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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-811]

Certain Stainless Steel Wire Rods From France: Final Results of

Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Final Results of Antidumping Duty Administrative

Review.

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SUMMARY: On January 26, 1998, the Department of Commerce (the

Department) published the preliminary results of the third

administrative review of the antidumping duty order on certain

stainless steel wire rods from France. This review covers Imphy S.A.

and Ugine-Savoie, two manufacturers/exporters of the subject

merchandise to the United States. The period of review (POR) is January

1, 1996 through December 31, 1996. We gave interested parties an

opportunity to comment on our preliminary results. Based on our

analysis of the comments received, we have changed the results from

those presented in the preliminary results of review.

EFFECTIVE DATE: June 3, 1998.

FOR FURTHER INFORMATION CONTACT: Robert Bolling or Stephen Jacques, AD/

CVD Enforcement Group III, Office 9, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington, DC 20230; telephone:

(202) 482-3434 or (202) 482-1391, respectively.

SUPPLEMENTARY INFORMATION

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (the Act), are references to the provisions effective

January 1, 1995, the effective date of the amendments made to the Act

by the Uruguay Round Agreements Act (URAA). In addition, unless

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

to 19 C.F.R. Part 353 (1997).

Background

On January 26, 1998, the Department published in the Federal

Register the preliminary results of the third administrative review of

the antidumping duty order on certain stainless steel wire rods from

France (63 FR 3704, January 26, 1998). The Department has now completed

this administrative review in accordance with section 751 of the Act.

Scope of the Review

The products covered by this administrative review are certain

stainless steel wire rod (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.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received comments and rebuttal comments from

Imphy S.A. and Ugine-Savoie, manufacturers/exporters of the subject

merchandise (respondents), and from Al Tech Specialty Steel Corp.,

Armco Stainless & Alloy Products, Carpenter Technology Corp., Republic

Engineered Steels, Talley Metals Technology, Inc., and United

Steelworkers of America, AFL-CIO/CLC (petitioners).

Comment 1: Respondents argue that the Department improperly

resorted to constructed value (CV), instead of utilizing

contemporaneous home market sales made in the ordinary course of trade.

Respondents note that in the Department's preliminary results, the

Department disregarded numerous home market sales that were below the

cost of production and, therefore, outside the ordinary course of

trade. In these instances, respondents contend that the Department

inappropriately resorted to CV, despite the existence of

contemporaneous home market sales of the foreign like product made in

the ordinary course of trade. Consequently, respondents argue that the

Department contravened the Court of Appeals for the Federal Circuit

(CAFC) January 8, 1998 decision in CEMEX v. United States, 133 F.3d 897

(Fed. Cir. 1998) (CEMEX). Respondents state that in CEMEX, the

Department disregarded home market sales of subject merchandise that

was comparable to the merchandise sold in the United States, as not in

the ordinary course of trade and, thus, ineligible as the basis for

determining foreign market value. Therefore, the Department used CV as

the basis for comparing U.S. sales.

Respondents note that although CEMEX was decided under pre-URAA

law, the reasoning of the Court is applicable to the new statute. The

new statute continues to subordinate CV to home market sales for

determining normal value, therefore, allowing the Department to use CV

only where price for home market sales of the foreign like product in

the ordinary course of trade cannot be determined.

Respondents note that in recent Departmental decisions, the

Department has referenced CEMEX, but never applied it's holding due to

time constraints and the fact that the case was decided under pre-URAA

law. Respondents contend that although CEMEX was decided under pre-URAA

law, the principles are applicable and must be applied. Respondents

argue that by applying its own matching hierarchy, the Department has

the facts on the record to confirm that contemporaneous sales of

foreign like product in the ordinary course of trade exist; therefore,

the Department does not need to resort to CV in these instances.

Petitioners argue that the Department should not modify its

preliminary results with regard to the CEMEX decision. Petitioners

contend that the Department has examined and rejected arguments that it

should depart from its normal methodology and base normal value on

other models if the Department finds that all contemporaneous sales of

the identical or most similar merchandise are made at below-cost

prices, citing Final Results of Antidumping Administrative Review:

Canned Pineapple Fruit from Thailand;

[[Page 30186]]

63 FR 7392, 7393 (February 13, 1998) (Pineapple). In the Pineapple

case, petitioners note that the Department determined that it should

not modify its preliminary methodology to conform to CEMEX, ``Because

the Court's decision was issued so close to the deadline for completing

this administrative review, we have not had sufficient time to evaluate

and apply (if appropriate and if there are adequate facts on the

record) the decision to the facts of the ``post-URAA'' case. For these

reasons, we have determined to continue to apply our policy regarding

the use of CV when we have disregarded below-cost sales from the

calculation of NV.'' Petitioners also state that a similar approach was

applied in Final Results of Antidumping Administrative Review: Silicon

Metal from Brazil; 63 FR 6899 (February 11, 1998).

Petitioners state that if the Department was to revise its model-

match methodology, the Department should focus on the facts on the

record because, when this review began, it was assumed that the

Department would use constructed value when the identical or most

similar matches identified were at below-cost prices. Thus, petitioners

argue that the record of this case does not permit use of the CEMEX

methodology. Petitioners point to the preliminary determinations in the

investigations of stainless steel wire rod as evidence. See Notice of

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination: Stainless Steel Wire Rod from

Taiwan; 63 FR 10841 (March 5, 1998) (SSWR from Taiwan). Petitioners

note that in SSWR from Taiwan, the Department stated that in order to

apply the CEMEX methodology, it would need information on the

appropriate product comparisons following application of the below-cost

test. Additionally, petitioners argue that in SSWR from Taiwan, the

Department did not rely on respondents' internal-code systems to

identify the next most similar models as a means to implement CEMEX.

Therefore, the Department issued a supplemental questionnaire in SSWR

from Taiwan requesting additional information on product

characteristics in order to be able to search for the next most similar

model when a matched product was sold below cost.

Petitioners argue that the Department's approach in the SSWR from

Taiwan is in contrast to this case. In this review, petitioners argue

that the Department has accepted respondents' internal product-coding

system, in lieu of Department-developed criteria. Thus, petitioners

assert that by relying on respondents' internal product-coding system

and using the CEMEX methodology, the Department would use sales of less

similar models as the basis for normal value instead of CV. Moreover,

petitioners contend that the Department has not obtained additional

information regarding more precise physical characteristics of the

subject merchandise, or alternative matches to the models proposed,

that it would need in order to implement CEMEX. Petitioners note that

the respondents offered no more than three similar types of merchandise

as a basis for comparison. Additionally, petitioners claim that the

record data does not provide adequate alternative matches for the

Department to apply the CEMEX methodology. Finally, petitioners

maintain that were the Department to apply CEMEX in this case, it would

be inconsistent with its own conclusions in SSWR from Taiwan. For these

reasons, petitioners argue that the Department should reject

respondents' allegation that it should apply CEMEX and state that,

given the short time since the Federal Circuit decision and the lack of

adequate record data, the Department will continue to apply its normal

methodology of resorting to CV where the model selected for comparison

is not in the ordinary course of trade. Department's Position: We agree

with the respondents. In CEMEX, based on the pre-URAA version of the

Act, the Court discussed the appropriateness of using CV as the basis

for foreign market value when the Department finds home market sales to

be outside the ``ordinary course of trade.'' The URAA amended the

definition of sales outside the ``ordinary course of trade'' to include

sales disregarded under section 773(b)(1) of the Act. See section

771(15) of the Act. Consequently, the Department has reconsidered its

practice in accordance with this court decision and has determined that

it would be inappropriate to resort directly to CV, in lieu of foreign

market sales, as the basis for normal value if the Department finds

foreign market sales of merchandise identical or most similar to that

sold in the United States to be outside the ``ordinary course of

trade.''

We will match a given U.S. sale to foreign market sales of the next

most similar model when all sales of the most comparable model are

below cost. The Department will use CV as the basis for normal value

only when there are no above-cost sales that are otherwise suitable for

comparison. Therefore, in this proceeding, when making comparisons in

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

sold in the home market as described in the ``Scope of Review'' section

of this notice, that were in the ordinary course of trade for purposes

of determining appropriate product comparisons to U.S. sales. Where

there were no sales of identical merchandise in the home market made in

the ordinary course of trade to compare to U.S. sales, we compared U.S.

sales to sales of the most similar foreign like product made in the

ordinary course of trade, based on the characteristics listed in

Sections B and C of our antidumping questionnaire. We have implemented

the Court's decision in this case, to the extent that the data on the

record permitted. Where there were neither identical nor similar

matches reported by respondents, we have used CV as the basis for

normal value.

Comment 2: Respondents argue that the Department should base CV

profit only on information pertaining to the POR as stated in section

773(a)(4) of the Act. Further, respondents contend that in its

preliminary results, the Department did not follow this methodology,

but based CV on data from both within and outside the POR. They note

that the Department used the cost of manufacturing (COM) and general

and administrative expenses (G&A) for the POR, but calculated CV profit

on all reported home market sales made in the ordinary course of trade.

Finally, respondents argue that the approach taken by the Department

was inaccurate and unfair because this approach encompassed the 26-

month home market window.

Respondents contend that the purpose of this administrative review

is to determine whether imports into the United States during the POR

were sold at prices that would constitute dumping. Respondents assert

that the statute requires that ``a fair comparison shall be made

between the export price or constructed export price and normal

value,'' and section 773(a)(1)(A) of the Act provides that in order to

achieve a fair comparison with the export price or constructed export

price, normal value shall be the price ``at a time reasonably

corresponding to the time of the sale used to determine the export

price or constructed export price.'' They argue that CV is a surrogate

for price, and must be contemporaneous with the U.S. sale being

compared. Thus, the Department should use information to calculate CV

that corresponds to sales during the POR.

Respondents state that they reported actual costs incurred for the

POR for both COP and CV as required by the Department's questionnaire.

However, in calculating CV profit for this case, the Department did not

use POR data, but

[[Page 30187]]

used all reported home market sales, which covered the period January

1995 through February 1997. Respondents argue that basing CV profit on

market behavior and conditions outside the POR leads to distortions and

is inappropriate, and the Department should revise its methodology for

the final results to calculate CV profit based on home market sales in

1996.

Petitioners state that the Department's calculation of CV profit is

consistent with the Act and past practice. Petitioners note that the

calculation of CV profit is to be based on profits earned ``in

connection with the production and sale of a foreign like product, in

the ordinary course of trade, for consumption in the foreign country.''

See section 773(e)(2)(A) of the Act.

Petitioners note that the home market sales identified in this

review are consistent with the Department's established practice. The

home market sales span the period from three months before the first

U.S. sale to two months after the last U.S. sale in the POR. Thus,

these sales fit the meaning of the Act. Petitioners contend that the

fact that respondents reported and made U.S. sales in a 26 month period

is not a flaw or unfair but merely reflects respondents' particular

reporting period.

Petitioners assert that the Department may not use one database of

home market sales for its determination of normal value sales

comparisons and another for its determination of CV profit.

Furthermore, petitioners contend that, contrary to respondents'

claim, the Department has traditionally interpreted the phrase ``at a

time reasonably corresponding to the time'' found in section

773(a)(1)(A) to mean a home market sale within the 90-60 day window.

Since respondents accepted this window, petitioners argue that

respondents must also accept this same database in identifying home

market sales from which to calculate CV profit.

Petitioners state that it is the Department's practice to rely on

all home market sales reported in the foreign market sales database for

determining normal value as the basis for calculating CV profit.

Moreover, petitioners argue that the Department has used this approach

in Notice of Preliminary Results of Antidumping Duty Administrative

Review: Tapered Roller Bearings from Japan; 61 FR 25200 (May 20, 1996).

Accordingly, petitioners assert that the Department should continue

using respondents' reported home market sales as the basis for

calculating CV profit.

Department's Position: We disagree with respondents. In this case,

the respondents reported home market sales based on the standard 60-

day/90-day contemporaneous window which, in this review, encompassed a

26-month period. The Department has used the home market sales during

this 26-month period to form the basis of its normal value calculation.

Thus, in accordance with its normal practice, the Department calculated

CV profit based on the contemporaneous sales data. In this case, U.S.

sales span a period of 21 months. It would not be appropriate to limit

the CV profit calculation to 12 months of home market sales, since this

would not reflect profit on all contemporaneous sales.

The fact that we used costs based on a different period (in this

case, 12 months) does not render our CV profit calculation

inappropriate or unreasonable. The respondents only reported cost of

manufacture and general administrative expenses for the 1996 calendar

year (the POR) as the basis for costs of all reported home market

sales. The respondents did not claim that the costs reported for this

period were in any way unrepresentative of the costs incurred for sales

throughout the 26-month period. In fact, these same cost figures formed

the basis for COP in determining whether any of the home market sales

made during the 26-month sales reporting period had been sold at below-

cost prices within the meaning of section 773(b) of the Act. Thus, it

was not unreasonable for the Department to calculate CV profit using

the same home market cost data that it used to test for below-cost

sales.

Further, if the respondents believed that for any reason the

submitted costs were not representative of the 26-month period, they

should have informed the Department that the 12-month costs used to

calculate CV profit were not representative of its 26-month costs.

Respondents knew from past experience that it is the Department's

practice, when calculating CV profit based on reported home market

sales, to calculate CV profit based on all reported contemporaneous

home market sales. The respondents have accepted this approach in past

administrative reviews (see Certain Stainless Steel Wire Rods from

France: Final Results of Antidumping Duty Administrative Review, 61 FR

47874 (September 11, 1996); Certain Stainless Steel Wire Rods from

France: Final Results of Antidumping Duty Administrative Review, 62 FR

7206 (February 18, 1997)) and have offered no compelling reason to

alter it in this review.

Comment 3: Respondents argue that in calculating CEP profit in the

preliminary results, the Department inappropriately excluded non-arm's

length home market sales used in the calculation of CEP profit.

Respondents contend that this methodology is contrary to both the

statute and the Statement of Administrative Action (SAA), and is a

departure from the methodology used in the prior review.

Respondents assert that section 772(f)(2)(C)(i) of the Act provides

that CEP profit will be calculated based on expenses and profit for all

sales in the United States and home market. Also, respondents note that

the SAA states that ``the total profit is calculated on the same basis

as the total expenses.'' See SAA at 155. Additionally, the SAA states

that ``the total expenses are all expenses incurred by or on behalf of

the foreign producer and exporter and the affiliated seller in the

United States with respect to the production and sale of the first of

the following alternatives which applies: (1) The subject merchandise

sold in the United States and the foreign like product sold in the

exporting country (if Commerce requested this information in order to

determine normal value and the constructed export price).'' See SAA at

154. Therefore, respondents argue that the statute and the SAA are

clear that both the expenses used to allocate the profit to the U.S.

sales, and the profit to be allocated, should be based on all sales of

the subject merchandise in the United States and the foreign like

product in the foreign market. Respondents maintain the statute does

not contain any provision for disregarding any sales in the calculation

of CEP profit; and maintain that disregarding any such sales would be

contrary to section 772(f) of the Act.

Respondents note that the Department's recent policy bulletin

(``Calculation of Profit for Constructed Export Price'' Policy Bulletin

No. 97/1 (``CEP Profit Policy Bulletin'')) is incorrect because the CEP

profit calculation does not reflect actual profit or loss for actual

market prices. Respondents maintain that section 772(f)(2)(D) of the

Act states that ``actual profit'' represents the profit earned on all

sales for which expenses were ``determined'' under section

772(f)(2)(C), and section 772(f)(2)(C) states that total expenses are

all expenses incurred with respect to the subject merchandise sold in

the United States and the foreign like product sold in the home market

if requested by the Department in order to determine normal value and

constructed export price. Thus, because the Department

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requested that respondents report all home market sales, and the Act

states that the calculation of total actual profit and total expenses

are made on the same basis, profits associated with non-arm's length

sales must be included in determining actual profit.

Respondents argue that excluding non-arm's length home market sales

from the calculation of CEP profit distorts the calculation of total

actual profit and is inconsistent with the statute and the SAA.

Although the Department includes unprofitable sales to an unaffiliated

party in determining CEP profit--even if the sales are not in the

ordinary course of trade--respondents contend that the Department has

no justification for excluding sales with an affiliated party

(including profitable sales) only because these sales do not pass the

Department's arm's length test. Therefore, respondents argue that the

Department should base its calculation of CEP profit on all home market

sales, including sales found not to be made at arm's length.

Petitioners state that the Department should continue to exclude

non-arm's length home market sales from its CEP profit calculation.

Petitioners argue that the Department has carefully analyzed this issue

in the past and has concluded that it would not be proper to consider

the profit (or lack thereof) on non-arm's length sales when attempting

to calculate total actual profit on CEP sales. Petitioners state that

the Department provided several reasons for its decision in its ``CEP

Profit Policy Bulletin.''

Petitioners state that the Department properly recognized that non-

arm's length sales do not provide an indication of the actual profits

associated with these sales. Thus, petitioners argue that relying on

non-arm's length transfer prices affords respondents a chance to

manipulate the profit calculations by shifting profit to downstream

sales by affiliated customers. In order to avoid this manipulation,

petitioners contend that the Department must exclude sales that are not

at arm's-length prices from its calculation of CEP profit.

Furthermore, petitioners assert that the Department's policy of

excluding sales that are not at arm's length from its calculation of

CEP profit is consistent with the Act because it requires the

calculation of total actual profit. Consequently, since the Act

recognizes that non-arm's length sales are not reliable indicators of

normal value or input costs, then they also are not reliable for

calculating actual profit.

Department's Position: We agree with petitioners. As we stated in

our CEP Profit Policy Bulletin, ``sales to affiliates made at non-arm's

length prices . . . are excluded from the CEP profit calculation

because they do not reflect actual market prices and, thus, do not

represent actual profit (or loss).'' Further, the Department stated

that ``non-arm's length sales are not a reliable indicator of `actual

profit,' just as they are not treated as a reliable indicator of normal

value or input costs.'' See sections 773(a)(5) and 773(f) of the Act.

Moreover, the Department's Bulletin states that ``inclusion of non-

arm's length sales would inappropriately distort the calculation of

total actual profit. Therefore, we include below-cost sales but exclude

non-arm's length sales for purposes of computing sales revenues and

expenses for CEP profit.''

Comment 4: Petitioners argue that the Department made a fundamental

legal error in determining a CEP offset was appropriate by identifying

the level of trade of CEP sales on an adjusted basis while identifying

the level of trade of home market sales on an unadjusted basis.

Petitioners argue that the comparison is inaccurate and leads to the

wrong conclusion that CEP sales were at a different and less advanced

level of trade than the home market sales. Petitioners argue that if

the Department were to look at the levels of trade for sales in the

U.S. and home market on the same basis, and rely on the unadjusted

starting price for both sales as the proper levels of trade, the

Department would conclude that the U.S. and home market levels of trade

are the same and that a CEP offset would not be necessary.

Petitioners contend that the Department's position that the CEP

level of trade is an adjusted price but the normal value level of trade

is linked to the starting price is not supported by the statute.

Section 772(b) of the Act states that CEP is ``the price the subject

merchandise is first sold . . . to a purchaser not affiliated with the

producer or exporter, as adjusted under subsections (c) and (d).

Therefore, petitioners contend that the starting price for a CEP sales

comparison is the price at which the product is sold to an unaffiliated

purchaser. Additionally, petitioners assert that the statute defines

normal value as the price at which the foreign like product is first

sold, under a variety of terms and conditions which provide for the

price to be adjusted. See sections 773(a)(1)(A) and 773(a)(1)(B).

Moreover, petitioners contend that section 773(a)(6)(C)(iii) of the Act

requires that normal value be adjusted for ``other differences in the

circumstances of sale,'' between the CEP and normal value sale, which

includes adjustments for the same types of expenses deducted from CEP.

Accordingly, petitioners argue that it is not accurate for the

Department to determine that CEP is a price that is exclusive of all

selling expenses, since these expenses are required to be adjusted for

pursuant to section 772(d) of the Act, but to describe normal value as

a price that is inclusive of all selling functions and ignore the

adjustments to normal value that are statutorily mandated by section

773(a)(6) of the Act. The Department must consider levels of trade in

the same manner in order to arrive at a fair comparison. Furthermore,

petitioners contend that Congress intended for the Department to look

at the sale to an unaffiliated purchaser, when examining CEP sales. See

section 772(b) of the Act. Petitioners argue that a CEP transaction is

between the foreign producer/U.S. affiliate, and the unaffiliated U.S.

producer. Petitioners argue that the Department has ignored these

transactions and has incorrectly focused on the adjusted CEP sale.

Consequently, they argue the Department is examining a level of trade

between a foreign producer and U.S. affiliate that is artificial.

Respondents argue that the Department properly examined the CEP

level of trade based on the price after adjustments under section

772(d) of the Act. Respondents argue that in the preliminary results,

the Department properly determined that its CEP sales to MAC (i.e., its

U.S. super-distributor), were made at a different level of trade than

home market sales (which were made to end-users).

Respondents maintain that petitioners argument is the identical

argument from the first and second administrative reviews in which the

Department granted a CEP offset. In fact, the argument also has been

considered and rejected by the Department, in other administrative

proceedings and in its final regulations. See Antidumping Duties;

Countervailing Duties; Final Rule, 62 FR 27296, 27414 (May 19, 1997);

and Notice of Final Determination of Sales at Less Than Fair Value:

Static Random Access Memory Semiconductors from Taiwan, 63 FR 8909,

8919-8120 (February 23, 1998), Notice of Final Determination of Sales

at Less Than Fair Value: Large Newspaper Printing Presses and

Components Thereof, Whether Assembled or Unassembled from Japan, 61 FR

38139, 38143 (July 23, 1996). Respondents maintain that the

Department's position is clear with

[[Page 30189]]

regard to identifying the level of trade of CEP sales. The Department

has stated ``in those cases where a level of trade comparison is

warranted and possible, then for CEP sales the level of trade will be

evaluated based on the price after adjustments are made under section

772(d) of the Act . . . In every case decided under the revised

antidumping statute, the Department has consistently adhered to this

interpretation of the SAA and of the Act.'' See Final Results of

Antidumping Duty Administrative Review, Dynamic Random Access Memory

Semiconductors of One Megabit or Above from the Republic of Korea; 62

FR 965, 966 (January 7, 1997). Therefore, respondents argue that the

Department should continue its past practice of beginning its level of

trade analysis for CEP sales after adjusting for U.S. selling expenses

and profit, as required by the SAA and the statute. See SAA at 159, and

section 772(d) of the Act.

Department's Position: We disagree with petitioners. The Department

is continuing its practice, articulated in section 351.412(c) of the

new regulations (see 62 FR 27296, 27414), of making the level of trade

comparisons for CEP sales on the basis of the CEP after adjustments

provided for in section 772(d) of the statute.

As we stated in the second administrative review (see Certain

Stainless Steel Wire Rods from France: Final Results of Antidumping

Duty Administrative Review, 62 FR 7206 (February 18, 1997) (``SSWR

II'')) the starting price is not the basis for comparison for CEP

sales. The comparison is based on the CEP, which is net of the CEP

deductions (i.e., those deductions provided for in section 772(d) of

the Act which are only applicable to CEP sales). The statute requires

the Department to make comparisons between NV and EP or CEP to the

extent practicable, at the same level of trade. See section

773(a)(1)(B) of the Act. If the starting price is used to determine the

level of trade for CEP sales, the Department's ability to make

meaningful comparisons at the same level of trade (or appropriate

adjustments for differences in levels of trade) would be severely

undermined in cases involving CEP sales. Similarly, using the

unadjusted price to determine the level of trade of both EP and CEP

sales would result in a finding of different levels of trade for an EP

and a CEP sale when, after adjustment, the selling prices reflect the

same selling functions. Moreover, using the adjusted CEP for

establishing the level of trade is consistent with the purposes of the

CEP adjustment; to determine what the sales price would have been had

the transaction between the producer and its U.S. affiliate qualified

as an export price sale. Accordingly, we have followed our practice

from the previous administrative review, which specifies that the level

of trade analyzed for EP sales is that of the unadjusted price, and for

CEP sales it is the level of trade of the price after the deduction of

U.S. selling expenses and profit associated with economic activity in

the United States pursuant to section 772(d) of the Act. Therefore, for

the final results, the Department has continued to apply the level-of-

trade analysis from its preliminary results in this review.\1\

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\1\ This approach was recently criticized by the Court of

International Trade in Borden, Inc. v. United States, Slip Op. 98-36

(March 26, 1998), at 55-59 (Borden) (rejecting the Department's

practice of adjusting the CEP starting price pursuant to section

772(d) of the Act prior to making the level of trade comparisons).

The Department intends to appeal this decision and, thus, will

continue to apply the methodology articulated in its new regulations

(19 C.F.R. Sec. 351.412).

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Comment 5: Petitioners argue that there are no differences in

selling functions between the U.S. and home market sales. Consequently,

even if the Department relies on an adjusted CEP to identify the U.S.

level of trade, respondents are not entitled to a CEP offset.

Petitioners maintain that the channels of distribution and the selling

activities for home market sales made during the POR are comparable to

the adjusted CEP sales.

Petitioners note that they informed the Department that sales in

the home market were predominantly through a different channel of

distribution and involved fewer selling functions than the Department

had examined in past reviews. In prior reviews, petitioners stated that

respondents' sales were primarily through Ugine Service (i.e., channel

2) and involved an extra layer of selling expenses when compared to

direct home market sales (i.e., channel 1) or CEP sales, and it was

the Ugine Service sales that respondents focused on to distinguish the

level of trade of the CEP and the home market sales.

Petitioners assert that they ran a test on the data which showed

that sales through Ugine Service are not predominate in terms of home

market sales for comparison. Petitioners noted that respondents

identify selling functions associated with channel 1 home market sales

but not with CEP sales, such as, customer sales contacts, technical

services and administrative functions. Nevertheless, petitioners

contend that the record demonstrates that the selling functions and

expenses associated with sales to both home market channel 1 and the

CEP sales, on an adjusted basis, are the same. Petitioners maintain

that the indirect selling expenses and their magnitude are the same for

both home market sales through channel 1 and CEP sales. Thus,

petitioners argue there can be no difference between the levels of

trade for home market channel 1 and CEP sales based on the intensity or

nature of the expenses for both home market channel 1 and U.S. CEP

sales, citing Professional Electric Cutting Tools from Japan: Final

Results of Antidumping Duty Administrative Review, 63 FR 6891, 6895

(February 11, 1998).

Moreover, petitioners note that the Department did not deduct

indirect selling expenses in calculating the adjusted CEP price. Thus,

petitioners argue that the selling functions must still be considered

as selling functions associated with the CEP sale in the level of trade

analysis. Petitioners contend that the indirect selling activities and

expenses incurred by respondents (i.e., MAC and Techalloy) in the U.S.

do not replace the selling activities and expenses incurred in the home

market, but provide an extra layer of functions and expenses in the

U.S. market.

Petitioners argue that the only difference in selling functions

between the home market and the CEP sales is the indirect selling

expenses associated with sales through channel 2 (Ugine Service).

Petitioners maintain that these additional selling expenses cannot

justify finding different levels of trade because the Department found

that these additional selling expenses do not support a finding of

different home market levels of trade between channel 1 and channel 2

sales. Therefore, petitioners argue that the record does not establish

any differences in selling functions between channel 1 home market

sales and CEP sales, and there are insufficient differences in selling

functions between channel 2 sales and CEP sales to justify different

levels of trade.

Respondents argue that they had different and fewer selling

functions which were performed for the CEP sales than for home market

sales to end-users, which are at a more advanced stage of distribution

than the CEP sales. Therefore, respondents argue that pursuant to

section 773(a)(7)(B) of the Act, the Department was correct in granting

a CEP offset.

Respondents state that petitioners mischaracterize the Department's

analysis of a CEP offset. Respondents assert that in the first and

second administrative reviews of this case, the Department examined and

compared the selling functions performed by Imphy and Ugine-Savoie for

sales to its

[[Page 30190]]

U.S. affiliate (i.e., MAC), and found the selling expenses in the home

market to end-users were different than selling expenses in sales to

MAC and involved different levels of trade. See Preliminary Results of

Antidumping Administrative Review: Certain Stainless Steel Wire Rods

from France, 61 FR 53199, 53201-53202 (September 11, 1996)(``SSWR I'').

Specifically, the Department found that the record reflected that

customer sales contacts, technical services, inventory maintenance,

computer systems and other administrative functions were selling

functions involved in home market sales to end-users and not in sales

to MAC. The Department found these differences demonstrate a difference

in level of trade. Respondents argue that the exact same selling

functions exist in this review and more differences are apparent when

the totality of selling functions are analyzed. Respondents assert that

Imphy and Ugine-Savoie perform certain selling functions in the home

market for direct sales, (e.g., suggesting product improvements,

developing sales strategy, providing information on market potential

and competitors, pricing, scheduling production and delivery, visiting

customers/potential customers and receiving orders, promoting new

products, etc.) but only to a limited extent or not at all, for CEP

sales.

Respondents assert that petitioners' argument that respondents'

home market sales involved the same selling functions as CEP sales is

the exact same argument from the first administrative review.

Respondents argue that, in this administrative review, they have more

responsibility for generating, administering and servicing sales to

end-users in the home market than for U.S. sales to MAC. According to

respondents, MAC's role as a super-distributor is to remove and assume

virtually all of the risks and selling functions involved in selling to

the U.S. market. Thus, these differences in selling functions support

the Department's determination of two different levels of trade.

Respondents argue that petitioners' allegation that there is no

difference in indirect selling expenses incurred by Imphy and Ugine-

Savoie between home market channel 1 and CEP sales is a false

allegation. Respondents state that they allocated their headquarters

indirect selling expenses based on worldwide net sales revenue for the

purpose of this administrative review, because respondents do not

separately book selling expenses by market. Additionally, headquarters

indirect selling expenses are difficult to separate by market. Any

separation of these expenses could produce rough and potentially

unverifiable estimates. Payroll expense is the predominant expense

which is difficult to separate by market since many of the same

headquarters personnel support sales to various markets. Nevertheless,

respondents contend that this allocation does not negate the

differences in the selling functions for sales to home market end-

users, compared to sales to MAC. Respondents maintain that in

responding to the Department's questionnaire, they tried to avoid

obtaining any advantage through their headquarters selling expenses,

and should not be penalized for the documented and verified differences

in selling functions between the two markets.

Moreover, respondents argue that petitioners' argument that direct

sales predominate in the home market is inaccurate because their

analysis examined raw information, not what was actually used in the

margin calculation. Analysis of the preliminary results shows that

sales through Ugine Service predominated in the comparisons,

particularly in comparisons to CEP. Respondents assert that this is

important, because the Department calculates CV using home market

selling expenses to derive a weighted average expense factor to add to

the cost of manufacture, citing Department of Commerce, Import

Administration Policy Bulletin, ``Treatment of adjustments and selling

expenses in calculating the cost of production (COP) and constructed

value (CV)'' (March 25, 1994). Respondents note that the selling

expense factor included selling expenses attributable to sales through

Ugine Service, which were greater than the selling expenses involved in

direct sales. Lastly, respondents state that more than half of the CEP

sales were compared to prices or CV reflecting the selling expenses of

Ugine Service. Therefore, respondents argue that they are entitled to a

CEP offset for comparisons to home market sales to end-users because

the home market sales involve a different and more advanced level of

distribution than sales to MAC and petitioners have not provided any

evidence to reverse the level of trade analysis.

Department's Position: We disagree with petitioners. We reviewed

respondents' selling functions and activities, and found that no single

selling function was sufficient to warrant a separate level of trade in

the home market. Specifically, we analyzed the respondents' level of

trade chart for the home market and found that only three selling

functions differed between the two home market channels of trade

(visiting customers/receiving orders, promoting new products, and

contacting customers/preparing claim reports). Additionally, we found

that the vast majority of the selling functions were either identical

or only differed moderately in intensity (i.e., order evaluation for

production of specific products, analyzing and paying warranty claims,

pre-sale inventory, packing, post-sale warehousing, suggesting

potential product improvements, developing sales strategy, providing

information on market potential and competitors, pricing, scheduling

production and delivery, follow-up on unpaid invoices, technical advice

regarding use, general administrative support including personnel,

advertising, computer systems and arranging freight and delivery).

Therefore, we have determined that the selling functions reported for

the home market channels of distribution are not different enough to

warrant two levels of trade in the home market.

To determine whether separate levels of trade exist between the

U.S. market and home market, we examined the respondents' level of

trade claims. In order to make this determination, we reviewed the

selling activities associated with each channel of distribution. The

Department compared EP sales to home market sales, and determined that

sales were made at the same LOT (i.e., to end-users) in both markets.

See May 7, 1997, Questionnaire Response, Exhibit 11.

For CEP sales, consistent with our practice, discussed above in

Comment 4, we consider only the selling activities reflected in the

constructed price, i.e., after the expenses and profit are deducted

under section 772(d) of the Act. Whenever sales are made by or through

an affiliated company or agent in CEP situations, we consider all

selling activities of both affiliated parties, except for those selling

activities related to the expenses deducted under section 772(d) of the

Act to determine the CEP level of trade.

The record indicates that the following selling functions were

performed for HM sales to end users (at varying levels of intensity)

but are not reflected in CEP: developing sales strategy, providing

information on market potential and competitors, order evaluation for

pricing and production scheduling, promoting new products, following-up

on unpaid invoices, providing technical services, and performing

administrative functions.

[[Page 30191]]

See May 7, 1997, Questionnaire Response, Exhibit 11.

The differences between the CEP level of trade and the home market

level of trade are sufficient to constitute different levels of trade.

We found that the data on the record did not allow the Department to

determine whether the differences in levels of trade affect price

comparability. Since there is only one home market level of trade which

has no equivalent to the CEP level of trade, price differences between

the relevant levels of trade can not be quantified. Further, the

Department has determined that home market sales involved a more

advanced stage of distribution (to end-users) as compared to

respondents' CEP sales in the United States (MAC and Techalloy).

Section 773(a)(7)(B) of the Act states that a CEP ``offset'' may be

made when two conditions exist: (1) normal value is established at a

level of trade which constitutes a more advanced stage of distribution

than the level of trade of the CEP; and (2) the data available do not

provide an appropriate basis for a level-of-trade adjustment.

The Department has considered petitioners' argument that there is

no difference between the home market channel 1 and CEP sales with

regard to indirect selling expenses and we do not find it persuasive.

Record evidence indicates that there are differences in selling

activities between home market sales to end users and CEP sales.

Notwithstanding these different activities, the indirect selling

expenses reported by Imphy and Ugine-Savoie are the same for home

market channel 1 and CEP. This does not mean, however, that the selling

activities are the same for these two groups of sales. The amount of

selling expenses in itself is not a dispositive indicator of whether

different levels of trade exist. In this case, there clearly are

sufficient differences in selling activities despite similar amounts of

expenses.

Comment 6: Petitioners argue that in calculating CEP, the

Department failed to deduct all selling expenses incurred in selling

the subject merchandise to the United States. Petitioners assert that

the Department did not deduct certain selling expenses (i.e., indirect

selling expenses and inventory carrying costs) that were incurred with

respect to U.S. sales.

Petitioners argue that section 772(d)(1) of the Act states that the

Department is required to deduct all direct and indirect selling

expenses ``incurred by or for the account of the producer or exporter,

or the affiliated seller in the United States, in selling the subject

merchandise.'' Additionally, petitioners maintain that the SAA states

that indirect selling expenses are to be deducted from CEP, citing SAA

at 824. Also, petitioners maintain that the Department should read the

SAA, at page 823, to mean that it should deduct indirect selling

expenses incurred by the producer with respect to U.S. sales of subject

merchandise in the home market or expenses incurred in selling to its

affiliated U.S. importer.

Lastly, petitioners argue that the Court of International Trade

upheld the Department's past practice of deducting indirect selling

expenses incurred in the home market or in selling to an affiliated

importer in the calculation of exporter's sales price (ESP), the

predecessor to CEP. See Silver Reed America, Inc. v. United States, 683

F. Supp. 1393 (1988). Also, petitioners note that the URAA did not

substantively amend the CEP provision to alter the deductions from CEP

as compared to ESP. In fact, petitioners argue the URAA was more

explicit than the prior statute in requiring all selling expenses be

deducted from CEP, citing section 772(d)(1) of the Act.

Respondents argue that petitioners made the same allegations in the

first and second administrative reviews of this proceeding and the

Department has rejected the argument in both instances. Further,

respondents contend that these expenses were not incurred with respect

to U.S. sales.

Respondents assert that in the first and second administrative

reviews, the Department did not deduct indirect selling expenses

incurred in France or inventory carrying costs imputed to the country

of manufacture in determining CEP, and there is no new information in

this review to cause the Department to reconsider its decision.

Respondents argue that the Department decided this exact issue in the

second administrative review, wherein the Department stated that

section 772(d)(1) of the Act provided for the deduction of specified

expenses incurred in selling in the United States; it did not provide

for the deduction of indirect expenses incurred in the home market. See

SSWR II, 62 FR at 7210. Therefore, respondents contend that pursuant to

section 772(d)(1) of the Act, home market expenses are not properly

deducted from the starting price in determining CEP and they do not

represent expenses associated with economic activities occurring in the

United States. See SAA at 153.

Moreover, respondents assert that the Department's approach is

consistent with its past practice and with section 351.402(b) of its

new regulations. See Preliminary Results of Antidumping Administrative

Review: Calcium Aluminate Flux from France, 61 FR 40396, 40397 (August

2, 1996). Respondents note that section 351.402(b) indicates that the

Secretary will deduct only expenses associated with a sale to an

unaffiliated customer in the United States. Hence, the indirect

expenses reported in the DINDIRSU field are expenses associated with

selling to MAC, Imphy and Ugine-Savoie's affiliated reseller in the

U.S., and are not deducted in the calculation of CEP. Additionally,

respondents assert that home market inventory carrying costs for sales

to the U.S. reported in the DINVCARU field are imputed inventory

carrying costs related to selling to MAC. Respondents argue that

deducting these expenses would be inconsistent with the statute.

Finally, respondents argue that petitioners' citation to Silver Reed is

not appropriate because, as the Department previously has found,

``cases addressing pre-URAA practice are not applicable.'' See SSWR I,

61 FR at 47882. Therefore, respondents argue that the Department should

reject petitioners' arguments and not deduct these expenses in

calculating CEP.

Department's Position: We disagree with petitioners. As we stated

in the final results of the first and second administrative review of

this order (see SSWR I, 61 FR at 47874; SSWR II, 62 FR at 7206), the

Department does not deduct indirect expenses incurred in selling to the

affiliated U.S. importer under section 772(d) of the Act. Section

772(d) of the Act is intended to provide for the deduction of expenses

associated with economic activities occurring in the United States. See

SAA at 823; see also, GATT 1994 Antidumping Agreement, article 2.4; see

also, Final Results of Antidumping Duty Administrative Review; Certain

Cold-Rolled Carbon Steel Flat Products from the Netherlands: 63 FR

13204, 13212 (March 18, 1998).

The Department's practice regarding deductions from CEP under

section 772(d) of the Act is articulated in its new regulations.

Section 351.402(b) of these regulations state that ``the Secretary will

make adjustments for expenses associated with commercial activities in

the United States that relate to the sale to an unaffiliated purchaser,

no matter where or when paid.'' 62 FR 27296, 27411. Additionally, the

Department's regulations state that ``the Secretary will not make an

adjustment for any expense that is related solely to the sale to an

affiliated importer in the United States.'' Id. The inventory carrying

costs petitioners refer to are expenses related solely to the sale to

the affiliated importer (i.e., MAC). Similarly, the indirect selling

expenses

[[Page 30192]]

incurred in the home market do not represent expenses associated with

economic activities in the United States. Therefore, for the final

results, the Department has not deducted the indirect selling expenses

and inventory carrying costs referred to by petitioners in its

calculation of CEP.

Comment 7: Petitioners argue that if the Department does not deduct

certain selling expenses (i.e., indirect selling expenses and inventory

carrying costs) from the CEP calculation, it may not deduct the same

expenses from normal value through the CEP offset. Petitioners assert

that the CEP offset is used to balance deductions for selling expenses

made to CEP where there are different levels of trade. Petitioners

maintain that certain indirect selling activities undertaken by Imphy

and Ugine-Savoie in connection with their home market sales and CEP

sales are the same. See Comment 5 above. Petitioners contend that

because Department did not deduct indirect selling expenses and

inventory carrying costs in the calculation of CEP, they should not be

deducted from normal value as part of the CEP offset.

Respondents argue that the Department's calculation of the CEP

offset in the preliminary results is in accordance with the Act.

Further, respondents contend that the CEP offset can include indirect

selling expenses and inventory carrying costs incurred in the home

market even if those expenses are not deducted from CEP. Respondents

assert that there is no statutory or other basis to consider whether a

particular home market indirect expense is also incurred with CEP

sales. Moreover, respondents cite to section 773(a)(7)(B) of the Act

and argue that the test is whether the home market indirect expenses

are incurred on sales in the home market. On that basis, all of the

indirect expenses incurred in the home market (i.e., indirect selling

expenses for Imphy's and Ugine-Savoie's commercial departments

(INDIRS1H), product liability premiums (PRLBPRMH), and inventory

carrying costs (INVCARH)) should be taken into account in calculating

the CEP offset for all home market sales. Additionally, respondents

argue that the indirect selling expenses for Ugine Service (INDIRS2H)

should be considered in calculating the CEP offset.

Department's Position: We agree with the respondents. Section

773(a)(7)(B) of the Act states that when the constructed export price

offset is applicable, ``normal value shall be reduced by the amount of

indirect selling expenses incurred in the country in which normal value

is determined on sales of the foreign like product but not more than

the amount of such expenses for which a deduction is made under section

772(d)(1)(D).'' Accordingly, the statute directs the Department to make

deductions for the CEP offset for home market indirect expense(s)

incurred on sales in the home market. The statue does not require that

the indirect selling expenses deducted from normal value be identical

or comparable in nature to the direct or indirect selling expenses

deducted from CEP.

Section 351.412(f)(2) of the Department's new regulations similarly

reflect the Department's practice that the amount of the CEP offset

``will be the amount of indirect selling expenses included in normal

value, up to the amount of indirect selling expenses deducted and

determining constructed export price.'' 62 FR 27296, 27415. This

regulation goes on to define indirect selling expenses as ``selling

expenses * * * that the seller would incur regardless of whether

particular sales were made, but that reasonably may be attributed, in

whole or in part, to such sales.'' Id. These regulations are consistent

with the Department's practice that the CEP offset is composed of home

market indirect selling expenses and there is no requirement that the

same or comparable types of expenses be deducted from CEP in order for

the expenses to be included in the CEP offset. For these reasons, the

Department has deducted all of the indirect expenses incurred in the

home market in calculating the CEP offset for home market sales matched

to CEP transactions.

Comment 8: Petitioners argue that the Department should deny

respondents' adjustment for negative billing adjustments for certain

home market sales. Petitioners contend that respondents have failed to

correct double-counting errors with regard to these billing adjustments

and warranty costs in their revised questionnaire response, and to

prove that billing adjustments were due to billing errors or link the

billing adjustments to billing errors.

Petitioners note that respondents stated in their July 28, 1997

supplemental questionnaire response, that ``[f]or certain sales, Ugine-

Savoie erroneously reported the associated warranty claim as a billing

adjustment.'' Also, petitioners note that the questionnaire response

indicated that ``on the revised HM Sales File submitted with this

response, the billing adjustment has been removed for these sales, as

the claim was included within warranty expense.'' See July 28, 1997

Supplemental Questionnaire Response at page 12. Thus, petitioners note

that respondents acknowledged that certain warranty expenses were

double-counted in their original response because certain billing

expense adjustments were also reported as warranty expenses, and the

billing adjustments were made to invoice prices (BILLADPH), not

quantities (BILLADQH). Therefore, petitioners contend that respondents

should have made corrections to the BILLADPH computer field. However,

petitioners assert that respondents did not correct the double-counting

error in their amended home market sales listing. See Petitioners'

letter of December 4, 1997.

Petitioners note that respondents stated the double-counting error

was corrected in the amended home market sales listing because the

double-counted amounts were removed from the BILLADQH field. See

Respondents' letter of December 15, 1997 at pages 8-10. However,

petitioners argue that the amounts reported under BILLADQH related to

quantity adjustments for warranty claims, not the prices. Petitioners

assert that removing the quantity amounts cannot correct the error of

double-counting warranty expenses because the amounts associated with

warranty claims are still reported in the invoice prices (i.e.,

BILLADPH) and warranty expenses. Therefore, petitioners argue the

Department should deny respondents' claimed negative billing

adjustments because they failed to correct the double-counting of

billing adjustments and warranty expenses and did not provide the

Department the information needed to correct the errors.

Petitioners also argue that respondents have failed to demonstrate

that the claimed billing adjustments were due to billing errors.

Petitioners have identified examples of where billing adjustments took

place for some sales but not others of the same product made on the

same day.

Respondents argue that petitioners wrongly asserted that

respondents failed to correct the double-counting of reported warranty

expense in its revised sales listing (i.e., July 28, 1997 supplemental

questionnaire response) and failed to substantiate that the reported

billing adjustments were due to billing errors or to link the billing

adjustments to the billing errors. Respondents state that petitioners

are confusing invoice revenue and invoice unit price. Respondents note,

as stated in their December 15, 1997 letter to the Department, that

billing revisions relating to warranty expense items involved

adjustments to quantity (BILLADQH), rather than price (BILLADPH), and

affected the QTYH

[[Page 30193]]

and BILLADQU fields. Respondents stated that they corrected errors in

their billing adjustments and warranty expenses in their July 28, 1997

supplemental response. To correct the errors, respondents made

corrections to their BILLADQH and QTYH fields to correct the errors.

The warranty field was not revised.

Respondents contend that petitioners have not commented on or

acknowledged their calculation example in their December 15, 1997

letter which illustrated the correction of the double-counting. In

reply to petitioners' identification of eight observations (which are

four pairs of transactions) that further question respondents' billing

adjustments, respondents state that for two pairs of the transactions,

Imphy should have reported billing adjustments in the BILLADPH field,

and that Imphy had a computer programming error that caused the

omission of the billing adjustments from these sales. Additionally,

respondents explain that this mistake was due to credit memos against

certain invoice numbers resulting from calculating invoice price on the

original invoices.

Nevertheless, respondents argue that all of the other records

alleged to be errors by petitioners are reported correctly. Respondents

stated that for the other two pairs of observations that petitioners

alleged included errors in billing adjustments to price, respondents

provided the following explanations: one transaction reflected a

special price adjustment granted by Ugine-Savoie, which the customer

requested to meet a specific market condition, while the other

transaction was a price adjustment that the customer requested.

Therefore, respondents assert that petitioners have no basis to request

the Department to deny any of the billing adjustments reported.

Department's Position: We agree with respondents. The Department

has examined the respondents' home market sales database, specifically

the sales that petitioners alleged were double-counted with regard to

billing adjustments and warranty expenses, and found that the billing

adjustments had been revised and correctly reported. In its analysis,

the Department examined respondents' July 28, 1997 supplemental

questionnaire response, home market sales database, and letter of

December 15, 1997. From the information on the record, we found that

respondents had eliminated the billing adjustment quantity from the

BILLADQH field which respondents used to report credit memos associated

with warranty claims. In addition, we found that they subsequently

revised the quantity reported in the QTYH field, increasing it by the

amount that had been reported in the BILLADQH field. Further, the

Department performed mathematical calculations on the relevant home

market sales to ensure that respondents had corrected the double-

counting error. We found that respondents had indeed corrected their

double-counting error, and found that their explanation that the

double-counting error effected the invoice revenue and not the invoice

price was consistent with the reported data.

Additionally, the Department has determined that respondents have

properly reported all of their billing adjustments. We examined

respondents' December 15, 1997 letter and related home market sales and

found that the alloy surcharge and billing adjustments were reported

correctly. Therefore, we have determined that respondents have properly

reported all of their billing adjustments with the exception of the two

invoices (fifteen home market sales observations) that did not have

adjustments reported due to a computer programming error. Respondents

reported these errors in their case briefs. The information submitted

regarding the correction of these errors constituted new factual

information which was untimely submitted. Petitioners did not have an

opportunity to comment on this new factual information which was

submitted too late for consideration by the Department. For these

reasons, the Department did not take this information into account for

these final results.

Comment 9: Petitioners argue that the Department incorrectly

categorized certain U.S. sales as sales that were made outside the POR,

and excluded these sales from its model match program. Petitioners

state that the Department's computer program indicates that even though

the subject merchandise of these sales entered the U.S. prior to the

POR, the sales were made during the POR. Moreover, they contend that

the Department's past practice has been to examine CEP sales during the

POR, considering there is a significant lag between entry date and sale

date for the CEP sales. See Gray Portland Cement and Clinker from

Japan: Final Results of Antidumping Duty Administrative Review, 58 FR

48826 (1993).

The respondents did not comment on this argument.

Department's Position: We agree with the petitioners. The

Department incorrectly categorized certain U.S. sales as sales that

were made outside the POR, and excluded these sales from its model

match program. Therefore, for the final results, the Department has

corrected its computer program to include these sales.

Comment 10: Respondents argue that the Department incorrectly

recalculated its reported home market credit expenses for sales with

missing payment and shipment dates. In the preliminary results,

respondents note that the Department stated that it intended to

calculate the missing payment or shipment date based on the average

time period between invoice date and payment or shipment date,

respectively. Respondents argue, however, that the Department committed

two programming errors in this recalculation. Therefore, respondents

stated that the Department should correct its errors and provided

programming language to fix the alleged errors.

The petitioners did not comment on this argument.

Department's Position: We agree with respondents and have corrected

the home market credit expense calculation for sales with missing

payment and shipment dates for the final results.

Comment 11: Respondents argue that the Department did not include

indirect selling expenses related to EP sales in the total expenses

used to calculate CEP profit pursuant to section 772(d)(3) of the Act,

because the Department set indirect selling expenses for EP sales to

zero before calculating the CEP profit rate. Respondents maintain that

the Department requested indirect selling expenses related to both EP

and CEP sales, and the Department's recent policy bulletin on the

calculation of CEP profit states that the calculation of total actual

profit under section 772(f)(2)(D) includes all revenues and expenses

from EP sales. Thus, indirect expenses related to EP sales should have

been included in the expenses used to calculate CEP profit.

The petitioners' did not comment on this argument.

Department's Position: We agree with the respondents in part. We

agree that the calculation of total actual profit under section

772(f)(2)(D) of the statute includes all revenues and expenses

resulting from the respondent's U.S. sales and home market sales. See

Final Results of Antidumping Duty Administrative Review; Certain Cold-

Rolled Carbon Steel Flat Products from the Netherlands; 63 FR 13204,

13211 (March 18, 1998). The Department, however, has not adopted the

computer programming changes suggested by respondents. Instead, in the

final margin program, the Department changed the definition of a

variable (INDEXUS) to be

[[Page 30194]]

the sum of indirect selling expenses and inventory carrying costs

incurred in the United States, and deleted another variable (INDEXPU)

from the final margin program. For a complete listing of the changes

the Department has made to its final margin program, please see the

Department's analysis memorandum and final margin computer program.

Comment 12: Respondents argue that the Department did not calculate

CV profit consistent with its determination of the CV profit rate.

Respondents assert that the Department calculated the CV profit rate as

the ratio of total home market profit on above-cost sales to the sum of

the total cost of manufacture, G&A, net financial expense, and packing

expenses. However, the Department applied the CV profit rate to a

larger base, in calculating the profit amount used to calculate profit

for CV. Respondents maintain that the CV profit rate should be applied

to the same expenses that were included in the denominator used to

calculate the CV profit rate. Therefore, respondents state that the

Department should correct its program to exclude direct and indirect

selling expenses from the base to which the CV profit ratio was

applied.

The petitioners did not comment on this argument.

Department's Position: We agree with respondents and have corrected

this error for the final results.

Final Results of Review

As a result of our review, we have determined that the following

margins exist:

------------------------------------------------------------------------

Margin

Manufacturer/exporter Time period (percent)

------------------------------------------------------------------------

Imphy/Ugine-Savoie....................... 1/1/96--12/31/96 7.46

------------------------------------------------------------------------

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between United States price and normal value may vary from

the percentages stated above. The Department will issue appraisement

instructions directly to the Customs Service. The final results of this

review shall be the basis for the assessment of antidumping duties on

entries of merchandise covered by this review. For duty assessment

purposes, we calculated an importer-specific assessment rate by

aggregating the dumping margins calculated for all U.S. sales to each

importer and dividing this amount by the total value of subject

merchandise entered during the POR for each importer.

Furthermore, the following deposit requirements will be effective

upon publication of this notice of final results of review for all

shipments of certain stainless steel wire rods from France entered, or

withdrawn from warehouse, for consumption on or after the publication

date, as provided for by section 751(a)(1) of the Act: (1) the cash

deposit rates for the reviewed companies will be the rates for those

firms as stated above; (2) if the exporter is not covered in this

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

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

period for the manufacturer of the merchandise; and (3) the cash

deposit rate for all other manufacturers or exporters will continue to

be 24.51 percent for stainless steel wire rods, the all others rate

established in the LTFV investigation. See Amended Final Determination

and Antidumping Duty Order: Certain Stainless Steel Wire Rods from

France (59 FR 4022, January 28, 1994).

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice serves as a final reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation or 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.

This notice also serves as the only reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with section 353.34(d) of the Department's

regulations. Timely notification of return/destruction of APO materials

or conversion to judicial protective order is hereby requested. Failure

to comply with the regulations and the terms of an APO is a

sanctionable violation.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR

353.33(c)(5).

Dated: May 26, 1998.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-14759 Filed 6-2-98; 8:45 am]

BILLING CODE 3510-DS-P