Suspension of Antidumping Duty Investigation: Steel Wire Rod From Venezuela

DEPARTMENT OF COMMERCE

International Trade Administration

[A-307-813]

Suspension of Antidumping Duty Investigation: Steel Wire Rod From

Venezuela

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

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[[Page 8949]]

SUMMARY: The Department of Commerce (the Department) has suspended the

antidumping duty investigation involving steel wire rod from Venezuela.

The basis for this action is an agreement between the Department and

C.V.G. Siderurgica del Orinoco, C.A. (Sidor) to revise their prices to

eliminate completely sales of this merchandise to the United States at

less than fair value.

EFFECTIVE DATE: February 13, 1998.

FOR FURTHER INFORMATION CONTACT: Lyn Baranowski, Lesley Stagliano,

Elisabeth Urfer, or Edward Yang, Office of AD/CVD Enforcement III,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th & Constitution Avenue N.W., Washington, DC

20230; telephone (202) 482-1385, (202) 482-0648, (202) 482-4236, or

(202) 482-0406, respectively.

SUPPLEMENTARY INFORMATION:

Background

On March 18, 1997, the Department initiated an antidumping

investigation under section 732 of the Tariff Act of 1930, (the Act),

as amended, to determine whether imports of steel wire rod from

Venezuela are being or are likely to be sold in the United States at

less than fair value (62 FR 13854 (March 18, 1997)). On April 14, 1997,

the United States International Trade Commission (ITC) notified the

Department of its affirmative preliminary injury determination (see ITC

Investigation Nos. 701-TA-368-371 and 731-TA-763-766). On October 1,

1997, the Department preliminarily determined that steel wire rod 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 Tariff Act of 1930, as

amended by the Uruguay Round Agreements Act (62 FR 51584 (October 1,

1997) (``LTFV Prelim'')).

The Department and Sidor initialed a proposed agreement suspending

this investigation on January 14, 1998. On January 14, 1998, we invited

interested parties to provide written comments on the agreement and

received comments from Connecticut Steel Corporation, Co-Steel Raritan,

GS Industries, Inc., Keystone Steel & Wire Company, North Star Steel

Texas, Inc. and Northwestern Steel and Wire Company.

The Department and Sidor signed the final suspension agreement on

February 13, 1998.

Scope of Investigation

The products covered by the investigation are certain hot-rolled

carbon steel and alloy steel products, in coils, of approximately round

cross section, between 5.00 mm (0.20 inch) and 19.0 mm (0.75 inch),

inclusive, in solid cross-sectional diameter. Specifically excluded are

steel products possessing the above noted physical characteristics and

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

definitions for a) stainless steel; b) tool steel; c) high nickel

steel; d) ball bearing steel; e) free machining steel that contains by

weight 0.03 percent or more of lead, 0.05 percent or more of bismuth,

0.08 percent or more of sulfur, more than 0.4 percent of phosphorus,

more than 0.05 percent of selenium, and/or more than 0.01 percent of

tellurium; or f) concrete reinforcing bars and rods. The following

products are also excluded from the scope of this investigation:

Coiled products 5.50 mm or less in true diameter with an

average partial decarburization per coil of no more than 70 microns in

depth, no inclusions greater than 20 microns, containing by weight the

following: carbon greater than or equal to 0.68 percent; aluminum less

than or equal to 0.005 percent; phosphorous plus sulfur less than or

equal to 0.040 percent; maximum combined copper, nickel and chromium

content of 0.13 percent; and nitrogen less than or equal to 0.006

percent. This product is commonly referred to as ``Tire Cord Wire

Rod.''

Coiled products 7.9 to 18 mm in diameter, with a partial

decarburization of 75 microns or less in depth and seams no more than

75 microns in depth, containing 0.48 to 0.73 percent carbon by weight.

This product is commonly referred to as ``Valve Spring Quality Wire

Rod.''

Coiled products 11 mm to 12.5 mm in diameter, with an

average partial decarburization per coil of no more than 70 microns in

depth, no inclusions greater than 20 microns, containing by weight the

following: carbon greater than or equal to 0.72 percent; manganese

0.50-1.10 percent; phosphorus less than or equal to 0.030 percent;

sulfur less than or equal to 0.035 percent; and silicon 0.10-0.35

percent. This product is free of injurious piping and undue

segregation. The use of this excluded product is to fulfill contracts

for the sale of Class III pipe wrap wire in conformity with ASTM

specification A648-95 and imports of this product must be accompanied

by such a declaration on the mill certificate and/or sales invoice.

This excluded product is commonly referred to as ``Semifinished Class

III Pipe Wrap Wire.''

The products under investigation are currently classifiable under

subheadings 7213.91.3000, 7213.91.4500, 7213.91.6000, 7213.99.0030,

7213.99.0090, 7227.20.0000, and 7227.90.6050 of the HTSUS. Although the

HTSUS subheadings are provided for convenience and customs purposes,

our written description of the scope of this investigation is

dispositive.

Exclusion of Pipe Wrap Wire

As stated in the LTFV Prelim, North American Wire Products

Corporation (``NAW''), an importer of the subject merchandise from

Germany, requested that the Department exclude steel wire rod used to

manufacture Class III pipe wrapping wire from the scope of the

investigations of steel wire rod from Canada, Germany, Trinidad and

Tobago, and Venezuela. On December 22, 1997, NAW submitted to the

Department a proposed exclusion definition. On December 30, 1997, and

January 7, 1998, the petitioners submitted letters concurring with the

definition of the scope exclusion and requesting exclusion of this

product from the scope of the investigation. We have reviewed NAW's

request and petitioners' comments and have excluded steel wire rod for

manufacturing Class III pipe wrapping wire from the scope of this

investigation (see Memorandum to Richard W. Moreland dated January 9,

1998).

Suspension of Investigation

The Department consulted with parties to the proceeding and has

considered the comments submitted with respect to the proposed

suspension agreement. In accordance with Section 734(b) of the Act,

exporters of the subject merchandise who account for substantially all

of the imports of that merchandise agree to revise their prices to

eliminate completely any amount by which the normal value of the

subject merchandise exceeds the export price or constructed export

price of that merchandise. We are satisfied that suspension of the

investigation pursuant to section 734(b) of the Act is in the public

interest and have concluded that the agreement can be monitored

effectively. See Public Interest Memorandum, February 13, 1998. We

find, therefore, that the criteria for suspension of an investigation

pursuant to section 734(b) of the Act have been met. The terms and

conditions of this agreement, signed February 13, 1998, are set forth

in Annex I to this notice.

Pursuant to section 734(f)(2)(A)(ii) of the Act, the suspension of

liquidation of all entries of steel wire rod from Venezuela entered or

withdrawn from warehouse, for consumption, as directed in our LTFV

Prelim is hereby

[[Page 8950]]

terminated. Pursuant to section 734(f)(2)(A)(iii) and 733(d)(1)(B) of

the Act, any cash deposits on entries of steel wire rod from Venezuela

pursuant to that suspension of liquidation shall be refunded and any

bonds shall be released.

Notwithstanding the suspension agreement, the Department will

continue the investigation if we receive a request for continuation of

the investigation from an appropriate party in accordance with section

734(g) of the Act within 20 days after the date of publication of this

notice. In accordance with section 734(g) of the Act, if we receive

such a request for continuation, we will complete the investigation and

notify the ITC of our final determination. If the ITC's injury

determination is negative, the agreement will have no force or effect,

and the investigation will be terminated (See section 734(f)(3)(A) of

the Act). If the ITC's determination is affirmative, the Department

will not issue an antidumping duty order as long as the suspension

agreement remains in force, the agreement continues to meet the

requirements of subsections (b) and (d) of section 734 of the Act, and

the parties to the agreement carry out their obligations under the

agreement in accordance with its terms (see section 734(f)(3)(B) of the

Act).

This notice is published pursuant to section 734(f)(1)(A) of the

Act.

Dated: February 19, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

Suspension Agreement Carbon Steel Wire Rod from Venezuela

Under section 734(b) of the Tariff Act of 1930, as amended (19

U.S.C. 1673c(b)) (the Act), and 19 CFR 353.18, the U.S. Department of

Commerce (the Department) and the signatory producers/exporters of

carbon steel wire rod from Venezuela enter into this suspension

agreement (the Agreement). On the basis of the Agreement, the

Department shall suspend its antidumping investigation initiated on

March 24, 1997(62 FR 13854), with respect to carbon steel wire rod from

Venezuela, subject to the terms and provisions set out below.

(A) Product Coverage

The products covered by this Agreement (``subject merchandise'')

are certain hot-rolled carbon steel and alloy steel products, in coils,

of approximately round cross section, between 5.00 mm (0.20 inch) and

19.0 mm (0.75 inch), inclusive, in solid cross-sectional diameter.

Specifically excluded are steel products possessing the above noted

physical characteristics and meeting the Harmonized Tariff Schedule of

the United States (HTSUS) definitions for (a) stainless steel; (b) tool

steel; (c) high nickel steel; (d) ball bearing steel; (e) free

machining steel that contains by weight 0.03 percent or more of lead,

0.05 percent or more of bismuth, 0.08 percent or more of sulfur, more

than 0.4 percent of phosphorus, more than 0.05 percent of selenium,

and/or more than 0.01 percent of tellurium; or (f) concrete reinforcing

bars and rods.

The following products are also excluded from the scope of this

Agreement:

Coiled products 5.50 mm or less in true diameter with an average

partial decarburization per coil of no more than 70 microns in depth,

no inclusions greater than 20 microns, containing by weight the

following: carbon greater than or equal to 0.68 percent; aluminum less

than or equal to 0.005 percent; phosphorous plus sulfur less than or

equal to 0.040 percent; maximum combined copper, nickel and chromium

content of 0.13 percent; and nitrogen less than or equal to 0.006

percent. This product is commonly referred to as ``Tire Cord Wire

Rod.''

Coiled products 7.9 to 18 mm in diameter, with a partial

decarburization of 75 microns or less in depth and seams no more than

75 microns in depth; containing 0.48 to 0.73 percent carbon by weight.

This product is commonly referred to as ``Valve Spring Quality Wire

Rod.''

Coiled products 11 mm to 12.5 mm in diameter, with an average

partial decarburization per coil of no more than 70 microns in depth,

no inclusions greater than 20 microns, containing by weight the

following: carbon greater than or equal to 0.72 percent; manganese

0.50--1.10 percent; phosphorus less than or equal to 0.030 percent;

sulfur less than or equal to 0.035 percent; and silicon 0.10--0.35

percent. This product is free of injurious piping and undue

segregation. The use of this excluded product is to fulfill contracts

for the sale of Class III pipe wrap wire in conformity with ASTM

specification A648-95 and imports of this product must be accompanied

by such a declaration on the mill certificate and/or sales invoice.

This excluded product is commonly referred to as ``Semifinished Class

III Pipe Wrap Wire.''

The products subject to this Agreement are currently classifiable

under subheadings 7213.91.3000, 7213.91.4500, 7213.91.6000,

7213.99.0030, 7213.99.0090, 7227.20.0000, and 7227.90.6050 of the

HTSUS. Although the HTSUS subheadings are provided for convenience and

customs purposes, the written description of the scope of this

Agreement is dispositive.

(B) U.S. Import Coverage

The signatory producers/exporters collectively are the producers

and exporters in Venezuela which, during the antidumping investigation

of the merchandise subject to the Agreement, accounted for

substantially all (not less than at least 85 percent) of the subject

merchandise imported into the United States. The Department may at any

time during the period of the Agreement require additional producers/

exporters in Venezuela to sign the Agreement in order to ensure that

not less than substantially all imports of subject merchandise into the

United States are covered by the Agreement.

(C) Basis of the Agreement

On and after the effective date of the Agreement, each signatory

producer/exporter individually agrees to make any necessary price

revisions to eliminate completely any amount by which the normal value

(NV) of this merchandise exceeds the U.S. price of its merchandise

subject to the Agreement. For this purpose, the Department will

determine the NV in accordance with section 773(e) of the Act and U.S.

price in accordance with section 772 of the Act.

(1) For all sales occurring on or after the effective date of the

Agreement through June 30, 1998, each signatory producer/exporter

agrees not to sell its merchandise subject to the Agreement, whether in

the form imported or as further manufactured subsequent to importation,

to unaffiliated purchasers in the United States; and

(2) For all sales occurring from July 1, 1998 through September 30,

1998, each signatory producer/exporter agrees not to sell its

merchandise subject to the Agreement, whether in the form imported or

as further manufactured subsequent to importation, to unaffiliated

purchasers in the United States at prices that are less than its NV, as

determined by the Department based on cost information for the period

October 1, 1997 through December 31, 1997, and provided to parties not

later than June 20, 1998; and

(3) For all sales occurring on or after October 1, 1998, each

producer/exporter agrees not to sell its merchandise subject to the

Agreement, whether in the form imported or as further manufactured

subsequent to

[[Page 8951]]

importation, to any unaffiliated purchaser in the United States at

prices that are less than its NV of the merchandise, as determined by

the Department on the basis of information submitted to the Department

not later than the dates specified in Section D of the Agreement and

provided to parties not later than September 20, December 20, March 20,

and June 20 of each year. This NV shall apply to sales occurring during

the fiscal quarter beginning on the first day of the month following

the date the Department provides the NV, as stated in this paragraph.

(D) Monitoring

Each signatory producer/exporter will supply to the Department all

information that the Department decides is necessary to ensure that the

producer/exporter is in full compliance with the terms of the

Agreement. As explained below, the Department will provide each

signatory producer/exporter a detailed request for information and

prescribe a required format and method of data compilation, not later

than the beginning of each reporting period.

(1) Sales Information

The Department will require each producer/exporter to report, on

computer tape in the prescribed format and using the prescribed method

of data compilation, each sale (which includes further manufactured

sales) of the merchandise subject to the Agreement, either directly or

indirectly to unaffiliated purchasers in the United States, including

each adjustment applicable to each sale, as specified by the

Department.

The first report of sales data shall be submitted to the

Department, on computer tape in the prescribed format and using the

prescribed method of data compilation, not later than October 15, 1998,

and shall contain the specified sales information covering the period

of July 1 through September 30, 1998. Each subsequent report of sales

data shall be submitted to the Department not later than January 15,

April 15, July 15, and October 15 of each year, and each report shall

contain the specified sales information for the quarterly period ending

one month prior to the due date, except that if the Department receives

information that a possible violation of the Agreement may have

occurred, the Department may request sales data on a monthly, rather

than quarterly basis.

(2) Cost Information

Producers/exporters must request NVs for all subject merchandise

that will be sold in the United States. For those products for which

the producer/exporter is requesting NVs, the Department will require

each producer/exporter to report: their actual cost of manufacturing;

selling, general and administrative (SG&A) expenses; further

manufacturing costs; and profit data on a quarterly basis, in the

prescribed format and using the prescribed method of data compilation.

Further manufacturing costs plus an allocable portion of profit, as

provided in section 772(d)(2) and (3) of the Act, will be subtracted

from the U.S. sale price to determine compliance with the NV. Each such

producer/exporter also must report anticipated increases in production

costs and may report anticipated decreases in production costs in the

quarter in which the information is submitted resulting from factors

such as anticipated changes in production yield, changes in production

process, changes in production quantities or changes in production

facilities. Extraordinary cost items related to the privatization will

be considered, consistent with the Department's regulations and

policies. If they meet our statutory and regulatory criteria, such

items may include shutdowns of facilities, environmental cleanups, and

workforce reductions. (For example, see the Side Letter to the

Suspension Agreement for Grey Portland Cement and Clinker from

Venezuela (initialed version dated December 22, 1991, finalized

February 11, 1992).)

The first report of cost data related to the relevant period of

July 1, 1998, through September 30, 1998 shall be submitted to the

Department not later than April 30, 1998, and shall contain the

specified cost data covering the period October 1, 1997, through

December 31, 1997. Each subsequent report shall be submitted to the

Department not later than July 31, October 31, January 31, and April 30

of each year, and each report shall contain specified information for

the quarter ending one month prior to the due date.

(3) Special Adjustment of Normal Value

If the Department determines that the NV it determined for a

previous quarter was erroneous because the reported costs for that

period were inaccurate or incomplete, or for any other reason, the

Department may adjust NV in a subsequent period or periods, unless the

Department determines that Section F of the Agreement applies.

(4) Verification

Each producer/exporter agrees to permit full verification of all

cost and sales information semi-annually, or more frequently, as the

Department deems necessary.

(5) Bundling or Other Arrangements

Producers/exporters agree not to circumvent the Agreement. In

accordance with the date set forth in Section D(1) of the Agreement,

producers/exporters will submit a written statement to the Department

certifying that the sales reported herein were not, or are not part of

or related to, any bundling arrangement, on-site processing

arrangement, discounts/free goods/financing package, swap, or other

exchange where such arrangement is designed to circumvent the basis of

the Agreement.

Where there is reason to believe that such an arrangement does

circumvent the basis of the Agreement, the Department will request the

producers/exporters to provide, within 15 days, all particulars

regarding any such arrangement, including, but not limited to, sales

information pertaining to covered and non-covered merchandise that is

manufactured or sold by producers/exporters. The Department will accept

written comments, not to exceed 30 pages, from all parties no later

than 15 days after the date of receipt of such producer/exporter

information.

If the Department, after reviewing all submissions, determines that

such arrangement circumvents the basis of the Agreement, it may, as it

deems most appropriate, utilize one of two options: (1) the cumulative

amount of the effective price discount resulting from such arrangement

shall be reflected in NV in accordance with Section D(3), or (2) the

Department shall determine that the Agreement has been violated and

take action according to the provisions under Section F.

(6) Rejection of Submissions

The Department may reject any information submitted after the

deadlines set forth in this section or any information which it is

unable to verify to its satisfaction. If information is not submitted

in a complete and timely fashion or is not fully verifiable, the

Department may calculate fair value, NV, and/or U.S. price based on

facts otherwise available, as it determines appropriate, unless the

Department determines that Section F applies.

(E) Disclosure and Comment

(1) The Department may make available to representatives of each

domestic party to the proceeding, under appropriately drawn

administrative protective orders, business proprietary information

submitted to the

[[Page 8952]]

Department during the reporting period as well as the results of its

analysis under section 773 of the Act.

(2) Not later than May 31, August 31, November 31, and the last day

in February of each year, the Department will disclose to each

producer/exporter the results and the methodology of the Department's

calculations of its NV. At that time, the Department may also make

available such information to the domestic parties to the proceeding,

in accordance with this section.

(3) Not later than 7 days after the date of disclosure under

paragraph E(2), the parties to the proceeding may submit written

comments to the Department, not to exceed 15 pages. After reviewing

these submissions, the Department will provide to each producer/

exporter its NV as provided in paragraph C(2). In addition, the

Department may provide such information to domestic interested parties

as specified in this section.

(F) Violations of the Agreement

If the Department determines that the Agreement is being or has

been violated or no longer meets the requirements of section 734 (b) or

(d) of the Act, the Department shall take action it determines

appropriate under section 734(i) of the Act and the regulations.

(G) Other Provision

In entering into the Agreement, the signatory producer/exporter

does not admit that any sales of the merchandise subject to the

Agreement have been made at less than fair value.

(H) Termination

The Department will not consider requests for termination of this

suspended investigation prior to February 13, 2003. Termination will be

conducted in accordance with section 751(c) of the Act and the

Department's regulations.

Any producer/exporter may terminate the Agreement at any time upon

notice to the Department. Termination shall be effective 60 days after

such notice is given to the Department. Upon termination, the

Department shall follow the procedures outlined in section 734(i)(1) of

the Act.

(I) Definitions

For purposes of the Agreement, the following definitions apply:

(1) U.S. Price--means the export price or constructed export price

at which merchandise is sold by the producer or exporter to the first

unaffiliated party in the United States, including the amount of any

discounts, rebates, price protection or ship and debit adjustments, and

other adjustments affecting the net amount paid or to be paid by the

unaffiliated purchaser, as determined by the Department under section

772 of the Act.

(2) Normal Value--means the constructed value (CV) of the

merchandise, as determined by the Department under section 773 of the

Act and the corresponding sections of the Department's regulations.

(3) Producer/Exporter--means (1) the foreign manufacturer or

producer, (2) the foreign producer or reseller which also exports, and

(3) the affiliated person by whom or for whose account the merchandise

is imported into the United States, as defined in section 771(28) of

the Act.

(4) Date of Sale--means the date on which the essential terms of

the contract, including price and quantity, are agreed and

determinable.

The effective date of the Agreement is the date on which it is

published in the Federal Register.

For the Venezuelan Producers/Exporters.

Dated: February 13, 1998.

Oscar Montero,

Director for Strategic Planning.

For the U.S. Department of Commerce.

Dated: February 12, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

Appendix A--Carbon Steel Wire Rod from Venezuela Principles of Cost

General Framework

The cost information reported to the Department that will form

the basis of the NV calculations for purposes of the Agreement must

be:

Comprehensive in nature and based on a reliable

accounting system (i.e., a system based on well-established

standards and can be tied to the audited financial statements);

Representative of the company's costs incurred for the

general class of merchandise;

Calculated on a quarterly weighted-average basis of the

plants or cost centers manufacturing the product;

Based on fully-absorbed costs of production, including

any downtime;

Valued in accordance with generally accepted accounting

principles;

Reflective of appropriately allocated common costs so

that the costs necessary for the manufacturing of the product are

not absorbed by other products; and

Reflective of the actual cost of producing the product.

Additionally, a single figure should be reported for each cost

component.

Cost of Manufacturing (COM)

Costs of manufacturing are reported by major cost category and

for major stages of production. Weighted-average costs are used for

a product that is produced at more than one facility (including

further manufacturing in the United States); based on the cost at

each facility.

Direct materials--cost of those materials which are input into

the production process and physically become part of the final

product.

Direct labor--cost identified with a specific product. These

costs are not allocated among products except when two or more

products are produced at the same cost center. Direct labor costs

should include salary, bonus, and overtime pay, training expenses,

and all fringe benefits. Any contracted-labor expense should reflect

the actual billed cost or the actual costs incurred by the

subcontractor when the corporation has influence over the

contractor.

Factory overhead--overhead costs include indirect materials,

indirect labor, depreciation, and other fixed and variable expenses

attributable to a production line or factory. Because overhead costs

are typically incurred for an entire production line, an appropriate

portion of those costs must be allocated to covered products, as

well as any other products produced on that line. Acceptable cost

allocations can be based on labor hours or machine hours. Overhead

costs should also reflect any idle or downtime and be fully absorbed

by the products.

Cost of Production (COP)

Is equal to the sum of materials, labor, and overhead (COM) plus

SG&A expenses in the home market (HM).

SG&A--those expenses incurred for the operation of the

corporation as a whole and not directly related to the manufacture

of a particular product. They include corporate general and

administrative expenses, financing expenses, and general research

and development expenses. Additionally, direct and indirect selling

expenses incurred in the HM for sales of the product under

investigation are included. Such expenses are allocated over cost of

goods sold.

Constructed Value (CV)

Is equal to the sum of materials, labor, and overhead (COM) and

SG&A expenses plus profit in the comparison market and the cost of

packing for exportation to the United States.

Calculation of Suspension Agreement NVs

NVs (for purposes of the Agreement) are calculated by adjusting

the CV and are provided for both EP and CEP transactions. In effect,

any expenses uniquely associated with the covered products sold in

the HM are subtracted from the CV, and any such expenses which are

uniquely associated with the covered products sold in the United

States are added to the CV to calculate the NV.

Export Price--Generally, a U.S. sale is classified as an export

price sale when the first sale to an unaffiliated person occurs

before the goods are imported into the United States. In cases where

the foreign manufacturer knows or has reason to believe that the

merchandise is ultimately destined for the United States, the

manufacturer's sale is the sale subject to review. If, on the other

hand, the manufacturer sold the merchandise to a foreign trader

without knowledge of the

[[Page 8953]]

trader's intention to export the merchandise to the United States,

then the trader's first sale to an unaffiliated person is the sale

subject to review. For EP NVs, the CV is adjusted for movement costs

and differences in direct selling expenses such as commissions,

credit, warranties, technical services, advertising, and sales

promotion.

Constructed Export Price--Generally, a U.S. sale is classified

as a constructed export price sale when the first sale to an

unaffiliated person occurs after importation. However, if the first

sale to the unaffiliated person is made by a person in the United

States affiliated with the foreign exporter, constructed export

price applies even if the sale occurs prior to importation, unless

the U.S. affiliate performs only clerical functions in connection

with the sale. For CEP NVs, the CV is adjusted similar to EP sales,

with differences for adjustment to U.S. and HM indirect-selling

expenses.

Home market direct-selling expenses--expenses that are incurred

as a direct result of a sale. These include such expenses as

commissions, advertising, discounts and rebates, credit, warranty

expenses, freight costs, etc. The following direct-selling expenses

are treated individually:

Commission expenses--payments to unaffiliated parties for sales

in the HM.

Credit expenses--expenses incurred for the extension of credit

to HM customers.

Movement expenses--freight, brokerage and handling, and

insurance expenses.

U.S. direct-selling expenses--the same as HM direct-selling

expenses except that they are incurred for sales in the United

States.

Movement expenses--additional expenses incidental to importation

into the United States. These typically include U.S. inland freight,

insurance, brokerage and handling expenses, U.S. Customs duties, and

international freight.

U.S. indirect-selling expenses--include general fixed expenses

incurred by the U.S. sales subsidiary or affiliated exporter for

sales to the United States. They may also include a portion of

indirect expenses incurred in the HM for export sales.

For EP Transactions

+direct materials

+direct labor

+factory overhead

=Cost of Manufacturing

+home market SG&A

=Cost of Production

+U.S. packing

+Profit

=Constructed Value

+U.S. direct selling expense

+U.S. commission expense

+U.S. movement expense

+U.S. credit expense

-HM direct selling expense

-HM commission expense 1

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

\1\ If the company does not have HM commissions, HM indirect

expenses are subtracted only up to the amount of the U.S.

commissions.

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

-HM credit expense

=NV for EP sales

For CEP Transactions

+direct materials

+direct labor

+factory overhead

=Cost of Manufacturing

+home market SG&A

=Cost of Production

+U.S. packing

+profit

=Constructed Value

+U.S. direct selling expense

+U.S. indirect selling expense

+U.S. commission expense

+U.S. movement expense

+U.S. credit expense

+U.S. further manufacturing expenses (if any)

+CEP profit

-HM direct selling expense

-HM commission expense 2

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

\2\ If the company does not have HM commissions, HM indirect

expenses are subtracted only up to the amount of the U.S.

commissions.

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

-HM credit expense

=NV for CEP sales

[FR Doc. 98-4539 Filed 2-20-98; 8:45 am]

BILLING CODE 3510-DS-P