Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Stainless Steel Wire Rod from Taiwan

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-828]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Stainless Steel Wire Rod

from Taiwan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: March 5, 1998.

FOR FURTHER INFORMATION CONTACT: Laurel LaCivita or Alexander Amdur,

Import Administration, International Trade Administration, U.S.

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

Washington, D.C. 20230; telephone: (202) 482-4740, or (202) 482-5346,

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 Uruguay Round Agreements Act

(URAA). In addition, unless otherwise indicated, all citations to the

Department's regulations are to the regulations codified at 19 CFR Part

351, 62 FR 27296 (May 19, 1997).

Preliminary Determination

We preliminarily determine that stainless steel wire rod (SSWR)

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

Since the initiation of this investigation (Notice of Initiation of

Antidumping Investigations: Stainless Steel Wire Rod from Germany,

Italy, Japan, Korea, Spain, Sweden, and Taiwan, 62 FR 45224 (August 26,

1997) (Notice of Initiation)), the following events have occurred:

On August 21, 1997, the Department issued a cable to the American

Institute in Taiwan requesting information identifying potential

Taiwanese producers and/or exporters of the subject merchandise to the

United States. We did not receive a response from the American

Institute in Taiwan. However, on August 29, 1997, and September 18,

1997, we received letters of appearance on behalf of Walsin Cartech

Specialty Steel Corporation (Walsin) and Yieh Hsing Enterprise

Corporation, Ltd. (Yieh Hsing), respectively. Based on these letters of

appearance and information contained in the petition, on September 19,

1997, the Department issued antidumping questionnaires to both Walsin

and Yieh Hsing (hereinafter ``the respondents'').

In September 1997, the United States International Trade Commission

(ITC) issued an affirmative preliminary injury determination in this

case (see ITC Investigation No. 731-TA-775).

On October 10, 1997, the petitioners in this case (i.e., AL Tech

Specialty Steel Corp., Carpenter Technology Corp., Republic Engineered

Steels, Talley Metals Technology, Inc., and United Steelworkers of

America) requested that the Department revise its questionnaire to

obtain information on the actual nickel, chromium, and molybdenum

content for each sale of the SSWR made during the period of

investigation (POI). The Department, upon consideration of the comments

from all parties on this matter, issued a memorandum on December 18,

1997, indicating its decision to make no changes in the model-matching

criteria specified in the September 19, 1997, questionnaire (see

Memorandum from Team to Holly Kuga, Office Director, dated December 18,

1997).

Also in October 1997, the Department received responses to Section

A of the questionnaire from the respondents. The respondents submitted

responses to sections B, C, and D of the questionnaire in November

1997.

On December 11, 1997, pursuant to section 733(c)(1)(A) of the Act,

the petitioners made a timely request to postpone the preliminary

determination. On December 16, 1997, we granted this request and

postponed the preliminary determination until no later than February

25, 1998 (62 FR 66849, December 22, 1997).

We issued supplemental questionnaires to the respondents in

December 1997 and received responses to these questionnaires in January

1998.

On January 26, 1998, the petitioners submitted a ``targeted-

dumping'' allegation with regard to Yieh Hsing's sales in the United

States. The petitioners requested that the Department compare

transaction-specific export prices in the U.S. market to the weighted-

average normal values in calculating the antidumping margin for Yieh

Hsing. Yieh Hsing responded to this allegation on February 6, 1998.

(See the ``Targeted Dumping'' section of this notice, below, for

further discussion.)

We received comments from the petitioners concerning the

information reported in the respondents' questionnaire responses and

issues they considered relevant to the preliminary determination on

February 6, 1998, and February 12, 1998.

Postponement of Final Determination and Extension of Provisional

Measures

Pursuant to section 735(a)(2) of the Act, on February 6, 1998 and

February 20, 1998, Yieh Hsing and Walsin, respectively, 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. On

February 18, 1998, Yieh Hsing amended its request to include a request

to extend the provisional measures from a four-month period to not more

than six months. Walsin included its request to extend the provisional

measures in its February 20, 1998 letter. In accordance with 19 CFR

351.210(b)(2), because (1) our preliminary determination is

affirmative, (2) Yieh Hsing and Walsin account for a significant

proportion of exports of the subject merchandise, and (3) no compelling

reasons for denial exist, we are granting the respondents' request and

are postponing the final determination until no later than 135 days

after the publication of this notice in the Federal Register.

Suspension of liquidation will be extended accordingly.

Scope of Investigation

For purposes of this investigation, SSWR comprises products that

are hot-rolled or hot-rolled annealed and/or pickled and/or descaled

rounds, squares, octagons, hexagons or other shapes, in coils, that may

also be coated with a lubricant containing copper, lime, or oxalate.

SSWR is made of alloy steels containing, by weight, 1.2 percent or less

of carbon and 10.5 percent or more of chromium, with or without other

elements. These products are manufactured only by hot-rolling or hot-

rolling, annealing, and/or pickling and/or descaling, are normally sold

in coiled form, and are of solid cross-section. The majority of SSWR

sold in the United States is round in cross-sectional shape, annealed

and pickled, and later cold-finished into stainless steel wire or

small-diameter bar.

The most common size for such products is 5.5 millimeters or 0.217

inches in diameter, which represents the smallest size that normally is

produced on a rolling mill and is the size that most wire-drawing

machines are set up to draw. The range of SSWR sizes normally sold in

the United States is between 0.20 inches and 1.312 inches

[[Page 10837]]

diameter. Two stainless steel grades, SF20T and K-M35FL, are excluded

from the scope of the investigation. The chemical makeup for the

excluded grades is as follows:

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

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

SF20T

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

Carbon............................ 0.05 max............. Chromium............. 19.00/21.00.

Manganese......................... 2.00 max............. Molybdenum........... 1.50/2.50.

Phosphorous....................... 0.05 max............. Lead................. Added (0.10/0.30).

Sulfur............................ 0.15 max............. Tellurium............ Added (0.03 min).

Silicon........................... 1.00 max.............

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

K-M35FL

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

Carbon............................ 0.015 max............ Nickel............... 0.30 max.

Silicon........................... 0.70/1.00............ Chromium............. 12.50/14.00.

Manganese......................... 0.40 max............. Lead................. 0.10/0.30.

Phosphorous....................... 0.04 max............. Aluminum............. 0.20/0.35.

Sulfur............................ 0.03 max.............

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

The products under investigation are currently classifiable under

subheadings 7221.00.0005, 7221.00.0015, 7221.00.0030, 7221.00.0045, and

7221.00.0075 of the Harmonized Tariff Schedule of the United States

(HTSUS). Although the HTSUS subheadings are provided for convenience

and customs purposes, the written description of the scope of this

investigation is dispositive.

Period of Investigation

The POI is July 1, 1996, through June 30, 1997.

Targeted Dumping

On January 26, 1998, the petitioners requested that, for Yieh

Hsing, the Department compare the transaction-specific export prices in

the United States market to weighted-average normal values, in

accordance with the ``targeted-dumping'' provisions of section

777A(d)(1)(B) of the Act. The petitioners' allegation claimed that Yieh

Hsing's prices for the subject merchandise in the United States vary

significantly on the basis of purchaser and that using a weighted-

average price in the Department's analysis would have the effect of

concealing or minimizing the margin of dumping. On February 6, 1998,

Yieh Hsing submitted comments challenging the petitioners' targeted-

dumping allegation.

The Department has denied the petitioners' request to compare the

transaction-specific prices in the United States market to weighted-

average normal values because the petitioners' analysis failed to meet

the basic requirements of section 777A(d)(1)(B)(i). The petitioners'

statistical analysis goes no further than a simple comparison of

average prices to different customers. Such a comparison, without

further statistical analysis, does not yield meaningful conclusions

about a pattern of export prices differing significantly among

purchasers. See Preliminary Determination of Sales at Less Than Fair

Value: Certain Pasta From Italy, 61 FR 1344 (January 19, 1996). Also

see Concurrence Memorandum dated February 25, 1998 (``Concurrence

Memorandum'') for further discussion of this issue.

Level of Trade

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

practicable, we determined normal value (NV) based on sales in the

comparison market at the same level of trade (LOT) as the export price

(EP) or constructed export price (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 from

exporter to importer. For CEP, it is the level of the constructed sale

from the exporter to the importer.

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

CEP, 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 difference in the levels between NV and CEP

affects price comparability, we adjust NV under section 773(a)(7)(B) of

the Act (the CEP offset provision). See Notice of Final Determination

of Sales at Less Than Fair Value: Certain Cut-to-Length Steel Plate

from South Africa, 62 FR 61731 (November 19, 1997).

Neither respondent claimed a LOT adjustment. Nevertheless, we

evaluated whether such an adjustment was necessary by examining each

respondent's distribution system, including selling functions, classes

of customers, and selling expenses. We found that the selling functions

performed by each respondent, which included sales negotiation and

shipping arrangements, where applicable, are sufficiently similar in

the United States and the home market to consider them as constituting

the same LOT in the two markets. Accordingly, all comparisons are at

the same LOT and an adjustment pursuant to section 773(a)(7)(A) of the

Act is not warranted. See Concurrence Memorandum.

Fair Value Comparisons

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

were made at less than fair value, we compared the EP or the CEP to the

NV, as described in the ``Export Price,'' ``Constructed Export Price''

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

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

or CEPs for comparison to weighted-average NVs.

We have considered price-averaging groups by customer types, but we

found no basis on which to conclude that we should use price-averaging

groups in our analysis. Accordingly, we have not based price

comparisons on customer types.

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

issued a decision in CEMEX v. United States,

[[Page 10838]]

1998 WL 3626 (Fed Cir.). In that case, based on the pre-URAA version of

the Act, the Court discussed the appropriateness of using CV as the

basis for foreign market value when the Department finds home market

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

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

the definition of sales outside the ``ordinary course of trade'' to

include sales below cost. See Section 771(15) of the Act. Consequently,

the Department has reconsidered its practice in accordance with this

court decision and has determined that it would be inappropriate to

resort directly to CV, in lieu of foreign market sales, as the basis

for NV if the Department finds foreign market sales of merchandise

identical or most similar to that sold in the United States to be

outside the ``ordinary course of trade.'' Instead, the Department will

use sales of similar merchandise, if such sales exist. The Department

will use CV as the basis for NV only when there are no above-cost sales

that are otherwise suitable for comparison. Therefore, in this

proceeding, when making comparisons in accordance with section 771(16)

of the Act, we considered all products sold in the home market as

described in the ``Scope of Investigation'' section of this notice,

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

determining appropriate product comparisons to U.S. sales. Where there

were no sales of identical merchandise in the home market made in the

ordinary course of trade to compare to U.S. sales, we compared U.S.

sales to sales of the most similar foreign like product made in the

ordinary course of trade, based on the characteristics listed in

Sections B and C of our antidumping questionnaire. We have implemented

the Court's decision in this case, to the extent that the data on the

record permitted.

With respect to the characteristics used to make product

comparisons, the Department's questionnaire instructed the respondents

to report the grades of the SSWR products that they sold during the POI

in accordance with AISI standards. In their sales listings, the

respondents reported both AISI and non-AISI (or internal) grades in

accordance with their sales accounting systems. The petitioners argued

that the respondents should not make changes to the product

characteristics once the Department had established such

characteristics because it could (a) seriously jeopardize the accuracy

of the Department's investigations, (b) extraordinarily complicate the

investigations, and (c) permit substantial manipulation of model

matches.

It is not the Department's normal practice to allow companies to

change the criteria to be used for model-match purposes based on their

own internal product-coding system once such criteria have been

established. Any such deviation leads to the possibility that the

margins calculated for each company under investigation could be based

on completely different product-grouping criteria. In addition,

allowing companies to deviate from the criteria may permit manipulation

of model matches, not only for the investigation, but also in future

reviews, in the event this investigation results in an antidumping duty

order.

Therefore, in instances where the respondent has reported a non-

AISI grade (or an internal grade code) for a product that corresponds

to a single AISI category, we have used the actual AISI grade rather

than the non-AISI grades reported by the respondent for purposes of our

preliminary analysis. However, in instances where the respondents

reported a non-AISI (or an internal grade code) that does not

correspond to an AISI grade, we have preliminarily used the grade code

reported by the respondents for purposes of our analysis. For further

discussion of this issue, see the Concurrence Memorandum dated February

25, 1998. We intend to examine this issue further for the final

determination.

Both Walsin and Yieh Hsing reported that they made sales of non-

prime merchandise in the home market during the POI. However, given the

limited home market sales quantity of non-prime merchandise and the

fact that no such sales were made to the United States during the POI,

where possible, we excluded non-prime sales from our analysis in

accordance with our past practice. See, e.g., Final Determinations of

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

Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain

Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-

Length Carbon Steel Plate from Korea, 58 FR 37176, 37180 (July 9,

1993). For similar reasons, where possible, we excluded from our

comparisons all home market sales of defective merchandise. See

Concurrence Memorandum.

Export Price/Constructed Export Price

For both respondents, we based our calculations on EP, in

accordance with section 772(a) of the Act, when 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. In accordance with section

772(b) of the Act, when the subject merchandise was first sold in the

United States by or for the account of the producer or exporter of such

merchandise, or by a seller affiliated with the producer or exporter,

to an unaffiliated purchaser, we used CEP.

Yieh Hsing classified all of its sales of SSWR in the United States

as EP sales in its questionnaire response, including those sales made

prior to importation through a U.S. sales agent. We examined several

factors to determine whether sales made prior to importation through a

U.S. sales agent to an unaffiliated customer in the United States are

EP sales. These factors are (1) whether the merchandise was shipped

directly from the manufacturer to the unaffiliated U.S. customer; (2)

whether the sales follow customary commercial channels between the

parties involved; and (3) whether the function of the U.S. selling

agent is limited to that of a ``processor of sales-related

documentation'' and a ``communication link'' with the unrelated U.S.

buyer. Where the factors indicate that the activities of the U.S.

selling agent are ancillary to the sale (e.g., arranging transportation

or customs clearance), we treat the transactions as EP sales. Where the

U.S. selling agent is substantially involved in the sales process

(e.g., negotiating prices), we treat the transactions as CEP sales. See

Certain Cut-to-Length Carbon Steel Plate from Germany: Final Results of

Antidumping Administrative Review, 62 FR 18389, 18391 (April 15, 1997).

Based on our review of the selling activities of the U.S. selling

agent, we reclassified Yieh Hsing's U.S. sales of SSWR through the

agent as CEP sales because the agent acted as more than a ``processor

of sales-related documentation'' and a ``communication link'' with the

unaffiliated U.S. customer. The U.S. sales agent performed a variety of

selling functions on behalf of Yieh Hsing in connection with Yieh

Hsing's SSWR sales in the United States including identifying U.S.

customers on its own and negotiating the terms of sale with U.S.

customers. Therefore, we preliminarily determine that Yieh Hsing's U.S.

sales of SSWR through its U.S. sales agent are CEP sales. For further

discussion of this issue, see the Concurrence Memorandum.

[[Page 10839]]

A. Export Price

Walsin

We calculated EP based on packed, delivered prices to unaffiliated

purchasers in the United States. We made deductions from the starting

price, where appropriate, for rebates, foreign inland freight, foreign

brokerage and handling expenses, international freight and marine

insurance, pursuant to section 772(c)(2)(A) of the Act.

Yieh Hsing

We calculated EP based on packed, delivered prices to unaffiliated

purchasers in the United States. We made deductions from the starting

price, where appropriate, for foreign inland freight, foreign brokerage

and handling, ocean freight, and marine insurance, pursuant to section

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

B. Constructed Export Price

Walsin

We calculated CEP based on the packed, delivered price to the first

unaffiliated customer in the United States in accordance with section

772(b) of the Act. We made deductions from the starting price for

rebates, foreign inland freight, foreign brokerage and handling, ocean

freight, marine insurance, U.S. duty and U.S. brokerage as appropriate,

in accordance with section 772(c)(2)(A) of the Act.

In accordance with section 772(d)(1) of the Act, we made additional

adjustments to the starting price by deducting direct and indirect

selling expenses associated with economic activities occurring in the

United States, including credit expenses and unaffiliated-party

commissions. Finally, we made an adjustment for CEP profit in

accordance with sections 772(d)(3) and 772(f) of the Act.

Yieh Hsing

We calculated CEP based on packed, delivered prices to unaffiliated

purchasers in the United States in accordance with section 772(b) of

the Act. We made deductions from the starting price, where appropriate,

for discounts, foreign inland freight, foreign brokerage and handling,

U.S. customs duties and harbor maintenance and merchandise processing

fees (which are included in U.S. duties), international freight and

marine insurance, pursuant to section 772(c)(2)(A) of the Act.

In accordance with section 772(d)(1) of the Act, we made additional

adjustments to the starting price by deducting selling expenses

associated with economic activities occurring in the United States,

including credit expenses and commissions. However, because the

deduction of this commission results in a price corresponding as

closely as possible to an export price, we have not made any additional

deduction of CEP profit. See Concurrence Memorandum of February 25,

1998.

Normal Value

After testing home market viability, whether sales to affiliates

were at arm's-length prices, 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 Comparisons'' sections of this notice.

1. 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, we

compared each 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. Because each

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 each respondent.

2. Affiliated-Party Transactions and Arm's-Length Test

We excluded sales to affiliated customers in the home market not

made at arm's-length prices 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, 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 parties were on average 99.5

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

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

CFR 351.403(c) and 62 FR at 27355 (preamble to the Department's

regulations). In instances where no affiliated-customer 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 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). 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.

3. Cost-of-Production Analysis

Based on the cost allegation submitted by the petitioners in the

petition, the Department found reasonable grounds to believe or suspect

that Walsin and Yieh Hsing had made sales in the home market at prices

below the cost of producing the merchandise, in accordance with section

773(b)(1) of the Act. As a result, the Department initiated an

investigation to determine whether the 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 Notice of Initiation. We

conducted the COP analysis described below.

A. Calculation of COP

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

COP for each company based on the sum of the cost of materials and

fabrication for the foreign like product, plus amounts for home market

SG&A and packing costs. We made company-specific adjustments to the

reported COP as follows:

Walsin. We adjusted the cost of copper that Walsin obtained from an

affiliate to reflect the market value paid to unaffiliated suppliers.

We recalculated Walsin's general and administrative (G&A) expense

factor to include certain miscellaneous income and expense items that

relate to the general production activity of the company as a whole.

See Memorandum to Christian Marsh from Stan Bowen and Laurens van

Houten dated February 25, 1998 (``Cost Memo'').

Yieh Hsing. Yieh Hsing failed to report a unique COP for each of

the product categories it reported on its computer sales listing.

Therefore, we calculated a unique cost for each missing product

category based on the grade of billet used in that category's

manufacturing process. We adjusted the cost of billets that Yieh Hsing

obtained from an affiliated supplier to reflect the market value paid

to unaffiliated suppliers. In addition, we increased Yieh Hsing's

reported billet cost to account for grinding loss. We adjusted the

pickling stage direct labor costs reported in the COP and CV databases

to reconcile with amounts reported in the Section D supplemental

response. We adjusted Yieh Hsing's submitted G&A expenses to exclude

miscellaneous income and expense items, which do not relate to the

general production

[[Page 10840]]

activities of the company as a whole. See Cost Memo.

B. Test of Home Market Sales Prices

We used each 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 order to determine whether these sales had been

made at prices below COP. 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) whether 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 (net of selling

expenses and packing) to the home market prices, less applicable

quantity discounts, rebates, movement charges, direct and indirect

selling expenses, and packing.

C. Results of the COP Test

Pursuant to section 773(b)(2)(C), where less than 20 percent of a

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''

within an extended period of time in accordance with section

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

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

within a reasonable period of time, in accordance with section

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

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

COP, we disregarded all sales of that product.

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

Walsin's and Yieh Hsing's home market sales within an extended period

of time were at prices less than COP. Further, the prices did not

provide for the recovery of costs within a reasonable period of time.

We therefore disregarded the below-cost sales and used the remaining

above-cost sales as the basis for determining NV, in accordance with

section 773(b)(1). For those U.S. sales of SSWR for which there were no

comparable home market sales in the ordinary course of trade, we

compared EPs or CEPs to CV in accordance with section 773(a)(4) of the

Act.

D. Calculation of CV

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

based on the sum of the respondents' cost of materials, fabrication,

SG&A, profit, and U.S. packing costs. We adjusted the COP included in

the calculation of CV as noted, above, in the ``Calculation of COP''

section of the notice. In accordance with section 773(e)(2)(A) of the

Act, we based SG&A and profit on the amounts incurred and realized by

each 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

Walsin

We calculated NV based on packed, delivered prices to unaffiliated

home market customers. We made deductions for foreign inland freight,

bank charges and discounts and rebates where appropriate, pursuant to

section 773(a)(6)(B) of the Act. Pursuant to section 773(a)(6)(C)(iii)

of the Act and 19 CFR 351.410(c), we made circumstance-of-sale

adjustments, where appropriate, for differences in royalty expenses,

credit expenses and interest revenue. Because Walsin paid commissions

on U.S. sales, in calculating NV, we offset these commissions using the

weighted-average amount of indirect selling expenses and inventory

carrying costs incurred on the home market sales for the comparison

product, up to the amount of the U.S. commissions. See 19 CFR

351.410(e).

We deducted home market packing costs and added U.S. packing costs,

in accordance with section 773(a)(6) of the Act. Where appropriate, we

made adjustments to NV to account for differences in physical

characteristics of the merchandise, in accordance with section

773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.

Yieh Hsing

We calculated NV based on packed, delivered prices to home market

unaffiliated customers and prices to affiliated customers that we

determined to be at arm's length. We made deductions for early payment

discounts and foreign inland freight, where appropriate, pursuant to

section 773(a)(6)(B) of the Act. Pursuant to section 773(a)(6)(C)(iii)

of the Act and 19 CFR 351.410(c), we made circumstance-of-sale

adjustments, where appropriate, for differences in credit expenses and

interest revenue. Because Yieh Hsing paid commissions on U.S. sales, in

calculating NV, we offset these commissions using the weighted-average

amount of indirect selling expenses incurred on the home market sales

for the comparison product, up to the amount of the U.S. commissions.

See 19 CFR 351.410(e). We did not include inventory carrying costs in

the weighted-average amount of home market indirect selling expenses

because Yieh Hsing did not calculate this expense in either its

original or supplemental responses properly. See Concurrence

Memorandum.

We deducted home market packing costs and added U.S. packing costs,

in accordance with section 773(a)(6) of the Act. Where appropriate, we

made adjustments to NV to account for differences in physical

characteristics of the merchandise, in accordance with section

773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.

Price-to-CV Comparisons

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

accordance with section 773(a)(8) of the Act. Where CV was compared to

EP, we deducted from CV the weighted-average home market direct selling

expenses and added the weighted-average U.S. product-specific direct

selling expenses in accordance with section 773(a)(6)(C)(iii) of the

Act. Where CV was compared to CEP, we deducted from CV the weighted-

average home market direct selling expenses (which included credit

expenses).

Currency Conversion

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

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

the Federal Reserve Bank.

Section 773A(a) directs the Department to use a daily exchange rate

in order to convert foreign currencies into U.S. dollars unless the

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

find that a fluctuation exists when the daily exchange rate differs

from the benchmark rate by 2.25 percent. The benchmark is defined as

the moving average of rates for the past 40 business days. When we

determine a fluctuation to have existed, we substitute the benchmark

rate for the daily rate, in accordance with established practice.

Further, section 773A(b) directs the Department to allow a 60-day

adjustment period when a currency has undergone a sustained movement. A

sustained movement has occurred when the weekly average of actual daily

rates exceeds the weekly average of

[[Page 10841]]

benchmark rates by more than five percent for eight consecutive weeks.

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

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

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

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

because the New Taiwan dollar did not undergo a sustained movement

during the POI.

Verification

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

information determined to be acceptable for use in making our final

determination.

Suspension of Liquidation

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

Customs Service to suspend liquidation of all imports of subject

merchandise that are entered, or withdrawn from warehouse, for

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

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

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

amount by which the NV exceeds the U.S. price, as indicated in the

chart below. These suspension-of-liquidation instructions will remain

in effect until further notice. The weighted-average dumping margins

are as follows:

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

Weighted-

average

Exporter/manufacturer margin

Percentage

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

Walsin Cartech Specialty Steel Corporation................. 27.81

Yieh Hsing Enterprise Corporation, Ltd..................... 10.50

All Others................................................. 17.09

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

ITC Notification

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

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

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

this preliminary determination or 45 days after our final determination

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry.

Public Comment

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

be submitted to the Assistant Secretary for Import Administration no

later than May 22, 1998, and rebuttal briefs no later than May 29,

1998. A list of authorities used and an executive summary of issues

must accompany any briefs submitted to the Department. Such summary

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

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

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

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

will be held on June 2, 1998, time and room to be determined, at the

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

Washington, DC 20230. Parties should confirm by telephone the time,

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

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

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

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

1870, within thirty days of the publication of this notice. Requests

should contain: (1) The party's name, address, and telephone number;

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

discussed. Oral presentations will be limited to issues raised in the

briefs. If this investigation proceeds normally, we will make our final

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

notice in the Federal Register.

This determination is published pursuant to section 777(i) of the

Act.

Dated: February 25, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-5599 Filed 3-4-98; 8:45 am]

BILLING CODE 3510-DS-P