Notice of Final Determination of Sales at Less Than Fair Value: Steel Wire Rod From Trinidad & Tobago

DEPARTMENT OF COMMERCE

International Trade Administration

[A-274-802]

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

Steel Wire Rod From Trinidad & Tobago

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final determination of sales at less than fair value.

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EFFECTIVE DATE: February 24, 1998.

FOR FURTHER INFORMATION CONTACT: Abdelali Elouaradia or Alexander

Braier, Import Administration, International Trade Administration, U.S.

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

Washington, D.C. 20230; telephone: (202) 482-2243 or (202) 482-3818,

respectively.

The Applicable Statute and Regulations

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

references to the provisions codified at

[[Page 9178]]

19 CFR Part 353 (April 1997). Although the Department's new

regulations, codified at 19 CFR 351 (62 FR 27296, May 19, 1997), do not

govern these proceedings, citations to those regulations are provided,

where appropriate, to explain current departmental practice.

Final Determination

We determine that steel wire rod (``SWR'') from Trinidad & Tobago

is being, or is likely to be, sold in the United States at less than

fair value (LTFV), as provided in section 735 of the Act.

Case History

Since the preliminary determination in this investigation

(Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination: Steel Wire Rod from Trinidad &

Tobago), 62 FR 51581 (October 1, 1997) (``SWR''), the following events

have occurred:

In November 1997, we conducted a verification of the respondent's

questionnaire responses. On December 15, 1997, the Department issued

its reports on verification findings for Caribbean Ispat, Ltd. (CIL).

On December 29, 1997, respondents submitted new computer sales listings

which included only data corrections identified through verification.

Petitioners and respondents submitted case briefs on December 22, 1997,

and rebuttal briefs on January 5, 1998. A public hearing was not held

as there were no requests for a hearing.

Scope of Investigation

The products covered by this 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 Notice of Preliminary Determination, 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 investigation 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 and instructions to Customs dated February 3, 1998).

Period of Investigation

The period of investigation (``POI'') is January 1, 1996 through

December 31, 1996.

Fair Value Comparisons

To determine whether sales of steel wire rod sold by CIL 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 ``EP''

and ``Normal Value'' sections of this notice below. In accordance with

section 777A(d)(1)(A)(i), we calculated weighted-average EPs for

comparisons to weighted-average NVs.

Product Comparisons

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

products produced by the respondent, 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 listed in the antidumping

duty questionnaire and the May 22, 1997, reporting instructions.

Consistent with our practice, we compared prime merchandise sold in

the United States to prime merchandise sold in the home market, and

secondary merchandise to secondary merchandise. See, e.g., Certain

Cold-Rolled Carbon Steel Flat Products from the Netherlands; Final

Results of Antidumping Duty Administrative Review, 61 FR 48465,

(September 13, 1996).

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

issued a decision in Cemex, S.A. v. United States, No. 97-1151, 1998 WL

3626 (Fed. Cir. Jan. 8, 1998). In that case,

[[Page 9179]]

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

disregarded as below cost. See section 771(15) of the Act. Because the

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

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

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

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

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

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

calculation of NV.

Level of Trade

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. 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 U.S. LOT is also the level of the starting-price sale, which is

usually the sale 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 the EP or

CEP, 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 an LOT adjustment under section

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

Neither CIL nor petitioners commented on our preliminary level of

trade analysis. Furthermore, our verification findings were consistent

with our preliminary level of trade analysis. Therefore, consistent

with our findings in the preliminary determination, for this final

determination we have continued to treat all of CIL's home market and

U.S. sales as being at a single level of trade and we have made no

level of trade adjustment when matching its U.S. sales to home market

sales.

Export Price

We based price in the United States on EP, in accordance with

subsections 772 (a) and (c) of the Act because the subject merchandise

was sold directly to the first unaffiliated purchaser in the United

States prior to importation and CEP was not otherwise warranted based

on the facts on the record.

We calculated EP based on packed prices to the first unaffiliated

customer in the United States. We made adjustments, where appropriate,

for international ocean freight, marine insurance, U.S. brokerage and

handling, U.S. Customs duties and user fees, U.S. inland freight from

port to unaffiliated customer, U.S. inland insurance, dock handling and

survey fees in both the United States and Trinidad in accordance with

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

We corrected the CIL's data for certain errors and omissions found

at verification and submitted to the Department.

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 (i.e.,

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

product is greater than five percent of the aggregate volume of U.S.

sales), we compare 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)(C) of the Act. Since

CIL'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.

Therefore, we have based NV on home market sales.

Cost of Production Analysis

Pursuant to an allegation made by petitioner, we initiated a cost

of production investigation in our notice of initiation (62 FR 13854

March 24, 1997). Before making any fair value comparisons, we conducted

the COP analysis described below.

Calculation of COP

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

materials and fabrication for the foreign like product, plus amounts

for home market general expenses and packing costs in accordance with

section 773(b)(3) of the Act. We relied on the submitted COP data,

except in the following instances where the costs were not

appropriately quantified or valued:

1. We revised the reported general and administrative expense

(``G&A'') rate to include only net foreign exchange losses related to

accounts payable. See comment 4.

2. We used CIL's COP/CV files which assign the cost of purchased

billets to specific control numbers. See comment 5.

Test of Home Market Prices

We used the respondent's submitted POI weighted-average COPs, as

adjusted (see above). We compared the weighted-average COP figures 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 below 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. On a product-

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

applicable movement charges, rebates, discounts, and direct and

indirect selling expenses.

Results of COP Test

Pursuant to section 773(b)(2)(C), 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,''

and within an extended period of time in accordance with section

773(b)(2)(B) of the Act. Where we determined that such sales were also

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, 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, and calculated NV based on CV.

[[Page 9180]]

Calculation of CV

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

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

U.S. packing costs, interest expenses and profit. As noted above, we

assigned the cost of purchased billets to specific control numbers and

recalculated Ispat's general and administrative expense amount. In

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

profit on the amounts incurred and realized by the respondent in

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

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

Price-to-Price Comparisons

For those product comparisons for which there were sales at prices

above the COP, we based NV on prices to home market customers. We made

adjustments, where appropriate, for physical differences in the

merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.

We calculated NV based on prices to unaffiliated home market

customers. We made deductions for discounts, rebates, and inland

freight. In addition, we made circumstance-of-sale adjustments or

deductions for credit, mark-up by affiliated parties, and warranty,

where appropriate. In accordance with section 773(a)(6), we deducted

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

Currency Conversion

For purposes of the preliminary determination, we made currency

conversions using the official daily exchange rate in effect on the

date of the U.S. sales. The Department's preferred source for daily

exchange rates is the Federal Reserve Bank. However, the Federal

Reserve Bank does not track or publish exchange rates for Trinidad

currency. Therefore, we made currency conversions based on the daily

exchange rates from the Dow Jones Business Information Service, as

published in the Wall Street Journal. This is consistent with the

Department's practice. See, i.e., Final Affirmative Countervailing Duty

Determination on Steel Wire Rod From Trinidad and Tobago, (FR cite).

Verification

As provided in section 782 (i) of the Act, we conducted a

verification of the information submitted by CIL for use in our final

determination. We used standard verification procedures, including

examination of relevant accounting and sales/production records and

original source documents provided by respondents.

Interest Party Comments

Comment 1: Composite Coils

CIL argues that the Department incorrectly treated its sales of

composite coil as sales of secondary merchandise rather than prime

merchandise. CIL states that a composite coil consists of smaller

sections of prime merchandise, which are physically banded together to

produce a full coil of prime merchandise. CIL argues that ``[Fo]ot for

foot, composite coil is prime merchandise'' (CIL Case Brief at 2)

because it shares the identical physical characteristics as prime

merchandise. Further, CIL maintains, petitioners have not introduced

any evidence that the physical characteristics of composite coils make

it a second quality product.

CIL notes that petitioner's argument that the Department should

classify sales of composite coils as secondary merchandise on the basis

of price alone is contrary to section 1677(16)(A) of the Act, which

states that the preferred ``foreign like product'' is the merchandise

``identical in physical characteristics'' with the subject merchandise

(CIL Case Brief at 3). CIL concludes, therefore, that the Department

must consider its sales of composite coils to be sales of prime

merchandise.

Petitioners urge the Department to uphold its preliminary

determination to treat composite coil sales as non-prime merchandise

sales, arguing that (1) the physical characteristics of composite coils

are different from prime merchandise, (2) composite coils are much more

difficult for wire drawers to process because they are not one

continuous piece of wire rod, and (3) therefore, composite coils are

priced lower than prime coils because they are less desirable to

customers, and not, as CIL contends, because of competitive pressures

in the home market. Petitioners assert that the very definition of a

composite coil points to the most significant physical difference

between it and prime merchandise, the fact that there are one or more

breaks in the coil which renders it much more difficult to process and

hence less desirable to customers. Petitioners conclude by rebutting

CIL's allegation that the Department has based its preliminary finding

that composite coils are not prime merchandise only based on price

differences. Petitioners state that ``* * * the Department is using the

unquestionable physical difference between composite coils and prime

merchandise as a matching criterion, not price'' (CIL Case Brief at 3).

DOC Position

We agree with CIL. Section 771(16) of the Act directs the

Department to compare sales of home market merchandise which are ``such

or similar'' to merchandise sold in the United States. In accordance

with section 771(16)(A), the Department first identifies and compares

that merchandise which is ``identical'' in terms of physical

characteristics, followed by sales of merchandise which is most

``similar'' in physical characteristics. To make these determinations,

the Department devises a hierarchy of commercially meaningful

characteristics suitable to each class or kind of merchandise. The

Department considers merchandise to be identical within the meaning of

section 771(16)(A) when all the relevant characteristics match.

Composite coils were verified as identical in every way to prime

merchandise within each CONNUM (see CIL Sales Verification) (Dec. 15,

1997), within the meaning of the statute and the Department's product

matching hierarchy. In addition, composite coils are purchased and used

by customers as prime merchandise, are used to fill orders of prime

merchandise sold, and are used in the same applications as continuous

coils. Therefore, as there is no basis for considering them as

secondary merchandise, the Department has revised these final results

to treat composite coils as prime merchandise.

Comment 2: U.S. Commissions

CIL claims that we made an improper adjustment to the U.S. price,

by deducting the mark-up retained by its affiliated parties from the

U.S. price. CIL further states that for the U.S. price calculation, in

the case of EP sales, the Department should not deduct any selling

expenses, direct or indirect, but can adjust normal value to reflect

differences in direct selling expenses incurred on U.S. and home market

sales through a ``circumstance of sale adjustment''. Furthermore, CIL

argues that the mark-up retained by its U.S. affiliates is irrelevant

to the dumping calculation, since it represents revenue to the overall

Ispat group, not an expense.

Petitioners argue that this mark-up is commission incurred only on

certain U.S. sales, but not in the home market. In addition,

petitioners argued that (1) the Department policy is to adjust for

commissions to affiliates or employees on EP sales, and (2) the

regulations

[[Page 9181]]

permit circumstance of sale adjustments for direct selling expenses.

DOC Position

We disagree with both CIL and petitioners, in part. We disagree

with CIL that the Department made an improper adjustment to U.S. price

based on the mark-up retained by CIL's U.S. sales affiliates. The

program log which was disclosed to all parties at disclosure clearly

indicates that no such adjustment relating to this mark-up was made to

U.S. price, and CIL's price calculation sheets for U.S. sales (see,

i.e. Sales Analysis Memo) (Sept. 24, 1997) clearly demonstrate that

this mark-up is incorporated into the gross unit price reported to the

Department (See, i.e., CIL Verification Exhibit 7).

We disagree with petitioners that this mark-up is a commission

warranting a circumstance of sale adjustment, because the Department

applies a two-pronged test to determine whether an adjustment for

related party commissions is appropriate. First, we determine if the

commissions are directly related to specific sales and, secondly, we

determine whether the commissions are at arm's length (See Final

Results of Antidumping Duty Administrative Review; Certain Welded

Carbons Steel Standard Pipes and Tubes from India, 57 FR 54360 (Nov.

18, 1992). Even though the facts on the record support the allegation

that this mark-up is directly related to specific sales, they do not

demonstrate that it is at arm's length. Since the preliminary

determination, we have reconsidered this issue. The Department's

current practice, as well as the stated preference in the finalized

regulations, is to use actual expenses incurred by U.S. affiliates. See

19 CFR 351.402; and e.g. Granular Polytetrafluoroethylene Resin from

Italy, 62 Fed. Reg. 48592, 48593 (September 16, 1997) (Comment 2). The

reported expenses incurred by CIL's U.S. affiliate are indirect

expenses. Thus, a circumstance of sale adjustment pursuant to section

353.56(a) of the Department's regulations is not warranted.

Comment 3: Applicable Exchange Rates

CIL contends that in absence of official Trinidad dollar to U.S.

dollar exchange rates from the Federal Reserve Bank, the Department

should use the publicly available published rates from the Central Bank

of Trinidad and Tobago (``Bank''). CIL argues that these rates are more

appropriate than the (Dow Jones rates) rates the Department used in the

preliminary determination because the difference between the Bank rates

and the preliminary determination rates is significant, and the Bank

rates are more reasonable and reflective of commercial reality in

Trinidad during the POI. CIL asserts that these rates do not represent

``new factual information'' in the context of the Department's

regulations because exchange rates are not provided by respondents, but

rather are obtained independently by the Department from publicly

availably sources.

Petitioners argue that CIL's proposition to use the Bank exchange

rates should be rejected because (1) the Bank's exchange rates

constitute new factual information, and (2) CIL's argument that the

Bank's rates are more reflective of commercial reality is predicated on

an analysis of only two weeks of data, which is an insufficient sample

to determine any significant difference between the two rates during

the POI.

DOC Position

The Department's normal practice is to use exchange rates provided

by the Federal Reserve Bank. When the Federal Reserve does not provide

exchange rates, as in the case of Trinidad, a reasonable alternative is

to use rates from the Dow Jones Business Information Services (see

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

Concrete Reinforcing Bars From Turkey, 62 FR 9737 (March 4, 1997), and

Ferrosilicon From Brazil; Preliminary Results of Antidumping Duty

Administrative Review, 61 FR 20793 (May 8, 1996)). The Dow Jones is a

well established, reliable source of commercially available exchange

rates. Thus it is reasonable to use these rates for this final

determination. Furthermore, Ispat provided no evidence that the Bank

rate was available to Ispat, or that Ispat used this rate during the

POI. For all of these reasons, the Department is continuing to utilize

Dow Jones exchange rates for this final determination.

Comment 4: Exchange Gains and Losses

CIL argues that the Department's policy to include exchange gains

and losses arising from the purchase of production inputs, but exclude

gains and losses arising from other foreign currency denominated

accounts, fails to reflect normal commercial business practices. CIL

argues that the Department calculated a nonexistent cost by recognizing

a foreign exchange loss on purchases transactions (accounts payable),

but disregarding foreign exchange gains on sales transactions (cash and

accounts receivable). CIL states that in normal financial practices,

corporate treasurers do not manage specific accounts, but instead

manage the net exposed position of the corporation. For example, if a

corporation is holding an accounts receivable (or cash) balance and an

accounts payable balance in the same currency maturing on approximately

the same date, the treasurer will consider the company hedged. Under

these circumstances any change in relative currency values will be

offset with no cost to the corporation. CIL claims that this situation

is in fact what happened within their organization during the POI.

CIL explains that the Act requires the Department to use the

exchange rate prevailing on the date of the sales transaction to

convert foreign currency amounts to U.S. dollars, and any exchange gain

or loss incurred when the actual payment is received is ignored. CIL

argues that the Department uses the exchange rate as of the date of the

sales transaction because the Department does not expect the producer

to adjust its sales prices for unforeseeable future favorable or

unfavorable exchange rate fluctuations. The Department's current policy

for purchase transactions, however, assumes that a producer can foresee

favorable or unfavorable exchange rate fluctuations, and can adjust

sales prices accordingly. CIL argues that to ensure nonexistent (due to

hedging) or unforeseeable (due to exchange rate fluctuations) costs are

not included in the cost of production, the Department should either

totally ignore the exchange gains and losses (regardless of whether

they arise from purchase or sales transactions) or offset the exchange

losses from purchase transactions with the exchange gain on sales

transactions.

Petitioners argue that the Department should follow its

longstanding practice as outlined in Circular Welded Non-Alloy Steel

Pipe and Tube from Mexico, (62 FR 37014, 37026, July 10, 1997) (Final

Results of the Administrative Review), where the Department did not

include exchange gains and losses on accounts receivables, because

these gains and losses relate to selling activities rather than

production costs. Petitioners state that the Department should not

alter its longstanding policy and should continue to ignore exchange

gains and losses on accounts receivables, as it did in the preliminary

determination.

DOC Position

We agree with the petitioner that foreign exchange gains and losses

arising from sales transactions should not be included in CIL's COP and

CV. It is the Department's normal practice to

[[Page 9182]]

distinguish between exchange gains and losses from sales transactions

and exchange gains and losses from purchase transactions. See, e.g.,

Circular Welded Non-Alloy Steel Pipe and Tube from Mexico, 62 FR 37014,

37026 (July 10, 1997) (Final Results of the Administrative Review,

Comment 31). The Department normally includes in its calculation of COP

and CV foreign exchange gains and losses resulting from transactions

related to a company's manufacturing operations (e.g., purchases of

inputs). See, e.g., Final Determination of Sales Less Than Fair Value:

Polyethylene Tenephthalate Film, Sheet, and Ship From the Republic of

Korea, 56 FR 16305, 16313 (April 22, 1991) (comment 16). We do not

consider foreign exchange gains and losses arising from sales

transactions to relate to manufacturing activities of a company.

Accordingly, for the final determination we included in COP and CV

exchange gains and losses arising from purchase transactions (accounts

payable), but disallowed exchange gains and losses arising from sales

transactions.

Comment 5: Purchased Billet Costs

CIL argues that the Department should not specifically assign the

cost of purchased billets to the specific CONNUMs produced from these

billets. Instead, CIL maintains that the Department should allocate the

cost of the purchased billets over all of CIL's production of subject

merchandise. CIL claims that assigning the cost of purchased billets to

the specific CONNUM distorts CIL's actual cost of production. CIL

states that the company could have produced the purchased billet

internally. The decision of which types of billets to purchase,

however, was discretionary and driven by revenue and cost

considerations, not by the type of billet.

CIL further claims that the purchase of billets is a departure from

the company's normal course of business, in which it internally

produces all billets. CIL states that, consistent with section

773(f)(1)(B) of the Act, its purchase of billets was a type of

nonrecurring cost that benefitted the company's current production.

Thus, according to CIL, the Department should adjust costs such that

purchased billets are spread across all production.

Petitioners contend that whenever the Department is able to do so,

it should assign costs only to those specific products whose production

incurred such costs. Petitioners state that because the costs for

purchased billets can be directly tied to specific CONNUMs, the most

accurate method of calculating COP is to allocate purchased billet

costs to the specific CONNUMs they were used to produce.

DOC Position

We agree with petitioners that the costs incurred for purchased

billets should be charged directly to the products produced from these

same billets. In fact, in this case, to do otherwise would not result

in a product-specific cost since the record clearly demonstrates which

products were manufactured by CIL from purchased billets.

With respect to CIL's characterization of purchased billets as a

nonrecurring cost, we consider the company's reliance upon section

773(f)(1)(B) of the Act to be misplaced (19 U.S.C. 1677(f)(1)(B)). The

billets at issue were purchased as direct material inputs used in the

production of specific steel rod products. The statute, on the other

hand, envisions nonrecurring costs as indirect costs that, by their

nature, can be shown to benefit current or future production and, thus,

should be systematically allocated to those products benefitted. As an

example of such nonrecurring costs, the Statement of Administration

Action (SAA), at page 835, cites preproduction research and development

costs. Such costs may be demonstrated to provide a clear but indirect

benefit to future production. In that regard, they differ markedly from

the cost of purchased billets at issue here since the billets are

simply a direct material input for a specific type of finished steel

rod.

Suspension of Liquidation

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

Customs Service to continue to suspend liquidation of all entries of

steel wire rod from Trinidad and Tobago, that are entered, or withdrawn

from warehouse, for consumption on or after the date of publication of

this notice in the Federal Register. The Customs Service will require a

cash deposit or posting of a bond equal to the estimated duty margins

by which the normal value exceeds the expert price, as shown below.

These suspension of liquidation instructions will remain in effect

until further notice. The weighted-average dumping margins are as

follows:

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

Weighted-

average

Manufacturer/producer/exporter percentage

margin

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

CIL........................................................ 11.85

All other.................................................. 11.85

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

ITC Notification

In accordance with section 735(d) of the Act, we have notified the

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

the ITC will determine, within 45 days, whether these imports are

causing material injury, or threat of material injury, to an industry

in the United States. If the ITC determines that material injury, or

threat of material injury, does not exist, the proceedings will be

terminated and all securities posted will be refunded or canceled. If

the ITC determines that such injury does exist, the Department will

issue antidumping duty orders directing Customs officials to assess

antidumping duties on all imports of the subject merchandise entered,

or withdrawn from warehouse, for consumption on or after the effective

date of the suspension of liquidation.

This determination is published pursuant to section 735(d) of the

Act.

Dated: February 13, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-4695 Filed 2-23-98; 8:45 am]

BILLING CODE 3510-DS-P