[Federal Register Volume 67, Number 69 (Wednesday, April 10, 2002)]
[Notices]
[Pages 17384-17389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-8704]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-832]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Carbon and Certain Alloy Steel Wire Rod from Germany

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

DATES: April 10, 2002.

FOR FURTHER INFORMATION CONTACT: Mark Flessner, Steve Bezirganian, or 
Robert James, at (202) 482-6312, (202) 482-1131, or (202) 482-0649, 
respectively; Antidumping and Countervailing Duty Enforcement Group 
III, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue NW, 
Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930, as amended (the 
Tariff Act), by the Uruguay Round Agreements Act (URAA). In addition, 
unless otherwise indicated, all citations to the Department's 
regulations are references to the provisions codified at 19 CFR Part 
351 (2001).

Preliminary Determination

    We preliminarily determine carbon and certain alloy steel wire rod 
from Germany (wire rod) is being sold, or is likely to be sold, in the 
United States at less than fair value (LTFV), as provided in section 
733 of the Tariff Act. The estimated margins of sales at LTFV are shown 
in the ``Suspension of Liquidation'' section of this notice.

Case History

    On September 24, 2001, the Department initiated antidumping 
investigations of wire rod from, inter alia, Germany. See Notice of 
Initiation of Antidumping Duty Investigations: Carbon and Certain Alloy 
Steel Wire Rod from Brazil, Canada, Egypt, Germany, Indonesia, Mexico, 
Moldova, South Africa, Trinidad and Tobago, Ukraine, and Venezuela, 66 
FR 50164 (October 2, 2001) (Initiation Notice). Since the initiation of 
the investigation the following events have occurred:
    In a letter dated October 9, 2001, petitioners (Co-Steel Raritan, 
Inc., GS Industries, Keystone Consolidated Industries, Inc., and North 
Star Steel Texas, Inc.) requested the scope of the investigation be 
amended to exclude high carbon, high tensile 1080 grade tire cord and 
tire bead quality wire rod actually used in the production of tire cord 
and tire bead, as defined by specific dimensional characteristics and 
specifications.
    On October 15, 2001, the United States International Trade 
Commission (the Commission) notified the Department of its affirmative 
preliminary injury determination on imports of subject merchandise from 
Brazil, Canada, Germany, Indonesia, Mexico, Moldova, Trinidad and 
Tobago, and Ukraine. See Carbon and Certain Alloy Steel Wire Rod From 
Brazil, Canada, Egypt, Germany, Indonesia, Mexico, Moldova, South 
Africa, Trinidad and Tobago, Turkey, Ukraine, and Venezuela, 66 FR 
54539 (October 29, 2001).
    The Department issued a letter on October 16, 2001 to interested 
parties in all of the concurrent wire rod investigations, providing an 
opportunity to comment on the Department's proposed model match 
characteristics and hierarchy. Petitioners submitted comments on 
October 24, 2001. The Department also received comments on model 
matching from respondents Hylsa, S.A. de C.V., of Mexico, and Ivaco, 
Inc. and Ispat Sidbec, Inc., both of Canada.
    On November 28, 2001, five U.S. tire manufacturers and an industry 
trade association, the Rubber Manufacturers Association, submitted a 
letter to the Department in response to petitioners' October 9, 2001 
submission regarding the exclusion of certain 1080 grade tire cord wire 
rod and 1080 grade tire bead wire rod. Additionally, the tire 
manufacturers requested clarification from the Department if 1090 grade 
wire rod is included in petitioners' October 9, 2001 scope exclusion 
request. The tire manufacturers also requested an exclusion from the 
scope of this investigation for 1070 grade wire rod and related grades, 
citing a lack of domestic production capacity to meet the requirements 
of the tire industry. On November 28, 2001, petitioners further 
clarified and modified their October 9, 2001 submission on the scope of 
the investigations. Finally, on January 21, 2002, Tokusen U.S.A., Inc. 
submitted a request that 1070 grade tire cord wire rod, and tire cord 
wire rod generally, be excluded from the scope of the antidumping and 
countervailing duty investigations.
    The petitioners filed a request with the Department on January 17, 
2002 to extend the deadline for the issuance of the preliminary 
determination by 30 days. On January 28, 2002, the Department published 
in the Federal Register the notice postponing the preliminary 
determination to March 13, 2002 (see Notice of Postponement of 
Preliminary Antidumping Duty Determinations: Carbon and Certain Alloy 
Steel Wire Rod From Brazil, Canada, Germany, Indonesia, Mexico, 
Moldova, Trinidad and Tobago, and Ukraine, 67 FR 3877). On March 4, 
2002, petitioners submitted a letter to the Department requesting that 
the Department extend the deadline for issuance of the preliminary 
determinations by an additional 20 days. In response, the Department 
published in the Federal Register a notice postponing the preliminary 
determination an additional 20 days to April 2, 2002 (see Notice of 
Postponement of Preliminary Antidumping Duty Determinations: Carbon and 
Certain Alloy Steel Wire Rod from Brazil, Canada, Germany, Indonesia, 
Mexico, Moldova, Trinidad and Tobago, and Ukraine, 67 FR 11674 (March 
15, 2002)).
    On December 6, 2001, the Department issued all sections of its 
antidumping duty questionnaire to Saarstahl AG (Saarstahl), the sole 
respondent in this investigation. On December 20, 2001, the Department 
received Saarstahl's response to Section A of the questionnaire. On 
January 2, 2002, petitioners filed comments on Saarstahl's Section A 
response. Saarstahl filed its response to sections B, C, and D of the 
questionnaire on January 10, 2002. On February 1, 2002, Saarstahl 
responded to the Department's supplemental Section A questionnaire.

[[Page 17385]]

 Petitioners filed comments on Saarstahl's Sections B, C, and D 
response on February 5, 2002, and on the company's supplemental Section 
A response on February 14, 2002. On February 19, 2002, the Department 
issued a supplemental questionnaire for Saarstahl's Sections B and C 
responses and for Saarstahl's February 1, 2002 supplemental Section A 
response. On February 27, 2002, the Department issued a supplemental 
questionnaire for Saarstahl's Section D response. Saarstahl filed its 
Sections B and C supplemental response on March 15, 2002; its Section D 
supplemental response followed on March 25, 2002.
    On December 5, 2001, petitioners alleged there was a reasonable 
basis to believe or suspect critical circumstances exist with respect 
to the antidumping investigations of steel wire rod from Brazil, 
Germany, Mexico, Moldova and Ukraine. Petitioners added Trinidad and 
Tobago to the allegation in a subsequent letter dated December 21, 
2001. On February 4, 2002, the Department issued its preliminary 
affirmative determination of critical circumstances. For a complete 
discussion of these preliminary findings,see Carbon and Alloy Steel 
Wire Rod From Germany, Mexico, Moldova, Trinidad and Tobago, and 
Ukraine: Notice of Preliminary Determination of Critical Circumstances, 
67 FR 6224 (February 11, 2002).

Period of Investigation

    The period of investigation (POI) is July 1, 2000 through June 30, 
2001. This period corresponds to the four most recent fiscal quarters 
prior to the filing of the petition (i.e., August 2001), and is in 
accordance with section 351.204(b)(1) of the Department's regulations.

Scope of the Investigation

    The merchandise covered by these investigations is certain hot-
rolled products of carbon steel and alloy steel, in coils, of 
approximately round cross section, 5.00 mm or more, but less than 19.00 
mm, in solid cross-sectional diameter.
    Specifically excluded are steel products possessing the above-noted 
physical characteristics and meeting the Harmonized Tariff Schedule of 
the United States (HTSUS) definitions for (a) stainless steel; (b) tool 
steel; (c) high nickel steel; (d) ball bearing steel; and (e) concrete 
reinforcing bars and rods. Also excluded are (f) free machining steel 
products (i.e., products that contain by weight one or more of the 
following elements: 0.03 percent or more of lead, 0.05 percent or more 
of bismuth, 0.08 percent or more of sulfur, more than 0.04 percent of 
phosphorus, more than 0.05 percent of selenium, or more than 0.01 
percent of tellurium).
    Also excluded from the scope are 1080 grade tire cord quality wire 
rod and 1080 grade tire bead quality wire rod. This grade 1080 tire 
cord quality rod is defined as: (i) grade 1080 tire cord quality wire 
rod measuring 5.0 mm or more but not more than 6.0 mm in cross-
sectional diameter; (ii) with an average partial decarburization of no 
more than 70 microns in depth (maximum individual 200 microns); (iii) 
having no inclusions greater than 20 microns; (iv) having a carbon 
segregation per heat average of 3.0 or better using European Method NFA 
04-114; (v) having a surface quality with no surface defects of a 
length greater than 0.15 mm; (vi) capable of being drawn to a diameter 
of 0.30 mm or less with 3 or fewer breaks per ton, and (vii) containing 
by weight the following elements in the proportions shown: (1) 0.78 
percent or more of carbon, (2) less than 0.01 percent of aluminum, (3) 
0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 
0.006 percent or less of nitrogen, and (5) not more than 0.15 percent, 
in the aggregate, of copper, nickel and chromium.
    This grade 1080 tire bead quality rod is defined as: (i) grade 1080 
tire bead quality wire rod measuring 5.5 mm or more but not more than 
7.0 mm in cross-sectional diameter; (ii) with an average partial 
decarburization of no more than 70 microns in depth (maximum individual 
200 microns); (iii) having no inclusions greater than 20 microns; (iv) 
having a carbon segregation per heat average of 3.0 or better using 
European Method NFA 04-114; (v) having a surface quality with no 
surface defects of a length greater than 0.2 mm; (vi) capable of being 
drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per 
ton; and (vii) containing by weight the following elements in the 
proportions shown: (1) 0.78 percent or more of carbon, (2) less than 
0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the 
aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of 
nitrogen, and (5) either not more than 0.15 percent, in the aggregate, 
of copper, nickel and chromium (if chromium is not specified), or not 
more than 0.10 percent in the aggregate of copper and nickel and a 
chromium content of 0.24 to 0.30 percent (if chromium is specified).
    The designation of the products as ``tire cord quality'' or ``tire 
bead quality'' indicates the acceptability of the product for use in 
the production of tire cord, tire bead, or wire for use in other rubber 
reinforcement applications such as hose wire. These quality 
designations are presumed to indicate that these products are being 
used in tire cord, tire bead, and other rubber reinforcement 
applications, and such merchandise intended for the tire cord, tire 
bead, or other rubber reinforcement applications is not included in the 
scope. However, should petitioners or other interested parties provide 
a reasonable basis to believe or suspect that there exists a pattern of 
importation of such products for other than those applications, end-use 
certification for the importation of such products may be required. 
Under such circumstances, only the importers of record would normally 
be required to certify the end use of the imported merchandise.
    All products meeting the physical description of subject 
merchandise that are not specifically excluded are included in this 
scope.
    The products under investigation are currently classifiable under 
subheadings 7213.91.3010, 7213.91.3090, 7213.91.4510, 7213.91.4590, 
7213.91.6010, 7213.91.6090, 7213.99.0031, 7213.99.0038, 7213.99.0090, 
7227.20.0010, 7227.20.0020, 7227.20.0090, 7227.20.0095, 7227.90.6051, 
7227.90.6053, 7227.90.6058, and 7227.90.6059 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the scope of this proceeding is dispositive.
    See the Department's scope memorandum, ``Carbon and Certain Alloy 
Steel Wire Rod: Requests for exclusion of various tire cord quality 
wire rod and tire bead quality wire rod products from the scope of 
antidumping duty (Brazil, Canada, Egypt, Germany, Indonesia, Mexico, 
Moldova, South Africa, Trinidad and Tobago, Ukraine, and Venezuela) and 
countervailing duty (Brazil, Canada, Germany, Trinidad and Tobago, and 
Turkey) investigations,'' dated April 2, 2002.

Use of Facts Available

    Section 776(a)(2) of the Tariff Act provides that if any interested 
party: (A) withholds information that has been requested by the 
Department; (B) fails to provide such information by the deadlines for 
submission of the information or in the form or manner requested; (C) 
significantly impedes an antidumping investigation; or (D) provides 
such information but the information cannot be verified, the Department 
shall, subject to section 782(d), use the facts otherwise available in 
making its determination.

[[Page 17386]]

    Section 782(d) of the Tariff Act requires the Department to 
``promptly inform'' a respondent of the nature of any deficiencies 
found in its response and to ``provide that person with an opportunity 
to remedy or explain the deficiency in light of the time limits 
established for the completion of investigations ... .'' To the extent 
the respondent fails to address the deficiencies, and subject to 
section 782(e), the Department may disregard all or part of the 
response. Section 782(e) provides the Department shall not decline to 
consider information deemed deficient under section 782(d) if: (1) the 
information is submitted by the deadline established for its 
submission; (2) the information can be verified; (3) the information is 
not so incomplete that it cannot serve as a reliable basis for reaching 
the applicable determination; (4) the interested party has demonstrated 
it acted to the best of its ability in providing the information and 
meeting the requirements established by the Department with respect to 
the information; and (5) the information can be used without undue 
difficulties.
    Finally, section 776(b) of the Tariff Act provides that adverse 
inferences may be used in selecting the facts otherwise available 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) (SAA).
    Although Saarstahl responded to the Department's original and 
supplemental questionnaires, the company's initial responses were 
deficient in certain respects. Specifically, Saarstahl failed to 
provide requested sample sales documentation, or to provide worksheets 
and supporting documents indicating its derivation of various reported 
expenses. In addition, Saarstahl failed to provide information in the 
form requested pertaining to certain expenses incurred on both its home 
market and U.S. sales which is essential to our calculations. For 
example, Saarstahl has not provided movement expenses, packing 
expenses, and certain other expenses in the form or manner requested. 
Despite our request that Saarstahl report transaction-specific movement 
expenses, for example, Saarstahl reported many of its home market and 
U.S. movement expenses based upon ``estimated freight expenses (Fracht-
Ruckstellung) calculated at the time of sale for each invoice.'' 
Saarstahl's January 22, 2002 Section B response at B-21. This involved 
inland plant-to-warehouse and plant-to-customer freight, and 
warehousing expenses in the home market. For U.S. sales, the Fracht-
Ruckstellung included foreign inland freight, freight to the port, 
ocean freight, inland and marine insurance, U.S. customs duties and, 
where applicable, warehousing expenses. Saarstahl has yet to provide 
the requested actual expenses or supporting documentation (for example, 
tariff schedules or contracts demonstrating the freight rates in effect 
during the POI). Furthermore, Saarstahl has not explained fully its 
original allocations based upon the Fracht-Ruckstellung, or provided 
the Department the means of establishing independently the validity of 
the underlying estimates. (For further details of these deficiencies, 
see the Preliminary Analysis Memorandum, dated April 2, 2002.)
    Similarly, Saarstahl reported identical packing expenses, by mill, 
for both home market and U.S. sales, despite indications in its 
response that sales for export require greater packing materials (an 
intuitive outcome, given the need to protect carbon and alloy steel 
during trans-oceanic passage). Saarstahl also did not provide 
worksheets supporting the calculation of packing costs for two of the 
three mills producing subject wire rod products during the POI.
    For the foregoing reasons, we have determined it is appropriate to 
use the facts otherwise available for the unsupported elements of 
Saarstahl's questionnaire response, in accordance with section 
776(a)(2)(B) of the Tariff Act. We issued a further supplemental 
questionnaire to Saarstahl on April 2, 2002, aimed at completing the 
record with respect to these and other issues prior to our eventual 
verification of Saarstahl's responses. Consequently, we have used no 
adverse inference at this time for purposes of this preliminary 
determination.
    As non-adverse facts available for U.S. sales, for the movement 
expenses at issue, we set these expenses to no less than the median 
value reported for each expense; similarly, for the home market we set 
the movement expenses to no greater than the median value reported for 
each expenses. As to packing expenses, we set U.S. packing costs equal 
to the highest mill-specific packing cost reported in Saarstahl's 
Section C response, and set home market packing equal to the lowest 
mill-specific packing cost reported in the company's Section B 
response. For further details regarding our selection of non-adverse 
facts available, see the Preliminary Analysis Memorandum. We will 
analyze fully Saarstahl's expected response to our March 29 
supplemental questionnaire and, where appropriate, will review our 
resort to, and selection of, the facts otherwise available.

Fair Value Comparisons

    To determine whether sales of wire rod from Germany to the United 
States were made at LTFV, we compared the export price (EP) or 
constructed export price (CEP) to the normal value, as described in the 
``Export Price and Constructed Export Price'' and ``Normal Value'' 
sections of this notice. In accordance with section 777A(d)(1)(A)(i) of 
the Tariff Act, we calculated weighted-average EPs or CEPs for 
comparison to normal value.

Transactions Investigated

    As stated at 19 CFR 351.401(i), the Department normally will use 
the respondent's invoice date as the date of sale unless another date 
better reflects the date upon which the exporter or producer 
establishes the essential terms of sale. In the home market Saarstahl 
reported as date of sale the date of the invoice between its sales 
company in Germany, Vertriebsgesellschaft Saarstahl mbH (VGS) and 
affiliated and unaffiliated end-users. For all U.S. sales Saarstahl 
initially reported as the date of sale the date of the invoice issued 
by VGS; this included sales made through Saarstahl's wholly-owned U.S. 
affiliate, Saarsteel, Inc. Saarstahl designated these sales as 
``channel 2'' sales. However, in its supplemental Section C response 
Saarstahl reclassified its U.S. channel 2 sales as CEP transactions, 
basing its date of sale for these transactions on the date of the 
invoice issued by Saarsteel, Inc. to its first unaffiliated customers 
in the United States. See Saarstahl's March 15, 2002 supplemental 
Sections B and C response at 53 and Appendix S-32.
    We have examined whether invoice date, purchase order date, or some 
other date best represents the date on which the essential terms of 
sale are established for both home market and U.S. sales. Record 
evidence suggests the essential terms of sale (including product 
specifications, quantities and, most notably, prices) are subject to 
change up to the point of manufacturing to fill a given order. Further, 
Saarstahl claims the final price to the customer may change up to the 
point of invoicing. Therefore, for this preliminary determination we 
have used the invoice date as the date of sale because this date best 
represents the date upon which all essential terms of sale are 
established. For U.S. channel 1 sales, i.e., those not involving 
Saarsteel, Inc., we used the date of the invoice between VGS and the 
unaffiliated U.S. customer; for channel

[[Page 17387]]

2 sales through Saarsteel, Inc., we used the date of the invoice 
between Saarsteel, Inc. and the first unaffiliated U.S. customer.

Product Comparisons

    In accordance with section 771(16) of the Tariff Act, all products 
produced by Saarstahl, covered by the description in the ``Scope of the 
Investigation'' section, above, and sold in Germany during the POI, are 
considered to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. Where there were no 
sales of identical merchandise in the home market to compare to U.S. 
sales, the Department compared U.S. sales to the next most similar 
foreign like product on the basis of the characteristics listed in 
Appendix V of the Department's December 6, 2001 antidumping 
questionnaire. If there were no home market foreign like products sold 
in the ordinary course of trade to compare to U.S. sales, we used 
constructed value (CV).

Export Price and Constructed Export Price

    Saarstahl reported two channels of distribution in the United 
States, channel 1 sales negotiated between VGS in Germany and the first 
unaffiliated U.S. customer, and channel 2 sales, which involved its 
U.S. affiliate Saarsteel, Inc. Initially, Saarstahl claimed all sales 
through both channels as EP transactions. Subsequently, Saarstahl 
revisited its classification of channel 2 sales, reporting these as CEP 
transactions without further explanation. For purposes of this 
preliminary determination we have accepted Saarstahl's revised 
classification of its sales, and will treat Saarstahl's channel 1 sales 
as EP transactions, and its channel 2 sales as CEP transactions. We 
will examine the proper classification of Saarstahl's U.S. sales during 
our upcoming verification of the respondent's questionnaire response.
    We calculated EP in accordance with section 772(a) of the Tariff 
Act. We based EP for Saarstahl on packed prices to unaffiliated 
purchasers in the United States. In accordance with section 772(c)(2), 
and where appropriate, we made deductions from the starting price for 
movement expenses, including foreign inland freight, foreign brokerage 
and handling, international freight, marine insurance, U.S. brokerage 
and handling, U.S. inland freight and insurance, U.S. customs duties, 
warehousing expenses and other U.S. movement expenses.
    With respect to Saarstahl's U.S. channel 2 sales, we accepted 
Saarstahl's classification of these transactions as CEP sales because 
its U.S. affiliate Saarsteel, Inc. invoiced U.S. customers, received 
payment for subject merchandise, and performed other functions, 
including, for example, warehousing, and financing of accounts 
receivable for warehouse sales. Consistent with the ruling of the Court 
of Appeals for the Federal Circuit (Federal Circuit) in AK Steel Corp. 
v. United States, 226 F.3d 1361 (Fed. Cir. 2000), we preliminarily 
determine all Saarstahl's channel 2 sales (i.e., those through 
Saarsteel, Inc.) are properly classified as CEP transactions.
    We based CEP on packed prices to unaffiliated purchasers in the 
United States. Where appropriate, we made deductions from the starting 
price for reported foreign inland freight and insurance, foreign 
brokerage and handling, international freight, marine insurance, U.S. 
brokerage and handling, U.S. inland freight and insurance, U.S. customs 
duties, warehousing expenses and other U.S. movement expenses. In 
accordance with section 772(d)(1) of the Tariff Act, we deducted those 
selling expenses associated with economic activities in the United 
States, including direct selling expenses (imputed credit expenses), 
and indirect selling expenses. For CEP sales we also made an adjustment 
for profit in accordance with section 772(d)(3) of the Tariff Act.

Normal Value

Selection of Comparison Market

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for normal value (NV) 
(i.e., whether the aggregate quantity of the foreign like product is 
equal to or greater than five percent of the aggregate quantity of U.S. 
sales), we compared Saarstahl's volume of home market sales of the 
foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1) of the Tariff Act. 
Since Saarstahl's aggregate quantity of home market sales of the 
foreign like product was greater than five percent of its aggregate 
quantity of U.S. sales of the subject merchandise, we determined the 
home market was viable for Saarstahl. Therefore, we have based NV on 
home market sales in the usual quantities and in the ordinary course of 
trade.

Affiliated Party Transactions and Arm's Length Test

    Saarstahl reported sales to its affiliated customers, claiming 
these firms consumed the foreign like product to produce merchandise 
not subject to this investigation. To test whether these sales were 
made at arm's length prices, the Department compared, on a model-
specific basis, the prices of sales to affiliated customers with sales 
to unaffiliated customers, net of all movement expenses, discounts, 
direct selling expenses, billing adjustments, commissions, and packing. 
Where, for the tested models of the foreign like product, 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); see also 
Antidumping Duties; Countervailing Duties: Final Rule, 62 FR 27296, 
27355 (May 19, 1997).
    If these affiliated party sales satisfied the arm's length test, we 
used them in our analysis. Sales of the foreign like product to 
affiliated customers in the home market which were not made at arm's 
length prices were excluded from our analysis because we considered 
them to be outside the ordinary course of trade. See 19 CFR 351.102.

Cost of Production Analysis

    Based on our analysis of the cost allegations submitted by the 
petitioners in the original petition, in accordance with section 
773(b)(2)(A)(i) of the Tariff Act, the Department found reasonable 
grounds to believe or suspect that German producers had made sales of 
wire rod in the home market at prices below the cost of producing the 
merchandise. As a result, the Department initiated an investigation to 
determine whether respondents made home market sales during the POI at 
prices below their cost of production (COP) within the meaning of 
section 773(b) of the Tariff Act. We conducted the COP analysis 
described below.

1. Calculation of COP

    In accordance with section 773(b)(3) of the Tariff Act, we 
calculated a weighted-average COP based on the sum of Saarstahl's cost 
of materials and fabrication for the foreign like product, plus amounts 
for home market selling, general, and administrative expenses (SG&A), 
including interest expenses, and packing costs. The Department relied 
upon the COP data submitted by Saarstahl on March 25, 2002, with two 
exceptions: First, we recalculated Saarstahl's SG&A ratio and, second, 
we adjusted Saarstahl's interest expense ratio, as the Department's 
policy is to allow short-term interest income up to, but not in excess 
of, the amount of financial expenses incurred. See Notice of Final 
Determination of Sales at Less

[[Page 17388]]

Than Fair Value: Static Random Access Memory Semiconductors From 
Taiwan, 63 FR 8909, 8933 (February 23, 1998) (Comment 28); see also the 
Office of Accounting's Preliminary Calculation Memorandum, dated April 
2, 2002.

2. Test of Home Market Prices

    We compared the weighted-average COP for Saarstahl to home market 
sales of the foreign like product, as required under section 773(b) of 
the Tariff Act, in order to determine whether these sales had been made 
at prices below the COP. In determining whether to disregard home 
market sales made at prices below COP, we examined whether such sales 
were made (i) in substantial quantities within an extended period of 
time, and (ii) at prices which permitted the recovery of all costs 
within a reasonable period of time, in accordance with section 
773(b)(1)(A) and (B) of the Tariff Act. On a product-specific basis, we 
compared COP to home market prices, less any applicable movement 
charges, billing adjustments, discounts and rebates.

3. Results of the Cost Test

    Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than 
twenty percent of Saarstahl's sales of a given product were at prices 
less than the COP, we did not disregard any below-cost sales of that 
product because we determined the below-cost sales were not made in 
``substantial quantities.'' Where twenty percent or more of Saarstahl's 
sales of a given product during the POI were at prices less than the 
COP, we determined such sales to have been made in substantial 
quantities within an extended period of time, in accordance with 
sections 773(b)(2)(C)(i) and 773(b)(2)(B) of the Tariff Act. In such 
cases, pursuant to section 773(b)(2)(D) of the Tariff Act, we also 
determined such sales were not made at prices which would permit the 
recovery of all costs within a reasonable period of time. Therefore, we 
disregarded the below-cost sales.
    Our cost test for Saarstahl revealed that more than twenty percent 
of the respondent's home market sales of certain products within an 
extended period of time were at prices below their respective COP, and 
such prices would not permit the recover of all costs within a 
reasonable period of time. Therefore, we disregarded the below-cost 
sales and used the remaining sales in our analysis, in accordance with 
section 773(b)(1) of the Tariff Act. See the Preliminary Analysis 
Memorandum.

Constructed Value

    In accordance with section 773(e)(1) of the Tariff Act, we 
calculated CV based upon the sum of the respondent's cost of materials, 
fabrication, SG&A, including interest expenses, and profit. In 
accordance with section 773(e)(2)(A) of the Tariff Act, we based SG&A 
and profit on the amounts incurred and realized by Saarstahl in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade for consumption in the foreign country. 
For selling expenses, we used the weighted-average home market selling 
expenses from Saarstahl's Section B sales listing. We relied upon the 
CV data the respondent supplied in its Section D supplemental 
questionnaire response, with the modifications noted above.

Price-to-Price Comparisons

    We based NV for Saarstahl on prices of home market sales that 
passed the cost test. We made deductions, where appropriate, for 
rebates. We added any interest revenue. We also deducted foreign inland 
freight, including inland insurance, and warehousing expenses, pursuant 
to section 773(a)(6)(B) of the Tariff Act. We made adjustments, where 
appropriate, for physical differences in the merchandise in accordance 
with section 773(a)(6)(C)(ii) of the Tariff Act, and 19 CFR 351.411. In 
accordance with section 773(a)(6)(iii) of the Tariff Act and 19 CFR 
351.410, we made circumstance of sale (COS) adjustments for commissions 
and for imputed credit expenses less any interest revenue. We also 
deducted home market packing costs and added U.S. packing costs in 
accordance with section 773(a)(6)(A) and (B) of the Tariff Act.

Price-to-CV Comparisons

    In accordance with section 773(a)(4) of the Tariff Act, we based NV 
on CV if we were unable to find a home market match of identical or 
similar merchandise made at arm's length prices and otherwise in the 
ordinary course of trade. Where appropriate, we made adjustments to CV 
in accordance with section 773(a)(8) of the Tariff Act. For comparison 
to EP, we made COS adjustments by deducting home market direct selling 
expenses and adding U.S. direct selling expenses.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Tariff Act, to the 
extent practicable, we determine the NV based on sales in the 
comparison market at the same level of trade (LOT) as the EP or CEP 
transaction. The NV LOT is that of the starting-price sales in the 
comparison market or, when NV is based on constructed value, that of 
the sales from which we derive SG&A expenses and profit. For EP the 
U.S. LOT is also the level of the starting-price sale, which is usually 
from the exporter to the importer. For CEP it is the level of the 
constructed sale from the exporter to the importer. To determine 
whether NV sales are at a different LOT than EP or CEP, we examine 
stages in the marketing process and selling functions along the chain 
of distribution between the producer and the unaffiliated customer. If 
the comparison-market sales are at a different 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 sales at 
the LOT of the export transaction, we make a LOT adjustment pursuant to 
section 773(a)(7)(A) of the Tariff 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).
    In determining whether separate LOTs actually existed in the home 
market for Saarstahl, we examined whether the respondent's sales 
involved different marketing stages (or their equivalent) based on the 
channel of distribution, customer categories, and selling functions (or 
services offered) to each customer or customer category in both 
markets. Saarstahl claimed two LOTs in both the U.S. and home markets, 
corresponding with the two channels of distribution it identified in 
its response. See Saarstahl's January 22, 2002 Sections B, C, and D 
Response at B-18 and C-20.
    In examining the selling activities associated with both channels 
of distribution, we note Saarstahl reported essentially identical 
selling activities for all sales in both markets, with one exception: 
inventory maintenance provided for channel 2 sales in the home market. 
See Saarstahl's December 20, 2001 Section A Response at Appendix A-9. 
It is not clear from the record whether the inventory maintenance 
described for these home market sales is properly classified as a 
``sales function.'' With one exception, the unaffiliated customer bears 
all warehousing expenses, rendering moot these activities in our LOT 
discussion. For that one exception, the warehousing expenses are 
negligible. Therefore, we preliminarily find no significant differences 
in selling functions between the different claimed channels of 
distribution. Accordingly, for this preliminary determination, we find 
a single LOT exists for all sales in both

[[Page 17389]]

the home and U.S. market and, further, that these sales occurred at the 
same LOT. Therefore, we have not made a LOT adjustment to NV because 
all transactions are deemed at the same LOT, and an adjustment pursuant 
to section 773(a)(7)(A) of the Tariff Act is not appropriate. Finally, 
because we found the LOT in the home market matches the LOT of the CEP 
transactions, we did not provide a CEP offset to normal value as 
described at section 773(a)(7)(B) of the Tariff Act.

Currency Conversion

    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, in accordance with section 773A(a) of the 
Tariff Act.

Verification

    In accordance with section 782(i) of the Tariff Act, we intend to 
verify all information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Tariff Act, the 
Department will direct the U.S. Customs Service to suspend liquidation 
of all entries of wire rod from Germany that are entered, or withdrawn 
from warehouse, for consumption on after 90 days prior to the date of 
publication of this notice in the Federal Register. We will instruct 
the U.S. Customs Service to require a cash deposit or posting of a bond 
equal to the estimated preliminary dumping margin indicated in the 
chart below. This suspension of liquidation will remain in effect until 
further notice. The weighted-average dumping margins for this 
preliminary determination are as follows:

------------------------------------------------------------------------
                     Exporter/manufacturer                        Margin
------------------------------------------------------------------------
Saarstahl AG...................................................    14.56
                                                                 percent
All Others.....................................................    14.56
                                                                 percent
------------------------------------------------------------------------

Commission Notification

    In accordance with section 733(f) of the Tariff Act, we have 
notified the Commission of our determination. If our final 
determination is affirmative, the Commission shall 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 threatening material injury to, the U.S. 
industry.

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of verification reports. Rebuttal briefs 
must be filed within five dates after the deadline for submission of 
case briefs. A list of authorities used, a table of contents, and an 
executive summary of the issues, limited to five pages, should 
accompany any briefs submitted to the Department. In accordance with 
section 774 of the Tariff Act, the Department will hold a hearing, if 
requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. Tentatively, such a 
hearing, if one is requested, will be held two days after the deadline 
for submission of rebuttal briefs, at the U.S. Department of Commerce, 
14th Street and Constitution Avenue NW, Washington, DC 20230. In the 
event the Department receives requests for hearings from parties to 
several wire rod cases, the Department may schedule a single hearing to 
encompass all those cases. Parties should confirm by telephone or 
electronic mail the time, date, and place of the hearing at least 48 
hours before the scheduled time. Interested parties who wish to request 
a hearing, or participate if one is requested, must submit a written 
request within 30 days of the publication of this notice. Requests 
should specify the number of participants and provide a list of the 
issues to be discussed. At any hearing each party may make an 
affirmative presentation only on issues raised in that party's case 
brief, and may make a rebuttal presentation only on arguments raised in 
that party's rebuttal brief. See 19 CFR 351.310(c). If this 
investigation proceeds normally, we will make our final determination 
no later than 75 days after the date of this preliminary determination.
    This determination is issued and published in accordance with 
sections 733(f) and 777)i)(1) of the Tariff Act.

    Dated: April 2, 2002
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-8704 Filed 4-9-02; 8:45 am]
BILLING CODE 3510-DS-S