[Federal Register Volume 67, Number 90 (Thursday, May 9, 2002)]
[Notices]
[Pages 31204-31212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11186]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-822]


Notice of Preliminary Determination of Sales at Not Less Than 
Fair Value: Certain Cold-Rolled Carbon Steel Flat Products From France

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

ACTION: Notice of preliminary determination of sales at not less than 
fair value.

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EFFECTIVE DATE: May 9, 2002.

FOR FURTHER INFORMATION CONTACT: Angelica Mendoza, John Drury or 
Abdelali Elouaradia at (202) 482-3019, (202) 482-0195 and (202) 482-
1374, respectively; AD/CVD Enforcement, Office 8, Group III, Import 
Administration, International Trade

[[Page 31205]]

Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:   

The Applicable Statute and Regulations

    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 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department of Commerce (Department's) 
regulations are to the regulations at 19 CFR part 351 (April 2001).

Preliminary Determination

    We preliminarily determine that certain cold-rolled carbon steel 
flat products (cold-rolled steel) from France are not being sold, or 
are not likely to be sold, in the United States at less than fair value 
(LTFV), as provided in section 733 of the Act. The estimated margins of 
sales at LTFV are shown in the ``Suspension of Liquidation'' section of 
this notice.

Case History

    On October 18, 2001, the Department initiated antidumping duty 
investigations of cold-rolled steel from a number of countries, 
including France. See Notice of Initiation of Antidumping Duty 
Investigations: Certain Cold-Rolled Carbon Steel Flat Products From 
Argentina, Australia, Belgium, Brazil, France, Germany, India, Japan, 
Korea, the Netherlands, New Zealand, the People's Republic of China, 
the Russian Federation, South Africa, Spain, Sweden, Taiwan, Thailand, 
Turkey, and Venezuela, 66 FR 54198, (October 26, 2001) (Initiation 
Notice). Also on October 18, 2001, based on information provided in the 
petition, we found ``reasonable grounds to believe or suspect'' that 
sales of the foreign like product in the markets of Belgium, France, 
Germany, India, Japan, Korea, the Netherlands, Thailand, and Turkey 
were made at prices below their respective costs of production (COP) 
within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, 
the Department initiated country-wide cost investigations on sales of 
the foreign like product in these markets. The petitioners in this 
investigation are Bethlehem Steel Corporation, LTV Steel Company, 
National Steel Corporation, Nucor Corporation, Steel Dynamics, Inc., 
WCI Steel, Inc., Weirton Steel Corporation, and United States Steel 
Corporation. Since the initiation of this investigation the following 
events have occurred.
    The Department set aside a period for all interested parties to 
raise issues regarding product coverage. See Initiation Notice at 
54198. From October 30, 2001, through November 8, 2001, petitioners 
filed comments proposing clarifications to the scope of these 
investigations. Also, from November to December 2001, the Department 
received numerous responses from interested parties aimed at clarifying 
the scope of the investigations.
    On October 30, 2001, the Department issued a letter to interested 
parties in all of the concurrent cold-rolled steel antidumping 
investigations, providing an opportunity for comment on the 
Department's proposed model matching characteristics and hierarchy. On 
November 8, 2001, petitioners and the Usinor Group (Usinor) submitted 
comments on the Department's request for information. For purposes of 
the antidumping duty questionnaires subsequently issued by the 
Department to the respondents, no changes were made to the product 
characteristics or the hierarchy of those characteristics from those 
originally proposed by the Department in its October 18, 2001, letter.
    On November 13, 2001, the United States International Trade 
Commission (ITC) notified the Department of its affirmative preliminary 
injury determination on imports of subject merchandise from Argentina, 
Australia, Belgium, Brazil, France, Germany, India, Japan, Korea, the 
Netherlands, New Zealand, the People's Republic of China, the Russian 
Federation, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and 
Venezuela. On November 20, 2001, the ITC published its preliminary 
determination determining that there is a reasonable indication that 
the United States industry producing cold-rolled steel is materially 
injured or threatened with material injury by reason of imports of the 
subject merchandise from cold-rolled steel from Argentina, Australia, 
Belgium, Brazil, France, Germany, India, Japan, Korea, the Netherlands, 
New Zealand, the People's Republic of China, the Russian Federation, 
South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela. 
See Certain Cold-Rolled Steel Products from Argentina, Australia, 
Belgium, Brazil, China, France, Germany, India, Japan, Korea, the 
Netherlands, New Zealand, Russia, South Africa, Spain, Sweden, Taiwan, 
Thailand, Turkey, and Venezuela, 66 FR 57985 (November 19, 2001).
    On December 3, 2001, we selected the largest producer/exporter of 
cold-rolled steel, Usinor, from France as the mandatory respondent in 
this proceeding. For further discussion, see Memorandum from Nancy 
Decker and Angelica Mendoza to Richard O. Weible, Selection of 
Respondent(s), dated December 3, 2001.
    The Department subsequently issued its antidumping duty 
questionnaire to Usinor on November 16, 2001. The questionnaire was 
divided into five parts, in which we requested that Usinor respond to 
Section A (general information, corporate structure, sales practices, 
and merchandise produced), Section B (home market or third-country 
sales), Section C (U.S. sales), Section D (cost of production/
constructed value), and Section E (further manufacturing) where 
appropriate. The Department also issued corrected pages of the model 
matching criteria on November 26, 2001.
    On December 26, 2001, the Department received Usinor's response to 
Section A of the questionnaire. On January 14, 2002, we received 
Usinor's response to Sections B through D of the Department's 
questionnaire.
    On January 7, 2002, petitioners filed comments on Usinor's Section 
A response, and also requested that the Department require Usinor to 
report the resales of cold-rolled steel made by its affiliated steel 
service centers (SSCs). On January 17, 2002, Usinor submitted rebuttal 
comments. On January 31, 2002, we issued a letter requesting Usinor to 
report in its Section B response the sales made by five of its 
affiliated SSCs (Cisatol, Service Acier Rhenan (SAR), Societe Lorraine 
de Produits Metallurgiques (SLPM), Sotracier, and Produits d'Usines 
Metallurgiques (PUM)) to the first unaffiliated end-customer. On 
January 28, 2002, and January 29, 2002, petitioners filed comments on 
Usinor's Section B through D response.
    On January 18, 2002, we issued a supplemental questionnaire for 
deficiencies in Usinor's Section A response. On February 12, 2002, we 
issued a supplemental questionnaire for deficiencies in Usinor's 
Section B and C responses. On February 28, 2002, we issued a 
supplemental questionnaire for deficiencies found in Usinor's 
supplemental Section D response.
    On January 31, 2002 and February 8, 2002, petitioners requested 
that the Department collapse Usinor's affiliated producers and SSCs of 
cold-rolled steel for this proceeding. On February 26, 2002, the 
Department determined to collapse eight of Usinor's affiliated 
producers (Sollac Atlantique S.A.

[[Page 31206]]

(Atlantique), Sollac Lorraine S.A. (Lorraine), Sollac Mediterranee 
(Mediterranee), PUM, Usinor Packaging S.A. (Packaging), Etilam, Beautor 
S.A., and Haironville) into a single entity for purposes of this 
investigation. For further discussion, see Memorandum on Collapsing 
from John Drury and Angelica Mendoza through Richard O. Weible to 
Joseph A. Spetrini, dated February 26, 2002 (Collapsing Memo).
    On February 11, 2002, we received Usinor's response to our 
supplemental Section A questionnaire. On February 14, 2002, we issued a 
letter requesting that Usinor report the order date associated with all 
invoiced sales of subject merchandise made during the POI. We received 
Usinor's responses to the Department's January 31, 2002, February 12, 
2002, and February 14, 2002, requests for information on March 5, 2002.
    On February 25, 2002, we issued a second supplemental questionnaire 
for deficiencies found in Usinor's supplemental Section A response. We 
received Usinor's response on March 13, 2002.
    On March 28, 2002, we received Usinor's response to our 
supplemental questionnaire on Section D. Usinor also submitted new home 
market and U.S. sales databases to (1) incorporate a small quantity of 
home-market sales of second-quality merchandise sold by Haironville 
(affiliated cold-rolled steel producer) to affiliated home-market 
customers, and (2) to remove a small quantity of sales made by Etilam 
(affiliated cold-rolled steel producer) of ``shadow mask steel'' (i.e., 
non-subject merchandise) that were incorrectly included in the home 
market and U.S. sales databases. On April 15, 2002, we issued a second 
supplemental questionnaire for deficiencies found in Usinor's 
supplemental Section D response. We received Usinor's response on April 
17, 2002.
    On April 23, 2002, the Department issued Usinor a second 
supplemental questionnaire for deficiencies found in its March 5, 2002 
and March 28, 2002 (with respect to its revised sales databases) 
questionnaire responses. The response to this request for information 
is due after our preliminary determination.
    On February 7, 2002, petitioners made a timely request for a fifty-
day postponement of the preliminary determination pursuant to section 
733(c)(1)(A) of the Act. On February 14, 2002, we postponed the 
preliminary determination until no later than April 26, 2002. See 
Certain Cold Rolled Carbon Steel Flat Products From Argentina, 
Australia, Belgium, Brazil, France, Germany, India, Japan, Korea, the 
Netherlands, New Zealand, the People's Republic of China, the Russian 
Federation, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and 
Venezuela; Notice of Postponement of Preliminary Determinations in 
Antidumping Duty Investigations, 67 FR 8227 (February 22, 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., September 28, 2001), and is 
in accordance with section 351.204(b)(1) of the Department's 
regulations.

Scope of Investigations

    For purposes of this investigation, the products covered are 
certain cold-rolled (cold-reduced) flat-rolled carbon-quality steel 
products. For a full description of the scope of this investigation, as 
well as a complete discussion of all scope exclusion requests submitted 
in the context of the on-going cold-rolled steel investigations, please 
see the ``Scope Appendix'' attached to the Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina, published concurrently with 
this preliminary determination.

Facts Available (FA)

    Section 776(a)(2)(A) of the Act provides that ``if any interested 
party or any other person--(A) withholds information that has been 
requested by the administering authority * * *, (B) fails to provide 
such information by the deadlines for the submission of the information 
or in the form and manner requested, subject to subsections (c)(1) and 
(e) of section 782, (C) significantly impedes a proceeding under this 
title, or (D) provides such information but the information cannot be 
verified as provided in section 782(i), the administering authority * * 
* shall, subject to section 782(d), use the facts otherwise available 
in reaching the applicable determination under this title.'' The 
statute requires that certain conditions be met before the Department 
may resort to the facts otherwise available. Where the Department 
determines that a response to a request for information does not comply 
with the request, section 782(d) of the Act provides that the 
Department will so inform the party submitting the response and will, 
to the extent practicable, provide that party the opportunity to remedy 
or explain the deficiency. If the party fails to remedy the deficiency 
within the applicable time limits, the Department may, subject to 
782(e), disregard all or part of the original and subsequent responses, 
as appropriate. Briefly, section 782(e) provides that the Department 
``shall not decline to consider information that is submitted by an 
interested party and is necessary to the determination but does not 
meet all the applicable requirements established by the administering 
authority'' if the information is timely, can be verified, is not so 
incomplete that it cannot be used, and if the interested party acted to 
the best of its ability in providing the information. Where all of 
these conditions are met, and the Department can use the information 
without undue difficulties, the statute requires it to do so.

Usinor's Downstream Sales

    On November 16, 2001, the Department issued Usinor its standard 
antidumping questionnaire. That questionnaire explicitly instructed 
Usinor to report sales from affiliated SSCs to the unaffiliated 
customers. We also directed Usinor to contact the agency official in 
charge in writing immediately if sales to all affiliated customers 
constituted less than five percent of total sales, or if Usinor was 
unable to collect the necessary information.
    On December 26, 2001, Usinor stated, in its original Section A 
response, that it would not report the sales of subject merchandise 
made by its affiliated SSCs for three reasons: (1) the merchandise sold 
by these entities is not comparable to merchandise sold in the U.S. 
market; (2) the records for these sales transactions are not accessible 
by Usinor, as the affiliated SSCs use incompatible computer systems, 
distinct software, and different file structures, and therefore, it 
would be inordinately difficult to report these transactions; and (3) 
lastly, Usinor believed that the prices for the sales to the affiliated 
service centers were comparable to the prices for the sales to 
unaffiliated customers.
    On January 7, 2002, petitioners requested that the Department 
require Usinor to report Section B responses for all sales transactions 
of cold-rolled steel made by its affiliated SSCs to the first 
unaffiliated customer. On January 16, 2002, the Department met with 
counsel for Usinor to discuss issues relating to the reporting of its 
downstream sales to unaffiliated customers (see Letter from Abdelali 
Elouaradia to Jeffrey Winton dated January 18, 2002 (Reporting 
Letter)). On January 17, 2002, Usinor reiterated that it did not 
believe that any of its affiliated service centers should be

[[Page 31207]]

required to report their resales. Usinor also requested that the 
Department limit its reporting requirements on this matter to avoid a 
disproportionate and unreasonable burden. Usinor proposed that it be 
required to report sales of cold-rolled steel made by only four of its 
affiliated service centers because these sales accounted for most of 
the purchases of subject merchandise from Usinor mills by affiliated 
service centers. Usinor further noted that the sales made by the 
remaining affiliated service centers accounted for less than five 
percent of total home-market sales. On January 31, 2002, the Department 
issued a letter requesting Usinor to resubmit its Section B response to 
the questionnaire and include sales made by five of its affiliated SSCs 
to the first unaffiliated customer. For further details, see the 
Department's letter dated January 31, 2002. On February 28, 2002, the 
Department requested that Usinor report cost information associated 
with the sales transactions made by the five affiliated SSCs.
    On March 5, 2002, Usinor submitted Section B responses for sales 
made by five of its affiliated SSCs to unaffiliated customers. On March 
18, 2002, petitioners filed comments on the responses made by Usinor's 
affiliated SSCs, noting that these sales of cold-rolled steel included 
sales made to affiliated customers. Petitioners further noted that 
sales made by Usinor to affiliated SSCs that are exempted from 
reporting their resales failed the arm's-length test and, therefore, 
the Department should apply facts available for these sales. As noted 
in the Department's January 31, 2002, letter, we determined that 
because these entities accounted for less than five percent of home 
market sales, Usinor did not have to report these resales. For the 
purposes of our preliminary determination, we are excluding from our 
margin analysis the sales made to these entities by Usinor that fail 
our arm's length or cost tests.
    On March 28, 2002, Usinor submitted the requested cost information 
associated with sales of cold-rolled steel made by affiliated SSCs. On 
April 2, 2002, petitioners contended that Usinor submitted an 
incomplete and unusable response with regard to its downstream sales by 
SSCs and that the Department should apply adverse facts available in 
for these sales. On April 4, 2002, Usinor explained that in some 
instances, because one of the reporting affiliated service centers 
purchased merchandise from another reporting affiliated reseller, both 
the initial sale from the supplying reseller to the other, and any 
subsequent sale from the purchasing reseller to its customer, have been 
reported. Usinor further explained that as a result of such 
transactions its home market database includes the SSCs' sales of 
subject merchandise that had been purchased from affiliated mills and 
sales of subject merchandise that had been purchased from other 
affiliated SSCs. For purposes of our preliminary margin analysis, we 
have excluded all sales made by the five affiliated SSCs to each other 
and to affiliated mills (see Memorandum to the File regarding 
Antidumping Duty Investigation on Certain Cold-Rolled Carbon Steel Flat 
Products from France; Preliminary Determination Analysis for the Usinor 
Group, dated April 26, 2002, (Sales Analysis Memo)). Usinor also 
indicated in its April 4, 2002, letter that it had included resales of 
cold-rolled steel made by the five affiliated SSCs to other affiliated 
entities that appear to have resold some or all of such merchandise in 
the home market. Usinor therefore failed to report certain downstream 
resales of cold-rolled steel (those resales made by the SSCs' 
affiliated customers) to the first unaffiliated customer.
    Because Usinor failed to fully provide all downstream sales to 
unaffiliated customers pursuant to the Department's request for this 
information, we preliminarily find, in accordance with section 776(a) 
of the Act, that the use of partial adverse facts available is 
appropriate for Usinor. Further, Usinor's failure to provide adequate 
explanations for its inability to provide the requested information 
indicates that Usinor has not acted to the best of its ability in 
responding to the Department's request for information. Therefore, the 
Department has also determined that Usinor has not acted to the best of 
its ability, and thus, application of an adverse inference is 
warranted, pursuant to section 776(b) of the Act. Accordingly, we have 
applied the highest gross unit price of subject merchandise sold to 
unaffiliated customers by model to those sales of cold-rolled steel 
made by the five affiliated resellers to affiliated customers by model 
that fail the arm's-length test. For those sales that did not have a 
model match, we applied the weighted-average gross unit price for those 
models with a match. (See Sales Analysis Memo.)

Credit Expense

    During this proceeding, the Department gathered information from 
Usinor regarding the date of payment used to calculate its per unit 
credit expense. On January 14, 2002, Usinor reported as the date of 
payment for U.S. sales the date on which it actually received payment, 
according to its accounts receivables ledger, from its unaffiliated 
customer. Usinor also reported that, for its U.S. sales of cold-rolled 
steel made during the POI through its affiliated ``super distributor'' 
(Usinor Steel Corporation, Inc. (USC)), it sold its accounts 
receivables to an affiliated financing company. After subsequent 
supplemental questionnaires, we learned that not only did USC sell its 
accounts receivables to an affiliated financing company, but in turn 
its affiliated financing company sold these accounts receivables to an 
unaffiliated funding company. On March 5, 2002, as requested by the 
Department, Usinor reported the date on which USC sold its accounts 
receivables to its affiliated financing company.
    However, Usinor has failed to provide the Department the 
information necessary to allow us to understand the relationship 
between USC's affiliated financing company and the unaffiliated funding 
company, and the terms at which its affiliated financing company 
transfers title to the accounts receivable to this unaffiliated funding 
company. We preliminarily find, in accordance with section 776(a) of 
the Act, that the use of neutral facts available is appropriate for 
Usinor where Usinor has failed to provide us with the appropriate date 
of payment for its CEP sales made by USC in the United States. 
Therefore, based on the facts otherwise available, we are preliminarily 
calculating the credit period as the payment term applicable to each 
U.S. sale of cold-rolled steel made through USC where the difference 
between the reported payment date and the shipment date (i.e., sale 
date) is less than the indicated payment term. Accordingly, for such 
instances, we have recalculated Usinor's imputed credit expense using 
this calculated credit period (see Sales Analysis Memo).

Movement Expenses

    In some instances, Usinor did not report an expense associated with 
the movement of subject merchandise for sale in the home market and the 
United States and/or Usinor provided an estimated cost adjusted for a 
variance between its estimated and actual total expenses. Usinor stated 
that it was unable to systematically link the movement expenses in 
question to transaction-specific invoices. It is the Department's 
practice and preference to use actual expenses for its margin 
calculations. We preliminarily find, in accordance with section 776(a) 
of the Act, that the use of facts otherwise available is appropriate 
for Usinor where Usinor has failed to provide us

[[Page 31208]]

with the actual expenses associated with the movement of its sales of 
cold-rolled steel during the POI in the home market and United States. 
Accordingly, for purposes of our preliminary determination, we applied 
a weighted-average movement expense using actual expenses provided by 
Usinor for those instances in which Usinor failed to report an expense 
or reported an adjusted estimated expense.

Product Comparisons

    Pursuant to section 771(16) of the Act, all products produced by 
the respondent that are within the scope of the investigation and were 
sold in the comparison market during the POI, are considered to be 
foreign like products. We have relied on fourteen criteria, in 
descending order of importance, to match U.S. sales of subject 
merchandise to comparison-market sales of the foreign like product: 
whether hardened or not; whether painted with poly vinylidene fluoride, 
other paint, or not; carbon content level; quality; yield strength; 
thickness; thickness tolerance; width; whether mill, slit, deburred 
edged, or other edge; whether coiled or cut sheet; whether temper-
rolled or not temper-rolled; whether stretch or tension leveled or not; 
whether annealed open coil, other annealed, or not annealed; and 
whether finished with bright, embossed/texturized, or matte surface. 
Where there were no sales of identical merchandise in the home market 
to compare to U.S. sales, we compared U.S. sales to the next most 
similar foreign like product, based on the characteristics and 
characteristic subcategories indicated in the Department's November 16, 
2001 questionnaire.

Fair Value Comparisons

    To determine whether sales of cold-rolled steel from France to the 
United States were made at less than fair value, we compared 
constructed export price (CEP) and export price (EP), where 
appropriate, to the normal value (NV), as described in the 
``Constructed Export Price,'' ``Export Price,'' and ``Normal Value'' 
sections of this notice, below. In accordance with section 
777A(d)(1)(A)(i) of the Act, we calculated weighted-average CEPs and 
EPs, where appropriate, for comparison to weighted-average NVs.

Date of Sale

    For its home market and U.S. sales, Usinor reported the date of 
invoice as the date of sale, in keeping with the Department's stated 
preference for using the invoice date as the date of sale. Usinor 
stated that the invoice date best reflects the date on which the 
material terms of sale are established and that it is possible for the 
quantity, price or other terms of sale to be modified between order 
date and invoice date.
    On January 7, 2002, petitioners requested that the Department 
require Usinor to report the frequency of changes made to a particular 
order between the order date and sale date. On February 14, 2002, the 
Department requested that Usinor submit the order date for all sales 
made during the POI. On March 5, 2002, Usinor reported the order date 
for all sales made during the POI in its home market and U.S. 
databases. Usinor indicated that for the most part when an order is 
modified, the original information recorded in the company's normal 
computer systems is written over with the new information, and the 
original record is not maintained. Usinor explained that for some of 
its reported sales transactions it is possible to determine that the 
record has been modified. However, Usinor further explained that it is 
not possible to determine which fields within the order have changed. 
Usinor concluded that the frequency of changes in price, quantity, or 
specifications between the initial order date and the final invoice 
date cannot be separately measured.
    The Department is preliminarily using the invoice date as the date 
of sale for both home market and U.S. sales. We intend to examine this 
issue at verification, and will incorporate our findings in our 
analysis for the final determination.
    In both the home and U.S. markets, Usinor had consignment sales in 
which subject merchandise was shipped to a storage facility at the 
customer's location. On February 12, 2002, the Department requested 
that Usinor report the date of sale as the date of shipment if the date 
of invoice is after the date of shipment for consignment sales 
transactions. For home market consignment sales, Usinor failed to 
comply with the Department's request, although for consignment sales 
made in the United States, Usinor reported, as requested, the date of 
shipment as the date of sale. For consignment sales made in the home 
market, we preliminarily determine that the date of shipment is the 
date of sale. For further details, see Sales Analysis Memo.

Export Price

    We used EP methodology in accordance with section 772(a) of the Act 
for sales where Usinor sold the merchandise under investigation before 
the date of importation directly to an unaffiliated purchaser in the 
United States. We based EP on packed prices to the first unaffiliated 
customer. In accordance with section 772(c)(2), we made deductions from 
the starting price for movement expenses, including foreign inland 
freight, inland insurance, foreign brokerage and handling, 
international freight, marine insurance, and U.S. customs duty.

Constructed Export Price

    Usinor reported as CEP transactions all sales of subject 
merchandise to its affiliated trading company, USC. USC then resold the 
subject merchandise to unaffiliated customers in the United States.
    We calculated CEP, in accordance with subsection 772(b) of the Act, 
for those sales made by USC to unaffiliated purchasers in the United 
States. We based CEP on the packed, delivered, duty paid prices to 
unaffiliated purchasers in the United States. We made adjustments for 
discounts and rebates, where applicable. We also made deductions for 
freight charged to the customer and other movement expenses in 
accordance with section 772(c)(2)(A) of the Act; these included, where 
appropriate, foreign inland freight, foreign inland insurance, foreign 
brokerage and handling, international freight, marine insurance, U.S. 
inland freight, U.S. inland insurance, other U.S. transportation fees, 
and U.S. customs duty. 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 commissions, direct selling 
expenses (warranty expenses and credit expenses), U.S. inventory 
carrying costs, and U.S. indirect selling expenses. For CEP sales, we 
also made an adjustment for profit in accordance with section 772(d)(3) 
of the Act. For sales of cold-rolled steel that were coded as non-
prime, we re-coded these sales as prime as Usinor did not provide 
sufficient evidence showing that these sales are actually of non-prime 
merchandise (see Sales Analysis Memo). We also removed all canceled 
sales from our analysis (see Sales Analysis Memo). For further 
information on adjustments made to our margin calculation please see 
Sales Analysis Memo.

Normal Value

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

[[Page 31209]]

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. As Usinor'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 of the subject merchandise, we determined that the home 
market was viable. Therefore, we have based NV on home market sales in 
the usual commercial quantities and in the ordinary course of trade. 
For those instances in which Usinor did not report a payment date with 
respect to its home market sales which have not been paid, we assigned 
the date of this preliminary determination (April 26, 2002) as the date 
of payment (see Sales Analysis Memo). For warranty expenses that were 
reported for Usinor's sales of cold-rolled steel produced by 
Atlantique, Lorraine, and Etilam, we multiplied the gross unit price by 
the calculated product family and customer-specific warranty expenses 
(reported by Usinor in its Appendix SB-12 and Appendix SB-14, 
respectively, dated March 5, 2002). For further information on 
adjustments made to our margin calculation see Sales Analysis Memo.

Affiliated-Party Transactions and Arm's-Length Test

    To test whether sales to affiliated service centers and end-users 
are made at arm's-length prices, we compare, on a model-specific basis, 
the prices of sales to affiliated customers with sales to unaffiliated 
customers net of all movement charges, billing adjustments, discounts, 
direct selling expenses, and packing. Where, for the tested models of 
foreign like product, prices to the affiliated party are on average 
99.5 percent or more of the price to unaffiliated parties, we determine 
that such sales are made at arm's length prices. See 19 CFR 351.403(c); 
see also Antidumping Duties; Countervailing Duties Final Rule, 62 FR 
27355 (May 19, 1997).
    If these affiliated party sales satisfied the arm's-length test, we 
used them in our analysis. Merchandise sold to affiliated customers in 
the home market made at non-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. 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.

Cost of Production Analysis

    Based on our analysis of the cost allegations submitted by 
petitioners in the original petition, the Department found reasonable 
grounds to believe or suspect that French producers had made sales of 
cold-rolled steel in the home market at prices below the cost of 
producing the merchandise, in accordance with section 773(b)(2)(A)(i) 
of the Act. 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 Act. We conducted the COP analysis described 
below.
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted average COP based on the sum of Usinor's cost of materials and 
fabrication for the foreign like product, plus an amount for home 
market selling, general and administrative expenses (SG&A) including, 
interest expenses, and packing costs.
    We relied on information from Usinor's section D questionnaire 
responses to calculate COP, except for the following changes: (1) 
Revised the total cost of manufacturing to include a cost 
classification variance between the financial and cost accounting 
systems for three of the collapsed companies (Atlantique, Lorraine, and 
Packaging); (2) included inland freight, inventory carrying cost, 
indirect selling and packing expenses between Usinor and its affiliates 
in the COP of the affiliated resellers, for the merchandise under 
consideration that was further manufactured by affiliates prior to sale 
to an unaffiliated party; (3) adjusted the reported value of slab and 
coil inputs obtained from affiliated parties to reflect the higher of 
transfer or market price; (4) revised the per-unit SG&A expenses to 
include application of the SG&A rate to the yield loss variable for the 
affiliated resellers; (5) revised the SG&A rate calculations to include 
certain expenses classified as extraordinary in the numerators, for 
Atlantique, Lorraine, Packaging, and Beautor. For Atlantique, Lorraine, 
and Packaging, we also revised the SG&A rate calculations to include 
foreign exchange losses and miscellaneous SG&A related accruals and 
provisions; (6) revised Etilam's SG&A rate calculation to exclude net 
exchange gains on accounts receivables from the numerator; (7) revised 
the unabsorbed SG&A costs rate calculation to exclude transportation 
costs from the denominator; (8) revised the financial expense rate 
calculation to exclude research and development costs from the 
denominator (the COP and CV files submitted by respondent did not 
reflect the submitted financial expense rate); and (9) based the 
difference in merchandise adjustment on the total cost of manufacturing 
rather than variable cost of manufacturing since certain fixed costs 
were included in variable costs in the affiliated resellers' COP and CV 
files, for the merchandise under consideration that was further 
manufactured by affiliates prior to sale to an unaffiliated party. For 
further details, see Memorandum from Heidi Schriefer to Neal Halper, 
dated April 26, 2002, Cost of Production and Constructed Value 
Calculation Adjustments for the Preliminary Determination (Cost 
Calculation Memo). We compared the weighted-average COP for Usinor to 
home market sales prices of the foreign like product, as required under 
section 773(b) of the Act. In determining whether to disregard home 
market sales made at prices less than the COP, we examined whether such 
sales were made (1) in substantial quantities within an extended period 
of time, and (2) at prices which permitted the recovery of all costs 
within a reasonable period of time in accordance with sections 
773(b)(1)(A) and (B) of the Act. On a product-specific basis, we 
compared the COP to home market prices, less any applicable movement 
charges, billing adjustments, and discounts and rebates.
    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 
twenty percent of Usinor'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 that the below-cost sales were not made in 
substantial quantities. Where twenty percent or more of Usinor'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, in 
accordance with section 773(b)(2)(C)(i) of the Act, within an extended 
period of time. In such cases, because we compared prices to weighted-
average COPs for the POI, we also determined that such sales were not 
made at prices that would not permit recovery of all costs within a 
reasonable period of time, in accordance with section773(b)(2)(D) of 
the Act. Therefore, we disregarded those below-cost sales.

Constructed Value

    In accordance with section 773(e)(1) of the Tariff Act, we 
calculated CV, where applicable, based on the sum of respondent's cost 
of materials, fabrication, SG&A including, interest expenses, and 
profit. We made the same

[[Page 31210]]

adjustments to the submitted CV data as noted above in the ``Cost of 
Production'' section. 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 Usinor in connection with the production and sale of the 
foreign like product in the ordinary course of trade for consumption in 
the foreign country.

Price-to-Price Comparisons

    We calculated NV for Usinor on prices of home market sales that 
passed the COP test. We made adjustments for billing adjustments and 
discounts. We made deductions, where appropriate, for warehousing, 
foreign inland freight, freight adjustments, and inland insurance, 
pursuant to section 773(a)(6)(B) of the Act. In addition, we made 
adjustments for differences in physical characteristics of the 
merchandise pursuant to section 773(a)(6)(C)(ii) of the Act, as well as 
for differences in circumstances of sale (COS) in accordance with 
section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We made COS 
adjustments for imputed credit expenses and warranties. Finally, we 
deducted home market packing costs in accordance with section 
773(a)(6)(A) and (B) of the Act. We have removed sales transactions 
that were identified as sample or testing/evaluation sales from our 
margin calculation (see Sales Analysis Memo). Usinor reported that, 
during the POI, it paid affiliated sales agents commissions for their 
handling of some cold-rolled steel sales in home market and United 
States. During the course of this proceeding, the Department requested 
that Usinor provide evidence for the record showing that these 
transactions were made at arm's length. With respect to commissions 
paid for sales of cold-rolled steel made in the home market, Usinor 
reported commissions paid to its affiliated selling agents. However, 
Usinor reported actual selling expenses incurred by its affiliated 
selling agents with respect to sales of cold-rolled steel made in the 
United States. We preliminarily find that Usinor has not sufficiently 
demonstrated that the reported commissions it paid to affiliated 
selling agents were made at arm's length. Therefore, we did not make 
adjustments for commissions in the home market. There was one more 
instance in which the Department preliminarily denied Usinor an 
adjustment to its NV. Due to the proprietary nature of this adjustment, 
we have explained this calculation in our preliminary analysis memo 
(see Sales Analysis Memo). We also excluded all intra-company 
transactions made between collapsed entities and all sales by the 
affiliated SSC's to other affiliated producers or SSCs that have 
already reported the resales to the first unaffiliated customer.

Price-to-CV Comparisons

    In accordance with section 773(a)(4) of the Act, we based NV on CV 
if we were unable to find a home market match of identical or similar 
merchandise. We calculated CV based on the costs of materials and 
fabrication employed in producing the subject merchandise, SG&A, and 
profit. In accordance with section 773(a)(2)(A) of the Act, we based 
SG&A expense, interest, and profit on the amounts incurred and realized 
by the respondent in connection with the production and sale of the 
foreign like product in the ordinary course of trade for consumption in 
France. For selling expenses, we used the weighted-average home market 
selling expenses. Where appropriate, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act. When we compared CV to 
CEP, we deducted from CV the weighted-average home market direct 
selling expenses.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the CEP transaction. The NV LOT is 
that of the starting-price sales in the comparison market or, when NV 
is based on CV, is that of the sales from which we derive selling, 
general and administrative (SG&A) expenses and profit. 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 U.S. 
sales, we examine 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. If the 
comparison market sales are made at different LOTs and the difference 
affects price comparability, as manifested in a pattern of consistent 
price differences between LOTs, and if the comparison market sale is at 
a different LOT from the export transaction, we make a LOT adjustment 
under section 773(a)(7)(A) of the Act. Finally, for CEP sales, if the 
NV is determined at a LOT at a more advanced stage of marketing than 
the CEP LOT, and despite the fact that the respondent has cooperated to 
the best of its ability, the data available do not provide an 
appropriate basis to determine whether the difference in LOT affects 
price comparability, the Department will grant a CEP offset. See 
section 351.412(f)(1) of the Department's regulations.
    In the home market, Usinor made sales to unaffiliated and 
affiliated end-users, unaffiliated distributors, and affiliated and 
unaffiliated SSCs. Usinor claims five channels of distribution with 
respect to these sales: (1) Sales shipped from the mill directly to 
unaffiliated end-users, distributors or service centers; (2) 
consignment sales, in which the merchandise is shipped to a storage 
location at the customer's site; (3) sales from the mills to affiliated 
producers of downstream products that processed the products into non-
subject products prior to sale to the first unaffiliated customer; (4) 
sales from the mills to affiliated service centers, which generally 
processed the merchandise into slit strip or cut-to-length sheets, and 
then sold the processed strips and sheets to affiliated or unaffiliated 
customers; and (5) sales by affiliated service centers to unaffiliated 
customers. Usinor claimed two LOTs in the home market: LOT 1 includes 
direct and consignment sales to unaffiliated end-users, unaffiliated 
distributors, affiliated and unaffiliated steel service centers, and 
affiliated customers that used cold-rolled steel as an input for the 
production of downstream products by Usinor's producing mills; and LOT 
2 includes direct sales to affiliated and unaffiliated end-users, and 
affiliated steel service centers by Usinor's affiliated SSCs.
    In the U.S. market, Usinor made sales to unaffiliated end-users and 
affiliated steel service centers. Usinor claims two channels of 
distribution with respect to these sales: (1) direct shipment sales; 
and (2) consignment sales. Usinor claims two LOTs in the U.S.: LOT 1 
includes direct and consignment sales made by USC; and LOT 2 includes 
direct sales made by Usinor.
    On February 26, 2002, the Department determined to collapse the 
eight Usinor affiliated producers (Atlantique, Lorraine, Mediterranee, 
Packaging, Etilam, Beautor, Haironville and PUM) into a single entity 
for purposes of this investigation. (See Collapsing Memo.) Therefore, 
for our preliminary LOT analysis we have considered there to be only 
four channels of distribution in the home market: (1) Direct sales to 
unaffiliated customers (i.e., end-users, distributors, and SSCs); (2) 
consignment sales to unaffiliated customers; (3) sales to affiliated 
SSCs (that were excluded from reporting their resales--see Reporting 
Letter); and (4) sales made by the five affiliated SSCs to unaffiliated

[[Page 31211]]

customers (i.e., end-users, distributors, and service centers).
    Usinor claims that CEP sales (those sales made through its 
affiliated trading company, USC) were made at a LOT more removed than 
the LOT of the home market sales made by its affiliated SSCs to 
unaffiliated customers. Usinor requests that the Department grant a CEP 
offset on all CEP sales, as Usinor's CEP sales cannot be compared to 
home market sales at the same LOT.
    In determining whether a separate LOT actually existed in the home 
market, we first examined if sales involved different marketing stages 
(or their equivalent) and selling functions along the chain of 
distribution by Usinor and its unaffiliated customers and the 
affiliated service centers to their unaffiliated customers. Normally, 
stages of marketing focus on whether sales are to SSCs or end-users, in 
some instances taking into account whether or not sales are made 
through intermediate parties. On this basis, it appears that Usinor's 
sales shipped from the mill directly, or on consignment basis to its 
unaffiliated customers (all customer categories), are made at the same 
stage of marketing as sales made by its affiliated service centers to 
their unaffiliated customers.
    In further analyzing Usinor's LOT claims in the home market, we 
reviewed available information on the record about the company's 
selling functions performed in the home market. Usinor identified 20 
different selling functions (see Exhibit SSA-4 of Usinor's March 13, 
2002, second supplemental Section A response) associated with its sales 
to unaffiliated customers.
    Next, we examined whether these selling functions are provided 
consistently to Usinor's four categories of customers in the home 
market, finding that all selling functions were provided to the same 
degree (i.e., high level of activity) to all customer categories (i.e., 
end-users, distributors, and SSCs), except for post-sale warehousing 
for consignment sales, visiting customers and promoting products for 
sales to affiliated service centers. In this case, we do not consider 
the difference in selling functions to be a significant difference 
considering that the majority of sales made in the home market were 
non-consignment sales and post-sale warehousing is only one selling 
function out of a total of twenty offered selling functions. Therefore, 
we preliminarily determine that only one LOT existed for Usinor in the 
home market.
    In determining whether separate LOTs actually existed in the U.S. 
market, we first examined whether Usinor's sales involved different 
marketing stages (or their equivalent) and selling functions along the 
chain of distribution between Usinor and its unaffiliated customers. As 
noted above, generally the stages of marketing focus on whether sales 
are to SSCs or end-users, in some instances taking into account whether 
or not sales are made through intermediate parties. On this basis, it 
appears that Usinor's cold-rolled steel sales shipped directly from the 
mill to unaffiliated customers may be at a different stage of marketing 
than its sales made through USC. This would indicate that Usinor has 
two U.S. LOTs.
    In determining whether the LOT in the home market is at a more 
removed LOT than LOT 1 that exists in the United States, as Usinor 
claims, we examined the selling functions performed by Usinor for CEP 
sales. According to Usinor, the selling functions that were provided 
for its CEP sales were the same as those provided in the home market, 
except for administrative support. We noted that the level at which the 
selling functions were performed by Usinor were not common to its CEP 
and home market sales (e.g., customer sales contact, production 
planning and order evaluation, warranty claims, technical service, and 
freight and delivery services were provided to home market sales, but 
not to CEP sales). Consequently, we preliminarily determine that Usinor 
provided significantly different selling functions in the home market 
than those in the U.S. market for CEP sales.
    With respect to its sales made at LOT 2, based on EP, in the United 
States, we noted insignificant differences in the level at which 
certain selling functions were performed (i.e., product brochures, 
general inventory maintenance) and thus, found these selling functions 
to be comparable to the home market LOT, and therefore no LOT 
adjustment was needed.
    We next examined whether a LOT adjustment was appropriate when 
Usinor's CEP sales are compared to the home market LOTs. The Department 
makes this adjustment when it is demonstrated that a difference in LOTs 
affects price comparability. However, where the available data do not 
provide an appropriate basis upon which to determine a LOT adjustment, 
and where the NV is established at a LOT that is at a more advanced 
stage of distribution than the LOT of the CEP transactions, we adjust 
NV under section 773(a)(7)(B) of the Act (the CEP offset provision). In 
the instant case, we were unable to quantify the LOT adjustment in 
accordance with section 773(a)(7)(A) of the Act, as we found only one 
LOT in the home market. Instead, because we determined that all of 
Usinor's home market sales were made at levels of trade more advanced 
than the LOT of Usinor's U.S. sales, we granted a CEP offset and 
applied this to comparisons between Usinor's CEP sales and all home 
market sales.

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

    As provided in section 782(i) of the Act, we intend to verify all 
information to be used in making our final determination.

Suspension of Liquidation

    In accordance with section 733(b)(3) of the Act, the Department 
will disregard any weighted-average dumping margin that is zero or de 
minimis, i.e. less than 2 percent ad valorem. Based on our preliminary 
margin calculation, we will not direct the U.S. Customs Service to 
suspend liquidation of any entries of cold-rolled steel from France as 
described in the ``Scope of Investigation'' section, that are entered, 
or withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register. The Department does 
not require any cash deposit or posting of a bond for this preliminary 
determination. The weighted-average dumping margin in the preliminary 
determination is as follows:

------------------------------------------------------------------------
                                                             Weighted
                  Exporter/manufacturer                   average margin
                                                           (percentage)
------------------------------------------------------------------------
Usinor Group............................................          1.97*
------------------------------------------------------------------------
* De minimis.

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, within 75 days after the date of 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 the verification reports. Rebuttal 
briefs must be filed within five days after the deadline for

[[Page 31212]]

submission of case briefs. 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 
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 any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs, 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW, Washington, DC 20230. In the event that the Department 
receives requests for hearings from parties to several cold-rolled 
steel cases, the Department may schedule a single hearing to encompass 
all those cases. Parties should confirm by telephone the time, date, 
and place of the hearing 48 hours before the scheduled time. Interested 
parties who wish to request a hearing, or 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. Oral 
presentations will be limited to issues raised in the briefs.
    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 Act.

    Dated: April 26, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-11186 Filed 5-8-02; 8:45 am]
BILLING CODE 3510-DS-P