Certain Stainless Steel Wire Rods From France: Preliminary Results of Antidumping Duty Administrative Review

[[Page 8915]]

DEPARTMENT OF COMMERCE

[A-427-811]

Certain Stainless Steel Wire Rods From France: Preliminary

Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review.

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SUMMARY: In response to a request by Imphy S.A., and Ugine-Savoie,

respondents, the Department of Commerce (the Department) is conducting

an administrative review of the antidumping duty order on certain

stainless steel wire rods from France. This review covers the above

manufacturers/exporters of the subject merchandise to the United

States. The period of review (POR) is August 5, 1993 through December

31, 1994.

We have preliminarily determined that respondents sold subject

merchandise at less than normal value (NV) during the POR. Interested

parties are invited to comment on these preliminary results. Parties

who submit argument in this proceeding should also submit with the

argument (1) a statement of the issue, and (2) a brief (no longer than

five pages, including footnotes) summary of the argument.

EFFECTIVE DATE: February 28, 1996.

FOR FURTHER INFORMATION CONTACT: Stephen Jacques or Jean Kemp, Office

of Agreements Compliance, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-

3434 or (202) 482-4037, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act), by the

Uruguay Rounds Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to the Department's regulations are to the

current regulations, as amended by the interim regulations published in

the Federal Register on May 11, 1995 (60 FR 25130).

Background

On December 29, 1993, the Department published in the Federal

Register (58 FR 68865) the final affirmative antidumping duty

determination on certain stainless steel wire rods from France, and

published an amended final determination and antidumping duty order on

January 28, 1994. On January 12, 1995, the Department published the

Opportunity to Request an Administrative Review of this order for the

period August 5, 1993-December 31, 1994 ( 60 FR 2941). The Department

received a request for administrative review from Imphy, S.A.,

(``Imphy'') and Ugine Savoie (``Ugine''), related producers/exporters

of the subject merchandise on January 30, 1995. We initiated the review

on February 15, 1995. On November 7, 1995, the Department published in

the Federal Register its notice extending the deadline in this review

(60 FR 56142).

The Department is now conducting this review in accordance with

section 751 of the Act. The review covers sales of certain stainless

steel wire rods by Imphy, Ugine, and their affiliated companies,

Metalimphy Alloys Corp. (``MAC''), and Techalloy Company, Inc.

(``Techalloy'').

Scope of the Review

The products covered by this administrative review are certain

stainless steel wire rods (SSWR), products which are hot-rolled or hot-

rolled annealed, and/or pickled rounds, squares, octagons, hexagons, or

other shapes, in coils. SSWR are made of alloy steels containing, by

weight, 1.2 percent or less of carbon and 10.5 percent or more of

chromium, with or without other elements. These products are only

manufactured by hot-rolling, are normally sold in coiled form, and are

of solid cross section. The majority of SSWR sold in the United States

is round in cross-sectional shape, annealed, and pickled. The most

common size is 5.5 millimeters in diameter.

The SSWR subject to this review is currently classifiable under

subheadings 7221.00.0005, 7221.00.0015, 7221.00.0020, 7221.00.0030,

7221.00.0040, 7221.00.0045, 7221.00.0060, 7221.00.0075, and

7221.00.0080 of the Harmonized Tariff Schedule of the United States

(HTSUS). Although the HTSUS subheadings are provided for convenience

and Customs purposes, our written description of the scope of the order

is dispositive.

Verification

As provided in section 782(i) of the Tariff Act, we verified

information provided by the respondent by using standard verification

procedures, including onsite inspection of the manufacturer's

facilities, the examination of relevant sales and financial records,

and selection of original documentation containing relevant

information. Our verification results are outlined in the public

versions of the verification reports.

Transactions Reviewed

In accordance with Section 751 of the Act, the Department is

required to determine the normal value and export price (EP) or

constructed export price (CEP) of each entry of subject merchandise

during the relevant review period. Because there can be a significant

lag between entry date and sale date for CEP sales, it has been the

Department's practice to examine U.S. CEP sales during the period of

review. Gray Portland Cement and Clinker from Japan; Final Results of

Antidumping Duty Administrative Review, 58 FR 48826 (1993) (Dept. did

not consider ESP (now CEP) entries which were sold after the POR). The

Court of International Trade has upheld the Department's practice in

this regard. See, The Ad Hoc Committee of Southern California Producers

of Gray Portland Cement v. United States, CIT Slip Op. 95-195, December

1, 1995.1

\1\ Although the CIT, in Ad Hoc, accepted that ``consideration

of all sales, rather than entries, made during the period of review

may result in the consideration of entries made prior to the

suspension of liquidation'', Ad Hoc is not a case in which the

respondent linked specific sales during the POR to specific entries

prior to the suspension of liquidation. Ad Hoc, Slip Op. at 19

(emphasis added).

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The Department has adopted an exception to its practice of

examining all U.S. sales during the period of review. That exception

applies when a respondent is able to demonstrate, to the satisfaction

of the Department, that the merchandise covered by a particular sale

entered prior to the suspension of liquidation pursuant to the

Department's preliminary determination in the LTFV investigation. See,

High-Tenacity Rayon Filament Yarn, Preliminary Results of Antidumping

Duty Administrative Review, 59 FR 32181 (1994) (specific sales excluded

when linked to pre-suspension entries); compare, Certain Corrosion-

Resistant Carbon Steel Flat Products from Australia; Preliminary

Results of Antidumping Duty Administrative Review, 60 FR 42507 (1995)

(sales not excluded when respondent unable to link them to specific

pre-suspension entries). Merchandise proven to have entered the U.S.

prior to the suspension of liquidation (and in the absence of an

affirmative critical circumstances finding) is not subject merchandise

within the meaning of section 771(25) of the Act.

In this review, respondent claimed that certain merchandise was not

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subject to review because it entered prior to the period of review for

sale by an affiliated U.S. company during the period of review. The

Department verified that respondent was able to link certain sales

during the period to entries of merchandise prior to the suspension of

liquidation. Because respondent has demonstrated that certain

merchandise entered prior to the suspension of liquidation, we excluded

sales of that merchandise from our analysis.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all

products produced by the respondent, covered by the description in the

Scope of the Review section, above, and sold in the home market during

the POR, to be foreign like products for purposes of determining

appropriate product comparisons to U.S. sales. Where there were no

sales of identical merchandise in the home market to compare to U.S.

sales, we compared U.S. sales to the next most similar foreign like

product on the basis of the characteristics listed in Appendix III of

the Department's June 20, 1995 antidumping questionnaire and additional

specifications listed in our December 1, 1995 supplemental

questionnaire. In making the product comparisons, we matched foreign

like products based on the physical characteristics reported by the

respondents and verified by the Department.

Level of Trade

As set forth in section 773(a)(2)(B)(i) of the Act and in the

Statement of Administrative Action (SAA) accompanying the Uruguay Round

Agreements Act, at 829-831, to the extent practicable, the Department

will calculate normal value based on sales at the same level of trade

as the U.S. sale. When the Department is unable to find sale(s) in the

comparison market at the same level of trade as the U.S. sale(s), the

Department may compare sales in the U.S. and foreign markets at a

different level of trade.

In accordance with section 773(a)(7)(A) of the Act, if we compare a

U.S. sale at one level of trade to normal value sales at a different

level of trade, the Department will adjust the normal value to account

for the difference in level of trade if two conditions are met. First,

there must be differences between the actual selling functions

performed by the seller at the level of trade of the U.S. sale and at

the level of trade of the NV sale. Second, the differences must affect

price comparability as evidenced by a pattern of consistent price

differences between sales at the different levels of trade in the

market in which normal value is determined. When constructed export

price is applicable, section 773(a)(7)(B) of the Act establishes the

procedures for making a constructed export price offset when: (1)

normal value is at a different level of trade, and (2) the data

available do not provide an appropriate basis for a level of trade

adjustment from the U.S. sale. Also, in accordance with section

773(a)(7)(B), to qualify for a CEP offset, the level of trade in the

home market must also constitute a more advanced stage of distribution

than the level or trade of the CEP.

In order to identify levels of trade, the Department must review

information concerning selling functions of the exporter. Therefore, in

addition to the questions related to the level of trade in our June 20,

1995, questionnaire, on December 13, 1995, we sent respondents

supplemental questions related to level of trade comparisons and

adjustments. We asked respondents to establish any claimed levels of

trade based on selling functions performed and services offered to each

customer or customer class, and to document and explain any claims for

a level of trade adjustment.

Respondents' reported one level of trade in the home market (to end

users) and two channels of distribution: 1) direct to end users; and 2)

through Ugine Service, a joint-venture between Imphy and Ugine which

acts as a selling arm. We examined and verified the selling functions

performed in each channel and found that the two sales channels

provided many of the same or similar selling functions including:

strategic planning, order evaluation, warranty claims, technical

services, inventory maintenance, packing and freight and delivery. We

found some differences between the two channels of trade in

advertising, customer contacts, computer systems (order input/invoice

system), and administrative functions. Overall, we determine that the

selling functions between the two sales channels are sufficiently

similar to consider them as one level of trade in the home market.

For the U.S. market, respondents claimed that they sold to two

levels of trade: 1) end users through MAC (EP sales); and 2)

distributors, e.g., MAC, Techalloy and US&A (CEP sales). We examined

and verified the selling functions performed for U.S. sales to end

users through MAC and determined that they are at the same level of

trade as home market sales. We then examined and verified that

different (fewer) selling functions were performed for U.S. sales to

distributors than for home market sales. Specifically, we found the

selling functions were sufficiently different in customer sales

contacts, technical services, inventory maintenance, computer systems

and administrative functions to warrant treating U.S. sales to

distributors and the home market sales as different levels of trade.

To the extent practicable, we compared normal value at the same

level of trade as the U.S. sale. Because we compared these CEP sales to

home market sales at a different level of trade, we examined whether a

level of trade adjustment may be appropriate. In this case, respondent

only sold at one level of trade in the home market; therefore, there is

no basis upon which respondent can demonstrate a consistent pattern of

price differences between levels of trade. Further, we do not have

information which would allow us to examine pricing patterns based on

respondent's sales of other products and there are no other respondents

or other record information on which such an analysis could be based.

Because the data available do not provide an appropriate basis for

making a level of trade adjustment but the level of trade in the HM is

a more advanced stage of distribution than the LOT of the CEP sale, a

CEP offset is appropriate. Respondents claimed a CEP offset for those

U.S. CEP and CEP/FM (CEP/Further Manufactured) sales compared to sales

in France through Ugine Service. We included a CEP offset for all sales

in France which are compared with CEP and CEP/FM sales in the United

States since the comparison of home market sales to CEP sales is at a

different level of trade. We applied the CEP offset to normal value or

constructed value, as appropriate (See Fair Value Comparisons Section,

below). The level of trade methodology employed by the Department in

these preliminary results of review is based on the facts particular to

this review. The Department will continue to examine its policy for

making level of trade comparisons and adjustments for its final results

of review.

Fair Value Comparisons

To determine whether sales of SSWR by respondents to the United

States were made at less than fair value, we compared the EP or CEP to

the normal value (NV), as described in the ``Export Price and

Constructed Export Price'' and ``Normal Value'' sections of this

notice. In accordance with section 777A(d)(2), we calculated monthly

weighted-average prices for NV and compared these to individual U.S.

transactions. Where possible, in calculating a monthly weighted average

normal

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value, we averaged home market sales across the channel of distribution

most comparable to that in which the U.S. transaction was made. Where

there were no home market sales through that channel of distribution,

we averaged home market sales through the other channel of

distribution.

Export Price and Constructed Export Price

We used EP, in accordance with subsections 772(a) and (c) of the

Act, where the subject merchandise was sold directly or indirectly to

the first unaffiliated purchaser in the United States prior to

importation and CEP was not otherwise warranted based on the facts of

record. In addition, we used CEP in accordance with subsections 772(b),

(c) and (d) of the Act, for those sales to the first unaffiliated

purchaser that took place after importation into the United States.

We made adjustments as follows:

We calculated EP based on packed prices to unaffiliated customers

in the United States. Where appropriate, we made deductions from the

starting price for discounts, foreign inland freight, foreign brokerage

and handling, international freight, U.S. inland freight, U.S.

brokerage and handling, and U.S. Customs duties. We also adjusted the

starting price for billing adjustments to the invoice price.

We calculated CEP sales based on packed prices to unaffiliated

customers. Where appropriate, we made deductions for early payment

discounts, credit expenses, warranty expenses, other direct selling

expenses and commissions. We deducted those indirect selling expenses,

including inventory carrying costs and product liability premiums, that

related to commercial activity in the United States. We also made

deductions for foreign brokerage and handling, foreign inland freight,

international freight, U.S. inland freight, U.S. brokerage and

handling, and U.S. duty and harbor fees. We also adjusted the starting

price for billing adjustments to the invoice price and for interest

revenue. Finally, we made an adjustment for CEP profit in accordance

with section 772(d)(3) of the Act.

Further Manufacturing

For product that was further manufactured after importation, we

adjusted for all value added in the United States, including the

proportional amount of profit attributable to the value added. We

computed profit based on total revenues realized on sales in both the

U.S. and home markets, less all expenses associated with those sales.

We then allocated profit to expenses incurred with respect to U.S.

economic activity (including further manufacturing costs), based on the

ratio of total U.S. expenses to total expenses for both the U.S. and

home market.

Normal Value

In order to determine whether there was a sufficient volume of

sales in the home market to serve as a viable basis for calculating NV,

we compared respondents' volume of home market sales of the foreign

like product to the volume of U.S. sales of the subject merchandise, in

accordance with section 773(a)(1)(C) of the Act. Since respondents'

aggregate volume of home market sales of the foreign like product was

greater than five percent of its aggregate volume of U.S. sales for the

subject merchandise, we determined that the home market was viable.

Therefore, we have based NV on home market sales.

Where appropriate, we deducted discounts, credit expenses, warranty

expenses, inland freight, inland insurance and packing. We also

adjusted the starting price for billing adjustments to the invoice

price and interest revenue. We did not adjust the starting price for

commissions in the home market (please see the Concurrence Memo for a

discussion of this issue).

To calculate the CEP offset, we took the home market indirect

selling expenses and deducted this amount from normal value, on home

market sales which were compared to U.S. CEP sales. We limited the home

market indirect selling expense deduction by the amount of the indirect

selling expenses incurred in the United States.

We made adjustments, where appropriate, for physical differences in

the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.

In accordance with the Department's practice, where the difference in

merchandise adjustment for any product comparison exceeded 20 percent,

we based normal value on CV. In addition, in accordance with section

773(a)(6), we deducted home market packing costs and added U.S. packing

costs.

Further, because we disallowed all home market commissions, we

deducted from normal value the lesser of either (1) the amount of

commission paid on a U.S. sale for a particular product, or (2) the

amount of indirect selling expenses incurred on the home market sales

for a particular product.

Price to CV Comparisons

Where we compared CV to EP, we deducted from CV the weighted-

average home market direct selling expenses and added the weighted-

average U.S. product-specific direct selling expenses.

Cost of Production Analysis

Based on the fact that the Department had disregarded sales in the

LTFV investigation because they were made below the cost of production

(COP), the Department found reasonable grounds in this review, in

accordance with section 773(b)(2)(A)(ii) of the Act, to believe or

suspect that respondents made sales in the home market at prices below

the cost of producing the merchandise. As a result, the Department

initiated an investigation to determine whether the respondents made

home market sales during the POR at prices below their COP within the

meaning of section 773(b) of the Act.

Before making any fair value comparisons, we conducted the COP

analysis described below.

A. Calculation of COP

We calculated the COP based on the sum of respondents' cost of

materials and fabrication for the foreign like product, plus amounts

for home market selling, general, and administrative expenses (SG&A)

and packing costs in accordance with section 773(b)(3) of the Act. We

relied on the respondents' reported COP amounts.

B. Test of Home Market Prices

We used the respondents' weighted-average COP for the POR. We

compared the weighted-average COP figures to home market sales of the

foreign like product as required under section 773(b) of the Act, in

order to determine whether these sales had been made at below-cost

prices within an extended period of time in substantial quantities, and

whether they were at prices which permit recovery of all costs within a

reasonable period of time. On a product-specific basis, we compared the

COP to the home market prices, less any applicable movement charges,

rebates, and direct and indirect selling expenses.

C. Results of COP Test

Pursuant to section 773(b)(2)(c), where less than 20 percent of

respondents' sales of a given product were at prices less than the COP,

we did not disregard any below-cost sales of that product because we

determined that the below-cost sales were not made in ``substantial

quantities.'' Where 20 percent or more of a respondent's sales of a

given product were at prices less than the COP, we disregarded the

[[Page 8918]]

below-cost sales because we determined that the below-cost sales were

made within an extended period of time in ``substantial quantities'' in

accordance with section 773(b)(2)(B) of the Act, and because we

determined that the below-cost sales of the product were at prices

which would not permit recovery of all costs within a reasonable period

of time, in accordance with section 773(b)(2)(D) of the Act. Where all

sales of a specific product were at prices below the COP, we

disregarded all sales of that product, and calculated NV based on CV,

in accordance with section 773(b)(1) of the Act.

D. Calculation of CV

In accordance with section 773(e) of the Act, we calculated CV

based on the sum of respondents' cost of materials, fabrication, SG&A ,

U.S. packing costs, interest expenses and profit as reported in the

U.S. sales databases. In accordance with sections 773(e)(2)(A), we

based SG&A and profit on the amounts incurred and realized by the

respondent in connection with the production and sale of the foreign

like product in the ordinary course of trade, for consumption in the

foreign country. We relied on the respondents' reported CV amounts. For

selling expenses, we used the weighted-average home market selling

expenses.

Arm's-Length Sales

Sales to affiliated customers in the home market not made at arm's

length were excluded from our analysis. To test whether these sales

were made at arm's length, we compared the starting prices of sales to

affiliated and unaffiliated customers net of all movement charges,

direct and indirect selling expenses, discounts and packing. Where the

price to the related party was 99.5 percent or more of the price to the

unrelated party, we determined that the sale made to the related party

was at arm's-length. Where no related customer ratio could be

constructed because identical merchandise was not sold to unrelated

customers, we were unable to determine that these sales were made at

arm's length and, therefore, excluded them from our analysis. See Final

Determination of Sales at Less Than Fair Value: Certain Cold-Rolled

Carbon Steel Flat Products from Argentina (58 FR 37062, 37077 (July 9,

1993)). Where the exclusion of such sales eliminated all sales of the

most appropriate comparison product, we made comparison to the next

most similar model.

Currency Conversion

For purposes of the preliminary results, we made currency

conversions based on the official exchange rates in effect on the dates

of the U.S. sales as certified by the Federal Reserve Bank of New York.

Section 773A(a) directs the Department to use a daily exchange rate in

order to convert foreign currencies into U.S. dollars, unless the daily

rate involves a ``fluctuation.'' For these preliminary results of

review, we have determined that a fluctuation exists when the daily

exchange rate differs from a benchmark by 2.25 percent. The benchmark

is defined as the rolling average of rates for the past 40 business

days. Therefore, when we determined a fluctuation existed, we

substituted the benchmark for the daily rate.

Preliminary Results of the Review

As a result of our comparison of USP and NV, we preliminarily

determine that the following weighted-average dumping margin exists:

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Manufacturer/exporter Period Margin

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Imphy/Ugine-Savoie........................... 8/5/93-12/31/94 5.01

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Parties to the proceeding may request disclosure within five days

of the date of publication of this notice. Any interested party may

request a hearing within 10 days of publication. Any hearing, if

requested, will be held 44 days after the date of publication or the

first business day thereafter. Case briefs and/or other written

comments from interested parties may be submitted not later than 30

days after the date of publication. Rebuttal briefs and rebuttals to

written comments, limited to issues raised in those comments, may be

filed not later than 37 days after the date of publication of this

notice. The Department will publish the final results of this

administrative review, including its analysis of issues raised in any

written comments or at a hearing, not later than 180 days after the

date of publication of this notice.

Upon completion of this review, the following deposit requirements

will be effective upon publication of the final results of this

antidumping duty review for all shipments of SSWR from France, entered,

or withdrawn from warehouse, for consumption on or after the

publication date, as provided by section 751(a) of the Tariff Act: (1)

the cash deposit rate for the reviewed companies will be that

established in the final results of review; (2) for exporters not

covered in this review, but covered in the LTFV investigation, the cash

deposit rate will continue to be the company-specific rate from the

LTFV investigation; (3) if the exporter is not a firm covered in this

review, or the original LTFV investigation, but the manufacturer is,

the cash deposit rate will be the rate established for the most recent

period for the manufacturer of the merchandise; (4) the cash deposit

rate for all other manufacturers or exporters will continue to be 24.51

percent, the ``All Others'' rate made effective by the LTFV

investigation. These requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

These preliminary results of review are published pursuant to

section 751(a)(1) of the Act and 19 CFR 353.22.

Dated: February 28, 1996.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 96-5259 Filed 3-5-96; 8:45 am]

BILLING CODE 3510-25-P