Preliminary Determination of Sales at Less Than Fair Value: Certain Cut-To-Length Carbon-Quality Steel Plate Products from France

[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]

[Notices]

[Pages 41198-41202]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 99-19300]

[[Page 41197]]

_______________________________________________________________________

Part II

Department of Commerce

_______________________________________________________________________

International Trade Administration

_______________________________________________________________________

Preliminary Determination of Sales at Less Than Fair Value: Certain

Cut-to-Length Carbon-Quality Steel Plate Products From France; India;

Indonesia; Italy; Japan and the Republic of Korea; Notice

Federal Register / Vol. 64, No. 145 / Thursday, July 29, 1999 /

Notices

[[Page 41198]]

DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-816]

Preliminary Determination of Sales at Less Than Fair Value:

Certain Cut-To-Length Carbon-Quality Steel Plate Products from France

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: July 29, 1999.

FOR FURTHER INFORMATION CONTACT: Jim Terpstra or Frank Thomson, Group

II, Office 4, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-

3965 or (202) 482-4793, respectively.

The Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (``the Act'') by

the Uruguay Round Agreements Act (``URAA''). In addition, unless

otherwise indicated, all references are made to the Department's

regulations at 19 CFR Part 351 (1998).

Preliminary Determination

We preliminarily determine that certain cut-to-length carbon-

quality steel plate products (``CTL plate'') from France are being, or

are 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: Certain Cut-To-Length Carbon-Quality Steel

Plate from Czech Republic, France, India, Indonesia, Italy, Japan,

Republic of Korea, and Former Yugoslav Republic of Macedonia (64 FR

12959, March 16, 1999)) (``Initiation Notice''), the following events

have occurred:

In their petition, the petitioners 1 identified Usinor

S.A. (``Usinor'') and its affiliates, Creusot Loire Industrie

(``CLI''), and GTS Industries S.A. (``GTS'') as possible exporters of

CTL plate from France. We requested on March 12, 1999, data on all

producers and exporters of the subject merchandise during the period of

investigation (``POI'') from the American Embassy in Paris. Based on

information on the record we issued antidumping questionnaires to

Usinor, CLI and GTS on March 17, 1999. 2

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\1\ The petitioners are Bethlehem Steel Corporation, Gulf States

Steel, Inc., IPSCO Steel Inc., the United Steelworkers of America,

and the U.S. Steel Group (a unit of USX Corporation).

\2\ Section A of the questionnaire requested general information

concerning the company's corporate structure and business practices,

the merchandise under investigation that it sells, and the sales of

that merchandise in all markets. Sections B and C of the

questionnaire requested home market sales listings and U.S. sales

listings. Section D of the questionnaire requested information

regarding the cost of production of the foreign like product and the

constructed value of the merchandise under investigation. Section E

of the questionnaire requested information regarding the cost of

further manufacture or assembly performed in the United States.

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In April 1999, the United States International Trade Commission

(``ITC'') issued an affirmative preliminary injury determination in

this case (see ITC Investigation No. 731-TA-815-822).

On May 10, 1999, Usinor submitted a consolidated response to

sections A, B, and C of the questionnaire on behalf of GTS and Sollac

S.A. (``Sollac'') (collectively referred to as ``Usinor''). Usinor

identified Sollac in its questionnaire responses as an affiliated

producer of subject merchandise during the POI. Usinor submitted a

response to section D of the questionnaire on May 14, 1999, and a

response to section E on May 21, 1999.

On April 12, 1999, Usinor requested that it be allowed not to

report information for the following entities that are affiliated with

Usinor: 1) Eurodecoupe, a maker of precision-cut specialty shapes that

sold subject merchandise in the home market; 2) CLI, a maker of

specialty steel intended for nuclear and high pressure applications;

and 3) certain affiliated downstream service centers/reprocessors.

Based on the reasons and factual representations outlined in Usinor's

request, on May 14, 1999, we granted this request and allowed Usinor to

exclude these sales from its response. However, we indicated that we

would review this matter at verification.

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

Usinor in May 1999 and received a response to this questionnaire along

with revised home market and U.S. sales listings in June 1999. We

issued a supplemental questionnaire for Sections D and E to Usinor in

June 1999 and received a response to this questionnaire in June 1999.

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

revised cost of production, constructed value, and further

manufacturing cost tapes in July 1999.

In May and June 1999, Usinor submitted additional clarifications to

its responses. Also, on July 9, 1999, petitioners submitted comments

for the Department's consideration in the preliminary determination.

Scope of Investigation

The products covered by the scope of this investigation are certain

hot-rolled carbon-quality steel: (1) Universal mill plates (i.e., flat-

rolled products rolled on four faces or in a closed box pass, of a

width exceeding 150 mm but not exceeding 1250 mm, and of a nominal or

actual thickness of not less than 4 mm, which are cut-to-length (not in

coils) and without patterns in relief), of iron or non-alloy-quality

steel; and (2) flat-rolled products, hot-rolled, of a nominal or actual

thickness of 4.75 mm or more and of a width which exceeds 150 mm and

measures at least twice the thickness, and which are cut-to-length (not

in coils). Steel products to be included in this scope are of

rectangular, square, circular or other shape and of rectangular or non-

rectangular cross-section where such non-rectangular cross-section is

achieved subsequent to the rolling process (i.e., products which have

been ``worked after rolling'')--for example, products which have been

beveled or rounded at the edges. Steel products that meet the noted

physical characteristics that are painted, varnished or coated with

plastic or other non-metallic substances are included within this

scope. Also, specifically included in this scope are high strength, low

alloy (HSLA) steels. HSLA steels are recognized as steels with micro-

alloying levels of elements such as chromium, copper, niobium,

titanium, vanadium, and molybdenum. Steel products to be included in

this scope, regardless of Harmonized Tariff Schedule of the United

States (HTSUS) definitions, are products in which: (1) Iron

predominates, by weight, over each of the other contained elements, (2)

the carbon content is two percent or less, by weight, and (3) none of

the elements listed below is equal to or exceeds the quantity, by

weight, respectively indicated: 1.80 percent of manganese, or 1.50

percent of silicon, or 1.00 percent of copper, or 0.50 percent of

aluminum, or 1.25 percent of chromium, or 0.30 percent of cobalt, or

0.40 percent of lead, or 1.25 percent of nickel, or 0.30 percent of

tungsten, or 0.10 percent of molybdenum, or 0.10 percent of niobium, or

0.41 percent of titanium, or 0.15 percent of vanadium, or 0.15

[[Page 41199]]

percent zirconium. All products that meet the written physical

description, and in which the chemistry quantities do not equal or

exceed any one of the levels listed above, are within the scope of

these investigations unless otherwise specifically excluded. The

following products are specifically excluded from these investigations:

(1) Products clad, plated, or coated with metal, whether or not

painted, varnished or coated with plastic or other non-metallic

substances; (2) SAE grades (formerly AISI grades) of series 2300 and

above; (3) products made to ASTM A710 and A736 or their proprietary

equivalents; (4) abrasion-resistant steels (i.e., USS AR 400, USS AR

500); (5) products made to ASTM A202, A225, A514 grade S, A517 grade S,

or their proprietary equivalents; (6) ball bearing steels; (7) tool

steels; and (8) silicon manganese steel or silicon electric steel.

The merchandise subject to these investigations is classified in

the HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 7208.51.0030,

7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000,

7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045,

7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050,

7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 7226.91.7000,

7226.91.8000, 7226.99.0000.

Although the HTSUS subheadings are provided for convenience and

Customs purposes, the written description of the merchandise under

investigation is dispositive.

Scope Comments

As stated in our notice of initiation, we set aside a period for

parties to raise issues regarding product coverage. In particular, we

sought comments on the specific levels of alloying elements set out in

the description above, the clarity of grades and specifications

excluded from the scope, and the physical and chemical description of

the product coverage.

On March 29, 1999, Usinor, a respondent in the French antidumping

and countervailing duty investigations and Dongkuk Steel Mill Co., Ltd.

and Pohang Iron and Steel Co., Ltd., respondents in the Korean

antidumping and countervailing duty investigations (collectively the

Korean respondents), filed comments regarding the scope of the

investigations on CTL plate and the Department's model matching

criteria. On April 14, 1999, the petitioners filed comments regarding

Usinor's and the Korean respondents' comments regarding model matching.

In addition, on May 17, 1999, ILVA S.p.A. (ILVA), a respondent in the

Italian antidumping and countervailing duty investigations, requested

guidance on whether certain products are within the scope of these

investigations.

Usinor requested that the Department modify the scope to exclude:

(1) Plate that is cut to non-rectangular shapes or that has a total

final weight of less than 200 kilograms; and (2) steel that is 4'' or

thicker and which is certified for use in high-pressure, nuclear or

other technical applications; and (3) floor plate (i.e., plate with

``patterns in relief'') made from hot-rolled coil. Further, Usinor

requested that the Department provide clarification of scope coverage

with respect to what it argues are over-inclusive HTSUS subheadings

included in the scope language.

The Department has not modified the scope of these investigations

because the current language reflects the product coverage requested by

the petitioners, and Usinor's products meet the product description.

With respect to Usinor's clarification request, we do not agree that

the scope language requires further elucidation with respect to product

coverage under the HTSUS. As indicated in the scope section of every

Department antidumping and countervailing duty proceeding, the HTSUS

subheadings are provided for convenience and Customs purposes only; the

written description of the merchandise under investigation or review is

dispositive.

The Korean respondents requested confirmation whether the maximum

alloy percentages listed in the scope language are definitive with

respect to covered HSLA steels.

At this time, no party has presented any evidence to suggest that

these maximum alloy percentages are inappropriate. Therefore, we have

not adjusted the scope language. As in all proceedings, questions as to

whether or not a specific product is covered by the scope and, hence,

must be reported, should be timely raised with Department officials.

ILVA requested guidance on whether certain merchandise produced

from billets is within the scope of the current CTL plate

investigations. According to ILVA, the billets are converted into wide

flats and bar products (a type of long product). ILVA notes that one of

the long products, when rolled, has a thickness range that falls within

the scope of these investigations. However, according to ILVA, the

greatest possible width of these long products would only slightly

overlap the narrowest category of width covered by the scope of the

investigations. Finally, ILVA states that these products have different

production processes and properties than merchandise covered by the

scope of the investigations and therefore are not covered by the scope

of the investigations.

As ILVA itself acknowledges, the particular products in question

appear to fall within the parameters of the scope and, therefore, we

are preliminarily treating them as covered merchandise.

Period of Investigation

The POI is January 1, 1998 through December 31, 1998.

Fair Value Comparisons

To determine whether sales of CTL plate from France to the United

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

export price (``CEP'') to the Normal Value (``NV''), as described in

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

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

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

NVs.

Product Comparisons

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

products produced by Usinor covered by the description in the ``Scope

of Investigation'' section, above, and sold in France during the POI,

to be foreign like products for purposes of determining appropriate

product comparisons to U.S. sales. We compared U.S. sales to sales made

in the home market, where appropriate. 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.

In making the product comparisons, we matched foreign like products

based on the physical characteristics reported by the respondents in

the following order of importance (which are identified in Appendix V

of the questionnaire): Painting, quality, grade specification, heat

treatment, nominal thickness, nominal width, patterns in relief, and

descaling.

Because Usinor had no sales of non-prime merchandise in the United

States during the POI, we did not use home market sales of non-prime

merchandise in our product comparisons (see, e.g., Final Determination

of Sales at Less Than Fair Value: Stainless Steel Wire

[[Page 41200]]

Rod from Sweden (63 FR 40449, 40450, July 29, 1998) (``SSWR'')).

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 transaction. The NV

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

when NV is based on constructed value (``CV''), that of the sales from

which we derive selling, general and administrative (``SG&A'') expenses

and profit. With respect to U.S. price and CEP transactions, the LOT 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 Carbon Steel

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

Usinor reported three customer categories (i.e., steel service

centers/resellers, pipe makers and original equipment manufacturers)

and five channels of distribution in the home market (i.e., sales made

by Usinor's affiliated producer Sollac, through its affiliated sales

network Sollac Vente France (SVF), directly to unaffiliated service

centers or end users (Channel 1), sales from Sollac, through SVF, to

its affiliated steel service center, SLPM, together with subsequent

resales by SLPM to unaffiliated end users (Channel 2), sales made by

Usinor's affiliated producer GTS Industries (GTS) directly to its

affiliated customer Europipe (Channel 3), sales made by GTS, through

SVF, directly to unaffiliated service centers or end users (Channel 4),

and sales from GTS, through SVF, to its affiliated steel service

center, SLPM, together with subsequent resales by SLPM to unaffiliated

end users (Channel 5)).

We determined that Usinor sold merchandise at two LOTs in the home

market during the POI. The first LOT involved sales through Channels 1,

3 and 4. The second LOT involved Usinor's sales through its affiliated

steel service center, SLPM, in Channels 2 and 5. We found significant

distinctions in selling activities and associated expenses between the

sales through Channels 2 and 5 and those through Channels 1, 3 and 4.

Based on these differences, we conclude that two LOTs existed in the

home market. From our analysis of the marketing process for these

sales, we also determined that sales through Channels 2 and 5 were made

at a more remote marketing stage than that for sales through Channels

1, 3 and 4. Because the large number of channels of distribution and

selling expenses involved in this analysis presents difficulty in

providing an adequate summary in this notice, see the LOT/CEP

Memorandum for a detailed explanation of the above, dated July 19,

1999, on file in Import Administration's Central Records Unit

(``CRU''), Room B-099, U.S. Department of Commerce, 14th and

Constitution Avenue, NW, Washington, DC.

Usinor reported three customer categories (i.e., steel service

centers/resellers, pipe makers and original equipment manufacturers)

and three channels of distribution in the United States: 1) CEP sales

made by Sollac, through its affiliated U.S. importer Francosteel, to

unaffiliated service centers or end users (Channel 6), 2) CEP sales

made by GTS, through its affiliated U.S. importer Francosteel, to

unaffiliated service centers or end users (Channel 7), and 3) CEP sales

from GTS directly to its affiliate Berg Steel, who further manufactured

the subject merchandise into non-subject merchandise, pipe, and resold

it to unaffiliated end users (Channel 8).

In order to determine whether separate LOTs actually existed

between the U.S. and home market, we reviewed the selling activities

associated with each channel of distribution. We determined that fewer

and different selling functions were performed for Usinor's CEP sales

than for sales at either of the home market LOTs and these differences

constitute differences in LOT. Therefore, we examined whether a LOT

adjustment was appropriate. The Department makes this adjustment when

it is demonstrated that a difference in LOTs affects price

comparability. See The Statement of Administrative Action accompanying

the URAA, H.R. Doc. No. 316, 103d Cong., 2d Sess. (1994) (hereinafter,

the ``SAA'') at 829-830. However, where the available data do not

provide an appropriate basis upon which to determine a LOT adjustment,

and where the NV is established at a LOT that is at a more advanced

stage of distribution than the LOT of the CEP transactions, we adjust

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

Because the LOT of the U.S. sales is different than either home market

LOTs, there is no reliable basis for quantifying a LOT adjustment in

accordance with section 773(a)(7)(A) of the Act. Further, we found that

the home market sales were at a more advanced stage of distribution

compared to sales at either U.S. LOT. Therefore, a CEP offset was

applied to NV for the NV-CEP comparisons. Because the large number of

channels of distribution and selling expenses involved in this analysis

presents difficulty in providing an adequate summary in this notice,

see the LOT/CEP Memorandum for a detailed explanation of our analysis.

Constructed Export Price

Usinor reported as CEP transactions the resales of its subject

merchandise by Francosteel to unaffiliated customers in the United

States (channels 6 and 7). We calculated CEP, in accordance with

subsection 772(b) of the Act, based on those sales to the first

unaffiliated purchaser that took place after importation into the

United States.

In addition, Usinor reported as CEP transactions sales of pipe

products which were further manufactured from CTL plate (subject

merchandise) by one of its affiliates in the United States (channel 8).

For these sales we used the price to the first unaffiliated customer

and deducted the costs of further manufacturing, in accordance with

section 772(d)(2) of the Act. We used the information in Usinor's

Section E response to calculate further manufacturing costs, except in

the following instances where the data were not properly quantified or

valued: (1) We increased the reported further manufacturing costs

because we disallowed an adjustment made to coating costs, (2) we

revised the reported further manufacturing G&A expense rate to reflect

the change we made to coating costs, and (3) we revised the reported

further manufacturing interest expense to reflect the interest expenses

incurred by Berg Steel Pipe Corporation (``Berg''), Usinor's affiliate

that further manufactures the plate in the United States. For further

information see

[[Page 41201]]

Memorandum to Neal Halper, dated July 19, 1999.

We based CEP on the packed FOB or delivered prices to unaffiliated

purchasers in the United States. We made adjustments to the starting

price, where appropriate, for freight revenue, interest revenue, and

billing adjustments. We made deductions for early payment discounts and

rebates, where applicable. We also made deductions for movement

expenses in accordance with section 772(c)(2)(A) of the Act; these

included, where appropriate, foreign inland freight, foreign brokerage

and handling, ocean freight, marine insurance, U.S. brokerage and

handling, foreign trade zone fees, U.S. customs duties (including

harbor maintenance fees and merchandise processing fees), and U.S.

inland freight expenses (freight from warehouse to the customer). In

accordance with section 772(d)(1) of the Act, we deducted those selling

expenses associated with economic activities occurring in the United

States, including direct selling expenses (credit costs, warranty

expenses, and other direct selling expenses), inventory carrying costs,

other indirect selling expenses, and commissions. We also deducted an

amount for further-manufacturing costs, where applicable, in accordance

with section 772(d)(2) of the Act and made an adjustment for profit in

accordance with section 772(d)(3) of the Act.

Normal Value

After testing (1) home market viability, (2) whether sales to

affiliates were at arm's-length prices, and (3) 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 (i.e.,

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

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

U.S. sales), we compared Usinor'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 Usinor'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 Usinor.

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

We have applied the arm's-length test to affiliated-party

transactions by comparing them to sales of identical merchandise from

Usinor to unaffiliated home market customers. If these affiliated-party

sales satisfied the arm's-length test, we used them in our analysis.

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

length prices (if any) were excluded from our analysis because we

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

351.102.

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

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

affiliated and unaffiliated customers net of all movement charges,

direct selling expenses, discounts and rebates, and packing. Where, for

the tested models of subject merchandise, prices to the affiliated

party were on average 99.5 percent or more of the price to the

unaffiliated parties, we determined that sales made to the affiliated

party were at arm's length. See 19 CFR 351.403(c) and 62 FR at 27355.

In instances where no price ratio could be constructed for an

affiliated customer because identical merchandise was not sold to

unaffiliated customers, we were unable to determine that these sales

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

LTFV analysis. Where the exclusion of such sales eliminated all sales

of the identical or most similar comparison product, we made a

comparison to the next most similar model. See, (e.g., SSWR).

3. Cost of Production Analysis

In their petition, the petitioners submitted an allegation pursuant

to section 773(b)(1) of the Act that Usinor had made sales in the home

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

the allegation indicated that there were reasonable grounds to believe

or suspect that Usinor sold CTL plate in the home market at prices less

than the COP. Accordingly, we initiated COP investigations with respect

to Usinor to determine whether sales were made at prices less than the

COP pursuant to section 773(b) of the Act (see Initiation Notice, 64 FR

12959, 12962).

We conducted the COP analysis described below.

A. Calculation of COP

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

based on the sum of Usinor's cost of materials and fabrication for the

foreign like product, plus amounts for home market selling, general and

administrative expenses (``SG&A''), interest expense, and packing

costs.

We relied on the COP data Usinor submitted in its Section D

questionnaire responses, without adjustment, to calculate weighted-

average COPs for the POI.

B. Test of Home Market Sales Prices

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 less than the COP, we examined whether (1) within an extended

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

such sales were made at prices which permitted the recovery of all

costs within a reasonable period of time. 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.

C. Results of the COP Test

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

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

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

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

``substantial quantities.'' Alternatively, where 20 percent or more of

a respondent's sales of a given product during the POI (normally equal

to one year, but not less than six months) are at prices less than the

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

quantities'' in accordance with sections 773(b)(2)(B) and (C) of the

Act. In such cases, because we compared prices to POI average costs, 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, in such

instances, we disregarded the below-cost sales.

In this investigation, we found that, for certain products, more

than 20 percent of Usinor'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 excluded these sales and used the remaining above-cost

sales as the basis for determining NV where such sales existed, in

accordance with section 773(b)(1) of the Act.

[[Page 41202]]

D. Calculation of CV

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

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

interest, U.S. packing costs, and profit. We made similar adjustments

as those described above for COP. 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. For selling expenses,

we used the weighted-average home market selling expenses.

Price-to-Price Comparisons

We calculated NV based on delivered prices to unaffiliated

customers or prices to affiliated customers that we determined to be at

arm's-length prices. We made adjustments to the starting price, where

appropriate, for billing adjustments. We made deductions, where

appropriate, from the starting price for early payment discounts, other

discounts, rebates, and inland freight. We made circumstance of sale

(COS) adjustments, in accordance with section 773(a)(6)(c)(iii) of the

Act, for direct selling expenses, including warranty expenses, credit

expenses, and other direct selling expenses. In addition, we made

adjustments for differences in the merchandise in accordance with

section 773(a)(6)(C)(ii) of the Act. Finally, we deducted home market

packing costs and added U.S. packing costs in accordance with sections

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

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 we compared CV to

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

selling expenses and added U.S. selling expenses.

Currency Conversion

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

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

the Federal Reserve Bank.

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

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

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

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

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

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

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

benchmark rate for the daily rate, in accordance with established

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

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

sustained movement. A sustained movement has occurred when the weekly

average of actual daily rates exceeds the weekly average of benchmark

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

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

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

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

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

because the French franc did not undergo a sustained movement.

Verification

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

information determined to be acceptable for use in making our final

determination.

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 CEP, 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-

Exporter/manufacturer average margin

percentage

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

Usinor.................................................. 29.88

All Others.............................................. 29.88

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

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 August 25, 1999, and rebuttal briefs no later than September

1, 1999. A list of authorities used and an executive summary of issues

should accompany any briefs submitted to the Department. Such summary

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

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

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

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

will be held on September 7, 1999, 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 30 days of the publication of this notice. Requests should

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

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

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

this investigation proceeds normally, we will make our final

determination by no later than 75 days after the date of this

preliminary determination.

This determination is issued and published pursuant to sections

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

Dated: July 19, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-19300 Filed 7-28-99; 8:45 am]

BILLING CODE 3510-DS-P