Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Stainless Steel Sheet and Strip in Coils From Taiwan

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-831]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Stainless Steel Sheet

and Strip in Coils From Taiwan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: January 4, 1999.

FOR FURTHER INFORMATION CONTACT: Carrie Blozy (Chang Mien), Doreen Chen

(Tung Mung), Gideon Katz (YUSCO) or Michael Panfeld, Import

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

Commerce, 14th Street and Constitution Avenue, NW, Washington, DC

20230; telephone: (202) 482-0165, (202) 482-0408, (202) 482-5255, and

(202) 482-0172, 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's regulations are to the regulations at 19 CFR part 351, 62

FR 27296 (May 19, 1997).

PRELIMINARY DETERMINATION: We preliminarily determine that stainless

steel sheet and strip in coils (``SSSS'') from Taiwan is being, or is

likely to be, sold in the United States at less than fair value

(``LTFV''), as provided in section 733 of the Act. The estimated

margins of sales at LTFV are shown in the ``Suspension of Liquidation''

section of this notice.

Case History

On July 13, 1998, the Department initiated antidumping duty

investigations of imports of SSSS from France, Germany, Italy, Japan,

Mexico, South Korea, Taiwan, and the United Kingdom. See Initiation of

Antidumping Duty Investigations: Stainless Steel Sheet and Strip in

Coils From France, Germany, Italy, Japan, Mexico, South Korea, Taiwan,

and the United Kingdom, 63 FR 37521, (July 13, 1998) (``Initiation'').

Since the initiation of this investigation the following events have

occurred.

The Department set aside a period for all interested parties to

raise issues regarding product coverage. On July 27, 1998, petitioners,

Allegheny Ludlum Corporation, Armco Inc., J&L Specialty Steel, Inc.,

Washington Steel Division of Bethlehem Steel Corporation (formerly

Lukens, Inc.), the United Steelworkers of America, AFL-CIO/CLC, the

Butler Armco Independent Union, and the Zanesville Armco Independent

Organization, Inc., filed comments proposing clarifications to the

scope of these investigations. From July October, 1998, the Department

received numerous responses from respondents aimed at clarifying the

scope of the investigations. See Memorandum for Joseph A. Spetrini,

Scope Issues, dated December 14, 1998.

On July 31, 1998, the Department requested information from the

American Institute in Taiwan (``AIT'') to identify producers/exporters

of the subject merchandise. On August 2, 1998, AIT responded to the

Department's request for information. On July 27 and July 28, 1998,

petitioners and Yieh United Steel Corporation (YUSCO), respectively,

submitted comments on our proposed model matching criteria.

On July 24, 1998, the United States International Trade Commission

(ITC) notified the Department of its affirmative preliminary injury

determination in this case. On August 3, 1998, the Department issued

antidumping questionnaires to YUSCO, Chia Far Industrial Factory Co.,

Ltd. (``Chia Far''), Tang Eng Iron Works Co., Ltd. (``Tang Eng''), Tung

Mung Development Co., Ltd. (``Tung Mung''), Ta Chen International (``Ta

Chen''), and Chang Mien Industries, Co., Ltd. (``Chang Mien''). On

September 21, 1998, the Department selected YUSCO and Tung Mung

(collectively ``respondents'') as respondents in this investigation. On

November 3, 1998, the Department amended its decision to include Chang

Mien as a mandatory respondent. See ``Selection of Respondents,''

below.

On September 8, 1998, we received the section A questionnaire

response from Chang Mien. On September 21, 1998, we received sections

B, C, and D of the questionnaire from Chang Mien. Petitioners filed

comments on Chang Mien's questionnaire responses on September 24, and

November 12, 1998. We issued supplemental questionnaires for sections

A, B, C and D to Chang Mien on November 13, 1998, and December 3, 1998,

and received responses to these questionnaires on November 27, 1998 and

December 10, 1998. Additionally, on December 4, 1998, petitioners

submitted comments concerning adjustments that the Department should

make in its preliminary determination.

On September 8, 1998, we received the section A questionnaire

response from Tung Mung. On September 24, 1998, we received sections B,

C, and D of the questionnaire from Tung Mung. Petitioners filed

comments on Tung Mung's questionnaire responses on September 24, and

October 16, 1998. We issued a supplemental questionnaire for sections

A, B, C and D to Tung Mung on October 26, 1998, and received responses

to this questionnaire on November 12, 1998. On November 18, 1998, we

requested that Tung Mung report the date or order, which Tung Mung

describes as ``initial estimates,'' and also requested that Tung Mung

ensure that all those home market sales for which ``initial estimates''

were finalized during the period of the investigation are included in

the revised home market sales listing. On December 2, Tung Mung

provided the requested information.

On September 8, 1998, we received the section A questionnaire

response from YUSCO. On September 25, 1998, we received sections B and

C of the questionnaire, and on September 28, 1998, we received section

D of the questionnaire from YUSCO. Petitioners filed comments on

YUSCO's questionnaire responses on September 25, 1998 and October 19,

1998. We issued a supplemental questionnaire for sections A, B, and C

to YUSCO on October 26, 1998, and received a response to this

questionnaire on November 18, 1998. We issued a supplemental

questionnaire for section D on November 2, 1998 and received a response

on November 16, 1998. We issued a second supplemental questionnaire for

sections A, B, and C on November 25, 1998 and received a response on

December 3, 1998.

On October 6, 1998, petitioners made a timely request for a thirty-

day postponement of the preliminary determination pursuant to section

733(c)(1)(A) of the Act. The Department determined that these

concurrent investigations are extraordinarily complicated and warranted

the thirty-day postponement requested by petitioners. On October 23,

1998, we

[[Page 102]]

postponed the preliminary determination until no later than December

17, 1998. See Stainless Steel Sheet and Strip in Coils From Italy,

France, Germany, Mexico, Japan, the Republic of South Korea, the United

Kingdom and Taiwan; Notice of Postponement of Preliminary

Determinations in Antidumping Duty Investigations, 63 FR 56909 (October

23, 1998). On October 30, 1998, petitioners alleged that there is a

reasonable basis to believe or suspect that critical circumstances

exist with respect to imports of SSSS from Taiwan. The critical

circumstances analysis for the preliminary determination is discussed

in the ``Critical Circumstances'' section of the notice below.

Finally, on December 3, 1998, petitioners submitted comments

regarding the product concordance. For specific adjustments to the

product concordance information submitted by Chang Mien, see Memorandum

to the File: Analysis of Chang Mien in the Preliminary Determination of

Stainless Steel Sheet and Strip in Coils from Taiwan, December 17,

1998.

On October 14 and 15, 1998, petitioners alleged that Ta Chen is

reselling subject merchandise by certain respondents in the United

States at prices less than Ta Chen's cost of acquisition and related

selling and movement expenses. On December 3, 1998, we initiated a

middleman dumping investigation against Ta Chen. The results of that

investigation will be incorporated in the final determination of this

investigation.

Postponement of Final Determination

Pursuant to section 735(a)(2) of the Act, on December 9, 1998,

YUSCO requested that, in the event of an affirmative preliminary

determination in this investigation, the Department postpone its final

determination until not later than 135 days after the date of the

publication of an affirmative preliminary determination in the Federal

Register. YUSCO also requested to extend the provisional measures to

not more than six months. Additionally, on December 11 and 15, 1998,

Tung Mung and Chang Mien, respectively requested a postponement of the

deadline for the Final Determination and an extension of provisional

measures, if found that their margins are higher than de minimis. In

accordance with 19 CFR 351.210(b), because (1) our preliminary

determination is affirmative, (2) YUSCO and Tung Mung account for a

significant proportion of exports of the subject merchandise, and (3)

no compelling reasons for a denial exists, we are granting the

respondent's 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 the Investigation

For purposes of this investigation, the products covered are

certain stainless steel sheet and strip in coils. Stainless steel is an

alloy steel containing, by weight, 1.2 percent or less of carbon and

10.5 percent or more of chromium, with or without other elements. The

subject sheet and strip is a flat-rolled product in coils that is

greater than 9.5 mm in width and less than 4.75 mm in thickness, and

that is annealed or otherwise heat treated and pickled or otherwise

descaled. The subject sheet and strip may also be further processed

(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that

it maintains the specific dimensions of sheet and strip following such

processing.

The merchandise subject to this investigation is classified in the

Harmonized Tariff Schedule of the United States (``HTSUS'') at

subheadings: 7219.13.00.30, 7219.13.00.50, 7219.13.00.70,

7219.13.00.80, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90,

7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35,

7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44,

7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35,

7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44,

7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30,

7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30,

7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25,

7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00,

7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80,

7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60,

7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15,

7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30,

7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and

7220.90.00.80. Although the HTS subheadings are provided for

convenience and Customs purposes, the Department's written description

of the merchandise under investigation is dispositive.

Excluded from the scope of this investigation are the following:

(1) sheet and strip that is not annealed or otherwise heat treated and

pickled or otherwise descaled; (2) sheet and strip that is cut to

length; (3) plate (i.e., flat-rolled stainless steel products of a

thickness of 4.75 mm or more); (4) flat wire (i.e., cold-rolled

sections, with a prepared edge, rectangular in shape, of a width of not

more than 9.5 mm); and (5) razor blade steel. Razor blade steel is a

flat rolled product of stainless steel, not further worked than cold-

rolled (cold-reduced), in coils, of a width of not more than 23 mm and

a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5

percent chromium, and certified at the time of entry to be used in the

manufacture of razor blades. See Chapter 72 of the HTSUS, ``Additional

U.S. Note'' 1(d).

In response to comments by interested parties the Department has

determined that certain specialty stainless steel products are also

excluded from the scope of this investigation. These excluded products

are described below:

Flapper valve steel is excluded. It is defined as stainless steel

strip in coils containing, by weight, between 0.37 and 0.43 percent

carbon, between 1.15 and 1.35 percent molybdenum, and between 0.20 and

0.80 percent manganese. This steel also contains, by weight, phosphorus

of 0.025 percent or less, silicon of between 0.20 and 0.50 percent, and

sulfur of 0.020 percent or less. The product is manufactured by means

of vacuum arc remelting, with inclusion controls for sulphide of no

more than 0.04 percent and for oxide of no more than 0.05 percent.

Flapper valve steel has a tensile strength of between 210 and 300 ksi,

yield strength of between 170 and 270 ksi, plus or minus 8 ksi, and a

hardness (Hv) of between 460 and 590. Flapper valve steel is most

commonly used to produce specialty flapper valves in compressors.

Also excluded is a product referred to as suspension foil, a

specialty steel product used in the manufacture of suspension

assemblies for computer disk drives. Suspension foil is described as

302/304 grade or 202 grade stainless steel of a thickness between 14

and 127 microns, with a thickness tolerance of plus-or-minus 2.01

microns, and surface glossiness of 200 to 700 percent Gs. Suspension

foil must be supplied in coil widths of not more than 407 mm, and with

a mass of 225 kg or less. Roll marks may only be visible on one side,

with no scratches of measurable depth. The material must exhibit

residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm

over 685 mm length.

Certain stainless steel foil for automotive catalytic converters

also is excluded from the scope of this investigation. This stainless

steel strip

[[Page 103]]

in coils is a specialty foil with a thickness of between 20 and 110

microns used to produce a metallic substrate with a honeycomb structure

for use in automotive catalytic converters. The steel contains, by

weight, carbon of no more than 0.030 percent, silicon of no more than

1.0 percent, manganese of no more than 1.0 percent, chromium of between

19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of

no more than 0.045 percent, sulfur of no more than 0.03 percent,

lanthanum of between 0.002 and 0.05 percent, and total rare earth

elements of more than 0.06 percent, with the balance iron.

Permanent magnet iron-chromium-cobalt alloy stainless strip also is

excluded from the scope of this investigation. This ductile stainless

steel strip contains, by weight, 26 to 30 percent chromium, and 7 to 10

percent cobalt, with the remainder of iron, in widths 228.6 mm or less,

and a thickness between 0.127 and 1.270 mm. It exhibits magnetic

remanence between 9,000 and 12,000 gauss, and a coercivity of between

50 and 300 oersteds. This product is most commonly used in electronic

sensors and is currently available under proprietary trade names such

as ``Arnokrome III.'' 1

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\1\ ``Arnokrome III'' is a trademark of the Arnold Engineering

Company.

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Certain electrical resistance alloy steel also is excluded from the

scope of this investigation. This product is defined as a non-magnetic

stainless steel manufactured to American Society of Testing and

Materials (ASTM) specification B344 and containing, by weight, 36

percent nickel, 18 percent chromium, and 46 percent iron, and is most

notable for its resistance to high temperature corrosion. It has a

melting point of 1390 degrees Celsius and displays a creep rupture

limit of 4 kilograms per square millimeter at 1000 degrees Celsius.

This steel is most commonly used in the production of heating ribbons

for circuit breakers and industrial furnaces, and in rheostats for

railway locomotives. The product is currently available under

proprietary trade names such as ``Gilphy 36.'' 2

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\2\ ``Gilphy 36'' is a trademark of Imphy, S.A.

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Certain martensitic precipitation-hardenable stainless steel also

is excluded from the scope of this investigation. This high-strength,

ductile stainless steel product is designated under the Unified

Numbering System (UNS) as S45500-grade steel, and contains, by weight,

11 to 13 percent chromium, and 7 to 10 percent nickel. Carbon,

manganese, silicon and molybdenum each comprise, by weight, 0.05

percent or less, with phosphorus and sulfur each comprising, by weight,

0.03 percent or less. This steel has copper, niobium, and titanium

added to achieve aging, and will exhibit yield strengths as high as

1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after

aging, with elongation percentages of 3 percent or less in 50 mm. It is

generally provided in thicknesses between 0.635 and 0.787 mm, and in

widths of 25.4 mm. This product is most commonly used in the

manufacture of television tubes and is currently available under

proprietary trade names such as ``Durphynox 17.'' 3

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\3\ ``Durphynox 17'' is a trademark of Imphy, S.A.

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Finally, three specialty stainless steels typically used in certain

industrial blades and surgical and medical instruments also are

excluded from the scope of this investigation. These include stainless

steel strip in coils used in the production of textile cutting tools

(e.g., carpet knives).4 This steel is similar to ASTM grade

440F, but containing, by weight, 0.5 to 0.7 percent of molybdenum. The

steel also contains, by weight, carbon of between 1.0 and 1.1 percent,

sulfur of 0.020 percent or less, and includes between 0.20 and 0.30

percent copper and between 0.20 and 0.50 percent cobalt. This steel is

sold under proprietary names such as ``GIN4 Mo.'' The second excluded

stainless steel strip in coils is similar to AISI 420-J2 and contains,

by weight, carbon of between 0.62 and 0.70 percent, silicon of between

0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent,

phosphorus of no more than 0.025 percent and sulfur of no more than

0.020 percent. This steel has a carbide density on average of 100

carbide particles per square micron. An example of this product is

``GIN5'' steel. The third specialty steel has a chemical composition

similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent,

molybdenum of between 1.15 and 1.35 percent, but lower manganese of

between 0.20 and 0.80 percent, phosphorus of no more than 0.025

percent, silicon of between 0.20 and 0.50 percent, and sulfur of no

more than 0.020 percent. This product is supplied with a hardness of

more than Hv 500 guaranteed after customer processing, and is supplied

as, for example, ``GIN6''. 5

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\4\ This list of uses is illustrative and provided for

descriptive purposes only.

\5\ ``GIN4 Mo'', ``GIN5'' and ``GIN6'' are the proprietary

grades of Hitachi Metals America, Ltd.

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Period of Investigation

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

March 31, 1998.

Selection of Respondents

Section 777A(c)(1) of the Act directs the Department to calculate

individual dumping margins for each known exporter and producer of the

subject merchandise. However, section 777A(c)(2) of the Act gives the

Department discretion, when faced with a large number of exporters/

producers, to limit its examination to a reasonable number of such

companies if it is not practicable to examine all companies. Where it

is not practicable to examine all known producers/exporters of subject

merchandise, this provision permits the Department to investigate

either: (1) A sample of exporters, producers, or types of products that

is statistically valid based on the information available at the time

of selection; or (2) exporters and producers accounting for the largest

volume of the subject merchandise that can reasonably be examined.

After consideration of the complexities expected to arise in this

proceeding and the resources available to the Department, we determined

that it was not practicable in this investigation to examine all known

producers/exporters of subject merchandise. Instead, we found that,

given our resources, we would be able to investigate the Taiwanese

producers/exporters with the greatest export volume, as identified

above. In total, these companies (YUSCO, Tung Mung and Chang Mien)

accounted for more than 85 percent of all known exports of the subject

merchandise from Taiwan during the POI. For a more detailed discussion

of respondent selection in this investigation, see Respondent Selection

Memorandum, September 24, 1998.

Fair Value Comparisons

To determine whether sales of SSSS from Taiwan to the United States

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

(``EP'') to the normal value (``NV''), as described in the ``export

price'' section of this notice below. In accordance with section

777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs for

comparison to weighted-average NVs.

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

issued a decision in CEMEX v. United States, 1998 WL 3626 (Fed Cir.).

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.'' The

[[Page 104]]

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.

Transactions Investigated

YUSCO

For its home market sales, YUSCO reported the Government Uniform

Invoice (``GUI'') date as the date of sale, while for its U.S. market

sales, YUSCO reported the commercial invoice date as the date of sale.

YUSCO stated that the sale dates submitted for each market represented

the date when the essential terms of sales, i.e., price and quantity,

are definitively set, and that until the invoice date, these terms were

subject to change. Petitioners alleged that the questionnaire response

by YUSCO does not support YUSCO's claim that price and quantity may

change at any time between the order acceptance date (confirmation

date) and the final invoice date. Given the relevance of petitioners'

comments and the nature of marketing these types of made-to-order

products, petitioners' claims have some merit. Consequently, on October

26, 1998, the Department requested that YUSCO provide additional

information concerning the nature and frequency of price and quantity

changes occurring between order and invoice. In addition, we requested

that YUSCO report sales during the POI for which YUSCO had issued an

order acceptance, in addition to those sales invoiced during the POI.

Based on our analysis of the information submitted by YUSCO, we have

preliminarily determined that for home market and U.S. sales, the GUI

and commercial invoice dates, respectively, are the appropriate

indicators of the actual date of sale because a large percentage of

orders in each market were modified or canceled during the time between

order and invoice dates.

YUSCO reported that it made sales of subject merchandise to several

end-users during the POI, including Yieh Mau, to which YUSCO claims an

affiliation. With respect to Yieh Mau, there is no equity ownership of

five percent or more between the two companies and YUSCO did not

provide record evidence sufficient to demonstrate either financial or

operational control of Yieh Mau. Therefore, the Department

preliminarily determines that Yieh Mau is not affiliated with YUSCO.

See Proprietary Analysis Memorandum: YUSCO. With respect to the other

allegedly affiliated parties, the Department has likewise conducted an

analysis of these parties' affiliation with YUSCO. Because the

identities of these parties, as well as all pertinent information

regarding the affiliations, is proprietary information, please refer to

the Proprietary Analysis Memorandum: YUSCO. We note that the Department

intends to examine closely all affiliation issues at verification.

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

length prices were excluded from our analysis because we considered

them to be outside the ordinary course of trade. See 19 CFR 351.102. To

test whether these sales were made at arm's-length prices, we compared

on a model-specific basis the starting prices of sales to affiliated

and unaffiliated customers net of all movement charges, direct selling

expenses, and packing. Where, for the tested models of subject

merchandise, prices to the affiliated party were on average 99.5

percent or more of the price to the unaffiliated parties, we determined

that sales made to the affiliated party were at arm's length. See 19

CFR 351.403(c). In instances where no price ratio could be constructed

for an affiliated customer because identical merchandise was not sold

to unaffiliated customers, we were unable to determine that these sales

were made at arm's-length prices and, therefore, excluded them from our

less than fair value (``LTFV'') analysis. See Final Determination of

Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat

Products from Argentina, 58 FR 37062, 37077 (July 9, 1993); Notice of

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination: Emulsion Styrene-Butadiene Rubber

from Brazil, 63 Fed. Reg. 59509 (Nov. 8, 1998). Where the exclusion of

such sales eliminated all sales of the most appropriate comparison

product, we made a comparison to the next most similar model.

Tung Mung

For its home market, Tung Mung reported the date of invoice as the

date of sale, while for its U.S. market sales, Tung Mung reported the

contract date as the date of sale. Tung Mung stated that the sale dates

submitted for each market represented the date when the essential terms

of sales, i.e., price and quantity, are definitively set, and that up

to the invoice date, these terms were subject to change. Petitioners

alleged that the questionnaire response by Tung Mung did not support

Tung Mung's claim that for home market sales, price and quantity may

change at any time between the order acceptance date (confirmation

date) and the final invoice date. Given the relevance of petitioners'

comments and the nature of marketing these types of made-to-order

products, petitioners' claims have some merit. Consequently, on October

26 and November 18, 1998, the Department requested that Tung Mung

provide additional information concerning the nature and frequency of

price and quantity changes occurring between the confirmation date and

date of invoice. In addition, we requested that Tung Mung report sales

during the POI for which Tung Mung had issued an order acceptance, in

addition to those sales invoiced during the POI. Based on our analysis

of the information submitted by Tung Mung, we have preliminarily

determined that the sales contract date is the appropriate date of sale

because the sale contract date is the date on which the terms are

finalized. With respect to home market sales, we have preliminarily

determined that the date of invoice is the appropriate date of sale

since it is the date on which the terms are set and not changed

thereafter. For a further discussion of this issue, see Analysis

Memorandum: Tung Mung.

Chang Mien

In its original questionnaire response, Chang Mien reported that

for home market transactions it was using the date of invoice as the

date of sale because Chang Mien's accounting books treated date of sale

in this manner. In petitioners' November 12, 1998 submission, they

stated that it appeared that Chang Mien was using the wrong date of

sale. Given the relevance of petitioners' comments and the nature of

marketing these types of made-to-order products, petitioners' claims

have some merit. Consequently, on November 13, 1998, the Department

requested that Chang Mien provide additional information concerning the

nature and frequency of price and quantity changes occurring between

the confirmation date and date of invoice. In its November 27, 1998

supplemental response Chang Mien stated that because home market

customers purchase from inventory, ``there usually is no price change

or

[[Page 105]]

change in quantity between order confirmation date (day 0) and shipping

(invoice date) (day 1-3).'' See Chang Mien's November 27, 1998

supplemental response at 8. Therefore, we preliminarily determine that

the date of the order confirmation is the more appropriate sale date.

Accordingly, on December 3, 1998, the Department requested that Chang

Mien submit a revised home market sales listing using date of order

confirmation as the sale date.

Also, in its November 27, 1998 supplemental response, Chang Mien

reported that for its U.S. transactions it was using the date of sale

employed in its accounting system, i.e., the export declaration date

for sales through August 31, 1997, and after August 31, 1997, the date

of shipment. In the preamble to the regulations, the Department

addressed the issue of why it was appropriate normally to use date of

invoice, not date of shipment as the uniform date of sale.

Specifically, the Department noted in the preamble that: (1) date of

shipment is not among the possible dates of sale specified in note 8 of

the AD Agreement; (2) date of shipment rarely represents the date on

which the material terms of sale are established; (3) firms rarely use

shipment documents as the basis for preparation of financial reports,

thus making reliance on date of shipment at verification more

difficult; and (4) concerns regarding possible manipulation by using

date of invoice do not warrant substituting date of shipment for date

of invoice.'' Antidumping Duties; Countervailing Duties: Final Rule, 62

FR 27297, 27349 (May 19, 1997). In this case, Chang Mien has reported

that the terms of sale changed between the order date and the invoice

date. Specifically, an analysis of all U.S. sales of subject

merchandise in the POI reveals that for approximately 94 percent of the

sales there was a change between the quantity ordered and the quantity

shipped, and that for approximately 30 percent of the sales, the change

between the quantity ordered and the quantity shipped was greater than

the accepted industry tolerances. Therefore, we preliminarily determine

that the invoice date is the appropriate date of sale for U.S.

transactions. Accordingly, on December 3, 1998, the Department

requested that Chang Mien submit a revised U.S. sales listing using

date of invoice as the sale date. For a further discussion of this

issue, see Memorandum to the File: Analysis of Chang Mien in the

Preliminary Determination of Stainless Steel Sheet and Strip in Coils

from Taiwan, December 17, 1998.

Product Comparisons

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

all products produced by respondents, covered by the description in the

``Scope of Investigation'' section, above, and sold in the home market

during the POI, to be foreign like products for purposes of determining

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

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

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

product on the basis of the characteristics and reporting instructions

listed in the Department's August 3, 1998 questionnaire.

Level of Trade

In accordance with section 773(a)(1)(B)(i) 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 constructed

export price (``CEP'') transaction. The NV LOT is that of the starting

price sales in the comparison market or, when NV is based on CV, that

of the sales from which we derive selling, general and administrative

expenses (``SG&A'') and profit. For EP, the LOT is also the level of

the starting price sale, which is usually from the exporter to the

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. 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 differences in the levels between NV and

CEP sales 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).

In this investigation, none of the respondents requested a LOT

adjustment. To ensure that no such adjustment was necessary, in

accordance with principles discussed above, we examined information

regarding the distribution systems in both the United States and Taiwan

markets, including the selling functions, classes of customer and

selling expenses for each respondent.

YUSCO

YUSCO reported one LOT in the home market and one LOT in the U.S.

market. YUSCO reported that it made sales in the home market through

one channel of distribution, directly from the plant to distributors,

end users, and further manufacturers. In the U.S. market, YUSCO

reported that it made sales through one channel of distribution,

directly from the plant to trading companies and distributors.

The Department examined the selling activities performed within

each LOT reported. YUSCO's selling activities in the home market were

comprised of technical advice, warranty services and freight and

delivery arrangements. YUSCO claimed that there were no other sales

support activities. None of YUSCO's home market selling activities

differed by customer category. YUSCO's selling activities in the U.S.

market were comprised of warranty services and freight and delivery

arrangements. Sales to trading companies were made on an FOB, FOR, or

C&F basis and sales to distributors were made on an FOB or CIF basis.

YUSCO claims that its selling activities did not differ by customer

category in any other way in the U.S. market. Because there are only

insignificant differences between the selling functions on sales made

to home market and U.S. customers, we preliminarily conclude that there

is one LOT in both the U.S. and home market and that sales to these

customers constitute the same LOT in each market. Therefore a LOT

adjustment for YUSCO is not appropriate. For a further discussion of

the Department's LOT analysis with respect to YUSCO, see Memorandum to

the File: Analysis of YUSCO in the Preliminary Determination of

Stainless Steel Sheet and Strip in Coils from Taiwan, December 17,

1998.

Tung Mung

Tung Mung claimed that there was only one LOT in the home market.

Tung Mung reported that in the home market it made sales to

distributors, service centers, and end-users through one channel of

distribution. Tung Mung offered freight and delivery arrangements and

warranty services to all customers in the home market. Based

[[Page 106]]

on our analysis, we preliminarily determine that Tung Mung had one LOT

in its home market.

In the U.S. market, Tung Mung reported that it sold at one LOT

through two channels of distribution, (1) a foreign distributor and (2)

domestic trading companies. In the U.S. market, Tung Mung reported only

one LOT to customers. Tung Mung reported that it performed identical

selling functions in the United States and in the home market. These

selling functions include freight and delivery arrangements and

warranty services. Therefore, we preliminary conclude that there is one

LOT in the U.S. and that sales to these customers constitute the same

LOT in the comparison market and the United States. Therefore a LOT

adjustment for Tung Mung is not appropriate. For a further discussion

of the Department's LOT analysis with respect to Tung Mung, see

Memorandum to the File: Analysis of Tung Mung in the Preliminary

Determination of Stainless Steel Sheet and Strip in Coils from Taiwan,

December 17, 1998.

Chang Mien

Chang Mien reported two LOTs in the home market and two channels of

distribution. Within both channels of distribution, the merchandise is

either shipped immediately to the customer or stored in Chang Mien's

warehouse. In the home market, Chang Mien stated that it performed

identical selling activities for both channels of distribution such as

providing inventory maintenance, technical advice, warranty services,

delivery arrangements, and advertising. Although the selling activities

offered are identical for each of its customers, an additional selling

activity is performed for those sales which are stored in inventory.

However, we preliminarily determine that sales on which inventory

maintenance is performed do not involve significantly greater resources

than sales on which inventory maintenance is not performed and,

therefore, do not constitute a separate LOT. Therefore, because Chang

Mien performs identical selling activities for each claimed LOT, we

preliminarily find that the two claimed LOTs constitute one LOT.

In the U.S. market, Chang Mien reported that it sold at one LOT,

through one channel of distribution, and to one type of customer

(trading company). For sales in the U.S. market, Chang Mien performed

the following activities: packing, delivery arrangements (i.e.,

transportation, brokerage and handling, and marine insurance),

advertising, and warranty services. Based on a comparison of the

selling activities performed in the U.S. market to the selling

activities in the home market, we preliminarily conclude that there is

not a significant difference in the selling functions performed in both

markets. We preliminarily conclude that U.S. sales are made at the same

LOT as the home market. Therefore, a LOT adjustment is not appropriate.

For a further discussion of the Department's LOT analysis with respect

to Chang Mien, see Memorandum to the File: Analysis of Chang Mien in

the Preliminary Determination of Stainless Steel Sheet and Strip in

Coils from Taiwan, December 17, 1998.

Export Price

For all respondents, we based our calculation on EP, in accordance

with section 772(a) of the Act, because the subject merchandise was

sold by the producer or exporter directly to the first unaffiliated

purchaser in the United States prior to importation, and CEP

methodology was not otherwise indicated. Furthermore, we calculated EP

based on packed prices charged to the first unaffiliated customer in

the United States.

We made company-specific adjustments as follows:

YUSCO

We made deductions from the starting price, where appropriate, for

the following movement expenses, in accordance with section

772(c)(2)(A) of the Act: foreign inland freight; international freight;

marine insurance; brokerage and handling expenses; container handling

fees; and certification fees. No other adjustments were claimed or

allowed.

Tung Mung

We made deductions from the starting price, where appropriate, for

the following movement expenses, in accordance with section

772(c)(2)(A) of the Act: foreign inland freight; containerization

expenses; brokerage and handling expenses; harbor duty fees, and bank

charges. Additionally, we added to the U.S. price an amount for duty

drawback pursuant to section 772(c)(1)(B) of the Act.

Chang Mien

We made deductions for foreign inland freight, brokerage and

handling, ocean freight, and marine insurance, in accordance with

section 772(c)(2)(A) of the Act. Additionally, we added to the U.S.

price an amount for duty drawback pursuant to section 772(c)(1)(B) of

the Act. For further information, see Memorandum to the File: Analysis

of Chang Mien in the Preliminary Determination of Stainless Steel Sheet

and Strip in Coils from Taiwan, December 17, 1998.

Normal Value

After testing home market viability and whether home market sales

were at below-cost prices, we calculated NV as noted in the ``Price-to-

Price Comparisons'' and ``Price-to-CV Comparison'' sections of this

notice.

Home Market Viability

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 (i.e.,

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

is equal to or greater than five percent of the aggregate volume of

U.S. sales), we compared each of the respondent's volume of home market

sales of the foreign like product to the volume of U.S. sales of the

subject merchandise, in accordance with section 773(a)(1)(B) of the

Act. Since each of the respondent's aggregate volume of home market

sales of the foreign like product was greater than five percent of its

aggregate volume of U.S. sales for the subject merchandise, we

determined that the home market was viable for all respondents.

Therefore, we have based NV on home market sales in the usual

commercial quantities and in the ordinary course of trade.

Cost of Production (COP) Analysis

Based on the cost allegation submitted by petitioners in the

petition, the Department found reasonable grounds to believe or suspect

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

cost of producing the merchandise, in accordance with section

773(b)(2)(A) of the Act. As a result, the Department initiated an

investigation to determine whether respondents made home market sales

during the POI at prices below their respective COPs within the meaning

of section 773(b) of the Act. See Initiation.

We conducted the COP analysis described below.

A. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated COP

based on the sum of the cost of materials and fabrication for the

foreign like product, plus amounts for home market SG&A, interest

expenses, and packing costs. We relied on the COP data submitted by

each respondent in its cost questionnaire response.

[[Page 107]]

B. Test of Home Market Prices

We compared the weighted-average COP for each respondent, adjusted

where appropriate (see above), to home market sales of the foreign like

product as required under section 773(b) of the Act. In determining

whether to disregard home market sales made at prices less than the

COP, we examined whether (1) within an extended period of time, such

sales were made in substantial quantities, and (2) such sales were made

at prices which permitted the recovery of all costs within a reasonable

period of time in the normal course of trade. On a product-specific

basis, we compared the COP to home market prices, less any applicable

movement charges and direct and indirect selling expenses.

C. Results of the COP Test

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

percent of respondent'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 a respondent'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,'' pursuant to section 773(b)(2)(c)(i), and within an

extended period of time in accordance with section 773(b)(2)(B) of the

Act. In such cases, because we compared prices to weighted-average COPs

for the POI , 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.

D. Calculation of CV

In accordance with section 773(e)(1) of the Act, we calculated CV

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

interest expenses, profit and U.S. packing costs. In accordance with

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

amounts incurred and realized by respondent in connection with the

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

of trade for consumption in Taiwan.

Price-to-Price Comparisons

We performed price-to-price comparisons where there were sales of

comparable merchandise in the home market that did not fail the cost

test. There were no sales to affiliated customers in the home market

for any respondent. We made adjustments, where appropriate, for

physical differences in the merchandise in accordance with section

773(a)(6)(c)(ii) of the Act.

YUSCO

For YUSCO's home market sales of products that were above COP, we

based NV on prices to home market customers. YUSCO classified certain

home market customers as affiliated, and one of these customers, Yieh

Mau, reported its downstream sales in the home and U.S. markets. We

have preliminarily determined that these customers were not affiliated

because five percent or more ownership does not exist between YUSCO and

any of these companies. Additionally, the record does not show that

these customers meet any other of the ``affiliated persons'' criteria

set forth in Section 771(33) of the Act. Therefore, we did not conduct

an arm's-length test on any of YUSCO's sales.

We calculated NV based on prices to unaffiliated home market

customers. We made deductions for inland freight and two post-sale

price adjustments (these adjustments were originally reported as a

quantity discount and sales promotion discount). In addition, we made

circumstance-of-sale (COS) adjustments for differences in direct

selling expenses (i.e., credit, warranty, and a document handling fee)

incurred on U.S. and home market sales, where appropriate. In

accordance with section 773(a)(6), we deducted home market packing

costs and added U.S. packing costs.

Tung Mung

For Tung Mung's home market sales of products that were above COP,

we based NV on prices to home market customers. We made a deduction for

inland freight and two post-sale price adjustments (these adjustments

were originally reported as a quantity discount and other discounts)

pursuant to Section 351.401(c) of the Department's Regulations. We

calculated NV based on prices to unaffiliated home market customers. In

addition, we made COS adjustments for differences in direct selling

expenses (i.e., credit and warranty expenses), where appropriate. In

accordance with section 773(a)(6), we deducted home market packing

costs and added U.S. packing costs.

Chang Mien

For Chang Mien's home market sales of products that were above the

COP, we based NV on prices to home market customers.

We calculated NV based on prices to unaffiliated home market

customers. We made a deduction for inland freight. In its December 4,

1998 submission, petitioners argued that the Department should deny

Chang Mien's reported home market credit expense and reclassify Chang

Mien's claimed advertising expenses as indirect selling expenses. For

the preliminary determination, the Department has accepted Chang Mien's

home market credit expenses and continued to classify Chang Mien's

advertising expenses in both the U.S. and home market as direct selling

expenses. We made COS adjustments for direct selling expenses (i.e.,

credit, warranty, advertising, and bank charges), where appropriate. In

accordance with section 773(a)(6), we deducted home market packing

costs and added U.S. packing costs.

Price-to-CV Comparisons

In accordance with section 773(a)(4) of the Tariff Act, we based NV

on CV if we were unable to find a home market match of such or similar

merchandise. We made adjustments to CV in accordance with section

773(a)(8) of the Tariff Act. For these EP comparisons, we made COS

adjustments by deducting home market direct selling expenses and adding

U.S. 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, in accordance with section 773A(a) of the

Tariff Act.

Critical Circumstances

On October 30, 1998, petitioners alleged that there is a reasonable

basis to believe or suspect that critical circumstances exist with

respect to imports of SSSS from Taiwan. In accordance with 19 CFR

351.206(c)(2)(i), since this allegation was filed at least 20 days

prior to the Department's preliminary determination, we must issue our

preliminary critical circumstances determination not later than the

preliminary determination.

Section 733(e)(1) of the Act provides that if a petitioner alleges

critical circumstances, the Department will determine whether there is

a reasonable basis to believe or suspect that: (A)(i) there is a

history of dumping and material injury by reason of dumped imports in

the United States or elsewhere of the subject merchandise; or

[[Page 108]]

(ii) the person by whom, or for whose account, the merchandise was

imported knew or should have known that the exporter was selling the

subject merchandise at less than its fair value and that there was

likely to be material injury by reason of such sales; and (B) there

have been massive imports of the subject merchandise over a relatively

short period.

To determine that there is a history of dumping of the subject

merchandise, the Department normally considers evidence of an existing

antidumping duty order on SSSS in the United States or elsewhere to be

sufficient. Petitioners did not provide any information indicating a

history of dumping of SSSS from Taiwan. Furthermore, we investigated

the existence of antidumping duty orders on SSSS from Taiwan in the

United States or elsewhere, and did not find any. We were also unable

to find other information that would have indicated a history of

dumping of SSSS from Taiwan.

In determining whether an importer knew or should have known that

the exporter was selling subject merchandise at less than fair value

and thereby causing material injury, the Department normally considers

estimated dumping margins of 25 percent or greater for EP sales to

impute knowledge of dumping and of resultant material injury. In this

investigation, we have not established calculated estimated dumping

margins of 25 percent or greater. Based on these facts, we determine

that the first criterion for ascertaining whether critical

circumstances exist is not satisfied. Therefore, we preliminarily

determine that there is no reasonable basis to believe or suspect that

critical circumstances exist with respect to exports of SSSS from

Taiwan by respondents (see, e.g., Notice of Preliminary Determination

of Sales at Less Than Fair Value and Postponement of Final

Determination: Collated Roofing Nails From Korea, 62 FR 25895, 25898

(May 12, 1997)). We have not analyzed the shipment data for respondents

to examine whether imports of SSSS have been massive over a relatively

short period. Because we do not find that critical circumstances exist

for all other respondents, we determine that critical circumstances do

not exist for companies covered by the ``All Others'' rate. We will

make a final determination concerning critical circumstances when we

make our final determination in this investigation, if that final

determination is affirmative.

Verification

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

information relied upon in making our final determination.

All Others Rate

In accordance with Section 735(c)(5) of the Act, the estimated all-

others rate shall be an amount equal to the calculated estimated

weight-average dumping margins established for producers individually

investigated, excluding any zero and de minimis margins, and any

margins determined entirely under section 776. As a result, the all-

others rate is 2.94 percent.

Suspension of Liquidation

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

directing the U.S. 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 U.S. 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 export price, as

indicated 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

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

Chang Mien........................................... .57

Tung Mung............................................ .07

YUSCO................................................ 2.94

All Others........................................... 2.94

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

ITC Notification

In accordance with section 733(f) of the Tariff 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 imports of SSSS are materially injuring, or

threaten material injury to, the U.S. industry.

Public Comment

Case briefs or other written comments may be submitted to the

Assistant Secretary for Import Administration no later than fifty days

after the date of publication of this notice, and rebuttal briefs,

limited to issues raised in case briefs, no later than fifty-five days

after the date of publication of this preliminary determination. A list

of authorities used and an executive summary of issues should accompany

any briefs submitted to the Department. This summary should be limited

to five pages total, including footnotes. In accordance with section

774 of the Tariff 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, any hearing will be held

fifty-seven days after publication of this notice at the U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington, D.C. 20230, at a time and location to be determined.

Parties should confirm by telephone the date, time, and location 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 date of 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. At the hearing, each party may make an affirmative

presentation only on issues raised in that party's case brief, and may

make rebuttal presentations only on arguments included in that party's

rebuttal brief. See 19 CFR 351.310(c). We intend to issue our final

determination in this investigation no later than 135 days after

publication of this notice.

This determination is issued and published in accordance with

sections 733(d) and 777(i)(1) of the Tariff Act.

Dated: December 17, 1998.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-34462 Filed 12-31-98; 8:45 am]

BILLING CODE 3510-DS-P