[Federal Register Volume 62, Number 224 (Thursday, November 20, 1997)]
[Notices]
[Pages 61964-61998]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30393]
[[Page 61964]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-849]
Final Determination of Sales at Less Than Fair Value: Certain
Cut-to-Length Carbon Steel Plate From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final determination of sales at less than fair value.
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EFFECTIVE DATE: November 20, 1997.
FOR FURTHER INFORMATION CONTACT: Lyn Baranowski, Doreen Chen, Gregory
Weber, N. Gerard Zapiain or Stephen Jacques, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-1385, (202) 482-0413, (202) 482-1102, (202) 482-
1395 or (202) 482-1391, respectively.
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 (``the Act'') by
the Uruguay Rounds Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations are to the
regulations codified at 19 CFR Part 353 (April 1, 1996).
Final Determination
We determine that certain cut-to-length carbon steel plate from the
People's Republic of China (``PRC'') is being, or is 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 are shown in the
``Suspension of Liquidation'' section of this notice.
Case History
The petitioners in this investigation are Geneva Steel Company and
Gulf States Steel Company.
The respondents which are PRC firms unless otherwise indicated:
(1) China Metallurgical Import & Export Liaoning Company
(``Liaoning''), an exporter of subject merchandise; Wuyang Iron and
Steel Company (``Wuyang''), which produced the merchandise sold by
Liaoning;
(2) Anshan Iron and Steel Complex (``AISCO''), a producer of
subject merchandise; Angang International Trade Corporation (``Anshan
International''), a wholly-owned AISCO subsidiary in China which
exported subject merchandise made by AISCO, and Sincerely Asia, Limited
(``SAL'') a partially-owned Hong Kong affiliate of AISCO involved in
sales of subject merchandise to the United States (collectively,
``Anshan'');
(3) Baoshan Iron & Steel Corporation (``Bao''), a producer of
subject merchandise; Bao Steel International Trade Corporation (``Bao
Steel ITC''), a wholly-owned subsidiary of Bao responsible for selling
Bao material domestically and abroad; and Bao Steel Metals Trading
Corporation (``B. M. International''), a partially-owned U.S.
subsidiary involved in U.S. sales, (collectively ``Baoshan'');
(4) Wuhan Iron & Steel Company (``Wuhan'') a producer of subject
merchandise; International Economic and Trading Corporation (``IETC''),
a wholly-owned subsidiary responsible for exporting Wuhan merchandise;
Cheerwu Trader Ltd. (``Cheerwu'') a partially-owned Hong Kong affiliate
of Wuhan involved in sales of subject merchandise to the United States
(collectively ``WISCO'');
(5) Shanghai Pudong Iron and Steel Company (``Shanghai Pudong'') a
producer and exporter of subject merchandise. During the investigation,
we also requested information from and conducted verification of
Shanghai No.1, a non-exporting producer of subject merchandise which
Shanghai Pudong had earlier indicated shared a common trustee, Shanghai
Metallurgical Holding (Group) Co. (``Shanghai Metallurgical'').
We consider Liaoning, Anshan, Baoshan, WISCO and Shanghai Pudong to
be sellers of the subject merchandise during the POI.
Since the preliminary determination in this investigation
(Preliminary Determination of Sales at Less Than Fair Value: Certain
Cut-to-Length Carbon Steel Plate from the People's Republic of China,
62 FR at 31972 (June 11, 1997)), the following events have occurred:
From June through July 1997, we verified the questionnaire
responses of the respondents. Pursuant to section 782(d) of the Act,
the Department rejected certain portions of submissions submitted by
Anshan, Baoshan and WISCO one week prior to verification. On August 5,
1997 we issued our verification reports.
At the request of the Department, interested parties submitted
additional information on surrogate values on August 5, 1997, for
consideration in the final determination.
The petitioners and all of the respondents submitted case briefs on
August 29, 1997, and rebuttal briefs on September 9, 1997. The
Department held a public hearing for this investigation on September
16, 1997 at the requests of respondents and petitioners.
On October 24, 1997, the Department entered into an Agreement with
the Government of the PRC suspending this investigation. Pursuant to
Section 734(g) of the Act, petitioners, Liaoning and Wuyang have
requested that this investigation be continued. If the ITC's final
determination is negative, the Agreement shall have no force or effect
and the investigation shall be terminated. See Section 734(f)(3)(A) of
the Act. If, on the other hand, the Commission's determination is
affirmative, the Agreement shall remain in force but the Department
shall not issue an Antidumping duty order so long as (1) the Agreement
remains in force, (2) the Agreement continues to meet the requirements
of subsection (d) and (l) of the Act, and the parties to the Agreement
carry out their obligations under the Agreement in accordance with its
terms. See Section 734(f)(3)(B) of the Act.
Scope of the Investigation
The products covered by this investigation are hot-rolled iron and
non-alloy steel universal mill plates (i.e., flat-rolled products
rolled on four faces or in a closed box pass, of a width exceeding 150
mm but not exceeding 1250 mm and of a thickness of not less than 4 mm,
not in coils and without patterns in relief), of rectangular shape,
neither clad, plated nor coated with metal, whether or not painted,
varnished, or coated with plastics or other nonmetallic substances; and
certain iron and non-alloy steel flat-rolled products not in coils, of
rectangular shape, hot-rolled, neither clad, plated, nor coated with
metal, whether or not painted, varnished, or coated with plastics or
other nonmetallic substances, 4.75 mm or more in thickness and of a
width which exceeds 150 mm and measures at least twice the thickness.
Included as subject merchandise in this petition are flat-rolled
products of nonrectangular cross-section where such cross-section is
achieved subsequent to the rolling process (i.e., products which have
been ``worked after rolling'')--for example, products which have been
bevelled or rounded at the edges. This merchandise is currently
classified in the Harmonized Tariff Schedule of the United States (HTS)
under item numbers 7208.40.3030, 7208.40.3060,
[[Page 61965]]
7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000,
7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030,
7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000.
Although the HTS subheadings are provided for convenience and customs
purposes, our written description of the scope of this investigation is
dispositive.
Period of Investigation
The period of investigation (POI) is April 1, 1996, through
September 30, 1996.
Separate Rates
All of the respondents have requested separate, company-specific
rates. In their questionnaire responses, respondents state that they
are independent legal entities. Of the five respondents, Anshan,
Baoshan, Liaoning and WISCO have reported that they are collectively-
owned enterprises, registered as being ``owned by all the people.''
Shanghai Pudong and Shanghai No. 1 are ``owned by all the people';
Shanghai Pudong has also stated that these two firms are owned by
Shanghai Metallurgical, which is in turn is also owned by ``all the
people.'' Shanghai Pudong stated that it does not have any corporate
relationship with any level of the PRC Government.
As stated in the Final Determination of Sales at Less than Fair
Value: Silicon Carbide from the People's Republic of China, 59 FR at
22585, 22586 (May 2, 1994) (``Silicon Carbide'') and in the Final
Determination of Sales at Less Than Fair Value: Furfuryl Alcohol from
the People's Republic of China, 60 FR at 22544 (May 8, 1995)
(``Furfuryl Alcohol''), ownership of a company by ``all the people''
does not require the application of a single rate. Accordingly, each of
these respondents is eligible for consideration for a separate rate.
To establish whether a firm is sufficiently independent to be
entitled to a separate rate, the Department analyzes each exporting
entity under the test established in the Final Determination of Sales
at Less Than Fair Value: Sparklers from the People's Republic of China,
56 FR. at 20588 (May 6, 1991) (``Sparklers'') and amplified in Silicon
Carbide. Under the separate rates criteria, the Department assigns
separate rates in nonmarket-economy cases only if an exporter can
affirmatively demonstrate the absence of both (1) de jure and (2) de
facto governmental control over export activities. See Silicon Carbide
and Furfuryl Alcohol.
1. Absence of De Jure Control
The respondents have placed on the administrative record a number
of documents to demonstrate absence of de jure control. Respondents
submitted the ``Law of the PRC on Industrial Enterprises Owned By the
Whole People,'' adopted on April 13, 1988 (the Industrial Enterprises
Law). The Department has previously determined that this Civil Law does
not confer de jure independence on the branches of government-owned and
controlled enterprises. See Sigma Corp v. United States, 890 F. Supp.
1077, 1080 (CIT 1995). However, the Industrial Enterprises Law has been
analyzed by the Department in past cases and has been found to
sufficiently establish an absence of de jure control of companies
``owned by the whole people,'' such as those participating in this
case. (See e.g., Notice of Preliminary Determination of Sales at Less
Than Fair Value and Postponement of Final Determination: Certain
Partial-Extension Steel Drawer Slides with Rollers from the People's
Republic of China, 60 FR at 14725, 14727 (June 5, 1995) (``Drawer
Slides''); Notice of Preliminary Determination of Sales at Less Than
Fair Value: Honey from the People's Republic of China, 60 FR at 14725,
14727 (March 20, 1995); and Furfuryl Alcohol. The Industrial
Enterprises Law provides that enterprises owned by ``the whole people''
shall make their own management decisions, be responsible for their own
profits and losses, choose their own suppliers, and purchase their own
goods and materials. The Regulations of the People's Republic of China
for Controlling the Registration of Enterprises as Legal Persons (Legal
Persons Regulations), issued on July 13, 1988 by the State
Administration for Industry and Commerce of the PRC, provide that, to
qualify as legal persons, companies must have the ``ability to bear
civil liability independently'' and the right to control and manage
their business. These regulations also state that, as an independent
legal entity, a company is responsible for its own profits and losses.
See Notice of Final Determination of Sales at Less Than Fair Value:
Manganese Metal from the People's Republic of China, 60 FR at 56046
(November 6, 1995).
In sum, in prior cases, the Department has analyzed the Chinese
laws and regulations on the record in this case, and found that they
establish an absence of de jure control for the types of companies
seeking separate rates in this investigation. We have no new
information in these proceedings which would cause us to reconsider
this determination.
2. Absence of De Facto Control
The Department typically considers four factors in evaluating
whether each respondent is subject to de facto governmental control of
its export functions: (1) whether the export prices are set by or are
subject to the approval of a governmental authority; (2) whether the
respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses. See, e.g., Silicon Carbide and Furfuryl Alcohol.
These factors are not necessarily exhaustive and other relevant indicia
of government control may be considered.
Respondents have asserted, and we verified, the following: (1) they
establish their own export prices independently of the government and
without the approval of a government authority; (2) they negotiate
contracts, without guidance from any governmental entities or
organizations; (3) they make their own personnel decisions including
the selection of management; and (4) they retain the proceeds of their
export sales, use profits according to their business needs, and have
the authority to obtain loans. In addition, respondents' questionnaire
responses indicate that company-specific pricing during the POI does
not suggest coordination among exporters. During the verification
proceedings, Department officials viewed such evidence as sales
documents, company correspondence, and bank statements. This
information supports a finding that there is a de facto absence of
government control of the export functions of these companies.
Consequently, we have determined that the five responding exporters
have met the criteria for the application of separate rates. We
determine, as facts available, that non-responsive exporters have not
met the criteria for application of separate rates. See also Comments 1
and 55.
China-Wide Rate
The petition filed on November 5, 1996 identified 28 PRC steel
producers with the capacity to produce cut-to-length carbon steel plate
during the POI. We received adequate responses from the five
respondents identified above. We received certification of non-
[[Page 61966]]
shipment with respect to seven companies from the China Chamber of
Commerce for Metals and Chemicals (CCCMC) in a letter dated January 22,
1997. Additionally, we received a letter from one respondent factory
indicating shipments through parties which have not responded to the
questionnaire. See Non-Responsive Exporters section above. All other
companies did not respond to our questionnaire. Further, U.S. import
statistics indicate that the total quantity and value of U.S. imports
of cut-to-length carbon steel plate from the PRC during the POI is
greater that the total quantity and value of plate reported by all PRC
companies that submitted questionnaire responses. Given these
discrepancies, we conclude that not all exporters of PRC plate
responded to our questionnaire. Accordingly, we are applying a single
antidumping rate--the China-wide rate--to all exporters in the PRC
other than those receiving an individual rate, based on our presumption
that those respondents who failed to respond constitute a single
enterprise under common control by the PRC government. See, e.g., Final
Determination of Sales at Less Than Fair Value: Bicycles From the
People's Republic of China, 61 FR at 19026 (April 30, 1996) (Bicycles).
Facts Available
This China-wide antidumping rate is based on facts available.
Section 776(a)(2) of the Act provides that ``if an 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.''
In addition, section 776(b) of the Act provides that, if the
Department finds that an interested party ``has failed to cooperate by
not acting to the best of its ability to comply with a request for
information,'' the Department may use information that is adverse to
the interests of that party as the facts otherwise available. The
statute also provides that such an adverse inference may be based on
secondary information, including information drawn from the petition.
As discussed above, all PRC exporters that do not qualify for a
separate rate are treated as a single enterprise. Because some
exporters of the single enterprise failed to respond to the
Department's requests for information, that single enterprise is
considered to be uncooperative. Accordingly, consistent with section
776(b)(1) of the Act, we have applied, as total adverse facts
available, the highest margin calculated for a respondent in this
proceeding. Based on our comparison of the calculated margins for the
other respondents in this proceeding to the margins in the petition, we
have concluded that the highest calculated margin is the most
appropriate record information on which to form the basis for dumping
calculations in this investigation since this rate is higher than the
highest rate in the petition. Accordingly, the Department has based the
China-wide rate on information from respondents. In this case, the
highest calculated margin is 128.59 percent.
Fair Value Comparisons
To determine if the cut-to-length plate from the PRC sold to the
United States by the PRC exporters receiving separate rates was sold at
less than fair value, we compared the ``United States Price'' (USP) to
NV, as specified in the ``United States Price'' and ``Normal Value''
sections of this notice.
United States Price
Export Price
We based USP on export price (EP) in accordance with section 772(a)
of the Act, because the subject merchandise was sold to unrelated
purchasers in the United States prior to importation and because
constructed export price methodology was not otherwise indicated. In
accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI-
wide weighted-average export prices (EPs) to NV based on the factors of
production. See Company Specific Calculation Memoranda, October 24,
1997.
For those exporters that responded to the Department's
questionnaire, we calculated EP based on prices to unaffiliated
purchasers in the United States. We made deductions, where appropriate,
for foreign inland freight, ocean freight, marine insurance, and
foreign brokerage. See ``Factor Valuations'' section of this notice.
Normal Value
A. Factors of Production
Because the Department has determined that China is a non-market
economy (``NME'') country, we calculated NV based on factors of
production reported by respondents in accordance with section 773(c) of
the Act. Where an input was sourced from a market economy and paid for
in market economy currency, we used the actual price paid for the input
to calculate the NV in accordance with our practice. See Lasko Metal
Products v. United States (``Lasko''), 437 F. 3d 1442, 1443 (Fed. Cir.
1994). We valued the remaining factors using publicly available
information from India where possible. Where appropriate Indian values
were not available, we for the most part used publicly available
information from Indonesia. In one case, when no appropriate value was
available from a country at the same level of development, we used a
U.S. value. See Comment 19 (slag).
B. Factor Valuations
The selection of the surrogate values was based on the quality and
contemporaneity of the data. Where possible, we attempted to value
material inputs on the basis of tax-exclusive domestic prices. Where we
were not able to rely on domestic prices, we used import prices to
value factors. To the extent possible, we removed from the import data
import prices from countries which the Department has previously
determined to be NMEs. As appropriate, we converted import prices for
inputs to delivered prices. For those values not contemporaneous with
the POI, we adjusted for inflation using wholesale price indices (WPI),
or consumer price indices (CPI) published in the International Monetary
Fund's International Financial Statistics. For a complete analysis of
our selection of surrogate values, see each company's Factors Valuation
Memorandum dated October 24, 1997. We have made the following changes
to surrogate valuation since the preliminary determination:
To value coal, we used import prices for the months contemporaneous
with the POI for which such data were available from the Monthly
Statistics of the Foreign Trade of India (Monthly Statistics). We also
valued coal as two separate categories: coking coal and other coal. See
Comment 16.
To value iron ore, for the final determination, we have, to the
extent possible, treated different types of iron ore as separate
factors of production (i.e., we treated the different types of iron ore
as separate inputs with separate surrogate values). When a producer has
purchased any type of iron ore from one or more market economy
suppliers, we have relied, to the fullest extent possible, on the
market economy purchase prices which were verified by
[[Page 61967]]
the Department. When a given producer sourced a particular type of iron
ore only locally, or imported only an insignificant percentage of that
type or iron ore, we valued that type of iron ore for that producer
based on Indian Monthly Statistics. See Comment 16.
To value steel scrap, we used import prices for the months
contemporaneous with the POI for which such data were available from
the Monthly Statistics. See Comment 17.
To value iron scrap, fluorite/fluospar, ferromanganese, magnesium
ore, aluminum and coke, we used Indian import values for the months
contemporaneous with the POI for which such data were available from
the Monthly Statistics. See Comment 18.
To value scale, we used the United States market price for slag,
which is a similar product. See Comment 19.
To value dolomite, we used import prices for ``agglomerated
dolomite'' from the Monthly Statistics. See Comment 15.
To value stones, we used data from the ``Stone, Sand and Gravel''
SITC 273 category from the United Nations Commodity Trade Statistics.
See Comment 20.
To value silicon manganese, we used import prices from the Monthly
Statistics. See Comment 21.
To value barge rates, we used a simple average of the rates used in
the preliminary determination and river rates from the Inland Waterways
Authority of India (part of the Ministry of Surface Transportation of
the Government of India) submitted by respondents. See Comment 25.
To value factory overhead, SG&A and profit for all respondents and
firms, we calculated a simple average using the financial reports of
the TATA Iron and Steel Company (``TATA'') and the Steel Authority of
India Limited (``SAIL''). See Comment 3.
Verification
As provided in section 782(i) of the Act, we verified the
information submitted by respondents for use in our final
determination. We used standard verification procedures including
examination of relevant accounting and production records and original
source documents provided by the respondents.
Critical Circumstances
Section 735(a)(3) of the Act provides that, in a final
determination, the Department will determine whether: (A)(i) there is a
history of dumping and material injury by reason of dumped imports in
the United States or elsewhere of the subject merchandise, or (ii) the
person by whom, or for whose account, the merchandise was imported knew
or should have known that the exporter was selling the subject
merchandise at less than its fair value and that there would be
material injury by reason of such sales, and (B) there have been
massive imports of the subject merchandise over a relatively short
period.
1. Importer Knowledge of Dumping
In determining whether there is a reasonable basis to believe or
suspect that an importer knew or should have known that the exporter
was selling the plate at less than fair value, the Department normally
considers margins of 15 percent or more sufficient to impute knowledge
of dumping for constructed export price (CEP) sales, and margins of 25
percent or more for export price (EP) sales. See, e.g., Preliminary
Critical Circumstances Determination: Honey from the People's Republic
of China (PRC), 60 FR at 29824 (June 6, 1995) (``Preliminary Honey'')
and Notice of Final Determination of Sales at Less Than Fair Value:
Brake Drums and Rotors from the People's Republic of China, 62 FR 9160
(Feb. 28, 1997) (``Brake Drums and Rotors'') .
Since the company specific margins for EP sales in our final
determination for carbon steel plate are equal to or greater than 25
percent for Anshan, Baoshan, Shanghai Pudong and WISCO, we have imputed
knowledge of dumping to importers of subject merchandise from these
exporters. We found that Liaoning had margins below 25 percent. Because
we found these margins to be below 25 percent, we do not impute
knowledge of dumping to importers of subject merchandise reported by
Liaoning. Therefore for Liaoning, we find that critical circumstances
do not exist with respect to the subject merchandise.
2. Importer Knowledge of Material Injury
Pursuant to the URAA, and in conformance with the WTO Antidumping
Agreement, the statute now includes a provision requiring the
Department, when relying upon section 735(a)(3)(A)(ii), to determine
whether the importer knew or should have known that there would be
material injury by reason of the less than fair value sales. In this
respect, the preliminary finding of the International Trade Commission
(ITC) is instructive, especially because the general public, including
importers, is deemed to have notice of that finding as published in the
Federal Register. If the ITC finds a reasonable indication of present
material injury to the relevant U.S. industry, the Department will
determine that a reasonable basis exists to impute importer knowledge
that there would be material injury by reason of dumped imports during
the critical circumstances period--the 90-day period beginning with the
initiation of the investigation. See 19 CFR 351.16(g). If, as in this
case, the ITC preliminarily finds threat of material injury (see Cut-
to-Length Carbon Steel Plate from China, Russia, South Africa, and
Ukraine, U.S. International Trade Commission, December 1996), the
Department will also consider the extent of the increase in the volume
of imports of the subject merchandise during the critical circumstances
period and the magnitude of the margins in determining whether a
reasonable basis exists to impute knowledge that material injury was
likely. As noted below, the extent of the import increase is nearly
double that needed to find ``massive imports.'' Despite the fact that
the ITC found only threat of injury, we find that the sheer volume of
imports entering the U.S. from the PRC would have alerted importers to
the fact that the U.S. industry would be injured by these dumped
imports.
3. Massive Imports
When examining the volume and value of trade flow data, the
Department typically compares the export volume for equal periods
immediately preceding and following the filing of the petition.
Pursuant to 19 CFR 353.16(f)(2), unless the imports in the comparison
period have increased by at least 15 percent over the imports during
the base period, we will not consider the imports to have been
``massive.'' In order to determine whether there have been massive
imports of cut-to-length plate, we compared imports in the three months
following the initiation of the investigation with imports in the three
months preceding initiation.
In this case, imports of Chinese plate increased 29 percent in the
three months following the initiation of the investigation when
compared to the three months preceding initiation, or nearly two times
the level of increase needed to find ``massive imports'' during the
same period.
4. China-Wide Entity Results
With respect to companies subject to the China-wide rate (i.e.,
companies which did not respond to the Department's questionnaire), we
are imputing importer knowledge of dumping based on the China-wide
dumping rate which is greater than 25 percent. As noted above, we have
also determined that importers knew or
[[Page 61968]]
should have known that there would be material injury to the U.S.
industry due to dumping by the China-wide entity based on the ITC's
preliminary determination and the fact that imports in the comparison
period are nearly twice the level for finding ``massive imports.'' In
the absence of shipment data for the China-wide entity, we have
determined based on the facts available, and making the adverse
inference permitted under section 776(b) of the Act because this entity
did not provide an adequate response to our questionnaire, that there
were massive imports of certain cut-to-length carbon steel plate by
companies that did not respond to the Department's questionnaire.
Therefore, we determine that critical circumstances exist with regard
to these companies.
5. Cooperating Respondents Results
Based on the ITC's preliminary determination of threat of injury,
the massive increases in imports noted above, and the margins greater
than 25 percent for Anshan, Baoshan, Shanghai Pudong and WISCO, the
Department determines that critical circumstances exist for Anshan,
Baoshan, Shanghai Pudong and WISCO. Because we found margins to be
below 25 percent, we do not impute importer knowledge of dumping for
Liaoning. Therefore for Liaoning, we find that critical circumstances
do not exist with respect to the subject merchandise.
Index of Interested Party Comments
a. General Comments
1 Separate Rates
2 Reporting of Sales
3 Financial Data from Indian Annual Reports
4 Offset Interest Expense by Short-term Income
5 Exclusion of Packing and Other Expenses from SG&A
6 Exclusion of Taxes from SG&A and overhead
7 Adjustment of Overhead Rate
8 Energy Adjustment
9 Credit for By-Products
10 Treatment of Gases
11 Valuation of Self-Produced Inputs
12 Domestic Inland Freight Expenses
13 Regression-Based Analysis
14 Labor Factors
15 Valuation of Limestone, Dolomite and Quicklime
16 Basket Categories--Coal and Iron Ore
17 Steel Scrap, Pig Iron Valuation
18 Valuation of Iron Scrap, Fluorite/Fluorspar, Coke, Aluminum,
Magnesium
19 Scale and Slag
20 Stones
21 Silicon Manganese
22 Electricity
23 Nominal vs. Actual Thickness
24 Alloy/Non-Alloy Steel Issue
25 River Freight
26 Ocean Freight Rates
27 Brokerage and Handling
28 Rejection of Untimely Factual Information
29 Methodology Used for Selection of Surrogate Values
30 Ministerial Error--Freight for Purchases of Certain Inputs
b. Anshan Specific Comments
31 Valuation of Certain Inputs
32 Valuation of Ocean Freight for Input(s) imported from Market
Economy Suppliers
33 Factors for Sintering Plant
34 Anshan's Reporting Methodology
35 Freight Amount on SAL Invoices
36 Labor Plate Mill, Roughing Mill, Other Sintering Mill
37 Material Inputs at No. 2 Steelmaking Plant
38 By-Product Credits
39 Credit For By-Products Produced in Coke Plant
40 Raw Materials for Sintering Shop
41 Moisture Content of a Certain Factor
42 Ministerial Errors
c. Baoshan Specific Comments
43 Product Specificity
44 Further Processing of By-Products
45 Inconsistencies discovered at Verification
46 Freight Reporting
47 Valuation of Certain Input
48 Packing
d. Liaoning/Wuyang Specific Comments
49 Verification of Wuyang's Labor Allocations
50 Wuyang's Standard Raw Material Consumption Rates
51 Reliability of Labor Allocations
52 Treatment of Heavy Oil, Oxygen and Coal Gas
53 Transportation from Factory to Port
e. Shanghai Pudong Specific Comments
54 Facts Available
55 Shanghai Pudong and Shanghai No. 1
56 Unreported Consumption of Input
57 Transportation Charges for Certain Inputs
58 Unreported Inputs from Unaffiliated Company
59 Gas Inputs
60 Adjustment of Labor Inputs
61 Assignment of Appropriate Surrogate Values
62 Ministerial Errors
f. WISCO Specific Comments
63 Facts Available
64 By-Product Credits
65 Facts Available for a Certain Input
66 Financial Records
67 Product Specificity
68 Adjustment of Labor Inputs
69 Ministerial Error-River Freight
Interested Party Comments
Comment 1: Separate Rates
Petitioners contend that the Department's preliminary decision to
assign separate rates to the five respondents who submitted
questionnaire responses in this case--Anshan, Baoshan, Liaoning, WISCO
and Shanghai Pudong--cannot be sustained in the final determination.
Petitioners note that under the Department's policy, exporters in non-
market economies are entitled to separate, company-specific margins
only when they can demonstrate an absence of government control over
export activities, both in law and in fact. Final Determination of
Sales at Less Than Fair Value: Sparklers from the People's Republic of
China, 56 FR 20,588 (May 6, 1991) (``Sparklers''); Silicon Carbide.
They assert that none of the PRC respondents has met this burden of
proof, whether with respect to de jure or de facto control. Petitioners
claim that the PRC government controls the steel industry.
Petitioners also claim that respondents did not fully cooperate
with the Department. They note that Baoshan only submitted certain
``excerpts'' from its annual report to the Department at verification.
In addition, they contend that Anshan did not provide certain reports
and financial statements. Petitioners argue that this information would
likely demonstrate that respondents are not entitled to a separate
rate.
Respondents argue that petitioners' arguments regarding separate
rates are factually and legally flawed and must be rejected.
Respondents note that in the preliminary determination, the
Department determined, respondents were not subject to de jure or de
facto government control. They assert that petitioners do not provide
any valid arguments or evidence that would justify a reconsideration of
this determination. Respondents also note the Department verified the
accuracy of this information. Accordingly, they assert that the
Department should affirm its finding of an absence of de jure and de
facto control in the final determination and should continue to
calculate a separate rate for each respondent in the final
determination.
Department's Position: We agree with respondents. The Department's
NME separate rates policy is based upon a rebuttable presumption that
NME entities operate under government control and do not merit separate
rates. This presumption can be overcome by a respondent's affirmative
showing that it operates without de jure or de facto government
control.
We found that the respondents have met their affirmative
evidentiary burden with respect to the Department's criterion of de
jure control, because they have provided copies of business licences
and the applicable government
[[Page 61969]]
statute granting them the right to operate as independent companies.
We found that the respondents met the evidentiary burden with
respect to de facto control as well. During verification, the
Department examined the issue and found that information provided by
respondents supported the contention that there is a de facto absence
of government control of the export functions of the respondents. See
Separate Rates Memorandum, October 24, 1997. Consequently, we have
determined that the respondents have met the criteria for the
application of separate rates.
We also disagree with petitioners' assertion that Baoshan failed to
provide a complete annual report at verification. The Department
examined the entire annual report at verification and included in the
verification exhibits those segments applicable to the investigation.
We also disagree with petitioners that Anshan did not cooperate
regarding submission of certain documents; the Department never
requested the documents petitioners claim Anshan refused to provide.
Comment 2: Reporting of Sales
Petitioners contend that the respondents do not appear to have
reported all of their sales for export to the United States. They state
that a review of the quantity and value of subject merchandise reported
by the respondents during the six-month POI shows that sales of the
subject merchandise were under-reported as compared to U.S. import
statistics. Petitioners contend that should the Department find that
any respondent that has failed to cooperate by not reporting sales of
the subject merchandise for export in its questionnaire response should
be deemed a non-responsive exporter and denied eligibility for
consideration for a separate rate.
Respondents contend that as part of its investigation in this case,
the Department has conducted a thorough examination of the sales made
during the period of investigation by each of the respondents involved
in this proceeding. Respondents assert that the Department's
examination confirmed that the respondents have reported all of their
sales properly.
Department's Position: We agree with respondents. The Department
conducted verification of the sales quantity and value totals submitted
by each of the respondents in the questionnaire responses and we found
that all respondents properly reported sales during the POI.
Comment 3: Financial Data From Annual Reports of Indian Steel Companies
Petitioners argue that the Department should use financial data
from annual reports of major steel producers in the principal surrogate
country to calculate factor values for profit, SG&A and overhead.
Petitioners claim that representative data that most accurately reflect
the current earnings and expenditures of Indian cut-to-length plate
(``CTLP'') producers can be found in recent annual reports of the two
largest Indian steel plate producers: the TATA Iron and Steel Company
(``TATA'') and the Steel Authority of India Limited (``SAIL'').
Petitioners state that these reports closely correlate with the POI and
the industry being investigated. Petitioners note that the Department
used a very similar methodology in its selection of surrogate values in
the concurrent investigation of imports of CTLP from the Ukraine.
Petitioners state that, in its preliminary determination for both
Azovstal and Ilyich, the Department calculated COM, SG&A, profit and
overhead by averaging data from the annual reports of two companies in
Brazil, the principal surrogate country in that case. See Preliminary
Determination of Sales at less Than Fair Value: Certain Cut-to-Length
Carbon Steel Plate from the Ukraine, 62 FR at 31957, June 11, 1997.
In contrast, petitioners claim the most recent data published in
the Reserve Bank of India Bulletin (dated April 1995) are for 1992-
1993. They argue there is no indication that any of this combined data
is audited or follows Indian generally accepted accounting principles
(GAAP). Finally, they state that the Reserve Bank data used in the
preliminary determination are not specific to steel production and
include an unknown number of other manufacturing and chemical
companies.
Respondents agree that the use of information from Indian steel
producers may be preferable to the rates obtained from the Reserve Bank
of India Bulletin. However, respondents disagree with petitioners'
suggestion that the Department should limit its analysis to SAIL and
TATA when there is information on the record for six such companies:
(1) TATA; (2) SAIL; (3) Pennar Steels, Inc. (``Pennar''); (4) Nippon
Denro Ispat Ltd. (``Nippon Denro''); (5) Visvesvaraya Iron & Steel Ltd.
(``Visvesvaraya''); and (6) Lloyds Metals and Engineers, Ltd.
(``Lloyds''). Respondents agree that the Department's goal in selecting
expense rates should be to use representative data that most accurately
reflect the current earnings and expenditures of Indian cut-to-length
plate producers. Respondents claim that ignoring two-thirds of the data
that is on the record would be clearly inconsistent with the
Department's goal of obtaining representative data--and would violate
the Department's fundamental obligation to calculate dumping margins as
fairly and accurately as possible. Respondents also dispute
petitioners' claim that there is insufficient detail in SAIL's annual
report to calculate an overhead rate.
Liaoning and Wuyang argue that the Department should calculate
surrogate overhead costs, SG&A expenses, and profit using the actual
data contained in the annual financial reports of the six Indian
producers of flat-rolled steel products that are on the record in this
investigation. They argue that the data contained in these six annual
reports are more appropriate for calculating overhead, profit and SG&A
ratios than the information from the Reserve Bank of India Bulletin
used in the preliminary determination because the annual report
financial information is specific to India's steel industry. They state
that using factory-specific information also would be consistent with
the approach taken by Commerce in a number of other investigations. See
Brake Drums and Rotors, 62 FR 9160; Melamine Institutional Dinnerware
Products From the People's Republic of China, 62 FR 1708 (January 13,
1997); Tapered Roller Bearings and Parts Thereof, Finished or
Unfinished, from the Hungarian People's Republic, 52 FR 17428 (May 8,
1987); Bicycles, 61 FR 19026.
Liaoning and Wuyang also argue that the financial experience of
these companies represents a broad spectrum of India's flat-rolled
steel industry, and an analysis that omits certain companies (or uses
only the large or only the small companies) would result in overhead,
profit and SG&A ratios that are not representative of either India's or
China's steel industry. For example, not all of the PRC respondents are
large-scale producers like the Indian producers SAIL and TATA. Wuyang,
in particular, is a small steel mill, whose annual sales are only ten
percent of those of TATA, and whose size (in number of employees) is
far more similar to Visvesvaraya or Nippon Denro. Moreover, they argue
that Wuyang does not have a blast furnace or basic oxygen furnace.
Wuyang's steelmaking relies entirely on electric arc furnaces, and
Wuyang's overhead, profit and SG&A ratios are much more likely to be
similar to those of Lloyds or Pennar than those of SAIL or TATA. They
state that only an analysis that
[[Page 61970]]
includes all the Indian steel producers will result in surrogate
overhead, profit and SG&A ratios that are equally representative of the
surrogate experience.
Liaoning and Wuyang argue that, in calculating the ratios, Commerce
should not calculate weighted-average ratios for the Indian steel
producers. Rather, Commerce should calculate overall ratios using a
straight average of the data contained in the six companies' financial
statements. See Bicycles from China, 61 FR at 19039 (when using the
Indian producers' annual reports to derive overhead, profit and SG&A,
Commerce calculated ``a simple average of the financial statements
consistent with [its] normal practice'').
Petitioners argue the Department should not rely on the data from
Pennar, Nippon Denro, Visvesvaraya or Lloyds Metals at all, but instead
use data from SAIL and TATA only. Petitioners state that the
Department's preference is to derive its calculation of NME financial
ratios from firms that are significant producers of merchandise that is
identical or most similar to that produced by the respondents under
investigation. See Melamine Institutional Dinnerware Products from the
People's Republic of China, 62 FR 1708, 1712 (January 13, 1997); Brake
Drums and Brake Rotors from the People's Republic of China, 62 FR 9160,
9167 (Feb. 28, 1997) (Final Determination) (financial data of two
companies not used because there was no information indicating their
production of subject merchandise during the POI); Polyvinyl Alcohol
from the People's Republic of China, 61 FR 14057 at 14061 (March 29,
1996) (Final Determination) (``the Department seeks to base surrogate
values on the industry experience closest to the product under
investigation'') . Petitioners claim that TATA and SAIL are companies
that produce cut-to-length carbon steel plate. By contrast, petitioners
claim Pennar Steels, Nippon Denro, Visvesvaraya, and Lloyds Metals do
not produce subject merchandise. Therefore, petitioners argue that,
because reliable financial data is available from Indian carbon steel
plate producers, consistent with its standard practice, the Department
should not rely on the data of other companies that do not produce
subject merchandise.
Department's Position: We agree with petitioners. It is the
Department's preference to base SG&A and profit ratios on data from
actual producers of subject merchandise in the surrogate country. See
Brake Drums and Rotors, 62 FR at 9168. Of the six companies whose
annual reports were submitted on the record, only SAIL and TATA
actually produce cut-to-length carbon steel plate. In addition, SAIL
and TATA are the only two companies whose annual reports reflect the
costs of producing steel and hot-rolled coils. This is relevant as all
five Chinese respondents produce coils and steel that are manufactured
into plate. The Department is not using the annual report of
Visvesvaraya because it is a subsidiary of SAIL and, therefore, all its
financial information is already incorporated into SAIL's annual
report. In addition, Visvesvaraya produced alloy and specialty steel,
not cut-to-length plate. The Department is not using Pennar's annual
report because Pennar buys hot-rolled coils and processes the coils
into cold-rolled strips. Thus, Pennar produces neither steel nor cut-
to-length plate. The Department is not using the annual report of
Lloyd's Metals or Nippon because both produce sponge iron and send the
iron to an affiliate where it is processed into hot-rolled coils (the
affiliates' costs are not incorporated into the annual reports). The
coils are then sent back to Lloyd's and Nippon, where they are
processed into cold-rolled products. Thus, like Pennar, neither Lloyd's
Metal nor Nippon produces steel or cut-to-length plate.
In contrast, the annual reports of both SAIL and TATA list plate as
products. In addition, Iron and Steel Works of the World, 12th edition
lists both companies as producers of plate. There does appear to be a
slight discrepancy in regard to TATA. Page 49 of TATA's annual report
indicates that TATA has not produced any ``plate'' since 1993. However,
the physical characteristics of the ``plate'' category for the
production statistics are unclear. It is possible that products that
the Department considers plate could be included in the category
``sheets''. Furthermore, TATA's annual report shows significant
production of both steel and hot-rolled coils.
Consequently, for the final determination, we have calculated
overhead, SG&A, and profit surrogate values by using a simple average
of relevant data from the annual reports of TATA and SAIL.
Comment 4: Interest Expenses Offset for Short-Term Income
Liaoning and Wuyang argue that Commerce should, when possible,
offset the interest and financial expenses of Indian steel producers
with their corresponding operating income. That is, when calculating
SG&A, Commerce should offset interest expenses by the amount of short-
term interest income. See Brake Drums and Rotors, 62 FR at 9168
(Department reduced interest expenses by amounts for interest income
and also allocated a portion of ``other income'' as short-term interest
income for those companies that did not specify a breakdown of their
non-operating income); see also Frozen Concentrated Orange Juice from
Brazil; Final Results of Antidumping Duty Administrative Review, 55 FR
26721, Comment 8 (June 29, 1990). Liaoning and Wuyang state that merely
adding financial expenses to SG&A without reducing those amounts by any
corresponding operating income would overstate actual net financial
expenses. They claim that offsetting financial expenses against
financial gains reflects more accurately the Indian producers' actual
financial cost of doing business.
Petitioners argue that Liaoning is incorrect in arguing that the
Department should, when possible, offset interest and financial
expenses of Indian steel producers with their corresponding operating
income. Petitioners argue that neither Brake Drums and Rotors nor
Frozen Concentrated Orange Juice from Brazil supports offsetting
financial expenses by operating income other than short-term interest
earned. Petitioners state that in Brake Drums and Rotors, where the
respondents made the same claim based on the Orange Juice
determination, the Department offset interest expenses by the amount of
short-term interest income. Petitioners cite Brake Drums and Rotors, in
which the Department ``disagree{d} that operating income * * * should
be in the offset.'' 62 FR at 9168. Petitioners claim that although the
Department did offset the interest expense of certain producers by a
portion of their ``other income'' or ``miscellaneous receipts,'' this
was done merely as a means of allocating short-term interest costs for
those producers whose financial statements did not specify a breakdown
of non-operating income. Petitioners argue that interest and financial
expenses may be reduced by amounts for interest income only if the
surrogate producers' financial reports note that the income was short-
term in nature.
Department's Position: We agree with petitioners. The Department
will offset interest expense by short-term interest income only where
it is clear from the financial statements that the interest income was
indeed short-term in nature. See Brake Drums at Rotors, 62 FR at 9168.
For the annual report of SAIL, the Department considered the following
items of the line item ``Interest Earned'' (page 31 of SAIL's annual
report) as short-term interest income: (1) loans and advances to other
companies, (2) loans
[[Page 61971]]
and advances to customers, (3) loans and advances to employees, and (4)
term deposits. Therefore, we offset SAIL's interest expense by these
amounts for the final determination. For the annual report of TATA, we
found that the interest expense reported (page 24 of TATA's annual
report) was already net of all short-term interest income. Therefore,
for the final determination, we did not further offset the interest
expense.
Comment 5: Exclusion of Packing and Other Expenses From SG&A Expenses
Liaoning and Wuyang also argue that, when calculating SG&A,
Commerce should exclude all expenses incurred by Indian steel producers
that relate to packing, as well as all other direct selling expenses.
They state that since packing and direct selling expenses are
separately accounted for in the Department's dumping calculation, these
expenses must be excluded to avoid double-counting. They argue that
Commerce should ensure that packing and other direct selling expenses
are not double-counted by excluding the categories ``other expenses''
and ``miscellaneous expenses'' in the Indian financials from the
surrogate SG&A values. They cite the Preliminary Determination of Sales
at Less Than Fair Value; Brake Drums and Rotors from China, 61 FR
53190. In that case, there was no indication from an Indian producer's
financial statement used to calculate SG&A as to which line item
expenses included a specific amount for packing expenses. Commerce
considered packing expenses to be included in the line item labeled
``miscellaneous expenses'' since ``there appears to be no other entry
under which such an expense could be included.'' Commerce therefore
removed the amount for ``miscellaneous expenses'' from the SG&A
calculation. See Factor Valuation Memorandum, Attachment 9, Shivaji
Analysis, at 2. Similarly, because there was no indication from the
financial statement of another producer as to which line item expenses
included a specific amount for packing expenses, Commerce considered
this expense to be included in the line item labeled ``other
expenses,'' and removed the amount for ``other expenses'' from the SG&A
calculation. Id., Rico Analysis, at 2. Liaoning and Wuyang argue that
in this investigation, where the Indian steel producers' financial
statements do not indicate what amounts are related to packing,
Commerce similarly should remove ``other expenses'' or ``miscellaneous
expenses'' from the calculation of SG&A in order to avoid including an
expense that is already deducted from U.S. price.
Liaoning and Wuyang also argue that Commerce should exclude from
the calculation of SG&A all direct selling expenses incurred by the
Indian steel producers that normally are deducted from export price and
constructed export price transactions when calculating net U.S. price.
They state that direct selling expenses, such as commissions,
discounts, bank charges, royalties, etc., should not be included in
normal value as part of the surrogate SG&A ratio because they are
deducted from U.S. price. They claim that Commerce cannot make a fair
comparison of normal value to export price and constructed export price
if it includes direct selling expenses in SG&A in the normal value
calculation, but deducts such expenses from EP and CEP. See Torrington
Co. v. United States, 66 F.3d 1347, 1352 (Fed. Cir. 1995) (the
antidumping statute requires an ``apples to apples'' comparison). They
argue that to ensure a fair comparison, Commerce therefore should
calculate an amount for SG&A that is net of all direct selling
expenses.
Petitioners argue there is no basis for Liaoning's claim that costs
related to packing would be included in either a ``miscellaneous
expense'' of ``other expense'' category. To the contrary, petitioners
argue that most steel companies pack their merchandise at the
production site; thus, the labor and materials associated with packing,
if there are any, will be included in cost of manufacturing, not in
SG&A. Petitioners argue that for those companies that pack merchandise
at a separate facility and assign the costs to SG&A, packing is usually
specified as a discrete item.
Petitioners argue that even if some companies were to include
packing in a miscellaneous or catch-all expense category, it is clear
the packing would be just one of numerous expenses. Petitioners claim
it would therefore be inappropriate--indeed distortive--to deduct the
entire amount of the reported miscellaneous or other expense, as
respondents suggests.
Petitioners suggest that respondents' reliance on the preliminary
determination in Brake Drums and Rotors is misplaced. Petitioners claim
for its preliminary determination, the Department removed the amount
for ``other expenses'' for the Indian producer RICO to account for
packing expenses. Brake Drums and Rotors, 61 FR 53190 at 53197 (October
10, 1996). Petitioners state that in the final determination, however,
the Department reversed itself. Petitioners state that the Department
expressly included RICO's ``other expenses'' in its SG&A calculations.
Petitioners argue that the Department should reject respondents'
argument that all direct selling expenses should be excluded from its
surrogate SG&A calculation. Petitioners argue that the purpose of the
calculation of the SG&A of the Indian producer is to determine the
ratio of selling, general and administrative expense to the cost of
manufacture. Petitioners argue that all expenses incident to selling,
general and administrative functions of the company should be part of
the SG&A calculation.
Even if the Department should decide to exclude direct selling
expenses, petitioners argue, respondents' classification of such
expense is overly broad. Petitioners argue that there is no evidence
that the suggested exclusions were directly related to specific sales.
Petitioners argue that because the Department has no information on the
specific amount of direct selling expenses incurred by surrogate
country producers, the Department should decline to make an item-by-
item evaluation of the Indian companies' SG&A components. See
Oscillating Fans and Ceiling Fans from the People's Republic of China
(``Oscillating Fans''), 56 FR 55271 at 55276 (Oct. 25, 1991) (Final
Determination); Tapered Roller Bearings and Parts Thereof, Finished or
Unfinished, from the Socialist Republic of Romania, 52 FR 17433, 17436
(May 8, 1987) (Final Determination). Petitioners argue that since there
is no indication whether (or how much of) such purported expenses are
directly related to specific sales, the Department should reject
respondents' claim that ``direct selling'' expenses should be excluded
from the surrogate SG&A ratios.
Department's Position: We agree with respondents that packing
expenses should be excluded from the SG&A surrogate value to the extent
possible. However, we disagree that all ``other expenses'' and
``miscellaneous expense'' categories should be excluded to prevent
double-counting from occurring. If there is a line in an Indian
producer's financial statement for packing expenses, then the
Department should not include it in SG&A. However, for both SAIL and
TATA there is no specific line item limited to packing expenses. As
petitioners state, it would be unreasonable and distortive for the
Department to exclude all ``other'' or ``miscellaneous'' expenses just
because they might contain packing expenses. These categories are
undoubtedly made up of many expenses and may not include packing
expenses
[[Page 61972]]
at all. It is possible, as petitioners suggest, that these companies
included packing expenses in their raw material costs.
We note that the fact pattern in this investigation differs from
Brake Drums and Rotors. We found that the ``other'' and
``miscellaneous'' categories listed in SAIL's and TATA's annual reports
are too large to throw out simply because they might contain packing.
Our examination of TATA's other expenses (page 26 of TATA's annual
report) shows that it includes items such as provision for
proportionate premium on redemption of non-convertible debentures,
expenses of issue of rights shares, loss on discarded assets, provision
for diminution in value of investments and exchange differences. We
find that there is no indication that the other expenses category
includes packing. Our examination of SAIL's annual report indicates
that there is no explanation of the miscellaneous category other than
that it includes a donation (page 36 of SAIL's annual report).
In regard to direct selling expenses, we agree in part with
respondents. We note that in this investigation, all U.S. sales were EP
sales. Therefore, we have not included, in our calculation of SG&A and
overhead, items for which we made adjustments to U.S. price (i.e.,
movement expenses). However, we do not agree with respondents that
items such as commissions, export sales expenses, insurance, and
royalties should be excluded from our calculation of SG&A and overhead.
All of these factors contribute to the SG&A and overhead ratios of
Indian steel producers; therefore these items (i.e., commissions,
export sales expenses, insurance, and royalties) have been included in
our SG&A calculations for the final determination. However, we have not
included, in our calculations of SG&A and overhead values, items for
which we made adjustments to U.S. price. To the extent possible, we
only deducted from U.S. price such items such as movement expenses. For
all five respondents, we deducted brokerage and handling from U.S.
price. In addition, we deducted from U.S. price, insurance related to
export sales for two respondents.
Respondents claim we should exclude commissions, export sales
expense, insurance, and royalty and ``cess'' as direct selling expenses
for SAIL. Likewise, they claim we should exclude royalty, insurance
charges, and commission/discounts as direct selling expenses for TATA.
We disagree with respondents' arguments. Because we did not exclude
such expenses from U.S. price, we are including them in SG&A.
Comment 6: Exclusion of Taxes From Overhead and SG&A
Liaoning and Wuyang also argue that the Department should not
include in its calculation of the overhead and SG&A ratios the expenses
incurred by Indian producers of steel that relate to taxes paid to
governmental authorities. They state that, in past cases, the
Department's practice has been to construct a value for the subject
merchandise as if it were manufactured by a producer in the surrogate
country for export. Pencils from the People's Republic of China, 59 FR
at 55625 (Nov. 8, 1994). Hence, they argue, in constructing values
based on Indian domestic prices, the Department must eliminate excise
duties, levies, and sales taxes from those prices, as these items are
rebated upon export from India. See Brake Drums and Rotors, 62 FR at
9163. In addition, they state that the Department has expressed a clear
preference for PAI that is tax exclusive. See Disposable Lighters from
the PRC, 59 FR at 64191, 64914 (Dec. 13, 1994); Sebacic Acid from the
PRC, 59 FR at 28053 (May 31, 1994). Therefore, they argue Commerce
should remove from the surrogate overhead and SG&A calculation any
excise duty listed in the financial reports. Brake Drums and Rotors, 62
FR at 9164.
Department's Position: We agree in part with respondents. We have
deducted all excise duties from our calculation of SG&A. However, we
have not excluded the line ``rates and taxes'' from our calculations.
These taxes represent the taxes and licenses, property taxes and other
miscellaneous taxes that Indian steel producers incur in the normal
course of business and, thus, should be a part of our SG&A surrogate
value.
Comment 7: Adjustment of Surrogate Overhead Rate
Respondents state that in the preliminary determination, the
Department adjusted the surrogate overhead rate for all Chinese
respondents who reported any workers as performing overhead or SG&A
functions that were not specifically tied to the production of subject
merchandise. Respondents argue that this adjustment was unnecessary
because (1) the surrogate overhead rate used by the Department in the
preliminary determination included overhead and SG&A labor and (2) the
Chinese respondents in this investigation properly allocated labor
between direct labor, indirect labor, factory overhead labor, and SG&A
labor.
Respondents argue that the labor adjustment made in the preliminary
determination arbitrarily and unfairly reclassified all workers working
in plants involved in the production of subject merchandise as direct
production workers, regardless of the tasks performed. Respondents
claim this unfairly penalized Chinese respondents for following normal
Departmental practice and excluding hours worked by overhead and SG&A
workers from the hours reported for production of subject merchandise.
Respondents argue that as a matter of principle and established
practice, the Department recognizes (1) that some functions performed
by workers are properly classifiable as factory overhead or SG&A
functions and (2) that the Department's normal value calculations in
non-market economy cases should include only workers involved in the
production of subject merchandise--workers performing overhead and SG&A
tasks are not to be included. See Carbon Steel Butt-Weld Pipe Fittings
from the People's Republic of China, 57 FR at 21058, 21064 (May 18,
1992) (direct labor hours for factory level administrators and workshop
level supervisors found to be factory overhead and SG&A, respectively);
Furfuryl Alcohol, 60 FR at 22544, 22548 (``Since our surrogate value
for factory overhead includes indirect labor and it is the Department's
practice to only include the production labor related to the subject
merchandise, we have revised our final calculations on labor to avoid
double counting labor.''). Respondents argue that the reason overhead
workers and SG&A workers should not be included in the Department's
calculations is that the costs of such workers are already reflected in
the surrogate overhead and SG&A rates applied by the Department to the
direct production costs incurred by the non-market economy producers.
Respondents claim that they undertook an analysis of the workers
employed in the facilities involved in the production of subject
merchandise and attempted to classify workers in a manner consistent
with the Department's request for information and the Department's
practice. Respondents state that in the questionnaires issued by the
Department in this investigation, the Department required Chinese
respondents to report labor hours for ``direct, skilled workers,''
``direct, unskilled workers,'' and ``indirect workers''--yet never
provided specific (or even illustrative) instructions regarding how
such workers should be
[[Page 61973]]
identified. They also claim the Department never provided any guidance
regarding how ``indirect'' workers were to be distinguished from
``factory overhead'' workers or SG&A workers. Respondents state that
they disclosed in their responses the rules applied by each respondent
for classifying workers, as well as a substantial amount of information
regarding the tasks performed by workers in the production facilities.
Respondents argue that, under these classification methodologies, the
dominant characteristic of workers classified as ``factory overhead''
workers is that these workers were responsible for the maintenance of
the facilities. They also argue the dominant characteristic of SG&A
workers is that they performed relatively high-level, supervisory or
administrative functions within the facilities and were not physically
involved in the production process.
Respondents claim that neither the Department nor the petitioners
have objected to the classification methodologies used by the Chinese
respondents to distinguish between direct, indirect, factory overhead,
and SG&A workers. They also claim that neither the Department nor the
petitioners have proposed any modifications or alternatives to the
methodologies used by the respondents to classify labor. Respondents
claim that, in light of these circumstances, it is fair to conclude
that the rules used by the respondents to classify labor are
reasonable. Respondents claim, in other words, that they were correct
in classifying maintenance workers as factory overhead workers and in
classifying supervisors and administrators as SG&A workers and in
excluding such workers from their reported labor hours, (i.e., labor
outside SG&A and overhead Therefore, respondents argue that any re-
classification of workers is unnecessary.
In addition, respondents argue that the Indian surrogate values for
factory overhead and SG&A rate reflect the labor cost of maintenance
and administration. Accordingly, they claim there is no reasonable
justification for ``adjusting'' (i.e., inflating) such rates to account
for maintenance workers and administrative personnel--since such an
adjustment would double-count labor expenses.
Liaoning and Wuyang reiterate that the Department should not, in
the final determination, make an adjustment to increase the surrogate
overhead value for Wuyang to account for labor resources dedicated to
overhead. They state that in its reported production expense factors,
Wuyang excluded from its ``labor'' calculation certain workers because
of the Department's policy for calculating overhead and SG&A in non-
market economy investigations. They argue that these workers can be
divided into three categories according to the relationship of their
activities to the subject merchandise: (1) activities entirely
unrelated to steel plate, in particular the activities of the
automation research and development division, which performs research
and development related to the company's consulting services in the
field of industrial automation; (2) activities generally related to all
products and services (for example, the personnel department); and (3)
activities generally related to steelmaking, in particular the
activities of the steel research and development division. They argue
with respect to category (3), to Liaoning and Wuyang's knowledge the
Department has never included R&D in the factors of production because
doing so would almost certainly double-count R&D included in the
surrogate values for factory overhead and SG&A. See, e.g., Oscillating
Fans, 56 FR at 55271 (Commerce Department agreed with Respondent that
product development and manufacturing liaison costs are not direct
manufacturing costs to be included in the factors of production and
that these costs are properly valued using surrogate country data for
factory overhead). They state that because surrogate overhead and SG&A
values already include R&D expenses, the overhead value would double-
count R&D if the Department were to include Wuyang's R&D labor in the
factors of production. They also argue that the Department has
established an explicit policy in NME cases of not adjusting the
surrogate values for R&D expenses under any circumstances. In Chrome-
Plated Lug Nuts from China, for example, a respondent requested the
Department to exclude R&D expenses from the surrogate value for factory
overhead on the ground that the respondent did not actually incur R&D
expenses. They claim that the Department refused to exclude the R&D,
citing the Department's policy not to make an ``item-by-item evaluation
of overhead components.'' 61 FR at 58514, 58517 (November 15, 1996),
citing Pure Magnesium and Alloy Magnesium from the Russian Federation,
60 FR 16440 (March 30, 1995) and Tapered Roller Bearings from Hungary,
52 FR at 17428 (May 8, 1987). They state that the Department reiterated
this policy in Heavy Forged Hand Tools from China, 61 FR 46443
(September 3, 1996), when the Department refused to deduct R&D expenses
from surrogate overhead values based on data published in the April
1995 Bulletin of the Reserve Bank of India, the same source upon which
petitioners relied in their petition to calculate factory overhead.
Liaoning and Wuyang conclude that given the nature of the overhead
and SG&A activities described above and the Department's established
policy in NME cases, Commerce should not reallocate any of Wuyang's
overhead labor to the labor valued directly based on factors of
production. In the alternative, they argue that if Commerce does adjust
the surrogate overhead value to account for ``additional labor,''
however, then Commerce also should (1) make all necessary corresponding
adjustments to Wuyang's energy consumption factors, because Wuyang
allocated its energy consumption based on its reported labor hours; and
(2) exclude ``other manufacturing expenses,'' ``other expenses,'' and
``miscellaneous expenses'' from the surrogate overhead and SG&A values
to avoid double counting labor expenses.
Petitioners state that this issue is not relevant to the final
determination unless the Department again chooses to rely on a source
for the surrogate value for overhead that does not include labor, such
as the Bulletin of the Reserve Bank of India data. However if this is
the case, petitioners argue the Department should make an adjustment
along the same lines as the one made in the preliminary determination
because the Department's methodology is sound.
Petitioners claim that respondents' criticism of the Department's
approach rests on several false premises: (a) that the values from the
Reserve Bank of India Bulletin already included labor; (b) that
overhead and SG&A workers are not to be included in the Department's
calculations; (c) that the Department's labor adjustment to overhead
arbitrarily and unfairly reclassified all workers working in plants
involved in the production of subject merchandise as direct production
workers, regardless of the tasks performed; and (d) that the Department
would have acted differently had it understood that not all respondents
had allocated a majority of their workers to overhead and SG&A.
Petitioners also argue that normal value in NME cases always
includes a component for overhead and SG&A. Petitioners state that
respondents do not seem to disagree in principle with the notion that
the labor associated with overhead belongs in the surrogate value for
overhead. Petitioners argue that it then becomes a factual question of
[[Page 61974]]
whether such labor is, or is not, included in the surrogate data.
Petitioners argue that labor is not included in the surrogate overhead
value calculated from the Reserve Bank of India Bulletin.
Finally, petitioners argue, respondents are wrong in focusing on
the Department's statement in the preliminary determination that
respondents allocated a majority of the labor employed in their
facilities to overhead and selling and general administrative tasks.
Petitioners argue it is plain from the preliminary calculation
memoranda that the Department's decision to adjust overhead for labor
was not dependent on a respondent allocating a ``majority'' of its
workers to overhead and SG&A.
Petitioners argue that respondents have presented no cognizable
basis for challenging the Department's practice of adjusting the
surrogate overhead value for labor where such value does not already
include overhead labor. Petitioners state that if, in the final
determination, the Department uses a surrogate overhead value other
than the value derived from the Reserve Bank of India Bulletin, and if
that alternative value likewise does not include all overhead labor, a
similar adjustment should be made.
Department's Position: Because the Department is now using a simple
average of the annual reports of SAIL and TATA, rather than the Reserve
Bank of India Bulletin, to calculate our surrogate overhead and SG&A
values the question of whether or not the data in that publication
included overhead labor is now moot. We agree with petitioners that to
the extent that our new surrogates do not include overhead or SG&A
labor, adjustments to these values are appropriate.
SAIL's annual report explicitly states that ``employee remuneration
and benefits'' are not included in the overhead category ``repairs and
maintenance.'' Nor is there any indication that ``employee remuneration
and benefits'' would be included in the following overhead categories:
``stores and spares,'' ``joint plant committee,'' ``insurance,''
``rent,'' ``royalty and cess,'' ``cash discount,'' ``conversion
charges,'' or ``water charges.'' However, ``handling expenses,'' which
is broken down into handling of raw materials, finished goods, and
scrap recovery, would appear to consist entirely of overhead labor. In
addition, there are SG&A categories that appear to account for SG&A
labor, such as, ``directors fee,'' ``remuneration to auditors,'' ``cost
audit fee,'' and ``miscellaneous.'' It is also likely that the
following SG&A categories contain some labor: ``export sales expense,''
``security expenses,'' ``traveling expenses,'' ``training expenses.''
Therefore it appears that the surrogate overhead and SG&A values
calculated from SAIL's annual report contain overhead and SG&A labor.
TATA's annual report also explicitly states that overhead items
``stores consumed,'' ``repairs to buildings,'' ``repairs to
machinery,'' and ``relining expenses'' exclude amounts charged to wages
and salaries. There is no indication that the other overhead
categories, ``rents,'' ``royalty,'' ``insurance charges,'' ``joint
plant committee funds,'' ``conversion charges,'' and ``depreciation''
include overhead labor. TATA's material handling charges appear to be
included with freight charges in the category ``freight and handling
charges'' which we allocated to COM as they are part of TATA's cost. We
have no way of determining how much of this figure should be allocated
to handling charges, and thus, to overhead. Therefore, we are including
the entire amount in COM. With regards to SG&A labor, the annual report
indicates that managerial remuneration is included in the SG&A category
``other expenses.'' Therefore, it appears that the surrogate overhead
and SG&A values calculated from TATA's annual report contain SG&A
labor, however, it is inconclusive whether or not it contains overhead
labor.
As stated above, the Department's surrogate SG&A and overhead
values are based on a simple average of the values calculated from the
annual reports of TATA and SAIL. Therefore, since both the annual
reports clearly contain SG&A labor, it is not necessary for the
Department to make an adjustment to our SG&A surrogate value to account
for SG&A labor.
As mentioned above, the overhead surrogate value calculated from
SAIL's annual report does contain overhead labor, however it is
inconclusive whether the overhead surrogate value calculated from
TATA's annual report contains overhead labor. Therefore, our simple
average of the two contains some overhead labor but it is not clear
whether it contains sufficient overhead labor. To ensure that no double
counting occurs, the Department is faced with the options of (1)
excluding from its calculation of overhead all SAIL and TATA income
statement line items that might include overhead labor and making a
similar overhead adjustment as in the preliminary determination (in the
preliminary determination, the Department adjusted the overhead
surrogate value using ratios developed from respondents reported
overhead and direct workers), or (2) leaving the overhead surrogate as
calculated and not making the overhead labor adjustment. The Department
considers it more reasonable to leave the overhead surrogate as
calculated. The Department fears that excluding all categories that
might include overhead labor would unfairly exclude many costs that
should be included in our overhead surrogate. Therefore, given the
Department's new surrogate values for SG&A and overhead, we did not
make any adjustments for overhead or SG&A labor in the final
determination.
Comment 8: Overhead Energy Adjustment
Respondents argue that the Department's overhead energy adjustment
was unnecessary and improper in the context of this investigation,
because (1) virtually all energy used by the Chinese respondents is
already included in the Department's normal value calculation, and (2)
the calculation used by the Department bears no relationship to any
reasonable ``overhead energy'' costs incurred in the production of
subject merchandise. Respondents state that the only energy inputs
treated as overhead by the Department were water, compressed or forced
air, and steam. Respondents claim that each of the overhead energy
items is relatively inexpensive so the overall cost of ``overhead
energy'' is negligible. They argue no adjustment is necessary in the
final determination.
Respondents argue that the adjustment used by the Department in the
preliminary determination was arbitrary and improper. They claim the
costs calculated using this methodology bear no relationship to any
reasonable cost of overhead energy. They contend that the purpose of
the overhead energy adjustment made in the preliminary determination
was to include a portion of overhead that was apparently missing from
our selected surrogate. The Reserve Bank of India Bulletin overhead
data does not contain any items that would lead the Department to
believe that overhead energy was accounted for. They claim there is no
reasonable basis to believe the adjustment used by the Department would
provide a reasonable estimate of the costs of providing water, steam,
and compressed air to the steel production facilities of the Chinese
respondents and therefore should not be used in the final
determination.
Petitioners argue that, had the Department not made some kind of
adjustment for the omission of power and fuel from the overhead
calculation, it would have improperly ignored respondents' overhead
energy costs.
[[Page 61975]]
Petitioners argue there is no support on the record for respondents'
belated claim that these costs are ``negligible'', because they have
not been reported. Petitioners state that the point of the adjustment
is to develop a reasonable estimate of the overhead energy costs of
producers of plate in the surrogate country. Petitioners do agree that
the methodology used by the Department is arbitrary, but the solution
proposed by respondents (i.e., ignoring the issue altogether) is not
adequate. Instead, petitioners claim if the Department continues to use
data from the Reserve Bank of India Bulletin for overhead, the energy
adjustment should be accomplished by other means. Because the record
data from Indian sources does not allow the Department to precisely
distinguish overhead energy from direct energy inputs used in the steel
industry, petitioners argue the Department should develop a ratio from
the cost accounting data provided by Geneva Steel in the petition.
Consistent with the usual cost accounting practices of the steel
industry, petitioners argue the petition separately sets forth direct
energy inputs and overhead energy consumption. From this information,
petitioners suggest the Department can determine the ratio of Geneva's
overhead energy costs to direct energy costs. Petitioners argue that
the surrogate value for overhead should be increased by an amount equal
to the above ratio times the individual respondent's total surrogate
costs for direct inputs of fuels, utilities, and gases.
Petitioners point out that, like the adjustment to overhead for
additional labor, the overhead energy adjustment is largely a function
of the Department's choice of the source for the overhead surrogate
value. Petitioners argue that regardless of the Department's choice of
overhead surrogate value in the final determination, it should
carefully examine whether overhead energy is included; if it is not,
the Department should make an overhead energy adjustment similar to the
one just described.
Department's Position: We agree with petitioners that this issue is
tied to the Department's choice of the source for the overhead
surrogate value. As discussed above, we have chosen a simple average of
the annual reports of SAIL and TATA as the source for the overhead
surrogate value. We then examined whether overhead energy was included
in the overhead values reported in those reports. Using a methodology
similar to that used in the preliminary determination, we excluded the
categories ``power and fuel,'' ``fuel oil consumed,'' and ``purchase of
power'' from our value for overhead since we are valuing these items as
direct inputs. For SAIL, we included in our overhead calculation the
item ``water charges'' since the Department normally treats water as an
overhead expense. In addition, we consider it likely that additional
overhead energy is included in the overhead item ``stores and spares.''
We allocated the item ``stores and spares'' to overhead. For TATA,
there is no item that is entirely comprised of overhead energy.
However, we consider it likely that some overhead energy is included in
the overhead item ``stores and spares.''
As with our calculation of overhead labor described in Comment 7,
the simple average of SAIL's and TATA's calculated overhead values
contains some overhead energy but it is not clear whether it contains
sufficient overhead energy. To ensure that no double counting occurs,
the Department is faced with the options of (1) excluding from its
calculation of overhead all SAIL and TATA income statement line items
that might contain overhead energy and making an appropriate overhead
energy adjustment, or (2) leaving the surrogate overhead value as
calculated and not making an adjustment for overhead energy. The
Department considers it more reasonable to leave the overhead surrogate
as calculated. As with labor, the Department fears that excluding all
categories that might include overhead energy would unfairly exclude
many costs that should be included in our overhead surrogate.
Therefore, given the Department's new surrogate value for overhead, we
did not make any adjustment for overhead energy in the final
determination.
Comment 9: Credit for By-Products
Respondents argue the Department must credit respondents' cost of
manufacture for by-products before applying the factory overhead rate
in the final determination. They argue that in the preliminary
determination, the Department treated costs and credits asymmetrically
by deducting by-products from the cost of manufacture after applying
the factory overhead rate and without including factory overhead in its
calculations of by-product credits.
Department's Position: We agree with respondents. In calculating
the cost of manufacture, the Department uses a net material amount that
we derive by deducting the by-products from gross materials. Therefore,
we credit by-products before we calculate the cost of manufacture and
overhead.
Comment 10: Treatment of Gases
Respondents argue that the Department should treat industrial gases
as overhead for the final results. Respondents argue that, in deciding
whether to treat industrial gases as overhead or direct material
inputs, the fundamental issue is how such materials are treated by
Indian steel producers. Respondents state that if the standard practice
for Indian firms is to treat industrial gases as overhead, then those
values must already be included in the surrogate value for factory
overhead that the Department is using. Respondents claim that, if this
is the case, including industrial gases as a direct input as well as in
overhead would result in double-counting.
Respondents argue that a review of the financial information of
Indian steel producers on the record reveals that the standard practice
for Indian steel companies is to include industrial gases as part of
factory overhead. Respondents claim that none of the annual reports of
Indian steel companies provided in this investigation treated
industrial gases as either a material input or an energy source. Thus,
respondents argue, including the cost of those gases as a direct input
in the final calculations would double-count those costs.
Petitioners argue that industrial gases used in iron and steel
making should be treated as direct energy inputs, and not as overhead.
Petitioners state that unless a gas is used specifically for overhead
energy (e.g., to heat a facility) it should not be characterized as
overhead. Petitioners argue that gases such as oxygen are important
inputs in the steel making process, serving both as refining agents and
as an energy source. Petitioners argue that valuing these gases as
direct inputs would not result in double-counting as respondents claim.
Petitioners state that worksheets provided by the Department in its
Factor Valuation Memorandum show that these energy inputs are not
included in factory overhead (Commerce specifically excluded ``power
and fuel'' expenses before it calculated the overhead rate for the
preliminary determination). Accordingly, petitioners argue there is no
double counting.
Petitioners argue that the respondents' contention that the
standard practice for Indian steel companies is to include these energy
inputs as part of factory overhead is incorrect. Petitioners claim that
respondents' statement that ``none of the annual reports * * * treated
industrial gases as either a material input or an energy source'' is
incorrect. Petitioners argue that the listing for
[[Page 61976]]
``Others'' in the power and fuel cost of SAIL most likely includes
industrial gases. Petitioners argue that neither SAIL's annual report
nor TATA's provides any information which supports respondents'
contention that industrial gas inputs should be included in factory
overhead.
Petitioners state that Indian accounting practices actually require
that energy inputs be treated as direct inputs. They argue that in
Brake Drums and Rotors, the Department found that, under Indian GAAP,
inputs may be treated as factory overhead only if they are not consumed
in the production process. See 62 FR at 9160, 9169 (citing the
Compendium of Statements and Standards published by the Institute of
Chartered Accountants of India). Petitioners argue that in this case
there can be no dispute that these energy inputs are consumed in the
production process. Accordingly, petitioners argue that respondents'
arguments regarding the inclusion of energy inputs in factory overhead
should be rejected.
Department's Position: We agree with petitioners. There is no
indication in the annual reports of SAIL and TATA that they treat
industrial gases as overhead energy costs. We have therefore valued
these gases as direct inputs and excluded the line items ``power and
fuel,'' ``fuel oil consumed,'' and ``purchase of power'' from our
overhead calculations to ensure that no double counting of these costs
occurs.
Comment 11: Valuation of Self-Produced Inputs
Respondents argue the Department's primary goal and responsibility
in selecting surrogate values in investigations involving producers in
a non-market economy (NME) is to determine--as accurately, fairly, and
predictably as possible--the costs that would have been incurred in
producing the subject merchandise if the costs of such production had
been determined by market forces. See Oscillating Fans, 56 FR at 55271,
55275, cited with approval in Lasko, 43 F.3d at 1442. To do so, the
Department requires respondents to report the actual inputs they use in
the production of the subject merchandise, and then values those inputs
at the price for those inputs in a comparable market economy. In this
case, the Department is calculating a normal value for steel plate
based on the actual inputs used by the Chinese producers to manufacture
steel plate and the values for those inputs primarily in India.
Respondents claim that the same rationale that leads the Department
to calculate normal value for steel plate based on the actual factors
of production also requires that it use a similar methodology for self-
produced inputs (such as oxygen, nitrogen, argon and similar gases) ``
at least when the necessary information is available on the record. In
this case, respondents argue the Department does have verified
information on the actual inputs used to produce the oxygen, nitrogen,
argon and similar gases that are used in steel plate production by
Anshan, Baoshan, Shanghai Pudong and WISCO. Respondents argue the
Department should therefore calculate the value for those gases based
on the actual inputs.
Respondents state that in the preliminary determination, the
Department ignored the actual inputs used to make these gases, and
instead valued these gases based on price quotations for such gases in
India. Respondents claim such an approach would be appropriate only if
the Department were to assume that it is more accurate to use the
prices in India for those gases than to build up the values for those
gases from the actual inputs used to produce them. Respondents claim
that assumption is flatly inconsistent with the entire methodology used
in non-market-economy cases, and cannot be correct. Respondents argue
that, if previous assumption were correct, then it would follow that
Commerce should value steel plate based on price quotations from Indian
suppliers rather than to build up a normal value based on the actual
factors of production used in manufacturing steel plate.
Petitioners argue that the values assigned to industrial gases used
by respondents should be based on Indian surrogate values and not
respondents' factors of production for these gases. Petitioners claim
that the respondents' factors of production cannot be used by the
Department because they are inherently unreliable. Petitioners argue
that it is only where the Department can determine that a non-market
economy producer's input prices are reliable that accuracy, fairness
and predictability are enhanced by using those input prices. See
Oscillating Fans, 56 FR at 55271 and 55274-75.
Petitioners claim that respondents used the Department's August 18,
1997 request for spreadsheets used in calculating the factors of
production as a chance to cure existing deficits in the record
regarding respondents' industrial gas production by submitting complete
factor of production data for ``certain'' gases. Petitioners claim it
would be unfair for the Department to use this mostly unverified data
to calculate factors of production for industrial gases because
petitioners have not been afforded the opportunity to comment on these
data and the Department did not have ample opportunity to consider
whether to verify the data pertaining to industrial gases.
Petitioners argue that respondents did not, as they contend, submit
complete factor information for the industrial gases used in the
steelmaking processes in their questionnaires or supplemental
questionnaires. Petitioners claim that the cites to questionnaire and
supplemental questionnaire responses did not adequately identify the
data necessary to sustain respondents' contention that they produce all
of the industrial gases they use. Petitioners also argue that the
Department's findings at verification regarding gas usage and
production by respondents further calls into question the reliability
of respondents' industrial gas production factor information. In
addition, petitioners argue that respondents have not put any
information on the record regarding the ownership of their gas plants.
For these reasons, petitioners argue that the respondents' factors of
production for these gases are unreliable and should not be used for
the final determination.
Department's Position: We agree that, for some respondents, the
value of the subject merchandise in this case is more accurately
measured if the self-produced gases are valued based on the actual
inputs used to make these gases.
In NME cases, the Department selects the surrogate values that
reflect best the costs that would have been incurred in producing the
subject merchandise if the costs of such production had been determined
by market forces. It is the Department's practice to collect data on
all direct inputs actually used to produce the subject merchandise,
including any indirect inputs used in the in-house production of any
direct input.
To accurately value all direct and indirect inputs, the Department
requires sufficient time to analyze usage rates and select appropriate
surrogate values. It is also important that interested parties have the
opportunity to comment on the reported usage rate and surrogate value
proposed by the Department. For these reasons, it is important that the
Department receives the respondents in a timely manner. In the instant
case, although WISCO claimed that the inputs for the production of this
gas were reported in its April 14, 1997 submission, the actual
information was not submitted until seven days before the verification.
The later submission was untimely because the Department had
specifically
[[Page 61977]]
requested that information and provided a deadline which was more than
two months earlier. The fact that this information was verified does
not commit the Department to consider it timely in its final
determination.
Similarly, Baoshan's April 14, 1997 supplemental response claimed
to have reported the inputs used in self-producing a certain gas, but
the actual data were absent from the specified appendix. Baoshan claims
that data on this gas and its material inputs can be found in a
different appendix and this information was verified. However, that
appendix responds to the Department's question on energy consumption
and contained a Baoshan Energy Department report for only the month of
July. Furthermore, no labor factors involved in the self-production of
oxygen are included on the worksheet. The Energy Department report was
later verified for the integrity of the reported energy consumption
rather than for production of this gas. Not until Baoshan's August 21,
1997 submission, which reached the Department after verification, did
Baoshan provide, in a usable format, the complete factors for the gas
it self-produces.
The Department is rejecting WISCO and Baoshan's production data for
their self-produced gases due to untimeliness and lack of consistency.
For WISCO and Baoshan, therefore, we are continuing to use the Indian
surrogate values that were used for the preliminary determination for
their self-produced gases.
Anshan reported gases which were self-produced and their production
inputs. Shanghai Pudong reported three factors as being as self-
produced and provided their inputs. For these two respondents, the
Department used their reported production inputs for valuing the
factors for producing the subject merchandise.
We disagree with the petitioner's claim that the verification of
the self-produced gases showed them to be unreliable for Anshan and
Shanghai Pudong. These data were submitted on the record in a timely
fashion and were verified. The verification report contains no mention
of discrepancies in these data.
Comment 12: Domestic Inland Freight Expenses
Liaoning and Wuyang maintain that if the Department uses Indian
Monthly Statistics to derive surrogate values for raw material inputs,
it should not add to these costs an extra amount for domestic inland
freight expenses. Respondent argues that in Sigma Corporation v. the
United States, 117 F.3d 1401 (Fed. Cir. July 7, 1997) (``Sigma''), the
U.S. Court of Appeals for the Federal Circuit (``CAFC'') ruled that to
do so would overstate the value of the freight component of normal
value. In making its decision, they argue, the Court determined that
the Department's methodology of adding a constructive freight charge on
top of the import prices double counted a substantial component of the
total freight expense. These respondents conclude that the Court's
holding in Sigma is applicable to this case, and if the Department uses
Indian Monthly Statistics to derive surrogate values for raw material
inputs, it should not add a constructive freight charge on top of these
prices for the shipment of such raw materials from Chinese suppliers to
the respondents in this investigation.
Petitioners argue that, in Sigma, the CAFC did not preclude the
Department from making an adjustment to account for domestic freight.
Petitioners argue that, to the contrary, the Court expressly determined
that the Department must devise an appropriate methodology to account
for the freight component without double counting. Petitioners add that
it is obvious that, depending on distances and modes of transportation,
the domestic freight expense to transport an input from a supplier in
China to the producer of the subject merchandise can be considerably
greater than the freight included in the Indian Monthly Statistics.
Petitioners maintains that, as the Sigma Court recognized, the
Department had a statutory duty to select a methodology that produces
``reasonably accurately estimates of the true value of the factors of
production.'' Petitioners conclude that this includes a proper
accounting of the domestic inland freight and that, accordingly, the
Department should devise an appropriate methodology to account for the
freight charges from the Chinese suppliers of the input to Wuyang's
factory without double counting.
Department's Position: We agree with petitioners and, in part, with
respondents. The CAFC's decision in Sigma requires that we revise our
calculation of source-to-factory surrogate freight for those material
inputs that are valued on CIF import values in the surrogate country.
The Sigma decision states that the Department should not use a
methodology that assumes import prices do not have freight included and
thus values the freight cost based on the full distance from domestic
supplier to producer in all cases. Accordingly, as in the Notice of
Final Determination of Sales at Less Than Fair Value: Collated Roofing
Nails from the People's Republic of China, 62 FR at 51410 (October 1,
1997) (``Nails''), we have added to CIF surrogate values from India a
surrogate freight cost using the shorter of the reported distances from
either the closest PRC port of export to the factory, or from the
domestic supplier to the factory. Where the same input is sourced by
the same producer from more than one source, we used the shorter of the
reported distances for each supplier.
Comment 13: Regression Based Analysis
Some respondents argue that the Department should use its
regression-based analysis to value labor. Respondents argue that the
Department's current policy, as stated in its revised regulations, is
to use a regression-based wage rate, in order to achieve a fairer, more
accurate, and more predictable result. Respondents state that as the
Department explained in the commentary accompanying its revised
regulations: ``[B]y combining data from more than one country, the
regression-based approach will yield a more accurate result. It also is
fairer, because the valuation of labor will not vary depending on which
country the Department selects as the economically comparable surrogate
economy. Finally, the results of the regression analysis are available
to all parties, thus making the labor value in all NME cases entirely
predictable.'' See Antidumping Duties, Countervailing Duties, 62 FR
27296, 27367 (May 19, 1997) (final rule).
Respondents argue that the Department has stated that these revised
regulations ``serve as a restatement of the Department's interpretation
of the requirements of the [Tariff] Act as amended by the URAA,'' even
in cases which are not directly governed by the new regulations. See 19
CFR Sec. 351.701. Thus, respondents argue the new wage rate methodology
set forth in the revised regulations (and in the Department's June 2,
1997, Policy Memorandum) should be applied in this case.
Petitioners argue the Department should reject the suggestion that
labor inputs should be valued using the new regression-based
methodology described in the Final Rule. Petitioners claim that: (1)
unless the regression model is limited to data from surrogate countries
that are at a level of economic development similar to China's, the new
labor valuation methodology set forth in 19 CFR Sec. 351.701(c)(3) is
contrary to section 773(c)(4) of the Act, 19 U.S.C. 1677b(c)(4), (2) it
fails to account adequately for labor costs other than wages, (3) by
its own terms, the new regulation does not apply to this investigation,
(4) it has not been the
[[Page 61978]]
Department's practice to use the regression methodology in NME cases
initiated prior to the effective date of the new regulations; and (5)
the new regression model has not yet been published in accordance with
the requirements of the Administrative Procedure Act.
Petitioners also urge the Department not to use the labor cost
methodology used in the preliminary determination. Petitioners state
that, in the preliminary determination, the Department applied a single
labor rate for the three levels of labor (skilled, unskilled and
indirect) that all respondents used in calculating their labor factors.
They state that in this case, the Department used data from the
Ministry of Labour, Government of India Annual Report 1994-95 which
contains 1990-91 data for the average labor cost in rupees per man-day
worked for the ``Basic Metals and Alloys Industries.'' Petitioners
argue that the labor data found in the Report and used by the
Department in its preliminary determination are aberrational. First,
they note that these data are approximately six years old. Second, they
point out that the Report does not provide any information as to which
industry sectors or companies are included in the category ``Basic
Metal and Alloys Industries.'' Third, they argue that the methodology
used by companies or industry associations to obtain the data submitted
to the Ministry of Labour and compiled for its Report is unknown. As a
result of the above, petitioners argue that it is not clear whether the
labor rate provided in the Report closely reflects the average labor
rate paid by a large integrated steel producer in India.
Instead of the regression-based model described in its new
regulations or the approach used in the preliminary determination,
petitioners argue that the Department should instead use a labor
surrogate value methodology based on data provided in TATA and SAIL's
1995-1996 Annual Reports to calculate a surrogate labor value.
Petitioners claim that a labor factor value based on the actual wages
paid to the employees of a large integrated steel producer in the
surrogate country is a more accurate means of calculating the labor
value than either of the two approaches previously described.
Furthermore, petitioners argue that use of a labor value calculated
from SAIL and TATA financial information would be consistent with the
use of COM, SG&A and profit values derived from annual reports of these
companies.
Liaoning and Wuyang argue that, as a surrogate value for labor,
Commerce should use the average labor cost per man-day worked for the
Basic Metal and Alloys Industries as reported in the Ministry of Labour
Government of India Annual Report 1994-95, which Commerce used in the
preliminary determination. They claim Commerce should not calculate the
surrogate labor value using data contained in the financial statements
of Indian producers of steel as recommended by petitioners because such
a methodology is both unreasonable and unreliable.
First, they argue that the salary and wage data listed in the
Indian financial statements include high remuneration for company
management personnel and other salaried workers, rather than being
specific to line production workers, which is the group for which a
surrogate labor valuation is sought. They claim the calculation of any
surrogate labor rate based on such figures therefore would grossly
inflate the Indian labor rate for production workers in the steel
industry.
Second, they argue that any relationship between the annual
expenditure of a company for wages, salaries, etc. and the absolute
number of employees of any given day during the year is entirely
speculative. They state that the Indian steel producer financial
statements on the record provide information regarding yearly employee
remuneration and benefit amounts, but none of the financial statements
provides specific information regarding (1) the number of labor hours
worked at each company during the year, (2) the number of different
employees paid during the year, (3) whether such employees worked
overtime, and (4) whether such employees were paid an additional amount
for overtime worked.
Finally, they argue that the record evidence provides no support
whatsoever for petitioners' assertion that the employee remuneration
paid by SAIL in 1995-96 corresponds only to the 187,504 persons
reported as employees on March 31, 1996. They state that the data
provided by petitioners vis-a-vis TATA are even more tenuous, since
there is no support for their assumption that the total number of
employees reported in the 1997 Iron and Steel Works of the World
publication is accurate or even related to TATA's 1995-96 fiscal year.
These questions, they argue, render unusable petitioners' suppositions
as to the number of workers employed by each company, and the possible
number of hours worked each day by company employees.
In comparison, Liaoning and Wuyang argue that the Report used by
Commerce in the preliminary determination includes figures that are
representative of the entire Indian steel industry, including both
large companies and small, and provides labor cost data specific to
production line workers. In addition, they state that, as noted in the
Commerce Department's factor valuation memoranda, the labor rate
provided in the Report is inclusive of wages and salaries, all types of
bonuses, money value of benefits in kind, old age benefits, maternity
benefits, social security charges, family pension, retirement benefits,
and other group benefits. They argue that unlike the unsubstantiated
figures calculated by petitioners, the Ministry of Labour values are
not distorted by conjecture regarding such factors as the number of
employees, man days worked, the inclusion of overtime hours. Therefore,
they claim Commerce should continue to value labor in the final
determination using the average labor cost per man-day worked for the
Basic Metal and Alloys Industries from the Report, which Commerce did
in the preliminary determination.
Department's Position: We agree with Liaoning and Wuyang. Because
the regulations applicable to this investigation do not dictate a
particular approach to selecting surrogate value for labor, the
Department has the discretion in choosing a method of valuing labor.
However, it has not been our practice to use the regression-based labor
rate developed in the new regulations initiated prior to issuing these
new regulations. Because we have not elected to use the regression
analysis approach, we need not address all of the arguments concerning
this methodology. We also disagree with petitioners' proposal to use
the financial statements of SAIL and TATA. These statements include
high wages for company management personnel and other salaried workers,
and thus are not specific to direct and other production labor. Also,
the financial statements only report aggregate labor costs and do not
provide information regarding the number of labor hours and thus we
could not determine a labor rate for these companies.
Comment 14: Labor Factors
Anshan, Baoshan, Shanghai Pudong and WISCO state that, throughout
this investigation, petitioners have contended that the data on labor
usage submitted by the Chinese respondents must be compared to
information in PaineWebber's World Steel Dynamics. Respondents state
that petitioners claim that any differences between information
reported by the respondents and the information contained in World
Steel Dynamics is to be treated as
[[Page 61979]]
evidence that the Chinese respondents are reporting their information
inaccurately is without merit. Anshan, Baoshan, Shanghai Pudong and
WISCO state that the labor hours reported are the result of a detailed
analysis of the companies' labor forces, based on the Department's
reporting requirements. Anshan, Baoshan, Shanghai Pudong and WISCO
argue the source documents and methodology used to derive these figures
were examined in detail by the Department during verification, and no
significant discrepancies were found. Therefore, they argue, these data
have been shown to be reliable.
By contrast, respondents argue, the source of the information in
World Steel Dynamics is unknown, the methodology used by World Steel
Dynamics to derive that information is not explained, and the figures
reported in World Steel Dynamics have not been verified. Respondents
claim that, in these circumstances, the labor usage figures reported in
World Steel Dynamics have no probative value at all. Respondents argue
that data from this service certainly do not provide a reasonable basis
for disregarding the verified information reported by respondents.
Department's Position: We agree with respondents. We verified all
of the respondents' reported labor factors and we noted no major
discrepancies. In light of these facts, we have no reason to believe
that the labor factors they provided in their questionnaire have been
misreported.
Comment 15: Valuation of Limestone, Dolomite and Quicklime
Anshan, Baoshan, Shanghai Pudong and WISCO argue that, in the final
determination, the Department should value limestone and dolomite based
on domestic Indian prices, rather than on Indian Monthly Statistics.
Respondents argue that domestic Indian prices for limestone and
dolomite are preferable because (1) it is Department policy to use
domestic, tax-exclusive prices where possible; (2) due to the low
market value of limestone, limestone is ordinarily obtained
domestically; and (3) import values used for limestone and dolomite are
aberrational when compared to the domestic prices submitted for these
values. Respondents claim that the Department incorrectly used, as the
surrogate value for dolomite, price information for ``calcined''
dolomite, although the dolomite inputs used by respondents are
``uncalcined.'' Furthermore, the value for quicklime, respondents
contend, should be the same as the value for limestone because the two
products are comparable. They contend that petitioners' argument (see
below) is internally inconsistent and should therefore be disregarded.
Liaoning and Wuyang argue that the Department should base the
surrogate values for these raw material inputs on data contained in the
financial statements of Indian producers. See Brake Drums and Rotors,
62 FR at 91631 (Feb. 28, 1997). They state that, following its normal
practice, Commerce should derive tax-exclusive surrogate values by
deducting from the raw material costs all excise taxes, central sales
taxes, and state sales taxes. See Public Version of the Factor
Valuation Memorandum from Brake Drums and Rotors, at 2 (Feb. 21, 1997)
(Commerce ``adjusted the domestic average value to exclude the excise
and sales tax'' and ``accepted the four-percent sales tax as a
conservative estimate of Indian state sales tax and have deducted
amounts for sales taxes'' at that rate). They argue a simple average
tax-exclusive surrogate value should be calculated for materials for
which data exists from more than one company.
In their case brief, petitioners maintain that the import values
used in the preliminary determination are accurate surrogate values for
limestone and dolomite sourced domestically by some of the respondents,
because certain other Chinese steel producers imported limestone and
dolomite for use in the production process. Petitioners agree with
respondents that it is the responsibility of the Department to find
surrogate values which reasonably reflect the economic conditions faced
by Chinese producers of cut-to-length carbon steel plate. See
Oscillating Fans, 56 FR at 55271, 55275. Therefore, petitioners contend
that it is reasonable for the Department to use surrogate import raw
material input sources when Chinese producers also import the same.
However, in their rebuttal brief, petitioners urge the Department
to use adverse facts available in valuing limestone, claiming that
respondents failed to provide complete and truthful answers to the
Department's questionnaires with regard to the source of supply for
these inputs. Should the Department agree to apply adverse facts
available, petitioners suggest that it rely on the data of an Indian
producer of subject merchandise, SAIL, because this data constitutes
both the highest value on the record, as well as the most reliable and
appropriate surrogate value under the Department's precedent.
Petitioners urge the Department to value dolomite with the same
value that it assigned to limestone. Petitioners argue that
respondents' claim that the proper surrogate value for dolomite is for
``uncalcined'' dolomite is without merit, because there is no evidence
provided by the respondents or otherwise that their dolomite inputs are
uncalcined. In addition, petitioners refute respondents' claim that
dolomite and limestone should be valued as ``crushed stones''
(Respondents PAI Memorandum, August 5, 1997). According to petitioners,
evidence on the record shows that crushed stones are not pure enough
for use in metallurgy.
For quicklime, petitioners argue that the Department should
separately value limestone and quicklime, as was done in the
preliminary investigation . However, they maintain that should the
Department decide to value the two products with the same surrogate
value, the Department should use SAIL's value for limestone and
quicklime.
Department's Position: We agree with the petitioners in part. The
surrogate value for limestone in the preliminary determination was
based on the Indian import price. We find that this value is the most
representative of the prices for limestone during the POI because the
domestic prices submitted by respondents appear to be significantly
lower than both the Monthly Statistics and data from Indian steel
producers that was submitted by petitioners. In addition, because we
are unfamiliar with India 1995: A Reference Annual, we hesitate to give
it greater weight as a source for limestone value than we give to the
Monthly Statistics, which we have frequently used for valuation
purposes and have no reason to believe is not reliable with respect to
this input. We also agree with petitioners that some companies import
limestone and that this provides support for the use of appropriate
import data to value limestone. For the final determination, we are
relying on the same surrogate value used in the preliminary
determination. We reject petitioners' argument that we should apply
adverse facts available for limestone based on what petitioners believe
to be uncooperative behavior on the part of one company, because there
is no evidence on the record to support their assertion that one
company did not act to the best of its ability to provide certain
information concerning limestone to the Department.
We agree with respondents that limestone and quicklime are
comparable products, based on our review of the Monthly Statistics.
However, we have decided that the difference between them is too
significant to value quicklime based on the surrogate for limestone. We
therefore agree with
[[Page 61980]]
petitioners that we should value the two products based on their
individual values as reported in Monthly Statistics.
With respect to dolomite, we agree that limestone and dolomite,
though separate products, are of comparable value. We have determined
that the Monthly Statistics upon which we relied in the preliminary
determination are obviously aberrational because the value from the
source which we used in the preliminary determination (a value for
``calcinated'' dolomite) is approximately ten times the value of
limestone. In contrast, based on our examination of Indian steel
producers' data, we find that the value of the dolomite they use (which
is not identified as either ``calcinated'' or nor ``calcinated'') is
generally significantly lower than that of the limestone they use.
Therefore, for the final determination, we determined that the value
for ``agglomerated'' dolomite in the Indian Monthly Statistics is
comparable to that for limestone in the same source. Therefore, we are
using the Monthly Statistics value for ``agglomerated'' dolomite to
value dolomite in the final determination.
Comment 16: Basket Categories--Coal and Iron Ore
Anshan, Baoshan, Shanghai Pudong and WISCO contend that the
Department's decision to use a single surrogate value for all coal and
iron ore inputs in the preliminary determination was faulty and suggest
that the Department instead assign different values for each kind of
coal and iron ore input used in the production process.
For coal, they argue that the Department's practice has
traditionally been to base its surrogate values on the prices in the
surrogate country for materials which most closely reflect the specific
grade and chemical composition of the type of input used by the NME
producer. See Certain Helical Spring Lock Washers from the People's
Republic of China, 61 FR 41994, 41996-97 (August 13, 1996) (``Helical
Spring Lock Washers''), and Heavy Forged Hand Tools from the People's
Republic of China, 62 FR 11813, 11815 (March 13, 1997). Therefore, they
contend that the Department should separately value the different kinds
of coal used in the production process. Respondents also contend that
coal should be valued and based on Indian, not Indonesian, values.
For iron ore, Anshan, Baoshan, Shanghai Pudong and WISCO assert
that the Department should value different forms of this input based on
the market prices paid for such ores. These market economy purchase
prices and quantities, they maintain, were verified by the Department.
Similarly, they urge the Department to calculate freight rates for the
delivery of iron ore purchased from market economy suppliers using the
actual rates paid by the Chinese respondents for such shipments during
the POI. For domestically purchased iron ore, Anshan, Baoshan, Shanghai
Pudong and WISCO suggest that the Department value all iron ore using
one Indian domestic price from India 1995: A Reference Manual. They
also maintain that, in valuing freight for domestic iron ore purchases,
the Department should average the distances from each company's iron
ore suppliers and apply surrogate freight rates to this average
distance.
Petitioners maintain that it was appropriate to assign a single
surrogate value for all coal used, because respondents reported various
kinds of coal in a confusing manner. In addition, they assert that the
value used in the preliminary determination is accurate and reasonable.
Petitioners contend, however, that should the Department decide to
value different kinds of coal separately, it should rely on surrogate
values obtained from annual reports of certain Indian producers of
subject merchandise.
With respect to iron ore, petitioners assert that domestically
purchased iron ore could not be significantly cheaper than other forms
purchased from market economy suppliers due to the fact that the
imported iron ore is in the form of concentrate, which requires further
processing before it can be used. As a result, they urge the Department
to maintain the methodology it used in the preliminary determination.
Department's Position: COAL: We agree with respondents that the
Department should value coal based on the surrogate country values for
types of coal which most closely reflect the specific grades and
chemical composition of coal types used by the Chinese producers. We
have valued coking coal and other coal separately, relying on Indian
Monthly Statistics to formulate appropriate surrogate values. We did
not value thermal coal separately because the information submitted by
respondents comes from countries not normally used as surrogates and we
were unable to independently find values for this type of coal. For all
coal other than coking coal, we based our surrogate value on the
classifications ``other,'' ``anthracite'' and ``steam coal,'' which we
averaged. We used Indian Monthly Statistics because we determined that
the data were more appropriate and more specific than the data from the
Indian steel producers.
Iron Ore: With respect to iron ore, we note that it has been the
Department's position in the past that when a significant portion of an
input used by a given producer is purchased from market economy
suppliers, the Department relies entirely on the market economy
purchase prices in valuing that input for that producer. Our
methodology in the preliminary determination was to aggregate all iron
ore whether sourced domestically or from market economy suppliers into
a single basket which we valued at international prices from market
economy suppliers. However, for the final determination, we have, to
the extent possible, treated different types of iron ore as separate
factors of production (i.e., we have valued different types of iron ore
as separate inputs). When a producer has purchased any type of iron ore
from one or more market economy suppliers, we have relied to the
fullest extent possible on the market economy purchase prices which
were verified by the Department. When a given producer sourced a
particular type of iron ore only locally, or imported only an
insignificant percentage of that type of iron ore, we valued that type
of iron ore for that producer based on Indian Monthly Statistics.
Freight For Coal and Iron Ore: Where we relied on the market
economy purchase prices to value the input, we also relied, for freight
cost from the market economy suppliers to the Chinese port, on the
market economy freight rates which the Department verified. For Chinese
inland freight on market economy purchased imports and for domestically
sourced inputs, we relied on the Chinese domestic freight factors,
valued using Indian surrogate data. We have not based domestic freight
costs on an average of the distance between all suppliers and the
relevant producers because a supplier-by-supplier calculation provides
a more accurate estimate of the costs of a producer that sources
different amounts of an input from multiple suppliers in different
locations. See Comment 12 regarding the Department's current freight
methodology.
Comment 17: Valuation of Steel Scrap and Pig Iron
Anshan, Baoshan, Shanghai Pudong, and WISCO argue that the
Department should value steel scrap and pig iron based on domestic
price information from India from the Economic Times because the prices
reported in the Economic Times represents prevailing prices in the
Indian market which are preferable to import prices in the
[[Page 61981]]
Department's hierarchy of surrogate value sources, and the prices
reported in the Economic Times are contemporaneous with the POI.
Liaoning and Wuyang argue that the Department should base the
surrogate values for steel scrap and pig iron inputs on data contained
in the financial statements of Indian producers, citing Brake Drums and
Rotors, 62 FR at 9163. They state that, following its normal practice,
Commerce should derive tax-exclusive surrogate values by deducting from
the raw material costs all excise taxes, central sales taxes, and state
sales taxes. See Factor Valuation Memorandum from Brake Drums and
Rotors, at 2 (Feb. 21, 1997), which Liaoning and Wuyang have placed on
the record of this investigation (Commerce ``adjusted the domestic
average value to exclude the excise and sales tax'' and ``accepted the
four-percent sales tax as a conservative estimate of Indian state sales
tax and have deducted amounts for sales taxes'' at that rate). Liaoning
and Wuyang argue that a simple average tax-exclusive surrogate value
should be calculated for materials for which data exists from more than
one company. See Factor Valuation Memorandum from Brake Drums and
Rotors, at 4.
Petitioners contend that the Department should value steel scrap
and pig iron based on U.N. Trade Commodity Statistics, or else continue
to use the value used in the preliminary determination, which is based
on Indonesian import data. They maintain that values that the four
respondents submitted from the Economic Times represent a snapshot of
prices that do not represent prevailing prices throughout the entire
period of investigation.
Department's Position: For steel scrap, we are using
contemporaneous import data from Indian Monthly Statistics. For pig
iron, we were unable to use the Indian Monthly Statistics as we
determined that the import price was aberrational because the Indian
data was based on a very small quantity and was almost two times the
price of the Indonesian pig iron. Consequently, we are continuing to
use prices from Indonesian import statistics that we used in the
preliminary determination. We did not use the data submitted by either
petitioners or respondents for either pig iron and steel scrap because
we found that these values were aberrational compared to the Indonesian
import statistics. We did not use the values from the Economic Times
because we determine that the information in the Economic Times
submitted by respondents and in the U.N. Trade Commodity Statistics
submitted by petitioners was aberrational. More detail on this issue
may be found in the business proprietary version of the Concurrence
Memorandum.
Comment 18: Valuation of Iron Scrap, Fluorite/Fluorspar, Coke,
Aluminum, Magnesium Ore, Ferrosilicon, Ferromanganese and Magnesium Ore
Anshan, Baoshan, Shanghai Pudong and WISCO argue that the
Department should value iron scrap, fluorite/fluorspar, coke, aluminum,
magnesium ore, ferrosilicon, ferromanganese, and magnesium ore based on
Indian Monthly Statistics that correspond to the investigation period.
In the preliminary determination, the Department valued some of these
inputs based on import statistics which pre-dated the period of
investigation. These respondents argue that petitioners' suggestion
that the Department value some of these inputs based on data from 1994
U.N. Trade Commodity Trade Statistics should be ignored, respondents
argue because it is not contemporaneous and less specific to the inputs
in question.
Liaoning and Wuyang argue that the Department should base the
surrogate values for these inputs on data contained in the financial
statements of Indian steel producers. See Brake Drums and Rotors, 62 FR
at 9163. They state that, following its normal practice, Commerce
should derive tax-exclusive surrogate values by deducting from the raw
material costs all excise taxes, central sales taxes, and state sales
taxes, citing to Factor Valuation Memorandum from Brake Drums and
Rotors, at 2 (Feb. 21, 1997) which they have added to the record of
this case. They argue a simple average tax-exclusive surrogate value
should be calculated for materials for which data exists from more than
one company. See Factor Valuation Memorandum from Brake Drums and
Rotors, at 4.
Petitioners urge the Department to either value these inputs based
on the 1994 U.N. Commodity Trade Statistics, and argue that these
statistics, although less contemporaneous, are more reliable.
Department's Position: We agree with the four respondents. To the
extent possible, we have relied on contemporaneous data, as the
Department normally prefers to use prices that are representative of
prices in effect during the POI. For iron scrap, we used the same
Indian Monthly Statistics value as we did in the preliminary
determination because this is the most contemporaneous value on the
record. For ferrosilicon, flourite/fluorspar, ferromanganese, magnesium
ore, aluminum, and coke, we have adopted the values from the Indian
Monthly Statistics for April through July of 1996, as submitted by the
respondents as these values are more contemporaneous with the POI than
the similar values used in the preliminary determination. We have
rejected Liaoning and Wuyang's argument that we should value these
factors based on Indian domestic data because we have found appropriate
surrogate values that represent a larger sample of prices from Indian
Monthly Statistics.
Comment 19: Scale and Slag
Anshan, Baoshan, Shanghai Pudong and WISCO argue that the
Department appropriately valued slag at the low U.S. market price of
$6.91 per metric ton and that the Department should continue to value
slag in the same manner for the final determination. Anshan, Baoshan,
Shanghai Pudong and WISCO additionally contend, however, that the
Indian import price of $483.91 per metric ton for scale is aberrational
high and that the Department should apply the same surrogate value for
scale as it applies to slag. Furthermore, these respondents argue that,
because both slag and scale are self-generated by-products of the
steelmaking process, the Department should not apply any freight
expense to the surrogate prices for slag and scale in the final
determination.
Petitioners agree that slag is essentially a mineral waste and has
a relative low value. Scale, on the other hand, they argue, is
processed steel, consisting of cuttings from actual steel slabs. Scale,
reason petitioners, thus has a far greater value as an input in
steelmaking than does slag. Petitioners continue that there is nothing
on the record to substantiate respondents' claim that the Indian price
for scale is ``aberrational.'' Petitioners conclude that the Indian
price the Department adopted in the preliminary determination is
reliable and should be used for the final determination.
Department's Position: We agree with respondents in part. Scale is
of little value in the steelmaking process. Because slag and scale are
very similar, the Department used the same value for scale and slag
($6.91 per metric ton) in its final determination. Furthermore, we
agree with respondent that a freight expense should not be added to the
surrogate prices for slag and scale when no freight is incurred in
China on these inputs, because they are self-generated.
[[Page 61982]]
Comment 20: Stones
Anshan, Baoshan, Shanghai Pudong and WISCO argue that, to the
extent that surrogate values for some types of ``stones'' have already
been submitted on the record (e.g., manganese, quicklime, limestone and
dolomite), the Department should use that information for surrogate
values for these inputs. To value types of stones for which no specific
surrogate value has been provided to the Department (e.g., serpentine,
calcium carbon trioxide (CaCO3), silicon sand/silicon
dioxide), the Department should use the surrogate value for ``stone,
sand and gravel'' proposed by the petitioners in their August 5, 1997
submission at Exhibit A--that is, $25.21 per metric ton.
Petitioners state that, with respect to silicon, the Department has
already found an appropriate surrogate value. Petitioners contend that
respondents have conceded that the category ``stones'' contains
unreported ``silicon sand'' and silicon dioxide in unknown quantities.
Therefore, petitioners state that the Department should use the value
for silicon as facts available in valuing ``stones'' for which no
specific surrogate value has been provided. In addition, regarding
calcium carbonate (CaC2) rocks, petitioners argue that the
Department should recalculate consumption for each company.
Department's Position: We agree with respondents that the
Department should use appropriate and specific surrogate values for all
types of ``stones.'' For the final determination, for Baoshan,
Liaoning, Shanghai Pudong and WISCO, we have obtained appropriate
separate values for all types of stones which were separately reported.
For Anshan, we have obtained a value from the U.N. Trade Commodity
Statistics for ``stones, sand and gravel'' and are valuing stones for
which we do not have a surrogate value using this data. We disagree
with petitioners' assertion that we should use silicon as facts
available for silicon sand. Based on our understanding of the steel
industry, silicon sand is more comparable to generic sand than it is to
silicon, which is a comparatively expensive commodity.
Comment 21: Silicon Manganese
Respondents note that, in the preliminary determination, the
Department valued silicon manganese at $578.68 per metric ton, based on
information contained in the 1995-96 annual report of SAIL. Respondents
argue that, if the Department continues to use this source in the final
determination, the value should be adjusted not only for inflation, but
also to remove Indian taxes reflected in the reported number.
Petitioners counter that nothing in the record supports
respondents' claim that taxes are included in the surrogate value used
by the Department for silicon manganese (based on SAIL data). Even if
taxes were included, furthermore, there is no record information that
would allow for a determination of the amount of taxes paid.
Accordingly, petitioners contend that the SAIL data must be used as
reported.
Department's Position: Although we consider the value for silicon
manganese we used in the preliminary determination appropriate for use
in our final determination calculations, we have located a more
contemporaneous Indian Monthly Statistic for the period April 1996
through July 1996 which we believe to be more accurate and
representative of a larger sample of the commodity. For the final
determination, we are relying on this import price to value silicon
manganese.
Comment 22: Electricity
Anshan, Baoshan, Shanghai Pudong and WISCO contend that, in the
preliminary determination, the Department valued electricity at $0.06
per kilowatt hour, based on data reported in the July 1995 publication
Current Energy Scene in India, published by the Center for Monitoring
Indian Economy. These respondents contend that the Department should
continue to use this value in the final determination.
Petitioners state that respondents' suggested rate for electricity
reflects the simple average of the Indian state electricity rates for
the ``large industry'' category as of January 1, 1995, adjusted to the
POI. See Shanghai Pudong Factor Valuation Memorandum, June 3, 1997, at
4-5. Petitioners maintain that, in its final determination, the
Department should use the electricity rates reported by Indian flat-
rolled steel producers in their annual reports for the fiscal year
ending March 1996. These reported rates are preferable, argue
petitioners, because they are more contemporaneous with the POI and are
specific to large steel manufacturers. See Polyvinyl Alcohol from the
People's Republic of China, 61 FR 14057 at 14061 (March 29, 1996)
(Final Determination). Petitioners calculate the weighted average
electricity rate for Pennar Steels Ltd., Nippon Denro Ispat Ltd.,
Visvesveraya Iron & Steel Ltd., SAIL, and Tata Steel Ltd., at $0.0648
per kilowatt hour.
Department's Position: We agree with respondents. We consider the
rate for electricity we used in the preliminary determination
appropriate for use in our final determination calculations as it is
publicly available and nothing on the record suggests that this value
is aberrational.
Comment 23: Scope Issue
Petitioners argue that the scope should be clarified to state that
it covers plate 4.75 mm in thickness or more, in nominal or actual
thickness. They state that, due to thickness tolerances in the various
common plate specifications, foreign producers may sell plate as \3/16\
inch (4.75 mm) plate at thickness less than \3/16\ inch and remain
within the specification.
Petitioners allege that there is a significant U.S. market for \3/
16\-inch (4.75 mm) plate. They also argue that they always intended
that the scope of the investigation would cover product of 4.75 mm in
actual or nominal thickness because any plate within the tolerance for
4.75 mm nominal thickness plate will compete directly with any other
plate within the tolerance. The customer knows that all plates within
the tolerance meet the performance standards of the specification.
Petitioners argue that actual and nominal thickness products are
produced on the same equipment, marketed in the same way to the same
customers and generally priced identically. They allege that failure to
include plate with a nominal thickness of at least 4.75 mm but an
actual thickness of less than 4.75 mm would seriously undermine the
scope of the investigation by allowing products that are considered
identical in the market to be treated differently under the scope.
Anshan, Baoshan, Shanghai Pudong and WISCO point out that
petitioners' request to change the scope was submitted more than five
months after the filing of the petition. They argue that petitioners'
proposal to change the scope so late in the proceeding is contrary to
the requirements of the law. Respondents note that the statute does not
permit the Department to amend the scope of the petition so late in
this investigation.
Department's Position: We disagree with petitioners and have
decided not to change the scope of products under investigation. For a
more complete discussion of this issue, See Memorandum on Scope of
Investigations on Carbon Steel Plate from Joseph Spetrini to Robert S.
LaRussa.
Comment 24: Alloy/Non-Alloy Steel Issue
Petitioners allege that foreign producers are beginning to slightly
vary
[[Page 61983]]
the alloy content of their carbon plate in order to technically remove
the product from the non-alloy steel tariff subcategories in the
Harmonized Tariff Schedule of the United States (``HTSUS'') and place
the products within the ``other alloy steel'' HTSUS subcategories
without changing the specification, grade, physical characteristics or
applications of the CTLP. Petitioners contend that such low-alloy
plates should be covered by the scope.
Petitioners argue that products classified as alloy steel under the
HTS, but ordered and produced to ``carbon'' steel specifications,
should be included within the scope of the investigation. They argue
that the alloys being added to these products are not changing the
performance characteristics of plate, and the alloy-added carbon
products and other carbon products are the functional equivalents of
one another. Petitioners further contend that the products are produced
by the same manufacturers on the same equipment, are sold to the same
customers for the same uses, and have nearly identical costs.
Petitioners assert that where the added alloy does not change the
performance characteristics of the plate or affect the product's
classification within the industry specification, the product should
remain within the scope of the investigation. They argue that the
addition of alloys that do not change the performance characteristics
or specifications of the product will not change the purchasers'
perception of the value, function or use of the product. Petitioners
conclude by stating that the failure to include such completely
substitutable products within the scope would undermine the efficacy of
any order.
Anshan, Baoshan, Shanghai Pudong and WISCO again argue that
petitioners' request to change the scope was untimely submitted and
should be rejected by the Department, as it is contrary to the
requirements of the law. Moreover, respondents contend that Department
and classification practice demonstrate that carbon steel does not
include products with alloying agents such as boron. Finally,
respondents assert that the statute does not permit the Department to
amend the scope of the petition proposed in the manner proposed by
petitioners so late in this investigation.
Department's Position: We disagree with petitioners and have
decided not to change the scope of products under investigation. For a
more complete discussion of this issue, See Memorandum on Scope of
Investigations on Carbon Steel Plate from Joseph Spetrini to Robert S.
LaRussa.
Comment 25: River Freight
Anshan, Baoshan, Shanghai Pudong and WISCO argue that, in the final
determination, the Department should not value river freight costs for
purchases of materials (and for the shipments of finished products by
the Chinese producers) using the surrogate value relied upon for the
preliminary determination, which was based on a 1993 embassy cable
regarding river barge rates in India originally submitted for Helical
Spring Lock Washers, 61 FR at 41994. In particular, Anshan, Baoshan,
Shanghai Pudong and WISCO argue that this source should not be used in
the final determination because (1) the rates do not in any way reflect
the costs of shipping raw materials and merchandise on the Yangtze
River on which their steel mill and export facilities are located, and
(2) the rates do not even accurately reflect the costs of river
shipping in India.
Respondents argue that the Department must, to the extent possible,
select surrogate values for river rates which accurately and fairly
reflect the costs of the shipping raw materials and steel products on
the Yangtze River. Respondents maintain that the use of Indian river
barge rates to establish surrogate values for Chinese shipments of raw
materials and final steel products on the Yangtze River is
inappropriate because there are no rivers in India that are comparable
to the Yangtze River and river shipping rates are heavily dependent on
the types of rivers used for shipping and the types of products being
shipped.
As an alternative to the Indian barge rates in the 1993 cable,
respondents urge that the Department use published Mississippi River
shipping rates as surrogate values for the cost of shipping on the
Yangtze River because, they claim, the Mississippi River is a ``working
river'' that is comparable in size to the Yangtze River.
If the Department continues to use Indian shipping rates to value
shipping on the Yangtze river, respondents recommend that the
Department use current, actual shipping rates rather than the 1993
quotation used in the preliminary determination. Respondents argue that
the 1996-97 rates collected and reported by the Ministry of Surface
Transport of the Government of India, which they have submitted, are
preferable because they are less aberrational, more contemporaneous,
and based on a broader range or merchandise than the rates used in the
preliminary determination, which do not identify the product for which
these rates were quoted.
Petitioners argue that the data on river freight supplied by the
respondents are unreliable; therefore, they urge, the Department should
continue to use the same values as in the preliminary determination.
Petitioners argue that respondents' claim that Indian rivers are
generally not accessible to large vessels is baseless, stating that CIA
reports indicate that a large percentage of inland waterways in India
are navigable.
Petitioners object to the use of U.S. freight rates as surrogate
values, arguing that the Department must calculate normal value based
on, ``to the extent possible, the prices or costs of factors of
production in one or more market economy countries that are * * * at a
level of economic development comparable to that of the nonmarket
economy country * * *.'' 19 U.S.C. 1677b(c)(4). Petitioners contend
that United States is not an appropriate surrogate country because it
is at a different level of economic development than the People's
Republic of China and not one of the five countries identified by the
Department as potentially suitable surrogates. See Memorandum to E.
Yang from D. Mueller, January 29, 1997 (``DOC Surrogate Selection
Memo'').
Further, petitioners assert that the information on Indian river
freight rates supplied by respondents is questionable with respect to
its meaning, origin and reliability. Petitioners argue that respondents
have not provided any credible evidence that the rates used by the
Department in the preliminary determination are ``aberrational.''
Department's Position: We agree with both respondents and
petitioners in part. For the final determination, we have decided to
base the river rates freight on a simple average of the rates used in
the preliminary determination and information submitted by respondents.
We note that the river rates we used in the preliminary determination
were significantly higher than rates for other forms of transportation.
For example, to ship merchandise 1100 km. by river using the rates used
in the preliminary determination would cost $68 per ton, whereas to
ship the same distance by train would only cost approximately $15 per
ton. We note that a respondent would usually use, in the normal course
of business, the most cost effective and efficient mode of
transportation. However, respondents did not ship by train. It is our
own practice to value the factors of production actually used by
respondents. Consequently, we have concluded that to only use the
surrogate
[[Page 61984]]
value we used in the preliminary results would be inappropriate.
Respondents also submitted river rates from the Inland Waterways
Authority of India, which is part of the Ministry of Surface
Transportation of the Government of India. We disagree with
petitioners' argument that the Department should reject this
information because respondents used a consultant in obtaining this
information. While it is true that a consultant was involved in
obtaining this information, the fact remains that the source of the
data is the Indian Government. In addition, we can find no evidence to
support the conclusion that the river rates presented in that document
are unreliable or distortive. The rates represent a wide variety of
rivers, products and distances in India, including river rates to and
from Calcutta, which is a major port. At the same time, we hesitate to
use only the river rate information obtained by respondents for the
final determination. As no evidence on the record indicates what
instructions were given to the consultant or what questions the
consultant asked the Indian Waterways Authority to obtain the data.
We also disagree with respondents' contention that we should use
rates from the Mississippi River for the final determination. First,
the United States is not one of the selected surrogate countries that
the Department normally uses. The Department also searched for
alternative sources of information from other surrogate countries. In
particular, we attempted to obtain river rate information from Egypt
(the Nile river) and Pakistan (the Indus river). However, we were
unable to obtain publicly available information for river rates from
these countries. Second, all rivers are to some degree unique, and the
Department's ability to address the quantity and the types of
differences noted by respondents is limited. Thus, it is not our
practice to find a surrogate value for freight over a particular route,
but rather to ascertain a reasonable value for river freight.
Comment 26: Ocean Freight Rates
Respondents argue that the Department should apply product- and
port-specific ocean freight rates. Respondents maintain that, in the
preliminary determination, the Department improperly applied the ocean
freight rates for shipping steel plate to other types of products,
which would necessarily have different shipping rates. Respondents urge
that the Department should value raw materials purchased from market-
economy suppliers using sale-specific shipping cost information from
market economy ocean freight providers. Respondents recommend that
product-and port-specific ocean-shipping rates published in Shipping
Intelligence Weekly be used to value ocean freight shipments in the
final determination.
Petitioners argue that the Department should continue using the
ocean freight rates from U.S. import statistic reports (IM-145 reports)
used in the preliminary determination. Petitioners assert that the
Department should not value raw materials purchased from market-economy
suppliers using sale-specific shipping cost information from market
economy shippers unless there is sufficient evidence that the specific
respondent purchased the input from a market economy supplier in market
economy currency. Further, petitioners argue that the surrogate values
based on shipping rates reported from Shipping Intelligence Weekly
submitted by respondents are inadequate for several reasons. First,
petitioners note that rates reported from the Shipping Intelligence
Weekly are not actual freight rates paid by customers, but instead are
described as ``average earnings.'' Second, petitioners contend that
respondents chose rates for the most efficient type of vessel for their
surrogate value. Third, petitioners note that information from Shipping
Intelligence Weekly was not accompanied by the certification of
accuracy as required by 19 CFR Sec. 353.31(i). Petitioners urge the
Department to continue using import data in the preliminary
determination, since the import data is representative of a large
sample of shipments and relate specifically to the chosen surrogate
country.
Department's Position: We agree with petitioners that rates
reported from Shipping Intelligence Weekly are not actual freight rates
paid by customers, but instead are described as ``average earnings.''
Second, we agree that respondents appear to have provided rate data for
the most efficient type of vessel, rather than the actual freight rates
paid by customers. Consequently, we find that the value reported in the
Shipping Intelligence Weekly are not appropriate for use as surrogate
values for ocean freight. For the final determination, therefore, we
have continued to use the IM-145 ocean rates used in the preliminary
determination.
Comment 27: Brokerage and Handling
Anshan, Baoshan, Shanghai Pudong and WISCO argue that the surrogate
value for brokerage and handling charges used in the preliminary
determination is aberrational. This value was based on ranged, public
information from 1991-92 that was originally submitted in the
Department's investigation of Sulphur Vat Dyes from India, 38 FR at
11835, 11841. These respondents recommend that the Department use,
instead, as a surrogate value for brokerage and handling, prices they
have submitted which are reported by Amrok Shipping Private Ltd. , a
shipper from India.
Liaoning and Wuyang argue that the Department should use a
brokerage and handling value contained in the public version of the
response of Isibars Limited in the antidumping review of Stainless
Steel Wire Rod from India, which they have added to the record of this
case to value foreign brokerage. They maintain that the value for
brokerage and handling used in the preliminary determination is
inappropriate because that value is for a product unrelated to the
subject merchandise of this investigation. Liaoning and Wuyang contend
that the brokerage and handling value from 1995-96 Stainless Steel Wire
Rod from India is preferable because it is specific to steel, more
contemporaneous, and more reliable, since it has been verified by the
Department.
Petitioners argue that the Department should continue to use the
surrogate value for brokerage and handling used in the preliminary
determination. Petitioners find it significant that this surrogate
value for foreign brokerage and handling was used by the Department in
two other final investigations. Petitioners argue that information
provided by the four respondents is an anecdotal and selective
commentary by a private shipping company that may have been paid to act
as a consultant by the respondents. Petitioners urge that the
Department reject the information provided by the four respondents on
the basis that it is likely to be biased and unreliable.
Department's Position: We agree with Liaoning and Wuyang. In the
preliminary determination, we used brokerage and handling rates as
reported in ranged, public information from 1991-92 that was originally
submitted in the Department's investigation of Sulphur Vat Dyes. We are
unfamiliar with the Amrok Shipping brokerage and handling information
submitted by Anshan, Baoshan, Shanghai Pudong and WISCO and do not know
what questions the four respondents asked to obtain the brokerage and
handling rates. The brokerage and handling rates submitted constitute
an individual's estimate and were not specific concerning certain
charges. In addition, we have no background information on the period
[[Page 61985]]
of time applicable to the brokerage and handling values submitted by
these respondents. Since the brokerage and handling rates in used in
the Stainless Steel Wire Rod are more contemporaneous than the
information used in the preliminary determination, specific to steel
and verified by the Department, we have used those rates for the final
determination.
Comment 28: Rejection of Untimely Factual Information
The four respondents argue that the Department should not reject
factual information submitted within the deadlines established by its
regulations. Thus, respondents urge the Department to reconsider and
reverse its earlier decision to reject submissions from Anshan, Baoshan
and WISCO. Respondents maintain that the information at issue was
submitted within the deadlines pursuant to the Department's
regulations, which allow for the submission of factual information in
an antidumping investigation up to one week prior to the start of
verification, in accordance with 19 CFR Sec. 353.31(a). Respondents
maintain that the Department, in rejecting certain portions of the
respondents' submission, misapplied the provision of 19 CFR
Sec. 353.31(b)(2), which states that, '' in no event will the Secretary
consider unsolicited questionnaire responses submitted after the date
of publication of the Secretary's preliminary determination.'' Citing
to the preamble of the relevant regulations, respondents argue that
this provision applies only to questionnaire responses received from
voluntary respondents and not to those from mandatory respondents. See
Antidumping Duties, 54 FR at 12742, 12759-60 (Mar. 28, 1989) (final
rule).
Further, respondents maintain that, in accordance with the
provisions of its regulations, the Department has in the past allowed
respondents to supplement their previous questionnaire responses prior
to verification. See Certain Iron Construction Casting from the
People's Republic of China, 50 FR at 43594 (Oct. 28, 1985); Polyvinyl
Alcohol from the People's Republic of China, 60 FR at 32757 (June 17,
1997); Collated Roofing Nails from the People's Republic of China, 62
FR at 25895 (May 12, 1997) (preliminary determination). Moreover,
respondents argue that the Department had sufficient time to analyze
and verify the additional information submitted, and that the rejection
of this information would unfairly penalize respondents for providing
information that they claim the Department had not requested be
provided in a questionnaire with an earlier due date.
For Anshan, the rejected information consisted of freight
information for certain inputs. Anshan argues that this freight
information should be accepted because Commerce had not requested this
information in its supplemental questionnaires and thus this
information was not untimely provided.
For Baoshan Steel, the Department had requested information on
distances from suppliers for all inputs in its supplemental
questionnaire, and Baoshan Steel neglected to include information on
the distance for one category of inputs. Baoshan Steel submitted the
omitted information one week prior to the start of verification.
For WISCO, the information rejected by the Department consisted of
the factors of production for producing oxygen and similar gases.
Respondents argue that the Department, in the supplemental
questionnaire, gave WISCO the option of either providing these factors
of production or explaining why these factors of production should not
be used. Respondents allege that, due to an inadvertent error, the
factor information they intended to provide was omitted from the
supplemental questionnaire. Respondents submitted this information one
week prior to verification.
Petitioners argue that respondents' challenge to the Department's
decision to reject their untimely submission of information requested
in the Department's questionnaires is both misleading and without
merit. Petitioners refer to 19 CFR Sec. 353.32(b), which provides that,
in the Secretary's written request to an interested party for a
response to a questionnaire, the Secretary will specify the time limit
for response. 'The Secretary will return to the submitter, with written
reasons for return of the document, any untimely or unsolicited
questionnaire responses rejected by the Department.'' 19 CFR
Sec. 353.31(b)(2). Petitioners maintain that the respondents'
submissions were properly rejected by the Department in accordance with
section 353.31(b)(2) because (1) the information that respondents claim
was improperly rejected by the Department consists of information
provided in response to supplemental questionnaires and (2) the
information was submitted after the deadline for questionnaire
responses. Petitioners add that, although the Department has allowed
respondents to supplement their previous questionnaire responses even
later than seven days prior to verification in past cases, regulations
should still be enforced under the present circumstances. Petitioners
also maintain that respondents have not adequately demonstrated that
they were not given ample notice and opportunity to file said
information in a timely fashion. With respect to Anshan, petitioners
argue that Anshan's freight information was not submitted within the
deadlines established by the Department's regulations. With respect to
Baoshan, petitioners argue that the rejected information was requested
both in the Department's December 19, 1996 and again in the
Department's March 13, 1997 questionnaire. Petitioners argue that
Baoshan had ample notice and opportunity to comply with the
Department's requests and that, as noted in the Department's letter of
June 16, 1997, there is no reason to believe that this information was
'inadvertently omitted.'' See letter from Edward C. Yang to Shearman &
Sterling, June 16, 1997. With respect to WISCO, petitioners argue that
the Department correctly rejected WISCO's submission of factors of
production for oxygen and similar gases, because respondents failed to
provide this information, which was requested by the Department in its
questionnaire of March 12, 1997, in its April 14, 1997 supplemental
questionnaire response. Petitioners argue that, in response to the
Department's supplemental questionnaire, WISCO neither provided factors
of production for oxygen and similar gases nor explained why it was
inappropriate to revise its calculations to account for the production
of oxygen and similar gases.
Department's Position: We agree with Anshan, but not with Baoshan
and WISCO. For Anshan, we have reconsidered our prior decision to
reject information on freight distances for certain inputs. Because, in
its March 12, 1997 supplemental questionnaire, the Department did not
specifically request that Anshan provide information concerning the
means of transportation or distances for certain material inputs
obtained from domestic sources, this information did not constitute an
out-of-time reply to a questionnaire, and because the information was
otherwise timely provided, we should reject this information.
Therefore, for the final determination, we have accepted Anshan's
information on distances between its plant and the sources of certain
inputs, and have used this information in calculating freight expenses
for those inputs.
With regard to Baoshan, the Department has determined, that it
correctly rejected the information submitted by Baoshan on June 10,
1997 with respect to the shipping distances
[[Page 61986]]
for one category of input. Baoshan stated in that submission, which was
received one week prior to verification, that they omitted such
information in the supplemental questionnaire responses due to an
alleged oversight. Because the Department specifically requested this
information in its March 12, 1997 supplemental questionnaire to
Baoshan, which required a complete response by April 14, 1997, Baoshan
had ample notice and opportunity to comply with the Department's
requests for this information. Therefore, we did not use the rejected
information for the final determination.
For WISCO, the Department has determined that it correctly rejected
information on factors of production for oxygen and similar gases. The
Department requested this information in a supplemental questionnaire
on March 12, 1997. WISCO has stated that it inadvertently omitted the
information from its April 14, 1997 response due to a mis-communication
and finally submitted the data in its June 10, 1997 submission. Since
WISCO had ample notice and opportunity to comply with the Department's
requests, we have not used the untimely submitted information on
factors of production for oxygen and similar gases for the final
determination.
Although the legislative history of the regulation cited by the
four respondents indicates that, in ``unusual circumstances,'' the
Department may retain and consider ``unsolicited questionnaire
responses'' (i.e., initial responses from voluntary respondents), this
provision does not revoke the rules of timeliness even for such
respondents. Further, respondents' reliance on this passage is
inapposite, because they are mandatory, not voluntary, respondents and
the data at issue were ``untimely'' provided (based on the time limit
specified by Commerce for response to the questionnaire), not
``unsolicited.'' See 54 FR at 12759-60, 12781.
Comment 29: General Issues Regarding Selection of Surrogate Values
Anshan, Baoshan, Liaoning and WISCO argue that the Department
should revise the methodology used to select surrogate values for
material inputs. Respondents argue that, in the preliminary
determination, the Department departed from its established ``rules''
for selecting surrogate values, which were developed to ensure
``accuracy, fairness and predictability.'' Oscillating Fans, 56 FR at
55271, 55275, cited with approval in Lasko, 43 F.3d 1442.
These respondents claim that the Department made certain
``methodological errors'' in selecting the surrogate values used in the
preliminary determination, and urge the following principles should
guide the Department's selection of surrogate values. First, these
respondents maintain that the Department should use surrogate values
that conform to the specific materials used in production. Respondents
argue that by assigning values from `basket' categories to certain
inputs which they reported at a more specific level, the Department
departed from its established practice to base its surrogate values on
the prices in the surrogate country for materials which most closely
reflect the specific grade and chemical composition of the type of
input used by the NME producer, whenever possible. See Lock Washers, 61
FR at 41994, 41996-97. Anshan, Baoshan, Shanghai Pudong and WISCO argue
that the Department's reasoning for using ``basket'' categories for
surrogate values is incorrect. For example, they contend that publicly
available published information on domestic prices in India for each of
the types of coal used by the Chinese respondents was available and
provided in their March 4 and August 5, 1997 submissions, despite the
Department's statement in the preliminary determination that the use of
these ``basket'' categories was necessary because the Department did
not have publicly available published information on the specific
prices for specific inputs within the basket categories. Preliminary
Determination, 62 FR at 31976. In addition, respondents note that each
of them provided information on actual prices paid for each type of
iron ore purchased from market economy suppliers in both the
questionnaire and supplemental questionnaire responses.
Second, the four respondents maintain that the Department departed
from its established practice of selecting, where possible, sources
which provide domestic, tax-exclusive prices. See Brake Drums and
Rotors, 62 FR at 9160, 9163. Instead, respondents maintain that the
Department used import data to value a number of inputs for which
publicly available published information on domestic prices was already
on the record. Respondents argue that the Department should use
domestic, tax-exclusive prices in preference to import values.
Third, they maintain, when the Department does use import data, it
should, in accordance with its established practice, use the available
import data that is most contemporaneous with the investigation period.
Respondents argue that, in the final determination, when the Department
uses import data, it should use Indian import data for the
investigation period which have become available since the publication
of the preliminary determination and have been submitted for the record
of this investigation.
Fourth, they insist that the Department should not use surrogate
values that are aberrational. See Sulfanilic Acid from the Republic of
Hungary, 57 FR at 48203, 48206 (Oct. 22, 1992). These respondents
contend that a number of surrogate values used in the preliminary
determination were aberrational, resulting in the distortion of the
results of the Department's preliminary calculations. They urge the
Department to carefully review the surrogate values used in the final
determination to avoid similar distortions. In addition, respondents
advise that where the values obtained from the primary surrogate are
aberrational or otherwise unreasonable, the Department should use
sources other than the designated ``primary'' surrogate for surrogate
values. Heavy Forged Hand Tools from the People's Republic of China, 60
FR at 49251, 49253 (Sept. 22, 1995).
Fifth, respondents argue that the Department should properly
inflate any surrogate values that are not contemporaneous with the
investigation period. In order to do so, respondents maintain that the
Department should correct certain clerical errors involving both the
selection of the appropriate data from the International Financial
Statistics publication and the decision as to whether to use wholesale
price index (WPI) or Consumer Price Index (CPI) inflators for certain
surrogate values.
Petitioners argue that the Department properly selected surrogate
values for material inputs in its preliminary investigation in
accordance with previous practices and regulations. Petitioners refer
to Section 773(c)(1) of the Act, which states that for the purposes of
determining normal value in a non-market economy, ``the valuation of
the factors of production shall be based on the best available
information regarding the values of such factors.'' 19 U.S. C.
1677b(c)(1). Petitioners assert that the statute does not require
Commerce to follow any single approach in evaluating data. Olympia
Industrial, Inc. v. United States, Slip Op. 97-44 (Ct. Int'l Trade
1997).
Petitioners state the following with regard to the ``established
rules'' governing the Department's approach in selecting surrogate
values: the
[[Page 61987]]
Department has stated that its objective in selecting surrogate values
in a non-market economy investigation is to value the inputs at prices
that most closely reflect the type of product used by producers in the
country under investigation. See Helical Spring Lock Washers, 61 FR at
11813, 11815 (March 13, 1997); the Department's clear preference is to
use published information that is most closely concurrent to the
specific period of investigation (POI) or period of review (POR). See
Drawer Slides, 60 FR at 54472, 54476 (October 24, 1995); the Department
has a longstanding practice of relying, to the extent possible on
publicly available information. See Sebacic Acid From the People's
Republic of China, 62 FR at 10530, 10534 (March 7, 1997); it is the
Department's practice, in selecting the ``best available data,'' to use
data from a variety of sources and to use different sources to value
different factors. Sulfanilic Acid from the People's Republic of China,
61 FR at 53703, 53704 (October 15, 1996).
Petitioners argue that in the preliminary determination, the
Department clearly states that it maintained a preference for using
publicly available tax-exclusive domestic prices and indicated that the
Department evaluated a number of possible sources before choosing the
most appropriate and reliable prices.
Petitioners rebut respondents' claim that the Department departed
from its practice of using, whenever possible, surrogate values that
conform to the specific materials used in production. Petitioners argue
that it was appropriate for the Department to create a ``basket''
category and assign a single surrogate value for coal for all
respondents, given that labels provided by respondents for forms of
coal inputs and their respective uses were confusing and unclear.
Petitioners argue that the Department did not depart from its
practice of using domestic, tax-exclusive prices in preference to
import values. Petitioners maintain that the Department's stated
preference for domestic, tax-exclusive prices is conditioned upon the
finding of reliable publicly available information. In the present
case, petitioners assert that the Department were unable to locate
reliable domestic value at the time of the preliminary determination.
Petitioners argue that the Department should use the same sources and
values for inputs as it did in the preliminary investigation except
where amended by material input suggestions made by petitioners in
their August 5, 1997 PAI submission and their briefs.
Petitioners argue that the Department should use available import
data most contemporaneous with the investigation period if they are
otherwise reliable. See Helical Spring Lock Washers, 61 FR at 41994,
41996-7.
Petitioners argue that respondents' claims that certain surrogate
values are aberrational are unwarranted.
Petitioners agree with respondents that the Department should
properly inflate any surrogate values that are not contemporaneous with
the period of investigation. Petitioners recommend that the Department
use the wholesale price index (WPI) to derive inflators regardless of
whether the associated values were reported in Rupees or U.S. dollars.
However, petitioners object to the use of United States producer price
index (PPI) for inflating dollar-denominated prices, which was used in
the preliminary determination. Petitioners argue that since the
inflation adjustments are intended to reflect price trends in the
surrogate country and not monetary trends in United States, the
Department should use inflation indices for the surrogate country,
rather than those for the United States. See e.g. Circular Welded Non-
Alloy Steel Pipe from Romania, 61 FR at 24274.
Department's Position: Both respondents and petitioners are correct
in stating that certain general principles have guided the Department's
practice in selecting surrogate values. We agree that surrogate values
should be products which are as similar as possible to the input for
which a surrogate value is needed. Likewise, we normally prefer a fully
reliable domestic, tax-exclusive price to an equally reliable import
price. We also prefer data (import and domestic) that are more
contemporaneous to the POI/ POR to data that are less contemporaneous,
and will normally update a value if more data covering additional
months within the POI/POR become available to us between the
preliminary and the final determination.
When we must use data that are not contemporaneous to the POI or
POR, we agree that it should be indexed forward using an appropriate
index. We also agree that the Department should not use values which it
has found to be ``aberrational,'' and that when the values obtained for
the primary surrogate are aberrational, the Department should seek
appropriate values in other economies, preferably in those at a similar
level of economic development. We also have a long-standing practice of
preferring publicly available information to other types of
information.
It is important to emphasize, however, that our overarching mandate
is to select the ``best'' available data (see 19 U.S.C. 1677b(c)(1)),
which involves weighing all of the relevant characteristics of the
data, rather than relying solely on one or two absolute ``rules.''
Thus, for example, the most specific data may not be the most
contemporaneous, the most reliable, or from the selected surrogate
country. There is no set hierarchy for applying the above-stated
principles, nor will parties always agree as to the reliability of
certain data or the relevance of certain facts or assertions. Thus, the
Department must weigh available information with respect to each input
value and make a product-specific and case-specific decision as to what
the ``best'' surrogate value is for each input. This we have done, to
the best of our ability, in this case.
Concerning petitioners' comments regarding the proper inflation of
any surrogate values that are not contemporaneous with the POI, we note
that the Department agrees with their assertion that we should use WPI
for those Indian values denominated in Rupees. However, we disagree
with their objection to the use of PPI for inflating dollar-denominated
prices, which was the methodology the Department used in the
preliminary determination. We have determined that it is a reasonable
methodology to use a U.S. index for those values denominated in U.S.
dollars, because price indices in the United States would directly
impact those prices denominated in the U.S. dollars.
Comment 30: Ministerial Error--Freight for Purchases of Certain Inputs
Petitioners argue that the Department should change the freight
charges for purchases of certain inputs which travel by two modes of
transportation for Baoshan, Shanghai Pudong and WISCO. Petitioners
allege that, in the preliminary determination, the Department
incorrectly weight-averaged the costs associated with the modes of
transportation.
Respondents did not comment on this issue.
Department's Position: We agree with petitioners with respect to
Baoshan and WISCO. For these companies, we have corrected the error for
the final determination. However, we disagree with petitioners
concerning Shanghai Pudong as we determine that this error is not
applicable to Shanghai Pudong. Because this issue involves business
proprietary information, please see Concurrence Memorandum for more
information.
[[Page 61988]]
Company-Specific Comments
1. Anshan
Comment 31: Valuation of Certain Inputs
Anshan argues that the Department should revise the surrogate
values for certain inputs (the identity of which constitutes business
proprietary information) to reflect the translation corrections
provided to the Department in its June 19, 1997 submission. Anshan
asserts that the translation corrections accurately describe the value
of the grades of the inputs at issue and that the Department confirmed
their accuracy during verification.
Petitioners argue that the Department should not revise surrogate
valuations to reflect the translation corrections contained in
respondent's June 19, 1997 submission because the translation
corrections constitute untimely and unsolicited information, and
therefore should be rejected. If the Department accepts Anshan's
representations, petitioners recommend that the Department continue to
use the same value for the inputs as was used in the preliminary
determination and make adjustments as necessary, according to their
chemical descriptions. Petitioners refute respondents' claims that the
results of verification sufficiently confirmed the accuracy of the
translations. In addition, petitioners argue that the record
information relating to the inputs (the identity of which constitutes
business proprietary information) suggests that chemical content for
certain inputs claimed by respondent are not accurate.
Department's Position: We agree with Anshan. We agree that the
corrections concerning this input that Anshan submitted to the
Department on June 19, 1997 (prior to the beginning of verification)
were timely. Therefore, we disagree with petitioners' contention that
the information was untimely and should be rejected. As we indicated in
our verification report for Anshan, we found at verification that there
were translation problems concerning both the exact name of the input
and its chemical identity. However, we examined supporting
documentation which indicated and confirmed the chemical composition of
the input.
Comment 32: Valuation of Ocean Freight for Input(s) Imported From
Market Economy Suppliers
Anshan argues that the Department should calculate ocean freight
charges for its purchases of a certain input based on the actual
shipping costs incurred.
Petitioners disagree, claiming that the documentation provided by
Anshan did not demonstrate the payment was made in market economy
currency. Accordingly, petitioners urge the Department to reject the
freight rates proposed by Anshan.
Department's Position: We agree with Anshan that we should value
ocean freight charges incurred in shipping market economy inputs based
on the actual shipping costs incurred. This is consistent with the
Department's practice of using the actual prices paid for inputs which
were purchased from market economy suppliers and paid for in market
economy currency. See 19 CFR 351.408(1). We also disagree with
petitioners' contention that the documentation provided by Anshan did
not demonstrate the payment for the input was in market economy
currency. We note that Anshan included copies of invoices and bank
statements denominated in U.S. dollars in their June 19, 1997
submission.
Comment 33: Factors for Sintering Plant
Petitioners argue that the Department should use facts available
for material, energy, and labor factors for the material preparation
workshop in Anshan's sintering plant. Petitioners argue that the
verification reports state that Anshan failed to report these factors
for the material preparation workshop in the general sintering plant.
With respect to the labor component, petitioners recommend that the
Department should use labor figures from the firing shop and the
mineral concentration shop. For the omitted energy component of this
workshop, petitioners urge that the Department should use the highest
reported energy consumption (in terms of electricity, natural gas, and
each other reported energy factor, per metric ton of plate) for any
other shop.
Anshan objects to petitioners' claim that it failed to report
factors of production for the general sintering plant. Anshan argues
that omission of these factors from its response stems from a
misunderstanding during verification about the functions of the
materials preparation workshop. Anshan explained that market economy
input is processed prior to importation, and does not require further
processing by the material preparation workshop. Therefore, the
inclusion of the factors for the materials preparation department in
Anshan's factors of production would result in double-counting.
Department's Position: We agree with Anshan. As the market economy
input is processed prior to importation, and does not require further
processing by the material preparation workshop, we would be double-
counting if we included in our calculation of normal value the factors
of production for the material workshop.
Comment 34: Anshan's Reporting Methodology
Petitioners argue that Anshan's margin must be based entirely on
facts available because its reporting methodology does not provide an
adequate factual basis for a final determination. Petitioners contend
that Anshan's questionnaire responses do not contain information with
sufficient product-specificity because, they claim, Anshan's reporting
methodology both lacks a meaningful product code system and fails to
account for cost variations between products of different widths.
Petitioners also identify as another anomaly in factor reporting the
lack of CONNUM-specific electricity factors. If the Department chooses
to accept Anshan's reporting methodology, petitioners request that any
final calculations based thereon must take into account the errors,
omissions and inconsistencies discovered at verification.
Anshan, citing Steel Plate from Korea, 58 FR at 37176, 37190 (July
9, 1993), argues that petitioners' challenge to Anshan's reporting
methodology is unsubstantiated and should be disregarded. Anshan argues
its records do not allow for the calculation of width-specific factors
of production. Anshan contends its reporting methodology does
sufficiently identify the source of production for plates of differing
widths.
Further, Anshan charges that petitioners have provided no basis for
rejecting the verified methodology used by Anshan to identify the
source of the slabs for each type of plate. Anshan argues that it
provided a detailed description of the methodology, along with
supporting documentation which can trace the source of production of
slabs and ingots. Anshan argues, further, that which items the
Department examines at verification is something to be decided not by
petitioners but by the Department. The Department, they note, does not
have to examine every single issue at verification, as long as it is
satisfied, that, on the whole, the verification indicates that the
response was accurate. See Silicon Metal from Argentina, 58 FR at
65336, 65340 (Dec. 14, 1993).
Department's Position: We agree with Anshan. During verification,
we noted that Anshan's reporting methodology was not based on width-
specific data. Since Anshan did not use a width-specific methodology in
the normal
[[Page 61989]]
course of business, it would be inappropriate to use facts available
because they reported data based on their usual system rather than a
width-specific system, unless the system normally used is found to be
distortive to the margin calculation. The Department has determined
that Anshan reported its factor data using a non-distortive methodology
that provided information of sufficient product specificity to support
a final determination.
Comment 35: Freight Amounts on SAL Invoices
Petitioners argue that freight charges reported for U.S. sales
should be the freight costs paid by the customer, rather than the
freight costs incurred by Anshan's affiliate, Sincerely Asia Limited
(SAL).
Anshan argues that sections 772(a) and (c) of the Tariff Act
requires that freight costs incurred by the Anshan's affiliate, rather
than the customer, should be deducted from export price.
Department's Position: We disagree with petitioners. Section
772(c)(2)(A) calls for the export price to be reduced by 'the amount,
if any, included in such price (emphasis added), attributable to * * *
expenses * * * incident to bringing the subject merchandise from the
original place of shipment in the exporting country to the place of
delivery in the United States.'' Because freight costs paid by the
unrelated customer should not be 'included in'' the export price, there
is no reason to deduct these from export price.
Comment 36: Labor for Plate Mill, Roughing Mill; Other Sintering
Labor and Iron Making
Plate Mill: Petitioners argue that respondent should revise labor
factors for plate mill labor to reflect the results of verification.
Anshan agrees that plate mill labor figures should be revised,
based on their August 21, 1997 submission, which reflects the number of
workers verified by the Department.
Roughing Mill: Petitioners argue that Anshan's labor database for
the roughing mill should be rejected because labor figures for that
facility could not be verified. Petitioners argue that certain labor
for this facility identified by respondents as ``unrelated'' labor
should be attributed to subject merchandise. For labor factors for the
roughing mill, petitioners urge the Department to use as facts
available the highest per-ton labor rate of any other Anshan shop
involved in the production of subject merchandise.
Anshan states that roughing mill labor figures should be revised,
based on their August 21, 1997 submission, which reflects the number of
workers verified by the Department.
Other Sintering Labor: Petitioners argue that the Department should
revise other sintering plant labor according to discoveries made at
verification, and that the Department should assign sintering plant
maintenance to the production of subject merchandise rather than
overhead.
Anshan argues that it is not necessary to reclassify any of
Anshan's workers. Respondent maintains that Anshan properly identified
all of its labor expenses at each relevant production facility, and
classified its workers according to the Department's questionnaire
instructions; Anshan states, moreover, that the Department verified its
reporting methodology.
Iron-Making: Petitioners argue that certain workers that Anshan
identified as ``unrelated workers'' in the iron-making plant must be
included in labor costs of producing subject merchandise.
Anshan argues that the Department examined its classification of
workers at verification and noted the Department found no discrepancy
in this regard.
Department's Position: We agree with both respondents and
petitioners in part. Anshan provided a detailed description of the
functions and job positions for all workers both directly and
indirectly involved in the production of subject merchandise. In
addition, we verified labor categories at verification.
For the plate mill, we agree with petitioners and Anshan, and have
used revised plate mill figures that were based on the results of
verification.
For the roughing mill, we found at verification that we were unable
to verify the labor calculations submitted in the June 19, 1997
submission, as we could not tie these calculations to supporting
summary worksheets examined at verification. Consequently, for the
final determination, we have used the highest per-ton labor rate for a
mill contained in Anshan's August 21, 1997 submission concerning labor
calculations as facts available.
For other sintering labor, we have revised our calculations for the
final determination to reflect the results of verification in this
category. We disagree with petitioners that we should reclassify
sintering plant maintenance to the production of subject merchandise
rather than overhead. We examined the labor classifications at
verification and found no evidence that Anshan improperly classified
sintering plant maintenance workers.
Likewise, for iron-making, we examined Anshan's classification of
workers at verification and found no evidence that these workers were
improperly classified.
Comment 37: Material Inputs at No. 2 Steelmaking Plant
Petitioners argue that the Department should use facts available
for certain ``auxiliary materials'' used at the No. 2 Steelmaking plant
that were not reported to the Department, but discovered at
verification. Petitioners urge that the Department use the highest
consumption rate reported for the material (or similar material) by
Anshan or any other respondent at any stage of production.
Anshan disagrees, arguing that the auxiliary materials not included
in the reported factors for the No. 2 Steelmaking plant were either
refractory materials used in the repair and maintenance of equipment or
were used only for the production of non-subject merchandise. Anshan
argues that the refractory materials should be considered overhead
materials whose costs need not be reported individually because
overhead materials are included in the surrogate value for overhead and
thus do not require separate factor valuation.
As for other unreported material inputs, Anshan maintains that they
were excluded because they were not used in the production of subject
merchandise sold by Anshan in the United States during the
investigation period.
Department's Position: We agree, in part, with both Anshan and
petitioners. We agree with Anshan that some of their ``auxiliary
materials'' are properly classified as refractory materials, and thus
are part of overhead.
However, for certain other inputs, we agree with petitioners. There
is no evidence on the record to confirm the accuracy of Anshan's
contention that the five unreported inputs other than refractory
materials were used only for the production of non-subject merchandise.
We were unable to find supporting documentation either in the
verification report, verification exhibits or questionnaire responses
to confirm that these inputs were only used for the production of non-
subject merchandise. Consequently, since Anshan did not report these
factors, we have applied facts available for these certain inputs used
in the Number 2 Steelmaking plant for the final determination.
We have information on consumption levels from Anshan concerning
only one of the five unreported inputs. Consequently, as facts
available, for three unreported inputs for which we have no information
concerning
[[Page 61990]]
consumption levels for either the exact input or an input was
substantially the same, we applied the consumption rate of the non-
reported input for which we have information. We determined that a
fourth unreported input was substantially the same as a reported input,
and used the consumption value for the reported input. To value each of
the five inputs, we used the surrogate value from the Monthly
Statistics either for the input in question or if no such value was
available, for a similar input. Because some of the information
associated with this issue is business proprietary, please see the
Concurrence Memorandum of October 24, 1997.
Comment 38: By-Product Credits
Petitioners maintain that energy used for additional processing in
by-product production should be deducted from the by-product credit.
Petitioners maintain that if the respondent is receiving a credit for a
processed by-product, the energy used for additional processing must be
reported so that its value can be deducted from the credit.
Anshan argues that if energy is deducted from the by-product
credit, respondent should still receive a credit for its by-product
production.
Department's Position: We agree with both petitioners and
respondents. Because additional energy costs are incurred in processing
the by-product, energy costs should be deducted from the by-product
credits. Therefore, we will deduct energy used for additional
processing from the by-product credit. See Comment 44.
Comment 39: Credit for a By-Product Produced in Coke Plant
Petitioners argue that Anshan should receive no credit for a by-
product which was discovered at verification to have been misreported.
If the Department grants a credit for the by-product at issue,
petitioners urge that the surrogate value for the by-product be based
on the correction made at verification. If the by-product undergoes
additional processing, petitioners argue that the by-product credit
must be reduced by the value of such additional processing.
Anshan objects to petitioners' claim that the Department should
deny it a credit for the by-product at issue. Anshan argues that the
Department verified the amount of this by-product generated at the coke
plant; thus, Anshan is entitled to a credit for its production of this
by-product.
Department's Position: We agree with Anshan. We have revised the
by-product credit for the input which was correctly reported at
verification.
Comment 40: Raw Materials for Sintering Shop
Petitioners argue that the Department should use facts available
for certain raw material inputs in the sintering shop because Anshan
failed to provide the Department with understandable, usable data with
regard to these raw materials. Petitioners note that Anshan
misidentified one gas input used by the sintering plant; therefore,
petitioners urge that facts available should be used with regard to
this gas input.
Anshan argues that although there was some confusion at
verification regarding the correct translation of the input names,
there is no justification for using facts available. Anshan notes that
both petitioners and respondent appear to agree concerning the type of
materials in question. Consequently, Anshan argues that these materials
are already included in overhead and to include them again as raw
materials would result in double counting.
Department's Position: We disagree with petitioners that the
Department should use facts available for these raw materials. While it
was true that we encountered difficulties at verification concerning
the proper translation of these items, we were able to examine
supporting documentation concerning the input. Consequently, we
disagree with petitioners' assertion that Anshan did not provide
understandable, usable data with regard to these raw materials. Because
the details of this issue are business proprietary, please see the
Concurrence Memorandum for a more complete discussion of this issue.
Comment 41: Moisture Content of a Certain Factor
Petitioners allege that it was inappropriate for Anshan to strip
out moisture content of a certain input. Petitioners urge the
Department to inflate the value to obtain a weight based equivalent to
the weight basis used for the matching surrogate value.
Anshan argues that it would be improper and highly distortive for
the Department to inflate the reported factor in the manner proposed by
petitioners.
Department's Position: We agree with respondent. As the details
underlying this comment are business proprietary, please see the
Concurrence Memorandum.
Comment 42: Ministerial Errors
Petitioners argue that the Department should correct certain
ministerial errors in its preliminary determination as to Anshan
pertaining to ocean freight, transportation surrogate values, and
foreign inland freight.
First, with respect to ocean freight, petitioners note that a
ministerial error in the SAS program inadvertently truncated a data
field used in the calculations of the actual ocean freight rate paid on
an invoice-specific basis for a market economy carrier. Petitioners
also note that the SAS program failed to deduct freight charges for
certain invoices.
Second, with respect to transportation surrogate values for foreign
inland freight, petitioners note that the inflator the Department used
to develop the transportation surrogate value is incorrect. According
to petitioners, the truck transportation rate for Anshan should be
changed from $0.02km/MT to the $0.03/km/MT, which is the value cited in
the cable that is the source of the surrogate value, and which is the
value used for the other respondents.
Third, with respect to foreign inland freight, petitioners claim
that the Department inadvertently applied the surrogate freight rate
for truck to certain foreign inland freight factors for which the
proper transportation freight rate should be that for train.
Fourth, with respect to the freight expense incurred for fuel oil,
petitioners argue that the freight charge for fuel oil which is brought
to Anshan by truck should be revised from $0.20/MT to $0.03/km/MT, to
conform with the value cited in the cable which is the source of the
surrogate value used.
Anshan had no comment with respect to the alleged ministerial
errors identified by petitioners.
Department's Position: We agree with petitioners as to all of the
above ministerial errors and have made appropriate corrections for the
final determination.
2. BAOSHAN
Comment 43: Product Specificity
Petitioners argue that Baoshan's margin must be based on facts
available because its reporting methodology, even if faithfully
followed, does not provide an adequate factual basis for a final
determination. Petitioners claim that the information reported by
Baoshan, even if verified, does not provide an adequate basis for
calculation of a dumping margin, largely because of a lack of product
specificity. They argue that verification of an inadequate database
does not transform it into an adequate database.
Petitioners argue that Baoshan's factor information cannot be used
because it is not product-specific. Petitioners claim that Baoshan's
cost models and reporting of U.S. sales do not make distinctions on a
proper basis.
[[Page 61991]]
Petitioners claim that verification did not resolve these problems;
instead, it only confirmed that Baoshan applied a flawed methodology.
Petitioners argue that Baoshan's margin in the final determination
should be based on neutral facts available. For a more detailed
discussion of this issue, please see Baoshan's Factor Value Memorandum.
Baoshan argues that the information it reported was as product
specific as possible. Moreover, Baoshan argues that this information
was fully disclosed in Baoshan's February 14 and April 14, 1997
submissions as well as during verification. Baoshan states that the
Department never asked it to revise its calculations to make them more
product-specific than its records allowed. Accordingly, Baoshan argues,
there is no basis for rejecting the information it has submitted.
Department's Position: We agree with Baoshan. The Department
verified that Baoshan reported its factors of production in a manner as
product-specific as possible. The Department has determined that using
a database that conforms to Baoshan's records kept in the normal course
of business is a more reasonable reporting methodology and produces
less distortive results than would follow from the use of a constructed
reporting methodology that deviates from Baoshan's records.
Comment 44: Further Processing of By-Products
Petitioners state that, in the verification report for Baoshan, the
Department notes that one of the reported by-products was further
refined to produce two other by-products. Petitioners argue that, as
with all other by-products resulting from all other processes
(regardless of the respondent involved), the Department must ensure
that any surrogate value given as a credit for any by-product actually
matches the by-product of the plate production process, rather than
some further refined product. Petitioners claim that if the Department
cannot match the actual by-product of the plate production process, but
can only find a surrogate value for the further-processed material,
then that surrogate value must be offset by the value of further
processing. Petitioners argue that where the respondent has not
provided sufficient information to calculate the offset in such
circumstances, the by-product credit should be denied.
Baoshan did not comment on this issue.
Department's Position: We agree with petitioners. As the Department
noted in its verification report for Baoshan, one of its by-products
was further refined to produce two other by-products. The Department
also noted that Baoshan did not report the factors involved in the
further refinement. It is the Department's policy to only grant by-
product credits for by-products actually produced directly as a result
of the production process. A respondent must report the factors
associated with the further refining of a by-product if it wishes to
receive a credit for the further refined product. Because Baoshan
failed to report these factors, therefore, we are only granting a
credit for the one by-product directly produced in the production
process.
Comment 45: Inconsistencies Discovered at Verification
Petitioners argue that the Department should correct all
inconsistencies discovered at verification. Petitioners state that
proper surrogate values should be matched to each input, in the
proportions indicated in the verification report. Petitioners argue
that, where the record does not contain a suitable surrogate value, the
Department should use, as facts available, the most costly material for
each respective process on the record.
Baoshan agrees that all data discovered at verification to be
incorrect should be corrected for the final results. However, Baoshan
disagrees with petitioners' suggestion that the Department must assign
adverse facts available to value the factors affected by these changes.
Baoshan claims that the Department has a statutory obligation to
calculate margins as accurately and fairly as possible. Accordingly,
Baoshan states, regardless of when the factors information was
reported, the Department should assign representative surrogate values.
Department's Position: We agree with Baoshan. It is the
Department's policy to assign surrogate values that most closely match
the reported factor. We have surrogate values for all the inputs
referenced by this comment. Consequently, there is no need for the
Department to use facts available for these factors for the final
determination. Because this comment involves business proprietary
information, please see the Concurrence Memorandum for a more complete
explanation.
Comment 46: Freight Reporting
Petitioners argue that the Department found numerous discrepancies
in the freight information supplied by Baoshan; therefore, Baoshan's
reporting of freight factors is unreliable. Petitioners argue that, as
facts available, the Department should use the distance to the most
distant supplier for all freight factors. However, petitioners state if
the Department does not use facts available for all freight, then it
must correct certain ministerial errors relating to freight charges in
the preliminary determination. Petitioners allege ministerial errors
concerning two factors and the highest calculated freight rate.
Baoshan argues that petitioners misconstrued the Department's
verification report. Baoshan argues that the report discusses the
proper methodology for calculating freight distances for Baoshan's
suppliers of one input. Baoshan claims that, at verification, the
Department confirmed that its suppliers each supplied varying
quantities of an input during the investigation period--not identical
quantities as the Department had presumed in making the freight
calculation in the preliminary determination. Baoshan claims that the
Department's narrative in its verification report merely reiterates the
information that was previously submitted. Baoshan argues that this is
not a reason for calculating the freight costs for this input based on
facts available.
Baoshan argues that, contrary to petitioners' allegation, Baoshan
did provide distances and transportation mode for the input at issue.
Baoshan claims the accuracy of this information was confirmed by the
Department during verification. Accordingly, Baoshan argues, the
Department should use this information for the final determination.
Finally, Baoshan claims that petitioners' explanation of the
Department's ministerial errors with respect to freight does not
provide the correct calculation of these values. Baoshan argues that
the calculation which they submitted in their rebuttal brief should be
used.
Department's Position: We agree in part with Baoshan. While there
were errors discovered in Baoshan's reported freight factors, the
errors were not significant enough to render the information
unreliable. We have corrected all of the discovered inconsistencies for
this final determination. We disagree, however, that the Department
verified that Baoshan received different quantities of one input from
different suppliers. Because proprietary information is involved,
please see Analysis Memorandum for Baoshan for further discussion of
this issue. Because we were unable to rely on Baoshan's freight factor
data for one input (for reasons discussed in the Analysis
[[Page 61992]]
Memorandum), we have used facts available for freight distances in
connection with that factor. As facts available, we will continue to
use the same methodology used in the preliminary determination and take
a simple average of all of Baoshan's suppliers of this input.
Comment 47: Valuation of a Certain Input
Baoshan argues that a certain input, the identity of which is
business proprietary information, should be valued based on the input-
specific surrogate value information that has already been submitted on
the record.
Department's Position: We agree with Baoshan. Because of the
proprietary nature of this issue, see the Concurrence Memorandum.
Comment 48: Packing
Baoshan argues that the Department's preliminary calculation of the
cost of packing for Bao Steel's exports contain three errors. (1) The
preliminary determination, Baoshan claims, incorrectly calculated
packing costs based on reported information for loading materials. (2)
The Department's preliminary packing cost calculations used an invented
``estimate'' of the weight of each piece of packing material used by
Bao Steel. (3) In the preliminary determination, the Department added
an amount for freight costs to the surrogate value for the packing
materials used by Baoshan.
Department's Position: We agree in part with Baoshan. At
verification, the Department was able to ascertain the actual weight of
Baoshan's packing materials. Thus, in the final determination, we have
used this value instead of the estimated weight used in the preliminary
determination. In addition, we will not add freight to the surrogate
value for the materials used for packing because the materials are
self-produced. We disagree however, with Baoshan's claim that the
Department used information reported for loading materials instead of
that reported for packing materials. We used packing labor information
from Exhibit D-6 of Baoshan's February 19, 1997 response. Thus, we used
the same packing labor information for the final determination.
3. Liaoning/(Wuyang)
Comment 49: Verification of Labor Allocations
Petitioners assert that the document examined at verification
``Corporate Announcement of Organizational Structure'' was not
collected as a verification exhibit and does not in itself attest to
the accuracy of Wuyang's labor allocations. Petitioners allege that no
attempt was made to verify Wuyang's labor allocations by examining
company attendance records, payroll ledgers or other employment
records. Thus, according to petitioners, those allocations have not
been verified and cannot be considered reliable.
Department's Position: We disagree with petitioners. Wuyang's
verification report states that, in order to tie together the A-36
allocation calculation for labor, the Department examined the original
Ingot-Casting Cost Statement, the Finished Goods Inventory Ledger of
the Steelmaking Plant, and the Production Accumulation Report of the
Production Office. For steelmaking, the Department tied original
payroll records to the total number of employees reported to the
Department. The Department tied the total payroll expenses for these
same employees to the August and June 1996 payroll ledgers. The
Department noted no discrepancies. Thus, petitioners are in error when
they state that the Department did not examine employment records and
that therefore Wuyang's labor allocations were not verified.
Furthermore, the Department is not required to collect particular
documents as exhibits to attest that items have been verified to its
satisfaction.
Comment 50: Standard Raw Material Factor Consumption Rates
Petitioners argue that Wuyang's raw material consumption rates
ignore differences in chemical composition for different products. In
addition, petitioners maintain that there is no supporting
documentation to substantiate Wuyang's assertion that the material
input factors reported are the quantities required to produce a ton of
finished product sold on a theoretical weight basis. Petitioners claim
that Wuyang's reported factor values are unreliable and unverified and
that it failed to act to the best of its ability. Petitioners conclude
that the Department should decline to consider Wuyang's raw material
factor information and apply facts available.
Liaoning and Wuyang counter petitioners' claim by stating that they
fail to recognize that Wuyang's carbon steel plate is produced using
scrap steel and that although Wuyang's steel scrap factor inputs are,
in fact, identical for each grade of subject merchandise that the
company produces, the types of scrap steel used in production differ in
chemistry for different grades of merchandise. Liaoning and Wuyang
argue that Wuyang's reported material inputs thus account for the
differences in inputs required to produce different products and
reflect the actual material inputs for each product sold. Liaoning and
Wuyang conclude that Wuyang has provided the Department with complete
and accurate information, which has been verified without discrepancy.
With respect to production on a theoretical weight basis, Wuyang
explains that it has allocated actual consumption to theoretical
production in a manner similar to the manner the way in which a company
uses a standard cost system to allocate actual costs.
Department's Position: We agree with Liaoning and Wuyang. The
verification report does not note any discrepancies between what it
encountered at verification and what Wuyang reported. With respect to
the petitioners' criticism as to Wuyang's use of theoretical weights,
we note that Wuyang reported the actual amounts of material inputs
required to produce one theoretical ton of finished product.
Consequently, for the final determination, there was no need for the
Department to make any adjustment to factor or sales amounts due to
Wuyang's use of theoretical weight.
Comment 51: Reliability of Labor Allocations
Petitioners state that Wuyang's reported labor input rates are
understated and must be rejected. Petitioners conclude that the
Department must base the final results for Liaoning and Wuyang on the
adverse best information available pursuant to 19 U.S.C. Sec. 1677e(b)
and (c). Failing that, the Department must revise Wuyang's data. In
addition, petitioners argue that respondent made a clerical error in
its labor hour calculations.
Department's Position: We agree with petitioners that Wuyang's
reported labor input rates are understated, and we have therefore
recalculated those rates. We also agree that there was a clerical error
in the labor hours calculation, and have corrected that error for the
final determination. Because this issue involves business proprietary
information, please see the Concurrence Memorandum for a further
discussion of this issue.
Comment 52: Treatment of Heavy Oil, Oxygen and Coal Gas
Petitioners, citing Sebacic Acid from the People's Republic of
China, 62 FR at 10530 (March 7, 1997), state that, consistent with past
practice, heavy oil, oxygen, and coal gas should be treated as direct
energy inputs rather than as overhead expenses. Petitioners add that
[[Page 61993]]
Wuyang has never provided evidence that heavy oil was not a fuel and
that at no time has Wuyang explained how heavy oil was used in the
production process.
Liaoning and Wuyang have expressed opposition to the Department's
inclusion of heavy oil in energy costs. See Wuyang's submission of June
16, 1997. Liaoning and Wuyang state that in the event that the
Department disagrees with Wuyang and includes heavy oil in energy
costs, the Department should use the revised factor the Department
verified. Liaoning and Wuyang add that the Department used facts
available to determine Chinese inland freight for heavy oil. If the
Department were to value heavy oil as a factor of production rather
than including it in overhead, and thus were to require data for
calculating freight, the Department should use the freight distance
reported in its June 16, 1997 submission according to Liaoning and
Wuyang.
Department's Position: We agree in part with both petitioners and
respondents. At the preliminary determination we included electricity
and coal gas as direct materials as well as heavy oil with freight
added (see calculation memorandum from case analysts to the file, June
3, 1997). At verification, the Department learned that Wuyang had
mistranslated the measure for heavy oil as kilograms when it should
have been represented in jin, a Chinese unit of measure equivalent to
half a kilogram. See Memorandum to Edward Yang, Director, Office of AD/
CVD Enforcement Office 9, from Elizabeth Patience and Doreen Chen,
Analysts, August 5, 1997. However, neither at verification nor at any
other time did Wuyang provide evidence that heavy oil was not a fuel or
explain how it was used in the production process. We therefore: (1)
Used the revised usage factor for heavy oil described in the
verification report, (2) included electricity, coal gas and heavy oil
as direct energy inputs and (3) used the freight distance Wuyang
reported in its June 16, 1997 submission.
Comment 53: Transportation From Factory to Port
Petitioners maintain that Wuyang knew that the subject merchandise
it sold to Liaoning was destined for resale in the United States, and
Liaoning never took physical possession of the subject merchandise.
Accordingly, the surrogate value of the cost of transporting the
subject merchandise from the factory to the port of exportation should
be deducted from the U.S. price, conclude petitioners, in accordance
with the practice described in Brake Drums and Rotors, 62 FR at 9160,
9170.
Liaoning and Wuyang state that foreign inland freight should not be
deducted from Liaoning's export prices because this expense was not
incurred by Liaoning, but rather was incurred by its unaffiliated
supplier. They further argue that, at verification, the Department
ascertained that Wuyang's factory price included delivery of the
merchandise to the seaport where it was shipped to the United States by
Liaoning. Respondent argues that in Titanium Sponge From the Russian
Federation: Final Results of Antidumping Duty Administrative Review, 61
FR at 58525 (November 15, 1996) (``Titanium Sponge''), the Department
determined that ``when a reseller, not the producer, is considered the
exporter, the ``original place of shipment'' is the point from which
the reseller shipped the merchandise.'' Respondent concludes that
Liaoning's acquisition price thus included all inland freight expenses,
and the cost of transporting the subject merchandise from the factory
to the PRC seaport should hence be treated as a component of Wuyang's
total costs instead of a deduction from the price to the U.S. customer.
Department's Position: We agree with petitioners. In Brake Drums
and Rotors we explained that it is the Department's ``normal
methodology to strip all movement charges, including all foreign inland
freight, from the U.S. price being compared to the NME normal value
based on factors of production.'' While it is true that in Titanium
Sponge the Department did not deduct factory-to-port movement charges
from the U.S. starting price, and instead included ``in normal value an
amount for the inland freight,'' the circumstances in that case were
different from those in the current investigation. Specifically, in
Titanium Sponge, (1) the subject merchandise produced in an NME country
was sold to an exporter located in a market economy without knowledge
on the part of the producer that the United States was the ultimate
destination for the merchandise, and (2) the exporter took physical
possession of the subject merchandise. Liaoning is not located in a
market economy; therefore the actual price it paid to Wuyang, which
also is not a market economy firm, is not relevant. (Furthermore,
Liaoning's supplemental section B questionnaire response states that
``Liaoning does not hold any inventory of the subject merchandise prior
to export''). The expense incurred to transport the steel to the port
is part of the cost of the U.S. sale and the factory was the original
place of shipment for the sale. Thus the Department has continued to
deduct the surrogate value of the cost of transporting the subject
merchandise from the factory to the port of exportation from the U.S.
price in its final determination calculations.
4. Shanghai Pudong
Comment 54: Facts Available
Petitioners allege that the verification team's investigation of
Shanghai Pudong revealed that the company had been repeatedly
misstating and concealing information concerning many critical aspects
of this investigation. See, e.g., Verification Report at 1-2 (listing
seven of the items that had been misreported by this respondent).
Petitioners contend that the consistency and repetition of Shanghai
Pudong's omissions and misrepresentations suggest that these were not
innocent mistakes, but calculated to obtain results more favorable to
Shanghai Pudong, demonstrating its repeated lack of cooperation in
providing the requested information. Petitioners argue that Shanghai
Pudong's actions in this regard have prejudiced the petitioners and
warrant application of adverse facts available.
Shanghai Pudong argues that petitioners' accusation and request for
adverse facts available is completely without merit. Shanghai Pudong
asserts that the only evidence offered by petitioners of the alleged
omissions were errors corrected by Shanghai Pudong at the start of
verification. Shanghai Pudong asserts that it went to great lengths to
ensure that the information provided to the Department was as accurate
and complete as possible and that the Department verified the responses
finding only minor errors.
Department's Position: We disagree with petitioners. The errors
cited by petitioners were corrected by respondents prior to the start
of the Department's verification. In addition, the Department examined
the errors in question and determined that they were not large enough
or sufficiently different from the previous responses to constitute a
new questionnaire response. Consequently, the Department determines
that there is no basis rejecting Shanghai Pudong's entire response for
the use of total adverse facts available in this situation.
Comment 55: Shanghai Pudong and Shanghai No. 1
Petitioners contend that Shanghai Pudong and Shanghai No. 1, which
did not respond to the Department's
[[Page 61994]]
questionnaire, should be collapsed by the Department and treated as a
single entity because, they allege, both plants are controlled by
Shanghai Metallurgical. Petitioners contend that Shanghai Metallurgical
is involved in the business operations of Shanghai Pudong and Shanghai
No.1. They note that the Department discovered at verification that
Shanghai Metallurgical appoints the Chairman of the Board of both
Shanghai Pudong and Shanghai No.1. Additionally, petitioners note that
all large investments by Shanghai Pudong and Shanghai No. 1 must be
approved directly by Shanghai Metallurgical. Petitioners claim that
respondents characterization of Shanghai Pudong and Shanghai No. 1 as
``competitors'' is simply preposterous. Petitioners note that there is
an annual meeting between Shanghai Metallurgical, Shanghai Pudong and
Shanghai No. 1 which includes discussion of business targets,
investment and productivity. Petitioners state that no such meetings or
discussions pursuant to such meetings could possibly take place between
true competitors.
Petitioners also contend that the production facilities of Shanghai
Pudong and Shanghai No.1 are not substantially different, thus
presenting the possibility of manipulation of price or production.
Therefore, that the two companies should be treated as one entity for
purposes of calculating an antidumping margin.
Shanghai Pudong asserts that under the provisions of Section
771(33) of the Tariff Act, Shanghai Pudong and Shanghai No. 1 are not
affiliated. It states that the two companies are not siblings, spouses,
or ancestors/lineal descendants. The two firms, Shanghai Pudong
contends, are not officers, directors, partners or employers nor do
they control each other or own stock in one another. Shanghai Pudong
argues that Shanghai Metallurgical does not exercise control over
either it or Shanghai No. 1. Accordingly, they argue, this is not a
case of ``[t]wo or more persons directly or indirectly controlling,
controlled by, or under common control with, any person'' under the
terms of Section 1677(33)(f) of the statute. Consequently, Shanghai
Pudong claims there is no basis for finding that Shanghai Pudong and
Shanghai No. 1 are affiliated under the statute.
Shanghai Pudong states that it would also be improper to collapse
the two companies because of significant differences in their
production facilities and capabilities.
Shanghai Pudong further claims that there is no possibility of
manipulation of price or production by Shanghai Pudong and Shanghai
No.1. It asserts that the two companies are independent entities that
do not share any managerial employees or board members. It notes that
there are no joint ventures between the companies, and claims that they
do not share marketing information--each company makes independent
marketing and pricing decisions. They also do not share information
regarding production or scheduling. Consequently, Shanghai Pudong
asserts, there is absolutely no evidence of any potential for the
manipulation of prices or production in the event that Shanghai Pudong
and Shanghai No. 1 are not collapsed.
Shanghai Pudong also notes that collapsing it with Shanghai No. 1
for the purposes of calculating costs would directly contradict the
Department's past decisions. It claims in the German Large Newspaper
Printing Press case, the Department acknowledged that the related
producers of identical subject merchandise satisfied the normal
criteria for collapsing, but nevertheless refused to collapse the
companies for the purpose of its cost calculations. See Notice of Final
Determination of Sales at Less Than Fair Value: Large Newspaper
Printing Presses from Germany (``LNPPs from Germany''), 61 FR 38166,
18188 (July 23, 1996). The Department held that the criteria ``relate
to collapsing companies for sales purposes rather than cost.'' Shanghai
Pudong claims there is clearly no basis for collapsing it with Shanghai
No. 1--competitors who do not have any business dealings with one
another--for the purposes of calculating costs.
Department's Position: Petitioners claim that the relationship
which Shanghai Pudong and Shanghai #1 share with Shanghai Metallurgical
requires that the Department ``collapse'' the two producers based on an
analysis under the criteria set forth in Nihon Cement. See Nihon Cement
Co. v. United States, 17 CIT 400 (1993).
We have construed petitioners' claim as a request to examine
whether it is appropriate for Shanghai Pudong to be treated a separate
entity for purposes of assigning a dumping margin.
The sole reason advanced by petitioners for arguing that Shanghai
Pudong should not be given a separate rate is that this result is
precluded by Shanghai Metallurgical's alleged control over Shanghai
Pudong and Shanghai No. 1.
In NME cases we only assign separate rates to exporters and
Shanghai No. 1 did not export to the United States.
As discussed above in Comment 1, we have determined that Shanghai
Pudong has met the criteria for separate rates by demonstrating both a
de facto and a de jure absence of government control over its export
operations. Shanghai No. 1 has made no such demonstration and therefore
is not entitled to a separate rate.
Furthermore, we note that, even if we had conducted a
``collapsing'' analysis, with respect to Shanghai Pudong and Shanghai
No.1, the results would have been identical because substantial
retooling would be required in order for Shanghai Pudong and Shanghai
No. 1 to restructure manufacturing priorities. Finally, we determine
that although there is some potential for manipulation of price or
production, this potential is not ``significant.'' Because business
proprietary information is associated with these conclusions, please
see the Concurrence Memorandum for details.
We also note that Shanghai Pudong incorrectly cites Comment 13 of
LNPPs from Germany for the proposition that the Department will not
``collapse'' producing companies whose sales data it is not using.
Because the comment cited involved a narrow issue of averaging the cost
of manufacturing the subject merchandise with respect to the respondent
company and its affiliate, the question of ``collapsing'' (i.e.,
treating two firms as a single respondent) was not raised in that case.
Therefore, what the Department meant by the last sentence of Comment 13
in LNPPs from Germany was that the five collapsing criteria cited by
the LNPPs respondent referred to ``collapsing companies,'' rather than
to decisions solely involved cost averaging.
Comment 56: Unreported Consumption of an Input
Petitioners contend that Shanghai Pudong's consumption and
conversion factors for a certain input are incorrect. Petitioners state
that information obtained at verification was undocumented and
inconsistent with information previously submitted by respondent.
Petitioners note that two of Shanghai Pudong's facilities showed a
different usage rate per ton of the input. Accordingly, they urge that
the Department should base valuation of the input on adverse
information available.
Shanghai Pudong argues that petitioners' arguments are flawed and
should be disregarded. It notes that the usage per ton of the input
varies by facility. In addition, it contends that it did not track the
usage of the input in the normal course of business. Consequently, at
the request of the Department, Shanghai Pudong
[[Page 61995]]
calculated a conversion calculation that yielded the values reported to
the Department.
Department's Position: We agree with Shanghai Pudong. We reviewed
this issue at verification and found that the usage rate for the input
does vary by facility. Consequently, we asked Shanghai Pudong to
calculate the conversion factor and amount of the material necessary to
produce the input which we examined at verification. Since Shanghai
Pudong's methodology was reasonable, we have accepted these values for
the final determination. Because this issue involves business
proprietary information, please see the Concurrence Memorandum for a
more complete explanation.
Comment 57: Transportation Charges for Certain Inputs
Petitioners contend that the Department should use adverse facts
available to value transportation charges for a certain input. They
argue that, at verification, the Department found that Shanghai
Pudong's reported information for the largest suppliers of this input
were incorrect. Petitioners argue that, as adverse facts available, the
Department should calculate freight charges for this input based on the
longest distance and highest volume reported.
Petitioners also urge the Department to use adverse facts available
for the transportation distances for four other inputs. Petitioners
note that the Department discovered errors at verification with respect
to these inputs.
Shanghai Pudong asserts that it attempted to provide support for
the input at verification but was not allowed to by the Department.
Shanghai Pudong argues that despite the errors uncovered at
verification, the information reported was basically accurate and can
be used for the final determination.
Concerning the transportation distances for the four other inputs,
Shanghai Pudong notes that the Department verified the information and
found only minor errors. Shanghai Pudong claims that the Department
should follow its established practice and use the verified information
in the final determination, citing Ferrosilicon from Brazil, 59 FR at
732, 736 (January 6, 1994) and Sulfur Dyes, 58 FR at 7537, 7543.
Department's Position: We agree with petitioners in part. We found
at verification that Shanghai Pudong incorrectly reported its top ten
suppliers for a certain input. The Department examined Shanghai
Pudong's documentation and methodology with the assistance of its staff
and found it to be incorrect. Consequently, for the final
determination, we calculated the freight distances for this input using
the longest distance reported for the input.
However, we disagree with petitioners regarding the transportation
information supplied for the other four inputs. The Department verified
this information and found only minor errors. Consequently, we have
determined that it is not necessary to use facts available for the
distances for these inputs. Due to the proprietary nature of details
concerning this issue, see the Concurrence Memorandum.
Comment 58: Unreported Inputs From Unaffiliated Company
Petitioners contend that, at verification, the Department asked
for, but was unable to obtain from Shanghai Pudong, certain information
concerning inputs from an unaffiliated company. They claim that certain
information was not part of the record and, therefore, the Department
should base its calculations on adverse facts available.
Shanghai Pudong argues that the petitioners misrepresent the facts
regarding the operations of the unaffiliated company. Shanghai Pudong
contends that there is information on the record concerning certain
inputs that it was able to obtain from the company. Shanghai Pudong
states that for one input, it was unable to obtain the information from
the unaffiliated entity. However, it notes that it attempted to fully
cooperate with the Department. Further, it claims that petitioners'
suggestion for using facts available for this situation is
inappropriate because this is not a situation in which an interested
party failed to cooperate.
Department's Position: We agree with respondents. Because of the
proprietary nature of the details of this issue, see the Concurrence
Memorandum.
Comment 59: Gas Inputs
Petitioners contend that Shanghai Pudong misled the Department by
not correctly reporting gas inputs that were used in a certain
production facility. Petitioners urge the Department to use adverse
facts available for these gas inputs.
Shanghai Pudong argues that petitioners misunderstand the
production process and have erroneously stated where the inputs are
generated. Shanghai Pudong claims that the production facility
accounted for the inputs in question in the ``miscellaneous expenses''
category. Shanghai Pudong also notes that, in the normal course of
business, the facility only consumed trivial amounts of these inputs.
Consequently, Shanghai Pudong did not track these inputs in its normal
record keeping system. Therefore, respondents state, there is no need
to use facts available in this situation.
Department's Position: We agree with respondent. We found at
verification that Shanghai Pudong did use small amounts of certain
inputs in a particular facility and that respondent included these
inputs in the ``miscellaneous expenses'' of its monthly production
report.
Comment 60: Adjustment of Labor Inputs
Petitioners argue that the Department should adjust Shanghai
Pudong's reported labor inputs upward to account for the cost factors
associated with transporting slabs between Shanghai Pudong's
facilities. They contend that, because respondent did not report these
factors, the Department should use adverse facts available to calculate
labor costs incurred in the transportation process.
Shanghai Pudong asserts that the labor used to move materials
between facilities is properly treated as an overhead expense. They
further state that they notified the Department that they treated this
expense as part of overhead in the supplemental questionnaire response.
Shanghai Pudong further notes that the Department never notified
Shanghai Pudong that this methodology was incorrect in any way.
Shanghai Pudong argues that petitioners' arguments for the use of facts
available are incorrect and should be rejected.
Department's Position: We agree with Shanghai Pudong that the labor
used to move materials between facilities is properly treated as
overhead. We verified and accepted Shanghai Pudong's methodology for
reporting the workers involved and the unit with which they are
associated.
Comment 61: Assignment of Appropriate Surrogate Values for a Certain
Input
Respondents argue that the Department should assign appropriate
surrogate values to the two different grades of a certain input used by
Shanghai Pudong. They maintain that because the Department discussed
usage of different grades at verification and because these two grades
vary substantially in market value, the Department should assign
appropriate surrogate values to each of the grades actually used in the
production process.
Petitioners contend that there is no evidence on the record to
support respondents' proposed methodology of
[[Page 61996]]
valuing the input by grade. According to petitioners, the Department
never verified the quantity and value of the different grades produced
or consumed. The new information submitted by respondents should be
disregarded as it contains unverified information and unexplained
calculations based on the unverified information. Petitioners suggest
valuing this input as they suggested in their comment for the relevant
surrogate values.
Department's Position: We agree with petitioners that this
information was new at verification and represents a major change to
the data which had been previously submitted. It has been the
Department's practice that if this information constitutes a
significant change, the Department may not use this information in the
final determination. Failing to report inputs in a timely manner
clearly constitutes a major impediment to the investigation. See 19
U.S.C. 1677e((a)(2)(c)). Moreover, by not reporting certain inputs
until after the due date for such information, Shanghai Pudong has
failed to act to the best of its ability to comply with the
Department's requests for timely submissions of information.
However, the Department, in keeping with our position in comment 29
above, agrees that it is our responsibility to value each of the grades
of the input separately, to the best of our ability. Therefore, we have
valued the two grades reported before verification separately. We are
valuing one grade of the input at the market economy price paid by the
respondent and we are valuing the other grade of the same input with
Indian Monthly Statistics. See Shanghai Pudong's factor valuation
memorandum for more information on this issue.
Comment 62: Ministerial Errors
Petitioners allege that the Department made certain ministerial
errors in the preliminary determination with respect to Shanghai
Pudong.
Factor Costs for Certain Inputs: Petitioners argue that the
Department should value two inputs based on the production factors
submitted by Shanghai Pudong rather than Indian surrogate values.
Respondents agree with petitioners that the Department should use its
reported factors rather than the values from Indian Monthly Statistics.
Transportation Surrogate Values: Petitioners allege that the
Department used an incorrect transportation surrogate value for truck
freight in the preliminary determination.
Respondents had no comment on this issue.
Freight Error: Petitioners contend the Department incorrectly
calculated the freight charges in the preliminary determination.
Respondents did not comment on this issue.
Respondents had no comment on this issue.
Freight for a Certain Input: Petitioners argue that the Department
should revise its calculation of the freight charges associated with a
certain input. Respondents did not comment on this issue.
Department's Position: (a) Factor costs for certain inputs: We have
used surrogate values from Indian Monthly Statistics for these inputs.
(b) Transportation surrogate value: We agree with petitioners and have
corrected the error for the final determination. (c) Freight error: We
agree with petitioners and have corrected the error for the final
determination. (d) Freight for a Certain Input: We agree with
petitioners that we incorrectly calculated freight for a certain input
in the preliminary determination. However, the ministerial error
allegation is irrelevant to the final determination as Shanghai Pudong
submitted revised transportation distances which correct for this
error. Because of the proprietary nature of the details of these
issues, see the Concurrence Memorandum for a more complete discussion.
5. WISCO
Comment 63: Facts Available: Certain Factors
Petitioners argue that, because certain factor inputs were
misreported or withheld and only discovered at verification, the
Department should apply adverse facts available for these inputs. In
particular, they contend that WISCO did not report the inputs of
certain factors at particular stages of production. Second, they argue
that WISCO misreported the amount of by-product electricity generated
at a certain stage of production. Additionally, they contend that WISCO
misreported certain by-products. Finally, they argue that WISCO failed
to report distances for certain material inputs. They contend that this
misreporting constitutes a significant impediment to this investigation
and as such, the Department should apply adverse facts available in
making its final determination. See 19 U.S.C. 1677e ((a)(2)(c)), 19
U.S.C. 1677e (b), and 19 U.S.C. 1677m(e) (1996).
WISCO asserts that the errors discovered at verification were minor
in nature and did not impede the investigation. It contends that the
Department typically uses information to which minor correction have
been made in its final determination.
Department's Position: We agree with WISCO in part. We found that
five of the six errors that the Department discovered at verification
were minor in nature and do not justify the use of adverse facts
available. Our review of these five errors indicates that they were
caused by oversight or clerical error on the part of WISCO.
Consequently, we disagree with petitioners' assertion that these errors
clearly constituted a significant impediment to this investigation or
that they proved that WISCO failed to act to the best of its ability to
comply with a request for information. We note that it has been the
Department's position in the past to accept such changes for the final
determination of an antidumping investigation. See, e.g., Ferrosilicon
from Brazil, 59 FR at 736; Sulfur Dyes, 58 FR at 7543.
However, we agree with petitioners that one of the six errors
indicated that WISCO did not report the inputs of certain factors at
particular stages of production. Therefore, for these inputs we have
applied facts available for the final determination. Because this
involves proprietary information, please see the Concurrence Memorandum
for a more complete explanation.
Comment 64: By-Product Credits
Petitioners contend that the Department should reject WISCO's
claimed credits for by-products at a the coke-making facility. They
allege that, at verification, the Department discovered that many of
the agents used to further process a certain by-product into other by-
products are listed on WISCO's production reports but were not reported
to the Department. Additionally, they argue that the Department should
not allow the offset because the claimed by-products require further
processing. For this reason, they argue that the Department should
apply facts available and deny any credit for these by-products,
relying on 19 U.S.C. 1677e(a) and (b).
Respondents argue that petitioners' arguments appear to be based on
a basic misunderstanding of WISCO's reporting of factors used and
products produced at WISCO's coke-making facility. WISCO maintains that
almost all of the factors used to process the by-products of the coke-
making facility were included in the reported factors of production and
that the minor reporting errors discovered during verification
regarding factors used in the coke-
[[Page 61997]]
making facility consisted of the omission of certain inputs used to
process a by-product. It contends that it told the Department during
verification that only a few inputs are consumed during processing.
Therefore, WISCO argues that the only relevant omissions of factors in
the particular facility were the quantities of certain inputs used in
the processing of the by-product. Furthermore, they assert that the
verification report indicates that these quantities were reported in
the production records provided to the Department during verification
and are included in the record in Verification Exhibit W-24. WISCO
urges the Department to use this verified information to determine the
quantity of inputs at the facility.
Department's Position: We agree with petitioners in part. The
Department noted in its verification report that ``WISCO did not report
the factors used to further process [the inputs]. In fact, many of the
agents used to refine [the inputs] are listed on the production
reports, but were not reported by respondent.'' The Department only
discovered these factors in examining the production reports at the
beginning of verification, because WISCO did not submit this
information prior to verification. It is the Department's general
policy to only grant by-product credits for by-products actually
produced directly as a result of the production process. A respondent
must report the factors associated with the further refining of a by-
product if they wish to receive a credit for the further refined
product. Even though these factors were in the production reports,
WISCO failed to report these factors to the Department. Therefore, we
have denied any credit for these by-products for the final
determination. Because this issue involves business proprietary
information, please see the Concurrence Memorandum for more
information.
Comment 65: Facts Available
Petitioners contend that market economy purchases of certain inputs
should be assigned adverse facts available because the company was
unable, at verification, to provide invoices for the purchases. See
Persico Pizzamiglio S.A. v. United States, 18 CIT 299, 305 (1994), 19
U.S.C. 1677m(i), and 19 U.S.C. 1677e (1988). In addition, they argue
that the domestically purchased input should be assigned facts
available for this company due to the company's failure to report
consumption of these inputs until after the questionnaire deadline. As
facts available, they argue that the Department should assign the
highest surrogate value on the record to each purchase.
Respondents maintain that, even though they were unable to provide
invoices to substantiate their market economy purchases of certain
inputs, they did provide the Department with copies of the relevant
contracts, which contained the price and the terms of sale, and Chinese
Government Customs (CCIB) forms showing the quantities imported. They
contend that all relevant information regarding WISCO's market economy
purchases of these inputs were verified by the Department and should be
used in the final determination.
Department's Position: We agree with petitioners that we should
assign adverse facts available to market economy purchases of inputs at
issue. We found at verification that WISCO was unable to provide
invoices for the purchases of these inputs. We did examine the terms of
sale based on the contracts and the CCIB forms. The CCIB forms do not
include prices, and while the contract show the original arrangements,
they may not reflect the prices ultimately paid. This is why the
Department relies on invoices reflecting the amount actually billed and
the currency in which payment was required. These invoices should be
available to WISCO, and WISCO's failure to produce them casts doubt on
its assertion that the contract terms were final. For the final
determination, we are using, as facts available, a single surrogate
value from Indian Monthly Statistics for these inputs. Because this
issue and our calculation of adverse facts available involves business
proprietary information, please see the Concurrence Memorandum for a
more complete explanation of the issue and our methodology.
Comment 66: Financial Records
Petitioners, citing Ansaldo Componenti, S.p.A. v. United States,
628 F. Supp. 198, 204 (CIT 1986) argue that the Department should apply
adverse facts available because WISCO failed to provide certain
financial records requested by the Department in the supplemental
questionnaire. See also 19 U.S.C. 1677e(a).
WISCO claims that, although it did decline to submit copies of
these documents due to legitimate business concerns, this decision did
not impede the course of the investigation. In addition, WISCO states
that the Department did not inform it that its response was deficient
in any way. WISCO maintains that, in non-market economy cases, issues
regarding the actual profits earned by non-market economy producers and
regarding its actual non-operating income and expenses are not relevant
to the investigation. Instead, this information is subsumed in the SG&A
expense rate and the profit rate that are obtained from a surrogate
country for use in the Department's normal value calculations.
Therefore, WISCO argues that adverse facts available is not warranted
in this case.
Department's Position: We agree with respondents that, although
WISCO did not provide the requested financial reports, it did provide a
sufficient explanation of why this information is considered sensitive.
We also determined that the information contained in the financial
reports was not necessary to the investigation and, therefore, WISCO's
failure to provide it did not impede the course of the investigation.
Consequently, we disagree with petitioners claim that we should use
adverse facts available for WISCO based on this issue. Because this
issue involves business proprietary information, please see the
Concurrence Memorandum for a more complete explanation.
Comment 67: Product Specificity
Petitioners contend that the Department should reject WISCO's claim
that it is unable to report certain input factors based on width and
other characteristics. They argue that, in fact, other information
WISCO submitted on the record suggests that WISCO could have reported
these characteristics. Accordingly, petitioners urge the Department to
apply adverse facts available.
WISCO maintains that it properly answered the Department's March
12, 1997 supplemental questionnaire on this issue and explained therein
why width cannot be a distinguishing factor for WISCO in the assignment
of control numbers. The Department, they argue, did not notify WISCO
that its response was deficient in any way and at verification, the
Department examined WISCO's production records and verified that its
descriptions were correct.
Department's Position: We agree with WISCO that its response to the
supplemental questionnaire was sufficient to explain why WISCO was
unable to report input factors based on certain characteristics. At
verification, we examined WISCO's records and found them to be
consistent with the response. Therefore, we disagree with petitioners'
claim that the Department should use facts available for this issue.
[[Page 61998]]
Comment 68: Adjustment of Labor Inputs
Petitioners argue that the Department should adjust WISCO's
reported labor inputs upward to account for the significant materials
handling costs associated with transporting materials and equipment
between WISCO's facilities. They contend that, because labor may play a
more significant role in the transportation process than is indicated
by WISCO's current allocation methodology, the Department, using
adverse facts available, should calculate labor and other costs
incurred in the transportation process and use this information to
adjust upward the labor factor usage rates. See 19 U.S.C. 1677b(c)(3).
WISCO asserts that the labor used to move materials between
facilities is properly treated as an overhead expense. It further
states that the Department verified that the bulk of the materials are
transported between facilities using conveyor belts and pipelines and,
therefore, petitioners' assertion that the labor costs associated with
the transportation of material is significant is factually incorrect.
Furthermore, WISCO maintains that it has a separate transport unit that
is responsible for movement of materials and equipment and it is not
possible to link specific inputs used in the transport unit to the
production of only subject merchandise. WISCO argues that, even if the
Department decided to adjust WISCO's labor factors to account for labor
employed in the internal transport unit, the adjustment suggested by
petitioners is inappropriate because petitioners suggest that the
Department base its labor adjustment on the surrogate value for train
transportation. WISCO argues that there is no explanation for why the
Department should link a surrogate value for rail freight and labor
costs associated with internal shipment of materials within WISCO's
facilities. WISCO argues that petitioners' arguments should be
rejected.
Department's Position: We agree with WISCO that the labor used to
move materials between facilities is properly treated as overhead,
based on our observations at verification. In addition, we verified and
accepted WISCO's methodology for reporting workers involved in moving
material between facilities and the unit with which they are
associated.
Comment 69: Ministerial Error--River Freight
Petitioners contend that the Department made a ministerial error in
valuing river freight in the preliminary determination and should
correct it in the final determination. WISCO did not comment on this
issue.
Department's Position: We agree with petitioners that there was a
ministerial error in the portion of the SAS program used for valuing
river freight in the preliminary determination. We have corrected this
error for the final determination. See Comment 25 above.
Suspension of Liquidation
On October 24, 1997, the Department signed a suspension agreement
with the Government of the PRC suspending this investigation.
Therefore, we are instructing Customs to terminate the suspension of
liquidation of all entries of cut-to-length carbon steel plate from the
PRC. Any cash deposits of cut-to-length carbon steel plate from the PRC
shall be refunded and any bonds shall be released.
On October 14, 1997, we received a request from petitioners
requesting that we continue the investigation. We received a separate
request for continuation from the United Steelworkers of America, an
interested party under section 771(9)(D) of the Act on October 15,
1997. Pursuant to these requests, we have continued and completed the
investigation in accordance with section 734(g) of the Act. We have
found the following margins of dumping:
------------------------------------------------------------------------
Margin
Weighted-average manufacturer/exporter (percent)
------------------------------------------------------------------------
Anshan (AISCO/Anshan International/Sincerely Asia Ltd.).... 30.68
Baoshan (Bao/Baoshan International Trade Corp./Bao Steel
Metals Trading Corp.)..................................... 34.44
Liaoning................................................... 17.33
Shanghai Pudong............................................ 38.16
WISCO (Wuhan/International Economic and Trading Corp./
Cheerwu Trader Ltd.)...................................... 128.59
China-wide Rate............................................ 128.59
------------------------------------------------------------------------
China-Wide Rate
The China-wide rate applies to all entries of the subject
merchandise except for entries from exporters that are identified
individually above.
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determination. As our final determination is affirmative,
the ITC will determine, within 45 days, whether these imports are
causing material injury, or threat of material injury, to an industry
in the United States.
On October 24, 1997, the Department entered into an Agreement with
the Government of the PRC suspending this investigation. Pursuant to
Section 734(g) of the Act, petitioners, Liaoning and Wuyang have
requested that this investigation be continued. If the ITC's final
determination is negative, the Agreement shall have no force or effect
and the investigation shall be terminated. See Section 734(f)(3)(A) of
the Act. If, on the other hand, the Commission's determination is
affirmative, the Agreement shall remain in force but the Department
shall not issue an Antidumping duty order so long as (1) the Agreement
remains in force, (2) the Agreement continues to meet the requirements
of subsection (d) and (l) of the Act, and the parties to the Agreement
carry out their obligations under the Agreement in accordance with its
terms. See Section 734(f)(3)(B) of the Act.
This determination is published pursuant to section 735(d) of the
Act.
Dated: October 24, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-30393 Filed 11-19-97; 8:45 am]
BILLING CODE 3510-DS-P