POSAM served as a point of contact for Changwon's U.S. 
customers, and relayed price inquiries and purchase orders from U.S. 
customers to and from Changwon through POSTEEL. See p. 24 of Changwon's 
December 11, 2000 Section A response. After Changwon confirmed the 
price and quantity of the sales and produced the orders, POSTEEL and 
POSAM arranged for transportation of Changwon's merchandise to the U.S. 
customers. See id. During this process, title passed from Changwon to 
POSTEEL, and then to

[[Page 51388]]

POSAM. POSAM then invoiced Changwon's U.S. customers, and received 
payment from these U.S. customers. See id. These facts were also 
present in the original LTFV investigation in which we determined 
Changwon's sales through POSTEEL and POSAM to be CEP sales (see 
Stainless Steel Wire Rod From Korea: Amendment of Final Determination 
of Sales at Less Than Fair Value Pursuant to Court Decision, 66 FR 
41550 (August 8, 2001)) (Amended Final Determination).
    Based upon these facts, including POSAM's role in invoicing and 
receiving payment from Changwon's U.S. customers, and Changwon's lack 
of direct contact with its U.S. customers, we have determined, 
consistent with the decision of the U.S. Court of Appeals for the 
Federal Circuit in AK Steel v. United States, 226 F.3d 1330 (Fed. Cir. 
2000), that Changwon's U.S. sales were made in the United States by its 
U.S. affiliate, and thus, are properly classified as CEP sales.
    We calculated CEP based on delivered prices to unaffiliated 
customers in the United States. We made deductions from the starting 
price, where appropriate, for foreign and U.S. brokerage and handling, 
foreign and U.S. inland freight, international freight, marine 
insurance, U.S. duties, and direct and indirect selling expenses to the 
extent that they are associated with economic activity in the United 
States in accordance with sections 772(c)(2)(A) and 772(d)(1)(B) and 
(D) of the Act. These deductions included credit expenses. We added 
duty drawback received on imported materials pursuant to section 
772(c)(1)(B) of the Act. Finally, in accordance with section 772(d)(3) 
of the Act, we made a deduction for CEP profit.
    We included those U.S. sales presented in the corrections at 
Changwon's U.S. verification. Consistent with the Department's 
practice, we excluded those reported sales that entered the U.S. under 
a temporary import bond and were subsequently re-exported to a third 
country. See, e.g., Oil Country Tubular Goods from Japan: Preliminary 
Results and Recission of Antidumping Administrative Review, 64 FR 48589 
(September 7, 1999) (unchanged by the final results); see also Remand 
Determination: Titanium Metals Corp. v. United States, 94-04-00236 (CIT 
April 17, 1995), affirmed by, Titanium Metals Corp. v. United States, 
901 F. Supp. 362 (CIT 1995).
    For further details, see Calculation Memorandum dated October 1, 
2001.

Level of Trade (LOT)

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practical, we determined NV based on sales in the comparison market at 
the same LOT as the EP or CEP sales. The NV LOT is that of the 
starting-price sales in the comparison market or, when NV is based on 
CV, that of the sales from which we derive selling, general, and 
administrative (SG&A) expenses and profit. For EP sales, the U.S. LOT 
is also the level of the starting-price sale. For CEP sales, it is the 
level of the constructed sale from the exporter to the importer. The 
Court of Appeals for the Federal Circuit (Federal Circuit) has held 
that the statute unambiguously requires Commerce to deduct the selling 
expenses set forth in section 772(d) from the CEP starting price prior 
to performing its LOT analysis. See Micron Technology, Inc. v. United 
States, 243 F.3rd 1301, 1315 (Fed. Cir. 2001). Consequently, the 
Department will continue to adjust the CEP, pursuant to section 772(d), 
prior to performing the LOT analysis, as articulated by the 
Department's regulations at 351.412.
    To determine whether NV sales are at a different LOT than the EP or 
CEP sales, we examined stages in the marketing process and selling 
activities along the chain of distribution between the producer and the 
unaffiliated customer. 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 the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP offset provision). 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).
    In determining whether separate levels of trade (LOTs) exist, we 
obtained information from the collapsed entity POSCO/Changwon/Dongbang 
about the marketing stages for the reported U.S. and comparison market 
sales, including a description of the selling activities performed by 
POSCO/Changwon/Dongbang for each channel of distribution. In 
identifying LOTs for EP and comparison market sales, we considered the 
selling functions reflected in the starting price before any 
adjustments. See 19 CFR 351.412(c)(1)(i) and (iii). In identifying LOTs 
for CEP sales, we considered the selling functions reflected in the 
starting price, as adjusted under section 772(d) of the Act. See 19 CFR 
351.412(c)(ii). We expect that, if claimed LOTs are the same, the 
selling functions and activities of the seller at each level should be 
similar. Conversely, if a party claims that LOTs are different for 
different groups of sales, the selling functions and activities of the 
seller for each group should be dissimilar.
    In this review, Changwon and Dongbang claimed that their respective 
sales involved identical selling functions, irrespective of the channel 
of distribution or market. We examined these selling functions for the 
collapsed entity POSCO/Changwon/Dongbang (for Changwon's CEP sales, 
after deducting POSAM's selling expenses incurred in the United 
States), and found that sales activities were limited in nature and 
scope in both the comparison and U.S. markets, and consisted primarily 
of providing freight and packing services. Therefore, we have 
preliminarily found that there is one LOT in the U.S. and comparison 
market, and thus, no LOT adjustment or CEP offset is required for 
comparison of U.S. sales to comparison market sales. For further 
details, see Memorandum on Level of Trade Analysis dated October 1, 
2001.

Normal Value

    After testing home market viability, whether sales to affiliates 
were at arm's-length prices, and whether home market sales failed the 
cost test, we calculated NV as noted in subsection 4, ``Calculation of 
NV,'' below.

1. 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 their U.S. 
sales of subject merchandise, in accordance with section 773(a)(1) of 
the Act. Because the respondents' aggregate volume of home market sales 
of the foreign like product is greater than five percent of their 
aggregate volume of U.S. sales of subject merchandise, we determined 
that the home market is viable for the respondents.

[[Page 51389]]

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

    Sales to affiliated customers in the home market not made at arm's 
length prices (if any) were excluded from our analysis because the 
Department 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, the Department compared, on a model-specific and 
quality-specific (i.e., prime and non-prime quality) basis, the 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 unaffiliated parties, the 
Department 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, the Department was 
unable to determine that these sales were made at arm's length prices 
and, therefore, excluded them from our analysis. See Notice of 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, the Department made a comparison 
to the next most similar product.

3. Cost of Production (COP) Analysis

    In the investigation of SSWR from Korea, the most recently 
completed segment of this proceeding, the Department disregarded POSCO/
Changwon/Dongbang's sales that were found to have failed the cost test. 
Accordingly, the Department, pursuant to section 773(b) of the Act, 
initiated a COP investigation of the respondents for purposes of this 
administrative review. We conducted the COP analysis as described 
below.
A. Cost Averaging Periods
    On December 4, 2000, the respondents notified the Department that 
they intended to calculate and report semi-annual weighted-average 
costs in their respective Section D submissions. The respondents 
contended that reporting annual weighted-average costs in this review 
would distort the dumping analysis due to substantial increases in the 
price of nickel, a major input of SSWR, during the POR. The Department 
decided to use a single weighted-average POR cost in its calculations. 
The Department concluded that, because nickel prices, and the 
respondents' costs, did not consistently increase during the POR, and 
because the nickel prices and the respondents' average reported sales 
price did not correspondingly increase during the POR, using a single 
POR weighted-average cost would not distort the dumping analysis. See 
Memorandum to Tom Futtner, on the 1999-2000 Administrative Review of 
the Antidumping Order on Stainless Steel Wire Rod from Korea, dated 
March 19, 2001.
    On December 4, 2000, the respondents also requested that the 
Department allow them to report costs for the two closest semi-annual 
periods to the POR, July 1, 1999, through June 30, 2000. The 
Department, as stated in the Department's October 20, 2000 antidumping 
questionnaire, may permit reporting of COP and CV based on a company's 
fiscal year, if the fiscal year ends within three months of the POR. 
However, the respondents' fiscal year, the calendar year, does not end 
within three months of the POR. Furthermore, the respondents did not 
demonstrate that the costs that they incurred for the period July 1, 
1999 through June 30, 2000 are representative of the costs that they 
incurred during the POR. Therefore, on February 7, 2001, the Department 
denied the respondents' request, and requested that the respondents 
calculate the reported COP and CV figures based on the actual costs 
incurred during the POR. On March 16, 2001, the respondents reported 
model-specific weighted-average costs for the POR.
B. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP, by model, for the POR based on the sum of 
materials and fabrication costs, general and administrative (G&A) 
expenses, and packing costs. Pursuant to section 773(f)(3) of the Act, 
and Sec. 351.407(b) of the Department's regulations, for a certain 
proprietary major input supplied to Changwon by affiliates, we used the 
higher of cost, transfer price, or market price. We relied on the 
submitted collapsed costs except in the specific instances noted below, 
where the submitted costs were not appropriately quantified or valued.
    1. In 1999, POSCO and Dongbang Transport Logistics Co., Ltd. 
(Dongbang Transport) (the companies on which we based the consolidated 
interest expense of Changwon and Dongbang, respectively) wrote off all 
of their deferred foreign exchange losses through retained earnings. 
POSCO and Dongbang Transport originally capitalized these losses with 
the intention of recognizing the loss over time on their income 
statements. Subsequently, POSCO and Dongbang Transport expensed these 
deferred losses directly to equity in 1999. Therefore, we adjusted 
POSCO/Changwon/Dongbang's reported interest expense to include the 
entire amount of the remaining deferred foreign exchange losses.
    2. We excluded from Changwon's G&A expense calculation certain non-
operating expense and income items, such as gains and losses on 
disposal of certain monetary instruments and other investment; gain on 
valuation of certain monetary instruments and redemption of debenture; 
extraordinary gain on a received asset; and certain proprietary 
miscellaneous non-operating income because these items do not relate to 
the general manufacturing activities of the company.
    3. We excluded from Dongbang's G&A calculation a loss on 
disposition of trade receivables because this item does not relate to 
the general manufacturing activities of the company, and included this 
loss in Dongbang's indirect selling expenses.
    4. We excluded from POSCO's G&A calculation (for G&A expenses 
included in certain proprietary inputs transferred to Changwon) certain 
non-operating expense and income items, such as gains and losses on 
futures, and disposition of investment assets; gain on valuation of 
securities, disposition of securities, disposition of investment 
assets, and redemption of corporate bond; and extraordinary gain on 
asset donation, because these items do not relate to the general 
manufacturing activities of the company.
    For further details, see Calculation Memorandum dated October 1, 
2001.
C. Test of Comparison Market Sales Prices
    As required under section 773(b) of the Act, we compared the 
adjusted weighted-average COPs to the comparison market sales of the 
foreign like product, in order to determine whether these sales had 
been made at prices below the COP within an extended period of time in 
substantial quantities, and whether such prices were sufficient to 
permit the recovery of all costs within a reasonable period of time. On 
a product-specific basis, we compared the revised COP to the comparison 
market prices, less any applicable movement charges and direct and 
indirect selling expenses.

[[Page 51390]]

D. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of POSCO/Changwon/Dongbang's sales of a given product were made 
at prices below the COP, we did not disregard any below-cost sales of 
that product because the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of POSCO/Changwon/
Dongbang's sales of a given product were made at prices below the COP, 
we determined that such sales were made in substantial quantities 
within an extended period of time (i.e., a period of one year). 
Further, because we compared prices to POR-average costs, we determined 
that the below-cost prices would not permit recovery of all costs 
within a reasonable time period, and thus, we disregarded the below-
cost sales in accordance with sections 773(b)(1) and (2) of the Act.
    We found that for certain products, POSCO/Changwon/Dongbang made 
home market sales at prices below the COP within an extended period of 
time in substantial quantities. Further, we found that these sales 
prices did not permit the recovery of costs within a reasonable period 
of time. We therefore excluded these sales from our analysis in 
accordance with section 773(b)(1) of the Act.
E. Calculation of CV
    In accordance with section 773(e)(1) of the Act, we calculated 
POSCO/Changwon/ Dongbang's CV based on the sum of POSCO/Changwon/
Dongbang's cost of materials, fabrication, SG&A, including interest 
expenses, and profit. We calculated the COPs included in the 
calculation of CV as noted above in the ``Calculation of COP'' section 
of this notice. In accordance with section 773(e)(2)(A) of the Act, we 
based SG&A and profit on the amounts incurred and realized by POSCO/
Changwon/Dongbang in connection with the production and sale of the 
foreign like product in the ordinary course of trade, for consumption 
in the foreign country.

4. Calculation of NV

    We determined price-based NVs for POSCO/Changwon/Dongbang as 
follows: We calculated NV based on packed, delivered and ex-factory 
prices to home market customers. We increased the starting price for 
freight and interest revenue, where applicable, and duty drawback 
revenue received from customers (as corrected by Dongbang in the 
corrections presented at the beginning of verification). We made 
deductions from the starting price for foreign inland freight, where 
appropriate, pursuant to section 773(a)(6)(B)(ii) of the Act. Pursuant 
to section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410(c), we made 
circumstance-of-sale (COS) adjustments to the starting price, where 
appropriate, for differences in credit, warranty, and bank expenses.
    We deducted home market packing costs from, and added U.S. packing 
costs to, the starting price, in accordance with section 773(a)(6)(A) 
and (B) of the Act. Where appropriate, we made adjustments to NV to 
account for differences in the physical characteristics of the 
merchandise sold in the U.S. and comparison market, in accordance with 
section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.
    Where we based NV on CV, we made adjustments to CV for COS 
differences, in accordance with section 773(a)(8) of the Act and 19 CFR 
351.410. We made COS adjustments by deducting direct selling expenses 
incurred on comparison market sales and adding U.S. direct selling 
expenses.
Currency Conversion
    Pursuant to section 773A(a) of the Act, we made currency 
conversions into U.S. dollars based on the exchange rates in effect on 
the dates of the U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following weighted-average margin exists for the period September 1, 
1999, through August 31, 2000:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
POSCO/Changwon/Dongbang....................................         4.56
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of the publication date of this notice. See 19 
CFR 351.310(c). If requested, a hearing will be held 44 days after the 
date of publication of this notice, or the first workday thereafter. 
Interested parties may submit case briefs within 30 days of the date of 
publication of this notice. Rebuttal briefs, limited to issues raised 
in the case briefs, may be filed not later than 7 days after the 
deadline for filing case briefs. Interested parties are invited to 
comment on the preliminary results. Parties who submit arguments are 
requested to submit with each argument: (1) A statement of the issue, 
(2) a brief summary of the argument and (3) a table of authorities. 
Further, we would appreciate it if parties submitting written comments 
would provide the Department with an additional copy of the public 
version of any such comments on a diskette. The Department will publish 
the notice of the final results of this administrative review, which 
will include the results of its analysis of issues raised in any 
written comments or hearing, within 120 days from the publication date 
of this notice.

Assessment Rate

    Pursuant to 19 CFR 351.212(b), the Department calculated an 
assessment rate for each importer of subject merchandise. Upon 
completion of this review, the Department will instruct Customs to 
assess antidumping duties on appropriate entries. For Changwon's 
reported sales, since Changwon reported the entered values and importer 
for its sales, we have calculated importer-specific ad valorem duty 
assessment rates based on the ratio of the total amount of dumping 
margins calculated for the examined sales to the entered value of sales 
used to calculate those duties. For Dongbang's reported sales, since 
Dongbang did not report the entered value for its sales, we have 
calculated importer-specific \4\ per unit duty assessment rates based 
on the ratio of the total amount of dumping margins calculated for the 
examined sales to the quantity of sales used to calculate those duties. 
Where the importer-specific assessment rate is above de minimis, we 
will instruct Customs to assess the importer-specific rate uniformly on 
all entries made during the POR.
---------------------------------------------------------------------------

    \4\ Dongbang also did not report the importers of its sales, but 
we determined the importers from Dongbang's sales documentation on 
the record.
---------------------------------------------------------------------------

Cash Deposit Requirements

    The following cash deposit requirements will be effective upon 
publication of these final results for all shipments of the subject 
merchandise entered, or withdrawn from warehouse, for consumption on or 
after the publication date of these final results of administrative 
review, as provided by section 751(a)(1) of the Act: (1) The cash 
deposit rate for the reviewed companies will be the rate listed above 
(except that if the rate is de minimis, i.e., less than 0.5 percent, a 
cash deposit rate of zero will be required); (2) for previously 
investigated companies not listed above, the cash deposit rate will 
continue to be the company-specific rate published for the most recent 
period; (3) if the exporter is not a firm covered in this review, a 
prior review, or the original

[[Page 51391]]

LTFV investigation, but the manufacturer is, the cash deposit rate will 
be the rate established for the most recent period for the manufacturer 
of the merchandise; and (4) the cash deposit rate for all other 
manufacturers or exporters will continue to be the ``all others'' rate 
of 5.77 percent, which is the ``all others'' rate established in the 
LTFV investigation (see Amended Final Determination). These deposit 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.

Notification to Interested Parties

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f)(2) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of the antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and this notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: October 1, 2001.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 01-25270 Filed 10-5-01; 8:45 am]
BILLING CODE 3510-DS-P