Carbon Steel Wire Rope From Mexico; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-806]

Carbon Steel Wire Rope From Mexico; Final Results of Antidumping

Duty Administrative Review

AGENCY: International Trade Administration/Import Administration,

Department of Commerce.

ACTION: Notice of Final Results of Antidumping Duty Administrative

Review.

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SUMMARY: On April 7, 1998, the Department of Commerce (the Department)

published in the Federal Register the preliminary results of its

antidumping duty administrative review of the antidumping duty order on

carbon steel wire rope from Mexico (63 FR 16967). This review covers

one manufacturer/exporter of the subject merchandise to the United

States, Aceros Camesa S.A. de C.V. (Camesa), and the period of March 1,

1996 through February 28, 1997. We gave interested parties an

opportunity to comment on the preliminary results of review. We

received comments from Camesa and from the Committee of Domestic Steel

Wire Rope and Specialty Cable Manufacturers (the petitioner). We have

changed the results from those presented in the preliminary results of

review.

EFFECTIVE DATE: September 2, 1998.

FOR FURTHER INFORMATION CONTACT: Joanna M. Gabryszewski, Laurel

LaCivita, or Maureen Flannery, Import Administration, International

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

Constitution Avenue, NW, Washington DC 20230; telephone (202) 482-0780,

(202) 482-4236, or (202) 482-3020, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute

Unless otherwise indicated, all citations to the statute are

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

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

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

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

provisions codified at 19 CFR part 353 (April 1, 1996).

Background

On April 7, 1998, the Department published in the Federal Register

the preliminary results of the review of the antidumping duty order on

carbon steel wire rope from Mexico (63 FR 16967). On May 7, 1998, we

received comments from the petitioner and Camesa. The petitioner and

Camesa submitted rebuttal comments on May 15, 1998. Both parties

presented their comments in a hearing held on May 28, 1998.

The Department has now completed this antidumping duty

administrative review in accordance with section 751(b) of the Act.

Scope of Review

The product covered by this review is steel wire rope. Steel wire

rope encompasses ropes, cables, and cordage of carbon steel, other than

stranded wire, not fitted with fittings or made up into articles, and

not made up of brass-plated wire. Imports of these products are

currently classifiable under the following Harmonized Tariff Schedule

(HTS) subheadings: 7312.10.9030, 7312.10.9060, and 7312.10.9090.

Excluded from this review is stainless steel wire rope, which is

classifiable under HTS subheading 7312.10.6000, and all forms of

stranded wire, with the following exception.

Based on the final affirmative determination of circumvention of

antidumping duty order, 60 Federal Register 10831 (February 28, 1995),

the Department has determined that steel wire strand, when manufactured

in Mexico by Camesa and imported into the United States for use in the

production of steel wire rope, falls within the scope of the

antidumping duty order on steel wire rope from Mexico. Such merchandise

is currently classifiable under subheading 7312.10.3020 of the HTS.

Although HTS subheadings are provided for convenience and for

Customs purposes, our own written description of the scope of this

review remains dispositive.

This review covers one manufacturer/exporter, Camesa, and the

period March 1, 1996 through February 28, 1997.

Model Match Methodology

On January 8, 1998, the Court of Appeals for the Federal Circuit

issued a decision in CEMEX v. United States, 133 F.3d 897 (Fed. Cir.)

(CEMEX). In that case, based on the pre-URAA version of the Act, the

Court discussed the appropriateness of using constructed value (CV) as

the basis for foreign market value when the Department finds home

market sales to be outside the ``ordinary course of trade.'' This issue

was not raised by any party in this proceeding. However, the URAA

amended the definition of sales outside the ``ordinary course of

trade'' to include sales below cost. See Section

[[Page 46754]]

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 (NV) 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.'' Instead, the Department will use sales of similar merchandise,

if such sales exist. The Department will use CV as the basis for NV

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

comparison. Therefore, in this segment of the 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, above, that were in the

ordinary course of trade for purposes of determining appropriate

product comparisons to U.S. sales. We have implemented the Court's

decision in this case, to the extent that the data on the record

permitted.

Analysis of the Comments Received

We gave interested parties an opportunity to comment on the

preliminary results of review. We received case and rebuttal briefs

from the petitioner and from Camesa.

Comment 1: Whether Camesa's U.S. Sale is a Bona Fide Transaction

The petitioner contends that the timing and nature of Camesa's one

sale to the United States during the period of review (POR) indicates

that it was not a bona fide transaction.

The petitioner asserts that although Camesa's sale of subject

product was not overtly fraudulent, circumstances surrounding the sale

were contrived under controlled conditions. Petitioner contends the

price of the product was arranged to ensure that the sale would yield

little or no dumping margin and serve as the basis for an

administrative review and adjustment of the existing antidumping duty

deposit requirement.

Petitioner argues that, given that Camesa had not sold carbon steel

wire rope to the United States in over three years, and that the U.S.

customer purchased subject product so late in the POR and was willing

to pay a 111.68 percent duty indicates that this sale was orchestrated

by Camesa and does not represent typical commercial trade. Petitioner

further contends that the price of the sale was calculated so as to

closely coordinate with home market sales of identical product during

the same period. Consequently, the petitioner argues, the Department

must disregard this sale and determine that no proper basis existed for

an administrative review of the March 1, 1996 through February 28, 1997

period.

Camesa contends that the petitioner has not provided any evidence

that the sale in question was not genuine, or that the prices were

aberrational or atypical compared to other sales in the U.S. market.

Camesa points out that the petitioner has not demonstrated that

Camesa's U.S. customer had a financial interest in the outcome of this

antidumping duty review. Camesa argues that the petitioner's arguments

are based on the speculation that the U.S. sale must have been

contrived because it occurred so late in the review period and results

in a margin that the petitioner does not like.

Camesa further claims that there is no statutory or regulatory

basis for excluding any U.S. sales from an administrative review.

Camesa notes that the Department set forth its understanding that

section 751(a)(2)(A) of the Act requires the Department to include all

U.S. sales in the calculation of dumping margins in Tapered Roller

Bearings and Parts Thereof, Finished and Unfinished, From Japan and

Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and

Components Thereof, From Japan; Final Results of Antidumping Duty

Administrative Reviews and Revocation in Part of an Antidumping

Finding, 61 FR 57629, 57639 (November 7, 1996) (TRBs). Therefore,

Camesa contends, its one U.S. sale should be included in this review.

DOC Position

We agree with Camesa. Section 751(a)(2)(A) of the Act requires the

Department to determine the NV and export price (or constructed export

price) of each entry of the subject merchandise and to calculate the

dumping margin for each entry during the POR. We stated in TRBs that

section 751(a)(2)(A) of the Act requires us to analyze all U.S. sales

within the review period. As the petitioner notes in its case brief,

the sale in question was made between a foreign company and the first

unaffiliated purchaser in the United States, during the POR. The

petitioner does not claim that this sale was fraudulent and has not

provided any evidence, only speculative allegations, that the sale was

not a bona fide transaction. Therefore, we have continued to include

this sale in our margin calculation in these final results of review.

Comment 2: Whether Camesa's Home Market Sales Constitute a Fictitious

Market

The petitioner contends that the home market sales which served as

the basis for the price comparison constitute a fictitious market. The

petitioner claims that section 773(a)(2) of the Act and section

353.43(b) of the Department's regulations require the Department to

disregard and/or reject any pretended sale or sales intended to

establish a fictitious market in determining NV.

The petitioner alleges that the data provided by Camesa regarding

the home market sales on which NV is based demonstrate a price movement

vis-a-vis different forms of the product subject to the order which is

indicative of a fictitious market. Specifically, the petitioner states

that the timing and isolated nature of one customer-specific discount

was contrived to lower the home market price, thereby reducing or

eliminating the dumping margin. Therefore, the petitioner asserts, the

price manipulation evident in these sales constitutes the very type of

price movement which the Department has determined constitutes the

basis for a fictitious market determination.

Camesa argues that there is no evidence to support the petitioner's

claim of a fictitious market. Camesa notes that under the Department's

established practice, a ``fictitious market'' may be found when the

evidence shows that the trends in prices for comparison products: (1)

are moving in a different way from the trends in prices for non-

comparison products, and (2) would have the effect of reducing the

dumping margins. See the preamble to Antidumping Duties; Countervailing

Duties; Final Rule; Final Rule, 62 FR 27296, 27357 (May 19, 1997).

Camesa claims that the home market prices for the comparison product in

the month of the U.S. sale were at relatively high levels both in

comparison to other sales of the same product and in comparison to the

trends in prices of non-comparison products. Thus, the price trends for

the comparison product had the effect of raising, not lowering, the

dumping margins.

Furthermore, Camesa argues that an analysis of the timing of its

home market sales and discounts reveals that these sales and discounts

were not unusual and were within the range of Camesa's normal sales

practices. Camesa concludes, therefore, there is no evidence to support

the petitioner's claim that these sales constitute a fictitious market.

[[Page 46755]]

DOC Position

The petitioner failed to raise its fictitious market allegation

until the filing of its case brief following the preliminary results of

this review. Therefore, the petitioner's allegation was untimely filed

and, consequently, does not warrant determining that Camesa's home

market sales constitute a fictitious market.

As we explained in our Notice of Final Results of Antidumping Duty

Administrative Review and Determination Not to Revoke Order in Part:

Dynamic Random Access Memory Semiconductors of One Megabyte or Above

from the Republic of Korea, 62 FR 39809, 39822 (July 25, 1997), a

fictitious market analysis is extraordinary. The preamble to

Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296,

27357 (May 19, 1997)(the Departments's regulations), implementing the

URAA, states that the Department typically does not engage in a

fictitious market analyses under section 773(a)(2) of the Act, or a

variety of other analyses called for by section 773, ``unless it

receives a timely and adequately substantiated allegation from a

party.'' (See Tubeless Steel Disc Wheels from Brazil; Final Results of

Antidumping duty Administrative Review, 56 FR 14083 (April 15, 1991);

Porcelain-on-Steel Cooking Ware from Mexico; Final Results of

Antidumping Duty Administrative Review, 58 FR 32095, 23096 (June 8,

1993) (Mexican Cooking Ware).) The various provisions of section 773,

particularly section 773(a)(2), ``call for analyses based on

information that is quantitatively and/or qualitatively different from

the information normally gathered by the Department as part of its

standard antidumping analysis.'' See 62 FR 27296, 27357, (May 19,

1997). The Department must determine, as a threshold matter, whether

such an analysis is warranted based upon the adequacy of the

allegation. See Mexican Cooking Ware; Electrolytic Manganese Dioxide

from Japan; Final Results of Antidumping Duty Administrative Review, 56

FR 28551, 28555 (May 14, 1993).

The untimely nature of the petitioner's allegation during this

review prevented the Department from making this threshold

determination at an appropriate point in the proceeding. Therefore, we

reject petitioner's fictitious market allegation.

Comment 3: The Date of Sale for Home Market Observation 527

The petitioner argues that the Department must reject the reported

date of sale for home market observation (OBS) 527 since Camesa used

the invoice date as the date of sale whereas, during verification, the

Department discovered a facsimile transmission from Camesa to its home

market customer indicating that the material terms of sale for OBS 527

had been settled three months before the date of invoice. The

petitioner contends that the Department should establish the date of

the facsimile transmission as the date of sale for OBS 527, since it

corresponds to the date of the last known changes in the material terms

of sale. As a result, the petitioner argues, OBS 527 should not be used

as a basis for calculating NV, since the earlier date of sale is

outside of the contemporaneous window period. The petitioner further

alleges that the remaining sales of the foreign like product sold in

the home market during the month of the U.S. sale, constitute an

unacceptably small quantity of home market sales upon which to base NV.

Therefore, the petitioner argues, the Department should base NV on

contemporaneous home market sales of other carbon steel wire rope

products of the same general class or kind as the subject merchandise

sold by Camesa in the United States, or, alternatively, on sales of the

foreign like product made prior to the month of the U.S. sale.

Camesa asserts that section 351.401 of the Department's regulations

stipulates that the date of sale should be based on the date of invoice

and that the preamble to this new regulation also expresses a

``preference for using a single date of sale for each respondent,

rather than a different date of sale for each sale.'' (See 62 FR 27296,

27348). Furthermore, Camesa notes that the preamble to the Department's

regulations also indicates that the Department will depart from using

the date of invoice as the date of sale when ``the material terms of

sale usually are established on some date other than the date of

invoice.'' (See 62 FR 27296, 27349.) Camesa finally points to the

requirement in the Department's questionnaire that respondents use a

uniform date of sale methodology for all sales.

Camesa notes that, as a general matter, the prices for the home

market sales reported during the POR were fixed based on the price

lists in effect when the invoice was generated. Camesa explains that it

used the date of invoice as the date of sale for all of the home market

transactions reported in this review. Finally, Camesa explains that the

facsimile transmission in question establishes neither the price nor

quantity of the sale and consequently cannot be used as the basis of

the date of sale.

DOC Position

We agree with Camesa. The Department's verification report

established that the purpose of the facsimile transmission petitioner

references was to grant a discount, and not to establish the price,

quantity or other terms of the sale. As Camesa explained above, the new

regulations require the use of single, uniform date of sale throughout

each response, rather than a different date of sale for each sale.

Although this review is not governed by the new regulations, the new

regulations serve as a restatement of the Department's interpretation

of the requirements of the Act as amended by URAA. See section 351.701

of the Department's regulations. Therefore, the Department will use the

date of invoice as the date of sale. Section 351.401(i) of Department's

regulations establishes that normally, the date of sale is the date of

invoice, as recorded in the exporter's or producer's records kept in

the ordinary course of business. Section 351.401(i) also states that

the Department may use a date other than the date of invoice if the

Secretary is satisfied that a different date better reflects the date

on which the exporter or producer establishes the material terms of

sale.

Camesa prepared its response on a consistent basis, using the

invoice date as the date of sale. There is no evidence that any date

other than the invoice date should be considered as the date on which

Camesa established the material terms of sale in the course of its

business. The verification report did not identify any discrepancies

with respect to the date of sale for this transaction. Therefore, for

the purposes of these final results of review, we will accept Camesa's

verified invoice date as the date of sale.

Comment 4: Duty Drawback

The petitioner argues that Camesa is not entitled to a duty

drawback adjustment under section 772(c)(1)(B) of the Act because

Camesa has failed to satisfy the Department's two-pronged test to

receive duty drawback. (See Far East Machinery Co. v. United States, 12

CIT 972, 974 (1988). Petitioner states that the first prong of the test

requires Camesa to demonstrate that the import duty and the rebate

received under the duty drawback program must be directly

[[Page 46756]]

linked to, and dependent upon, one another. The second prong requires

that Camesa demonstrate that there were sufficient imports of raw

materials to account for the duty drawback received on exports of the

manufactured product, Id.

Petitioner argues that Camesa failed to satisfy the first prong

because under PITEX, Mexico's duty drawback program, Camesa did not

actually pay the import duty as petitioner claims is required by the

Act. According to the petitioner, duty drawback adjustments ``may only

be made where imports [sic] duties are actually paid and rebated.''

Petitioner's case brief at 19 (emphasis in original), citing Far East

Machinery, 12 CIT at 976, quoting Huffy Corporation v. United States,

10 CIT 214 (1986).

Moreover, petitioner argues that since Camesa did not pay any

import duties, it has failed to establish that such duties were paid

for those raw materials that were used to produce steel wire rope sold

in the home market but not paid on wire rope products exported.

Petitioner also asserts that Camesa did not pay duties on a quantity of

imported rod substantially greater than the quantity of its documented

exports.

Camesa contends that the petitioner incorrectly characterizes

section 772(c)(1)(B) of the Act and in a way that is directly

inconsistent with the plain language of the Act. Camesa also disputes

petitioner's allegation that they did not meet the second prong, i.e.,

did not export a sufficient quantity of finished products to account

for its amount of imports. Camesa argues that petitioner ignored the

vast majority of the steel products it exports--steel wire, steel wire

strand, and electro-mechanical cable--which, like steel wire rope, are

produced from imported steel wire rod. Camesa notes that the total

exports of these products were substantially more than the quantity of

steel wire rod imported by Camesa.

DOC Position

We disagree with the petitioner. Section 772(c)(1)(B) of the Act

explicitly provides for the Department's grant of a duty drawback

adjustment when import duties ``imposed by the country of exportation

which have been rebated, or which have not been collected, by reason of

the exportation of the subject product to the United States''. Id.

(emphasis added).

Petitioner's argument that Camesa has to actually pay and receive a

rebate in order to qualify for duty drawback adjustment is contrary to

the plain language of the statute and the Department's long-established

practice. ``Section 772(c)(1)(B) of the Act provides for adjustment for

duty drawback on import duties which have been rebated (or which have

not been collected) by reason of exportation * * *.'' Final

Determination of Sales Less Than Fair Value: Stainless Steel Wire Rod

from Korea, 63 FR 40404, 40415 (July 29, 1998). See also Certain Welded

Stainless Steel Pipe from Taiwan; Final Results of Administrative

Review, 63 FR 38382, 38389 (July 16, 1998); Certain Welded Carbon Steel

Pipes and Tubes from India; Final Results of New Shipper Antidumping

Duty Administrative Review (Indian Pipe), 62 FR 47632, 47635 (September

10, 1997).

The Department will grant a duty drawback adjustment if we

determine: 1) that the import duty and rebate are directly linked to,

and dependent upon, one another; and 2) that imported raw materials are

sufficient to account for the duty drawback received on the exports of

the manufactured product. (See Far East Machinery, 12 CIT at 974.)

However, the Department has never established a strict prerequisite

that import duties must actually be paid and subsequently rebated in

order for there to be the necessary link justifying an adjustment to

the U.S. starting price. Nor have the courts established such a

requirement. It is true, as petitioner notes, that the Court of

International Trade stated in Far East Machinery that payment of import

duties is a ``prerequisite to receipt of an export rebate'' to qualify

for an adjustment. Far East Machinery, 12 CIT at 976. However,

petitioner has taken the Court's discussion of this issue out of

context. In Far East Machinery, the respondent had actually paid duties

upon importing the input and had received some amount of rebate on

exporting the subject merchandise. The question in that case only

concerned whether the government drawback program at issue established

the necessary link between actual payment of the duties and receipt of

the rebate. See id.; see also, Du Pont de Nemours & Co. v. United

States, 841 F. Supp. 1237, 1242-43 (CIT, 1993); Huffy Corp., supra.

In this case, under the PITEX program, the Mexican government has

effectively suspended collection of duties from Camesa on imported

steel wire rod contingent upon Camesa's later exporting merchandise

containing an equivalent amount of steel. The Department has reviewed

this type of program before. See Silicon Metal from Brazil; Final

Results of Antidumping Duty Administrative Review, 62 FR 1970, 1976

(January 7, 1997) (Brazilian duty drawback program suspends the payment

of taxes or duties that ordinarily would have been due upon

exportation); Extruded Ruber Thread from Malaysia; Final Results of

Antidumping Administrative Review, 62 FR 33588, 33598-99 (June 20,

1997) (import duties not collected when subject merchandise

incorporating those imported goods were exported).

Therefore, in cases where the import duty is not collected, the

first prong then becomes whether ``import duties were actually not

collected by reason of the exportation of the subject merchandise to

the United States.'' This type of program falls within the express

language of section 772 (c)(1)(B). See Indian Pipe, at 47632, 47635.

The Department determines that Camesa has met the requirements of the

first prong.

The Department examined and reviewed the PITEX program at

verification. The Department also examined the Mexican government's

audits of Camesa's imports of wire rod, consumption of steel wire rod,

and subsequent exports of wire rope. We verified that Camesa conformed

to the requirements of the PITEX program, which requires that exports

be sufficient to account for the drawback claimed.

The Department agrees with Camesa that it has also met the second

prong. After taking into consideration the variety of products Camesa

exported--including exports of steel wire, steel wire strand, and

electro-mechanical cable--Camesa's total exports were sufficient to

account for the quantity of steel wire rod imported. It should also be

noted that the Court of International Trade has consistently held that

there is no requirement that specific inputs be traced from importation

through exportation before allowing drawback on duties paid. See Far

East Machinery, 12 CIT at 975.

Comment 5: The Accuracy of Camesa's Duty Drawback Claims

The petitioner contends that the Department must reject Camesa's

claimed adjustment for duty drawback since the Department was unable to

verify the information provided in the questionnaire response. The

petitioner claims that Camesa, by basing the reported duty drawback

adjustment on only one of many imports of steel wire rod, attempted to

obtain the highest possible adjustment by selectively supplying the

Department with certain information, while withholding other, less

advantageous, information. Therefore, the petitioner argues, as adverse

facts available, the Department must reject Camesa's claim for a duty

drawback adjustment in its entirety.

[[Page 46757]]

Camesa argues that the Department should use verified information,

and not ``adverse inferences'' to correct what it claims was a minor

``error'' in the reported duty drawback found during verification.

Camesa claims that the employee responsible for providing the duty

drawback information did not explain that the information was based on

a single import of wire rod. At verification, the Department reviewed

the documents for all of Camesa's purchases of imported rod during the

review period. Camesa claims the Department did not find discrepancies

with respect to the one invoice that was reported. Camesa further

contends that, at verification, it successfully demonstrated the

accuracy of the information it had submitted. Camesa claims that the

duty drawback rate that it submitted was not unreasonable, since it is

very close to the rates obtained for other imports which occurred at

the beginning and the middle of the POR. Therefore, Camesa argues,

since the verification report did not identify any discrepancies in the

information reported in the questionnaire response, the Department

should base Camesa's duty drawback adjustment for the final results of

review on verified information, rather than on adverse facts available.

DOC Position

We agree with the petitioner that Camesa failed to use all of the

appropriate information available to it in calculating its claimed

adjustment for duty drawback. The Department's verification established

that Camesa used only one of many imports of steel wire rod as the

basis for the claimed adjustment, yet reported it as an average price

for imported rod during the POR. In addition, Camesa was not able to

explain the reason for the reporting error at verification. (See Report

of the Sales and Cost Verification of Aceros Camesa S.A. de C.V.

(Camesa) in the First Administrative Review of the antidumping Duty

Order on Steel Wire Rope from Mexico, March 31, 1998, pages 12 and 13.)

In fact, Camesa's explanation of this ``minor'' error is made for the

first time in its case brief. Consequently, in the preliminary results

of review, we concluded that Camesa overreported the amount of the duty

drawback and we made an adjustment based on adverse inferences. Since

there have been no changes in material fact since the preliminary

results of this review, we have continued to allow an adjustment for

duty drawback in the final results of this review and to make an

adjustment to starting price in the United States using the smallest

per-unit amount of duty drawback calculated for any invoice of steel

wire rod purchased during the POR.

Comment 6: Rescission of the Department's Decision to Initiate the

Sales Below Cost Investigation

Camesa contends that the Department should rescind its decision to

initiate a sales-below-cost investigation in this review. Camesa claims

that the petitioner's sales-below-cost allegation failed to include the

net gain on monetary position recorded on Camesa's financial

statements, thereby overstating net financial expense and the cost of

production (COP). Camesa further contends that if the petitioner had

properly included the net gain on monetary position in its

calculations, all of the home-market sales identified by the petitioner

would have been made above cost, and the allegation would not have been

made. Therefore, Camesa argues, the petitioner's allegation should be

rejected and the sales-below-cost investigation should be rescinded.

The petitioner contends that the Department's decision to initiate

the investigation was proper in all respects and in accord with the

Department's standards. The petitioner further states that it presented

the Department with more than sufficient grounds to proceed with an

investigation. And, since the petitioner's allegation otherwise met the

legal criteria for initiation of a COP investigation, the Department's

decision to initiate a COP investigation was fully in accord with the

controlling statutory standard and legal precedent. Therefore, the

petitioner contends, the Department must reject Camesa's argument for

rescission of the initiation of the COP investigation.

DOC Position

We agree with the petitioner. The Department considered Camesa's

arguments and rejected them on two previous occasions. Camesa

originally presented this argument in its letter to the Department on

October 1, 1997 arguing that the petitioner failed to include net gain

on monetary position in its calculation of net financial expense.

Nevertheless, at the time of the decision to initiate a sales-below-

cost investigation, the Department determined that Camesa did not

sufficiently substantiate its case for this adjustment for the record

for the Department to be able to determine whether Camesa's proposed

adjustment concerning the monetary position was appropriate. In the

Department's October 6, 1997 decision memo, Steel Wire Rope from

Mexico: Whether to Initiate a Sales Below Cost Investigation, the

Department stated on page 3, ``since Camesa's financial statements do

not specify what the interest expenses relate to, we believe that we do

not have enough information on the record to determine whether such an

adjustment is appropriate in this case.'' On October 19, 1997, Camesa

again requested the Department to rescind its decision to initiate a

sales-below-cost investigation, presenting for a second time the

arguments set forth in its October 1, 1997 letter. The request was

considered and denied in a letter from the Department to Camesa on

October 23, 1997. Furthermore, the Department found the petitioner's

allegation to be representative of the broader range of the home market

sales than were actually used to determine NV in the review.

Therefore, the Department initiated a sales-below-cost

investigation, because at the time the decision was made, the

Department had ``reasonable grounds'' to believe that sales of foreign

like product under consideration for the determination of normal value

had been made at prices which represent less than the cost of

production. See Section 773(b)(1) of the Act. The Department will not

revisit the issue of initiation at this time.

Comment 7: Disregarding Sales Below Cost

Camesa claims that the Department erroneously conducted its cost

test on all home market sales of the foreign like product reported to

the Department. Camesa points out that it made only one sale of steel

wire rope to the United States during the POR, and that the Department

based its preliminary results of review on home market sales of the

identical product. Therefore, Camesa points out that section 773(b)(1)

of the Act requires the Department to exclude sales below cost which

have been made within an extended period of time in substantial

quantities, and were not at prices which permit recovery of all costs

within a reasonable period of time. Camesa notes that section

773(b)(2)(C) states that ``sales made below cost of production have

been made in substantial quantities if --(i) the volume of such sales

represents 20 percent or more of the volume of sales under

consideration for the determination of normal value, or (ii) the

weighted average per unit price of the sales under consideration for

the determination of normal value is less than the weighted average per

unit cost of production for such sales.'' Therefore, Camesa concludes,

the Department cannot apply the cost test to sales of similar

merchandise or disregard them

[[Page 46758]]

from its analysis, since only sales of identical merchandise should

have been the relevant universe of sales under consideration for the

determination of NV.

Camesa notes that this issue does not bear any significance for

calculation of NV in the current review, since the Department did not

disregard any of the home-market sales of the product that were used as

the basis for NV. However, Camesa notes that it may have a significance

in future reviews since the Department's questionnaire instructs

respondents to respond to the cost of production and CV sections of the

questionnaire only if any of the respondent's sales were disregarded as

below cost in the prior review. Therefore, Camesa requests the

Department to specifically state that none of Camesa's home market

sales were disregarded as below cost in the current review.

The petitioner contends that Camesa is incorrect in its assertion

that the sales of similar merchandise in the home market are not under

consideration for the determination of NV. It further notes that all

sales of merchandise covered by the scope of the order remain

candidates for the determination of NV, even if the NV for the final

results of this review continues to be based solely on the identical

home market product. The petitioner argues that, since the Department

acted in accordance with law in its preliminary results of review, it

must maintain this analysis for purposes of the final results of this

review.

DOC Position

We disagree with Camesa's interpretation of section 773(b)(1) of

the Act and that we should find that no below-cost-sales were

disregarded. The premise underlying Camesa's argument--that the sales-

below-cost analysis is done after the Department does its matching

analysis--is inconsistent with the current court decision in CEMEX.

The Department's practice following the CEMEX decision is to

conduct a sales-below-cost test prior to conducting the matching

analysis. The Court in CEMEX held that ``A determination of the dumping

margin cannot be made if sales of a product which are to be relied upon

in reaching foreign market value are not in the ordinary course of

trade. [citations omitted]. Therefore, the initial consideration for

Commerce is whether, under section 1677b(a)(1), the sales are `in the

usual commercial quantities and in the ordinary course of trade. 19

U.S.C. 1677b(a)(1).' '' CEMEX, 133 F.3d at 903 (emphasis added).

The Court in CEMEX explicitly held that sales below cost are not in

the ``ordinary course of trade.'' Citing Mantex v. United States, 841

F. Supp. 1290, CIT, 1993, the Court in CEMEX held that `` `[a] profit

level comparison is probative of the economic reality' of the sales

[citation omitted] and therefore the disparity in profit margins is

indicative of sales that were not in the ordinary course of trade.''

CEMEX, 133 F.3d at 900 citing Mantex, 841 F.Supp. at 1308.

Sales that are below cost (not in the ordinary course of trade) are

then disregarded and subsequently the matching analysis is done on

remaining sales. ``Commerce should then examine the next available

class of merchandise * * * to determine if it matches any of the * * *

categories of `such or similar merchandise.' '' CEMEX, 133 F.3d at 903.

Therefore, Camesa's argument that only identical merchandise should

have been subjected to the sales-below-cost analysis is contrary to the

Court's mandate in CEMEX. Camesa incorrectly takes a very narrow

interpretation of the phrase ``under consideration for the

determination of normal value'' to include only those identical sales

that were actually used in calculating normal value. The Department

considers all home market sales reported to be ``under consideration

for the determination of normal value.'' The fact that certain sales

were later disregarded for being below cost or non-identical matches,

when identical matches were available, does not alter the fact that

initially all reported home market sales were ``under consideration for

the determination of normal value.''

Accordingly, based on the cost test, the Department disregarded

certain of Camesa's below-cost home-market sales in the current review.

Comment 8: Home Market Credit

Camesa maintains that the Department should calculate home-market

credit expenses based on the actual short-term interest rate available

to Camesa, rather than the published interbank equilibrium rate

(abbreviated TIIE in Spanish), used in the preliminary results of

review. Camesa notes that the TIIE rate is an interbank rate which is

available for transactions between banks and not intended for corporate

customers. Therefore, Camesa contends, the Department should calculate

the credit expense for Camesa's home-market sales based on the evidence

on the record concerning the actual interest rates Camesa would have

paid if it had short-term borrowings during the review period.

The petitioner contends that the Department properly used the TIIE

interest rate to determine home market credit expense during this

review. The petitioner states that since Camesa did not have actual

borrowings in the home market during the period of the review, an

interest rate must be imputed. The petitioner contends that the

interest rates proposed by Camesa are hypothetical and speculative,

cannot be verified and cannot serve as the basis for a circumstance of

a sale adjustment. Therefore, the petitioner contends, the Department

should continue to use the TIIE rate in its final results of review.

DOC Position

The Department's preference for determining an interest rate for

imputed credit expenses when the respondent does not have any short-

term loans is set forth in Import Administration Policy Bulletin 98.2

(Policy Bulletin 98.2). Policy Bulletin 98.2 states, ``For foreign

currency transactions, we will establish interest rates on a case-by-

case basis using publicly available information, with a preference for

published average short-term lending rates.'' The Bulletin also states

that any short-term interest rates used by the Department should meet

three criteria: `` * * * it should be reasonable, readily obtainable,

and representative of `usual commercial behavior.' '' We were not able

to identify any published sources of short-term lending rates in Mexico

during the period of review. However, we recognize that the information

on the record concerning the minimum interest rate that Camesa could

have obtained from commercial banks, if it had had short-term

borrowings during the period of review, satisfied the above criteria.

Furthermore, we agree with Camesa that the TIIE rate is an interbank

rate that is applied only to transactions between banks and understates

the rates available to corporate customers and is not appropriate for

calculating imputed credit expenses in this review. Therefore, for

these final results we have imputed credit expenses using the

information on the record. (See, Calculations Memo for the Final

Results of Review, dated August 21, 1998.)

Comment 9: The Timeliness of the Filing of the Public Version of

Camesa's Case Brief

The petitioner argues that by submitting the public version of its

case brief to the Department on May 11, 1998, Camesa missed the public

filing deadline date of May 8, 1998. The petitioner contends that due

to the untimely filing, the Department must reject Camesa's filing

according to the

[[Page 46759]]

Department's regulation at section 353.38(a) which states that ``[T]he

Secretary will return to the submitter * * * any written argument

submitted after the time limits specified in this section or by the

Secretary.'' The petitioner further contends that to do otherwise not

only works to the prejudice of the petitioner, which operated under the

established time frames, but provides license for Camesa, and parties

to other proceedings before the Department, to flout the Department's

mandatory requirements. The petitioner further argues that, at the

least, the Department must reject Camesa's claim for confidentiality

regarding its case brief since it failed to perfect this claim by

filing a public version of the case brief by the close of the next

business day. Camesa did not comment on this issue.

DOC Position

Camesa attempted to file its business proprietary version of its

case brief on May 7, 1998. Details of Camesa's attempt to file its case

brief in a timely manner are outlined in Sherman & Sterling's letter to

the Honorable William Daley dated May 8, 1998 and accompanying

affidavit of its courier. The Department accepted Camesa's explanation

and effectively gave Camesa an extension of one day by accepting its

case brief on May 8, 1998. See 353.38(c)(1). Therefore, the public

version of Camesa's case brief was due on the next business day, which

in this case was on May 11, 1998. See 353.32(b). Camesa timely filed

its public version on May 11, 1998.

Final Results of the Review

As a result of our review of the comments, we determine that the

following dumping margins exist:

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

Margin

Manufacturer/exporter Period (percent)

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

Aceros Camesa, S.A. de C.V............... 3/1/96-2/28/97 0.00

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

The Department shall determine, and the Customs service shall

assess, antidumping duties on all appropriate entries. We will instruct

customs to liquidate the entries made during the POR without regard to

antidumping duties since no margins were determined to exist in this

review. The Department will issue appraisement instructions directly to

the U.S. Customs Service.

Further, the following deposit requirements will be effective upon

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

of steel wire rope from Mexico 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 rate for Camesa will

be the rate stated above; (2) for previously investigated companies not

listed above, the cash deposit rate will continue to be the company-

specific rate published for the most recent period; (3) if the exporter

is not a firm covered in this review, or the original investigation of

sale at less than fair value (LTFV), 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 (4) the cash deposit rate

for all other manufacturers or exporters will continue to be 111.68

percent, the all others rate established in the LTFV investigation.

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 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.

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)), section 771(i) of

the Act (19 U.S.C. 1677f(i)), and 19 CFR 353.22.

Dated: August 27, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-23670 Filed 9-1-98; 8:45 am]

BILLING CODE 3510-DS-P