Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Emulsion Styrene- Butadiene Rubber from Mexico

DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-821]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Emulsion Styrene-

Butadiene Rubber from Mexico

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 4, 1998.

FOR FURTHER INFORMATION CONTACT: Sunkyu Kim or John Maloney, Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.

20230; telephone: (202) 482-2613 or (202) 482-1503, respectively.

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 of Commerce's (the

Department's) regulations are references to 19 CFR part 351 (62 FR

27296, May 19, 1997).

Preliminary Determination

We preliminarily determine that emulsion styrene-butadiene rubber

(ESBR) from Mexico is being, or is likely to be, sold in the United

States at less than fair value (LTFV), as provided in section 733 of

the Act. The estimated margin of sales at LTFV is shown in the

``Suspension of Liquidation'' section of this notice, below.

Case History

Since the initiation of this investigation (see Notice of

Initiation of Antidumping Investigations: Emulsion Styrene-Butadiene

Rubber from Brazil, the Republic of Korea, and Mexico (63 FR 20575,

April 27, 1998)), the following events have occurred:

On May 18, 1998, the United States International Trade Commission

(ITC) issued an affirmative preliminary injury determination in this

case (see ITC Investigation Nos. 731-TA-794-796).

In May and June 1998, the Department obtained information from the

U.S. Embassy in Mexico identifying Industrias Negromex, S.A. de C.V.

(Negromex) as the only producer and/or exporter of the subject

merchandise to the United States. Based on this

[[Page 59520]]

information, the Department issued the antidumping questionnaire to

Negromex in May 1998.

In June 1998, the Department received a response from Negromex to

Section A of the questionnaire. Negromex submitted its response to

Sections B and C of the questionnaire in July 1998.

On July 21, 1998, pursuant to section 733(c)(1)(A) of the Act, the

petitioners made a timely request to postpone the preliminary

determination. The petitioners filed an explanatory amendment to that

request on July 23, 1998. We granted this request and, on July 28,

1998, postponed the preliminary determination until no later than

October 28, 1998 (see Notice of Postponement of Preliminary

Determinations of Sales at Less Than Fair Value: Emulsion Styrene-

Butadiene Rubber From Brazil, the Republic of Korea, and Mexico (63 FR

41544, August 4, 1998)).

On July 27, 1998, the petitioners submitted a timely allegation,

pursuant to section 773(b) of the Act, that Negromex had made sales in

the home market at less than the cost of production (COP). Our analysis

of that allegation indicated that there were reasonable grounds to

believe or suspect that Negromex sold ESBR in the home market at prices

less than the COP. Accordingly, on August 21, 1998, we initiated a COP

investigation with respect to ESBR pursuant to section 773(b) of the

Act (see Memorandum from Team to Louis Apple, Director, Office 5, dated

August 21, 1998).

We issued a supplemental questionnaire for Sections A, B, and C to

Negromex in August 1998 and received a response to that supplemental

questionnaire, along with revised U.S. and home market sales listings,

in September 1998. In those revised sales listings, Negromex included,

at the request of the Department, one ``sample'' U.S. sale for which

Negromex received payment and transferred ownership to the customer. We

received Negromex's response to Section D of the questionnaire in

September 1998. In October 1998, we issued a supplemental questionnaire

for Section D to Negromex, but the response to that supplemental

questionnaire, submitted on October 23, 1998, was not considered for

purposes of the preliminary determination because of a lack of time to

properly analyze the response. We will consider it, however, for

purposes of the final determination.

Postponement of Final Determination and Extension of Provisional

Measures

On October 14, 1998, Negromex requested that, in the event of an

affirmative preliminary determination in this investigation, the

Department postpone its final determination until no later than 135

days after the publication of this notice in the Federal Register,

pursuant to section 735(a)(2)(A) of the Act. Negromex also requested

that the Department extend provisional measures pursuant to section

733(d) of the Act from four months to not more than six months. In

accordance with 19 CFR 351.210(e), because: (1) Our preliminary

determination is affirmative; (2) Negromex accounts for a significant

proportion of exports of the subject merchandise; (3) no compelling

reasons for denial exist; and (4) Negromex has requested an extension

of provisional measures, we are granting this request and are

postponing the final determination until no later than 135 days after

the publication of this notice in the Federal Register. Suspension of

liquidation will be extended accordingly.

Scope of Investigation

For purposes of this investigation, the product covered is ESBR.

ESBR is a synthetic polymer made via free radical cold emulsion

copolymerization of styrene and butadiene monomers in reactors. The

reaction process involves combining styrene and butadiene monomers in

water, with an initiator system, an emulsifier system, and molecular

weight modifiers. ESBR consists of cold non-pigmented rubbers and cold

oil extended non-pigmented rubbers that contain at least one percent of

organic acids from the emulsion polymerization process.

ESBR is produced and sold, both inside the United States and

internationally, in accordance with a generally accepted set of product

specifications issued by the International Institute of Synthetic

Rubber Producers (IISRP). The universe of products subject to this

investigation are grades of ESBR included in the IISRP 1500 series and

IISRP 1700 series of synthetic rubbers. The 1500 grades are light in

color and are often described as ``Clear'' or ``White Rubber.'' The

1700 grades are oil-extended and thus darker in color, and are often

called ``Brown Rubber.'' ESBR is used primarily in the production of

tires. It is also used in a variety of other products, including

conveyor belts, shoe soles, some kinds of hoses, roller coverings, and

flooring.

Products manufactured by blending ESBR with other polymers, high

styrene resin master batch, carbon black master batch (i.e., IISRP 1600

series and 1800 series) and latex (an intermediate product) are not

included within the scope of this investigation.

The products under investigation are currently classifiable under

subheading 4002.19.0010 of the Harmonized Tariff Schedule of the United

States (HTSUS). Although the HTSUS subheading is provided for

convenience and customs purposes, the written description of the scope

of this investigation is dispositive.

Period of Investigation

The period of investigation (POI) is April 1, 1997, through March

31, 1998.

Fair Value Comparisons

To determine whether sales of ESBR from Mexico to the United States

were made at less than fair value, we compared the constructed export

price (CEP) to the Normal Value (NV) for Negromex, as described in the

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

notice, below. In accordance with section 777A(d)(1)(A)(i) of the Act,

we calculated weighted-average CEPs for comparison to weighted-average

NVs.

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

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

Cir. 1998). 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 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 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 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 Investigation'' section of this notice,

above, that were in the ordinary course of trade for purposes of

determining appropriate product

[[Page 59521]]

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.

Level of Trade and CEP Offset

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the comparison market at

the same level of trade (LOT) as the EP or CEP transaction. The NV LOT

is that of the starting-price sales in the comparison market or, when

NV is based on constructed value (CV), that of the sales from which we

derive selling, general and administrative (SG&A) expenses and profit.

For EP, the LOT is also that of the starting-price sale, which is

usually from exporter to importer. For CEP, it is the level of the

constructed sale from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP or CEP

sales, we examine stages in the marketing process and selling functions

along the chain of distribution between the producer and the

unaffiliated customer in the comparison market. If the comparison-

market sales are at a different LOT and the difference affects price

comparability, as manifested in a pattern of consistent price

differences between the sales on which NV is based and comparison-

market sales at the LOT of the export transaction, we make a LOT

adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP

sales, if the NV level is more remote from the factory than the CEP

level and there is no basis for determining whether the difference in

the levels between NV and CEP affects price comparability, we adjust NV

under section 773(a)(7)(B) of the Act (the CEP-offset provision). See

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

Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731

(November 19, 1997).

For its home market sales, Negromex reported: (1) Four customer

categories--large purchaser end users, other end users, unaffiliated

distributors, and small footwear manufacturers; and (2) three channels

of distribution--direct sales to large purchaser/other end users,

direct sales to unaffiliated distributors, and direct sales to small

footwear manufacturers through its Guadalajara warehouse. Negromex

claimed two levels of trade in the home market: (1) Direct sales to

large purchasers and other end users; and (2) direct sales to

unaffiliated distributors and small footwear manufacturers through

Guadalajara. For its U.S. sales, Negromex reported that its affiliated

importer, GIRSA, Inc. (GIRSA), made sales to: (1) Two customer

categories--large purchaser end users and other end users; and (2)

through one channel of distribution. Negromex claimed one level of

trade in the U.S. market (the CEP sale to GIRSA).

According to Negromex, there is no level of trade in the home

market that is comparable to the CEP level of trade (Negromex's sales

to GIRSA). Negromex asserts that its CEP level of trade involves few

selling activities while, in contrast, its NV levels of trade (home

market sales to the four classes of customers) involve significantly

greater selling activities. Thus, Negromex contends that each of its

proffered NV levels of trade occurs at a different, and more advanced,

marketing stage than its CEP level of trade. Based on that contention,

Negromex requests that the Department apply a CEP offset by adjusting

NV under section 773(a)(7)(B) of the Act (the CEP offset provision).

Accordingly, we have performed an analysis of the information on the

record to determine whether a LOT adjustment, or in the alternative, a

CEP offset, is warranted.

In order to determine whether NV was established at a different LOT

than CEP sales, we examined stages in the marketing process and selling

functions along the chains of distribution between Negromex and its

home market customers. We compared the selling functions performed for

home market sales with those performed with respect to the CEP

transaction, exclusive of economic activities occurring in the United

States, pursuant to section 772(d) of the Act, to determine if the home

market levels of trade constituted more advanced stages of distribution

than the CEP level of trade.

Based on an analysis of the information on the record, we found

that Negromex made sales in the home market at two distinct levels of

trade, the end user level of trade and the unaffiliated distributor

level of trade, each representing different marketing stages and tiers

of selling functions and services. In addition, we found that one of

the levels of trade in the home market, sales to unaffiliated

distributors, was comparable to the CEP level of trade because of the

similarities between the class of customer and distribution channel.

Our analysis of the chains of distribution and selling functions

performed for sales to unaffiliated distributors in the home market and

CEP sales in the U.S. market indicated that both are made at the same

stage in the marketing process and involve analogous levels of selling

functions. For a detailed explanation of this analysis, see the

memorandum to The File through James Maeder from The Team, issued for

the preliminary determination of this investigation, dated October 28,

1998.

To the extent possible, we have used home market sales at the

unaffiliated distributor level of trade for comparison purposes in our

analysis without making a LOT adjustment. When we were unable to find

sales of the foreign like product in the home market at the same LOT as

the U.S. sales, we determined whether a LOT adjustment was warranted.

To make that determination, pursuant to section 773(a)(7)(A)(ii) of the

Act, we performed an analysis to ascertain whether there was a pattern

of consistent price differences between the end user level of trade in

the home market and the unaffiliated distributor level of trade in the

home market, which is analogous to the CEP level of trade. To

accomplish this, we compared the weighted-average of Negromex's NV

prices of sales made at both home market levels of trade for products

sold at both levels. We base our findings on whether the weighted-

average prices are higher for a preponderance of sales concerning the

quantities of each product sold. See Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts Thereof from France, et. al.:

Preliminary Results of Antidumping Duty Administrative Reviews (61 FR

35713, July 8, 1996). Because the weighted-average prices were higher

at the end user level of trade for a preponderance of the products and

quantities sold, we found that there was a pattern of consistent price

differences between the products sold at the two levels of trade in the

home market. Thus, we made an adjustment to NV for the difference in

levels of trade when we made our comparison of CEP sales to home market

sales at the end user level of trade.

Negromex requested a CEP offset in this investigation. Section

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

when two conditions exist: (1) NV 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 to determine a level-of-trade adjustment. In this

investigation, we made a level of trade adjustment to NV in accordance

with section 773(a)(7)(A) of the Act.

[[Page 59522]]

Therefore, we have not made a CEP offset.

Date of Sale

For U.S. sales made pursuant to the terms of two long-term

contracts, Negromex has reported the contract date as the date of sale

for all sales made under these contracts. Both contracts are year-long

contracts that establish a minimum annual quantity of merchandise that

is required to be purchased. Negromex reported that amounts of

merchandise in addition to the minimum requirement could be purchased

upon the agreement of both parties. Prices for the minimum annual

quantity are fixed under the contracts and are based upon a

mathematical formula that incorporates published monthly monomer prices

and prices of butadiene and styrene--the major inputs of ESBR.

Pursuant to 19 CFR 351.401(i), the date of sale is normally the

date of invoice unless satisfactory evidence is presented that the

material terms of sale, price and quantity, are established on some

other date. See also Final Determination of Sales at Less Than Fair

Value: Polyvinyl Alcohol from Taiwan, 61 FR 14067 (March 29, 1996). The

Department has determined that, for a long-term contract, the price

term is fixed if it is established by a published source outside of the

control of either party to the contract, such that there is nothing

more that the parties need to negotiate concerning the price of the

goods sold. See Final Determination of Sales of Less Than Fair Value:

Brass Sheet and Strip From France, 52 FR 812, 814 (January 9, 1987). In

addition, the Department has decided that, for a long-term contract

with a minimum quantity requirement, the date of the contract is the

date of sale as to the minimum quantity specified in the contract.

However, if the customer has not yet agreed to purchase any quantities

above the minimum, then, for any amount sold in excess of the minimum,

the Department will use the date of invoice as the date of sale. See

Titanium Sponge From Japan; Final Results of Antidumping Duty

Administrative Review and Tentative Determination To Revoke in Part, 54

FR 13403, 13404 (April 3, 1989); see also Toho Titanium Co., Ltd. v.

U.S., 743 F. Supp. 888, 890-91 (CIT 1990).

Under the long-term contracts in this investigation, the price term

is fixed on the contract date, based on a set formula of published

monthly prices for major inputs which are outside the control of either

party to the contract. A minimum quantity requirement is also fixed on

the contract date, but the parties made no agreement to purchase

quantities greater than the minimum. Given these facts and the

Department's practice, for Negromex's long-term contracts in the U.S.

market we have used the contract date as the date of sale for sales

equaling the minimum quantity agreed to in the contract. For any

quantity sold above the minimum under these contracts, we used the

reported invoice date as the date of sale.

Addition of Product Characteristics by Negromex

Negromex reported five additional product characteristics (ash

content, free soap content, styrene content, mooney viscosity, and

vulcanization time tolerance) not specified in the Department's

questionnaire as matching criteria. Negromex alleged that these

characteristics are commercially relevant because its customers have

differing requirements for these characteristics and Negromex records

the levels of these five characteristics for the ESBR it produces.

Negromex referenced Notice of Final Determination of Sales at Less Than

Fair Value: Certain Pasta from Italy, 61 FR 30326 (June 14, 1996)

(Pasta from Italy) to support its addition of these product

characteristics as matching criteria.

The Department has not accepted these additional product

characteristics as matching criteria for purposes of the preliminary

determination. The product characteristics included in our

questionnaire define standard grades of ESBR according to the generally

accepted set of product specifications issued by the International

Institute of Synthetic Rubber Producers. These characteristics

sufficiently define the product for matching purposes and Negromex has

not provided adequate information on the record to establish that their

additional product characteristics would result in more appropriate

product matches. Moreover, in Pasta from Italy, we accepted the

addition of wheat quality as a product matching criterion because we

found that the level of wheat quality materially affected pasta input

costs and, ultimately, pasta prices. See Pasta from Italy at 30346. In

this investigation, Negromex's cost information on the record does not

provide evidence of any difference in ESBR production costs relating to

any of the additional five physical characteristics. Therefore, we

preliminarily determine that ESBR is sufficiently defined for matching

purposes by the ten criteria included in the questionnaire.

Constructed Export Price

We used CEP methodology for all sales by Negromex, in accordance

with section 772(b) of the Act, because sales to the first unaffiliated

purchaser took place after importation into the United States.

We calculated CEP based on the packed, FOB Brownsville, Texas

warehouse starting price to the first unaffiliated purchaser in the

United States. In accordance with section 772(c)(1)(B) of the Act, we

added an amount for uncollected import duties in Mexico. We made

deductions from the starting price, where appropriate, for foreign

inland freight, transport and storage insurance, foreign brokerage and

handling, U.S. brokerage and handling (including U.S. Customs Service

processing fees), and U.S. warehousing expenses, pursuant to section

772(c)(2)(A) of the Act.

We made additional deductions from the starting price, in

accordance with section 772(d)(1) of the Act, for selling expenses

associated with economic activities occurring in the United States,

including direct selling expenses (credit costs and technical service

expenses), indirect selling expenses, and inventory carrying costs. In

those instances where Negromex did not report payment dates, we

calculated credit expenses using the date of the preliminary

determination as the payment date. Additionally, in the instance where

Negromex did not report a shipment date, we computed the average number

of days between shipment and payment on Negromex's U.S. sales and

assigned the shipment date for that sale to be the date of the average

number of credit days prior to the preliminary determination. Pursuant

to section 772(d)(3) of the Act, the starting price was further reduced

by an amount for profit to arrive at CEP. In accordance with section

772(f) of the Act, we calculated the CEP profit rate using the expenses

incurred by Negromex and GIRSA on their sales of the subject

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

home market and the profit associated with those sales.

Normal Value

In order to determine whether there is a sufficient volume of sales

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

compared Negromex's volume of home market sales of the foreign like

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

accordance with section 773(a)(1)(C) of the Act. Because Negromex's

aggregate volume of home market sales of the foreign like product

[[Page 59523]]

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

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

for Negromex.

Based on the information contained in the cost allegation submitted

by the petitioners, the Department found reasonable grounds to believe

or suspect that Negromex made sales in the home market at prices below

their COPs, in accordance with section 773(b)(1) of the Act. As a

result, the Department initiated an investigation to determine whether

Negromex made home market sales at prices below their COPs during the

POI, within the meaning of section 773(b) of the Act. See Memorandum

from the Team to Louis Apple, Director, Office 5, dated August 21,

1998. Before making any fair value comparisons, we conducted the COP

analysis described below.

We calculated the COP based on the sum of Negromex's cost of

materials and fabrication for the foreign like product, plus amounts

for home market SG&A and financial expenses and packing costs, in

accordance with section 773(b)(3) of the Act. In addition, we adjusted

Negromex's G&A expense ratio and finance expense ratio calculations as

set out in the Preliminary Determination Cost Calculation Memo from

Sunkyu Kim to the File, dated October 28, 1998.

We compared Negromex's weighted-average COP figures to home market

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

the Act, in order to determine whether sales had been made at prices

below their COPs. On a product-specific basis, we compared the COP to

home market price, less any applicable movement charges, discounts,

direct selling expenses and packing expenses.

In determining whether to disregard home market sales made at

prices below the COP, we examined whether such sales were made: (1) In

substantial quantities within an extended period of time; and (2) at

prices which permitted the recovery of all costs within a reasonable

period of time in the normal course of trade, pursuant to section

773(b)(1) of the Act.

Pursuant to section 773(b)(2)(C) of the Act, where less than 20

percent of Negromex's sales of a given product were at prices less than

the COP, we did not disregard any below-cost sales of that product

because we determined that the below-cost sales were not made in

``substantial quantities.'' Where 20 percent or more of Negromex's

sales of a given product during the POI were at prices less than the

COP, we determined such sales to have been made in ``substantial

quantities'' within an extended period of time in accordance with

section 773(b)(2)(B) of the Act. In such cases, we also determined that

such sales were not made at prices which would permit recovery of all

costs within a reasonable period of time, in accordance with section

773(b)(2)(D) of the Act. Therefore, we disregarded the below-cost

sales. Where all sales of a specific product were at prices below the

COP, we disregarded all sales of that product. For those U.S. sales of

ESBR for which there were no comparable home market sales in the

ordinary course of trade, we compared the CEP to CV in accordance with

section 773(a)(4) of the Act.

We found that, for certain models of ESBR, more than 20 percent of

Negromex's home market sales within an extended period of time were at

prices less than COP. Further, the prices did not provide for the

recovery of costs within a reasonable period of time. We, therefore,

disregarded the below-cost sales and used the remaining above-cost

sales as the basis for determining NV, in accordance with section

773(b)(1) of the Act.

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

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

expenses, profit, and U.S. packing costs. For Negromex, in accordance

with section 773(e)(2)(A) of the Act, we based SG&A expenses and profit

on the amounts incurred and realized by Negromex in connection with the

production and sale of the foreign like product in the ordinary course

of trade, for consumption in the foreign country.

We calculated NV for Negromex as noted in the ``Price to Price

Comparisons'' and ``Price to CV Comparisons'' sections of this notice,

below.

Price to Price Comparisons

We calculated NV based on packed, delivered prices to unaffiliated

home market customers. We made deductions from the starting price,

where appropriate, for price correction and customer pickup billing

adjustments, volume rebates, and export rebates. We also made

deductions, where appropriate, for foreign inland freight, warehousing,

and foreign inland insurance expenses, pursuant to section 773(a)(6)(B)

of the Act. Pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR

351.410, we made circumstance-of-sale adjustments, where appropriate,

for differences in credit expenses, warranty expenses, and technical

service expenses. In those instances where Negromex did not report

payment dates, we calculated credit expenses using the date of the

preliminary determination as the payment date. Finally, we deducted

home market packing costs and added U.S. packing costs in accordance

with section 773(a)(6) (A) and (B) of the Act.

To the extent practicable, we based NV on sales at the same level

of trade as the CEP sales. In cases where NV was calculated at a

different LOT, we made an adjustment, pursuant to section 773(a)(7) of

the Act. This adjustment is discussed further in the Level of Trade

section, above.

Price to CV Comparisons

For price to CV comparisons, we made adjustments to CV in

accordance with section 773(a)(8) of the Act. In addition, we deducted

from CV the weighted-average home market direct selling expenses.

Currency Conversion

We made currency conversions into U.S. dollars based on the

exchange rates in effect on the dates of the U.S. sales as certified by

the Federal Reserve Bank.

Section 773A(a) of the Act directs the Department to use a daily

exchange rate in order to convert foreign currencies into U.S. dollars

unless the daily rate involves a fluctuation. It is the Department's

practice to find that a fluctuation exists when the daily exchange rate

differs from the benchmark rate by 2.25 percent. The benchmark is

defined as the moving average of rates for the past 40 business days.

When we determine a fluctuation to have existed, we substitute the

benchmark rate for the daily rate, in accordance with established

practice. Further, section 773A(b) of the Act directs the Department to

allow a 60-day adjustment period when a currency has undergone a

sustained movement. A sustained movement has occurred when the weekly

average of actual daily rates exceeds the weekly average of benchmark

rates by more than five percent for eight consecutive weeks. (For an

explanation of this method, see Policy Bulletin 96-1: Currency

Conversions (61 FR 9434, March 8, 1996).) Such an adjustment period is

required only when a foreign currency is appreciating against the U.S.

dollar. The use of an adjustment period was not warranted in this case

because the Mexican Peso did not undergo a sustained movement.

Verification

As provided in section 782(i) of the Act, we will verify all

information determined to be acceptable for use in making our final

determination.

[[Page 59524]]

Suspension of Liquidation

In accordance with section 733(d) of the Act, we are directing the

Customs Service to suspend liquidation of all imports of subject

merchandise that are entered, or withdrawn from warehouse, for

consumption on or after the date of publication of this notice in the

Federal Register. We will instruct the Customs Service to require a

cash deposit or the posting of a bond equal to the weighted-average

amount by which the NV exceeds the constructed export price, as

indicated in the chart below. These suspension-of-liquidation

instructions will remain in effect until further notice. The weighted-

average dumping margins are as follows:

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

Weighted-

average

Exporter/Manufacturer margin

percentage

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

Industrias Negromex, S.A. de C.V........................... 29.57

All Others................................................. 29.57

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

ITC Notification

In accordance with section 733(f) of the Act, we have notified the

ITC of our determination. If our final determination is affirmative,

the ITC will determine before the later of 120 days after the date of

this preliminary determination or 45 days after our final determination

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry.

Public Comment

Case briefs or other written comments in at least ten copies must

be submitted to the Assistant Secretary for Import Administration no

later than February 5, 1999, and rebuttal briefs no later than February

12, 1999. A list of authorities used and an executive summary of issues

should accompany any briefs submitted to the Department. Such summary

should be limited to five pages total, including footnotes. In

accordance with section 774 of the Act, we will hold a public hearing,

if requested, to afford interested parties an opportunity to comment on

arguments raised in case or rebuttal briefs. Tentatively, the hearing

will be held on February 16, 1999, time and room to be determined, at

the U.S. Department of Commerce, 14th Street and Constitution Avenue,

N.W., Washington, D.C. 20230. Parties should confirm by telephone the

time, date, and place of the hearing 48 hours before the scheduled

time.

Interested parties who wish to request a hearing, or to participate

if one is requested, must submit a written request to the Assistant

Secretary for Import Administration, U.S. Department of Commerce, Room

1870, within 30 days of the publication of this notice. Requests should

contain: (1) the party's name, address, and telephone number; (2) the

number of participants; and (3) a list of the issues to be discussed.

Oral presentations will be limited to issues raised in the briefs. If

this investigation proceeds normally, we will make our final

determination by no later than 135 days after the publication of this

notice in the Federal Register.

This determination is issued and published pursuant to sections

773(d) and 777(i) of the Act.

Dated: October 28, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-29553 Filed 11-3-98; 8:45 am]

BILLING CODE 3510-DS-P