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    11 June 1997
    Source: http://www.access.gpo.gov/su_docs/aces/aces140.html

    See related orders:
    http://jya.com/ita-russia.htm
    http://jya.com/ita-so-africa.htm
    http://jya.com/ita-ukraine.htm

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    [Federal Register: June 11, 1997 (Volume 62, Number 112)]
    [Notices]
    [Page 31972-31979]
    From the Federal Register Online via GPO Access [wais.access.gpo.gov]
    [DOCID:fr11jn97-160]

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

    DEPARTMENT OF COMMERCE

    International Trade Administration
    [A-570-849]

    Preliminary Determination of Sales at Less Than Fair Value:
    Certain Cut-to-Length Carbon Steel Plate From The People's Republic of
    China

    AGENCY: Import Administration, International Trade Administration,
    Department of Commerce.

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

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

    EFFECTIVE DATE: June 11, 1997.

    FOR FURTHER INFORMATION CONTACT: Elizabeth Patience, Stephen Jacques,
    or Jean Kemp, Import Administration, International Trade
    Administration, U.S. Department of Commerce, 14th Street and
    Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
    3793.

    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 Rounds Agreements Act (URAA). In addition, unless otherwise
    indicated, all citations to the Department's regulations are to the
    current regulations, codified at 19 CFR part 353 (April 1, 1996).

    Preliminary Determination

        We determine preliminarily that certain cut-to-length carbon steel
    plate from the People's Republic of China (``PRC'') 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 are shown in the ``Suspension of Liquidation'' section of this
    notice.

    Case History

        Since the initiation of this investigation (61 FR 64051, December
    3, 1996), the following events have occurred:
        On November 27, 1997, we sent a survey to the Chinese Ministry of
    Foreign Trade and Economic Cooperation (``MOFTEC'') and the China
    Chamber of Commerce of Metals, Minerals & Chemicals Importers &
    Exporters (``CCCMC'') to determine the identity of producers and
    exporters of subject merchandise, but we received no response.
        On December 19, 1996, the United States International Trade
    Commission (``ITC'') issued an affirmative preliminary injury
    determination in this case (see ITC Investigations Nos. 731TA-753-756).
    The ITC found that there is a reasonable indication that an industry in
    the United States is threatened with material injury by reason of
    imports from the PRC of steel plate. We issued an antidumping
    questionnaire to the Chinese Ministry of Foreign Trade and Economic
    Cooperation (``MOFTEC'') with a list of 20 possible producers of
    subject merchandise and requested MOFTEC to forward it to all
    producers/exporters of subject merchandise on December 20, 1996. We
    also sent courtesy copies to the 20 producers on that date. These
    producers were identified in Iron and Steel Works of the World, 11th
    edition, 1994.
        The questionnaire is divided into four sections. Section A requests
    general information concerning a company's corporate structure and
    business practices, the merchandise under investigation that it sells,
    and the sales of the merchandise in all of its markets. Sections B and
    C request home market sales listings and U.S. sales listings,
    respectively. (Section B does not normally apply in antidumping
    proceedings involving the PRC). Section D requests information on the
    factors of production of the subject merchandise.
        On January 10, 1997, Geneva Steel Company and Gulf States Steel
    Company, (petitioners) amended their petition to allege that critical
    circumstances existed with respect to subject merchandise.
        On January 24, 1997 the following submitted their section A
    response: China Metallurgical Import & Export Liaoning Company
    (Liaoning), an exporter of subject merchandise; Wuyang Iron and Steel
    Company (Wuyang), which produced the merchandise sold by Liaoning;
    Anshan Iron and Steel Complex (AISCO), a producer of subject
    merchandise; Angang International Trade Corporation (Anshan
    International), a wholly-owned AISCO subsidiary in China with its own
    business license to import and export merchandise, and Sincerely Asia,
    Limited (SAL) a partially-owned Hong Kong affiliate of AISCO involved
    in sales of subject merchandise to the United States, (collectively,
    Anshan); Baoshan Iron & Steel Corporation (Bao), a producer of subject
    merchandise; Bao Steel International Trade Corporation (Bao Steel ITC),
    a wholly-owned subsidiary of Bao responsible for selling Bao material
    domestically and abroad; and Bao Steel Metals Trading Corporation (B.
    M. International), a partially-owned U.S. subsidiary involved in U.S.
    sales, (collectively

    [[Page 31973]]

    Baoshan); Wuhan Iron & Steel Company (Wuhan) a producer of subject
    merchandise; International Economic and Trading Corporation (IETC), a
    wholly-owned subsidiary responsible for exporting WISCO merchandise;
    Cheerwu Trader Ltd. (Cheerwu) a partially-owned Hong Kong affiliate of
    Wuhan involved in sales of subject merchandise to the United States
    (collectively, WISCO); Shanghai Pudong Iron and Steel Company (Shanghai
    Pudong) a producer and exporter of subject merchandise. See the
    Collapsing section of this memorandum, below. We consider Anshan,
    Baoshan, Liaoning, WISCO and Shanghai Pudong to be sellers of the
    subject merchandise during the POI.
        In a letter entering notice of its appearance, Liaoning stated that
    it purchased and sold subject merchandise from an unaffiliated
    producer, Wuyang Iron and Steel Company (``Wuyang''). We therefore
    requested that Wuyang also respond to the Department's questionnaires.
    Wuyang complied with the Department's request.
        On February 12 and February 14, 1997, the five exporters submitted
    their section C responses. On February 19 and February 20, 1997,
    Anshan, Baoshan, Wuyang, Shanghai Pudong, and WISCO producer/supplier
    factories submitted section D questionnaire responses.
        On March 11, 1997, we issued a supplemental questionnaire to
    Liaoning and Wuyang. On March 12, 1997 we issued supplemental
    questionnaires to Anshan, Shanghai Pudong, and WISCO. On March 13,
    1997, we issued a supplemental questionnaire to Baoshan.
        We received a supplemental questionnaire response from Liaoning and
    Wuyang on April 9, 1997. We received supplemental questionnaire
    responses from Anshan, Baoshan , Shanghai Pudong and WISCO on April 14,
    1997. Anshan provided corrections to minor errors in its responses on
    April 21, 1997, Baoshan submitted corrections on April 24, 1997 and
    Shanghai Pudong submitted corrections in their April 29, 1997
    submission.
        On May 2, 1997, we issued supplemental questionnaires requesting
    additional information regarding each respondent's labor consumption
    factors. Additionally, we requested information about Shanghai Pudong's
    affiliation with Shanghai No. 1 a non-exporting producer of subject
    merchandise which Shanghai Pudong had earlier indicated shared a common
    trustee, Shanghai Metallurgical Holding (Group) Co. (``Shanghai
    Metallurgical''). Wuyang submitted its response on May 9, 1997. The
    other respondents submitted their labor information on May 16, 1997. At
    their request, we granted Shanghai Pudong an extension, until May 23,
    1997, to submit affiliation information.
        On January 30, 1997, we requested publicly-available information
    for valuing the factors of production and for surrogate country
    selection. Petitioners had already provided comments on surrogate
    values to be used in this investigation in their petition of November
    5, 1996. Respondents provided their comments on this matter on March 4,
    1997. Petitioners provided further surrogate values and rebuttal to
    respondent's comments on April 10, 1997. On April 11, 1997, respondents
    objected this filing. Respondent stated that petitioners sought to
    insert new information on the record in an untimely fashion. We granted
    respondents an opportunity to submit comments on petitioners' April 10,
    1997 filing. We received no response.
        On March 28, 1997, we postponed the preliminary determination until
    not later than May 14, 1997 (62 FR 14887), because we determined this
    investigation to be extraordinarily complicated within the meaning of
    section 733(c)(1)(B)(i) of the Act.
        On April 15, 1997, petitioners submitted a request that the scope
    of their petitions be amended to include three items--plate in coil;
    plate made to carbon plate specifications regardless of alloy content;
    and plate sold to nominal plate thicknesses whose actual thickness is
    slightly less than the thickness of plate but within specified
    thickness tolerances. With respect to plate in coil, petitioners
    maintain that this product has essentially the same physical
    characteristics and end uses as cut-to-length plate. Petitioners
    further claim that a post-initiation shift has occurred in the pattern
    of trade from cut-to-length plate to plate in coil form, and that such
    a development indicates that any eventual order on cut-to-length plate
    will be susceptible to circumvention. Petitioners submitted additional
    information on May 9, 1997. Respondents submitted extensive rebuttal
    comments on April 25, 1997, and May 30, 1997.
        Because of the very recent submission of arguments on these complex
    and technical subjects, we were unable to fully analyze all of the
    relevant information on the record prior to this preliminary
    determination. In order to fully examine petitioners' claims, we intend
    to carefully examine all evidence and argument on the record regarding
    this matter and issue a decision as soon as possible.
        On April 30, 1997 (62 FR 23433) we further postponed the
    preliminary determination until not later than June 3, 1997.

    Scope of the Investigation

        The products covered by this investigation are hot-rolled iron and
    non-alloy steel 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 thickness of not less than 4 mm,
    not in coils and without patterns in relief), of rectangular shape,
    neither clad, plated nor coated with metal, whether or not painted,
    varnished, or coated with plastics or other nonmetallic substances; and
    certain iron and non-alloy steel flat-rolled products not in coils, of
    rectangular shape, hot-rolled, neither clad, plated, nor coated with
    metal, whether or not painted, varnished, or coated with plastics or
    other nonmetallic substances, 4.75 mm or more in thickness and of a
    width which exceeds 150 mm and measures at least twice the thickness.
    Included as subject merchandise in this petition are flat-rolled
    products of nonrectangular cross-section where such cross-section is
    achieved subsequent to the rolling process (i.e., products which have
    been ``worked after rolling'')--for example, products which have been
    bevelled or rounded at the edges. This merchandise is currently
    classified in the Harmonized Tariff Schedule of the United States (HTS)
    under item numbers 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. Although the
    HTS subheadings are provided for convenience and customs purposes, our
    written description of the scope of this investigation is dispositive.

    Period of Investigation

        The period of investigation (POI) is April 1, 1996, through
    September 30, 1996.

    Non-Market-Economy Country Status

        The Department has treated the PRC as a nonmarket-economy country
    (NME) in all past antidumping investigations and administrative
    reviews. See, e.g., Final Determination of Sales at Less Than Fair
    Value: Silicon Carbide from the People's Republic of China, 59 FR 22585
    (May 2, 1994) (Silicon Carbide); and Final Determination of Sales at
    Less Than Fair Value: Furfuryl Alcohol from the People's Republic of
    China, 60 FR

    [[Page 31974]]

    22545 (May 8, 1995) (Furfuryl Alcohol). Neither respondents nor
    petitioners have challenged such treatment. Therefore, in accordance
    with section 771(18)(C) of the Act, we will continue to treat the PRC
    as an NME in this investigation.

    Surrogate Country

        When investigating imports from an NME, section 773(c)(1) of the
    Act directs the Department in most circumstances to base normal value
    (NV) on the NME producers' factors of production, valued in a surrogate
    market-economy country or countries considered to be appropriate by the
    Department. In accordance with section 773(c)(4), the Department, in
    valuing the factors of production, shall utilize, to the extent
    possible, the prices or costs of factors of production in one or more
    market-economy countries that are comparable in terms of economic
    development to the NME country and are significant producers of
    comparable merchandise. The sources of the surrogate factor values are
    discussed under the NV section below.
        The Department has determined that India, Pakistan, Sri Lanka,
    Egypt and Indonesia are countries comparable to the PRC in terms of
    economic development. See Memorandum from David Mueller to Edward Yang,
    dated January 29, 1997.
        Customarily, we select an appropriate surrogate based on the
    availability and reliability of data from these countries. For PRC
    cases, the primary surrogate has usually been India if it is a
    significant producer of comparable merchandise. However, the Department
    has determined that Indonesia also is a significant producer of
    comparable merchandise.
        We used India as the primary surrogate country and accordingly, we
    have calculated NV using Indian prices to value the PRC producers'
    factors of production, when available and appropriate. We have obtained
    and relied upon publicly-available information wherever possible. Where
    Indian surrogate values were not available or where we considered these
    values to be aberrational, we have used Indonesian import prices as
    surrogate values. For one factor, slag, we were unable to locate an
    appropriate surrogate value from any of the comparable countries
    identified above. Therefore, we selected a U.S. slag value as the most
    appropriate surrogate. See Concurrence Memoranda.

    Non-Responsive Exporters

        Consistent with Department practice, we presumed that those
    respondents who failed to respond constitute a single enterprise, and
    are under common control by the PRC government. See Final Determination
    of Sales at Less Than Fair Value: Bicycles from the People's Republic
    of China, 61 FR 19026 (April 30, 1996) (Bicycles). We applied a single
    antidumping deposit rate--the China-wide rate--to these exporters and
    all other exporters in the PRC who did not respond to our
    questionnaire.

    Separate Rates

        All of the respondents have requested separate, company-specific
    rates. In their questionnaire responses, respondents state that they
    are independent legal entities. Of the five respondents, Anshan,
    Baoshan, Liaoning and WISCO have reported that they are collectively-
    owned enterprises, registered as being ``owned by all the people'',
    Shanghai Pudong and Shanghai No. 1 are owned by Shanghai Metallurgical.
    Shanghai Metallurgical is also owned by ``all the people.'' Shanghai
    Pudong stated that it does not have any corporate relationship with any
    level of the PRC Government. As stated Silicon Carbide and Furfuryl
    Alcohol, ownership of a company by all the people does not require the
    application of a single rate. Accordingly, each of these respondents is
    eligible for consideration for a separate rate.
        To establish whether a firm is sufficiently independent to be
    entitled to a separate rate, the Department analyzes each exporting
    entity under the test established in the Final Determination of Sales
    at Less Than Fair Value: Sparklers from the People's Republic of China,
    56 FR 20588 (May 6, 1991) (Sparklers) and amplified in Silicon Carbide.
    Under this test, the Department assigns separate rates in nonmarket-
    economy cases only if an exporter can affirmatively demonstrate the
    absence of both (1) de jure and (2) de facto governmental control over
    export activities. See Silicon Carbide and Furfuryl Alcohol.
    1. De Jure Control
        The respondents have placed on the administrative record a number
    of documents to demonstrate absence of de jure control. Respondents
    submitted the ``Law of the PRC on Industrial Enterprises Owned By the
    Whole People,'' adopted on April 13, 1988 (the Industrial Enterprises
    Law). The Department has previously determined that the Civil Law does
    not confer de jure independence on the branches of government-owned and
    controlled enterprises. See Sigma Corp v. United States, 890 F. Supp.
    1077, 1080 (CIT 1995). However, the Industrial Enterprises Law has been
    analyzed by the Department in past cases and has been found to
    sufficiently establish an absence of de jure control of companies
    ``owned by the whole people,'' such as those participating in this
    case. (See Notice of Preliminary Determination of Sales at Less Than
    Fair Value and Postponement of Final Determination: Certain Partial-
    Extension Steel Drawer Slides with Rollers from the People's Republic
    of China, 60 FR 14725, 14727 (June 5, 1995); Notice of Preliminary
    Determination of Sales at Less Than Fair Value: Honey from the People's
    Republic of China, 60 FR 14725, 14727 (March 20, 1995); and Furfuryl
    Alcohol. The Industrial Enterprises Law provides that enterprises owned
    by ``the whole people'' shall make their own management decisions, be
    responsible for their own profits and losses, choose their own
    suppliers, and purchase their own goods and materials. The Regulations
    of the People's Republic of China for Controlling the Registration of
    Enterprises as Legal Persons (Legal Persons Regulations), issued on
    July 13, 1988 by the State Administration for Industry and Commerce of
    the PRC, provide that, to qualify as legal persons, companies must have
    the ``ability to bear civil liability independently'' and the right to
    control and manage their business. These regulations also state that,
    as an independent legal entity, a company is responsible for its own
    profits and losses. See Notice of Final Determination of Sales at Less
    Than Fair Value: Manganese Metal from the People's Republic of China,
    60 FR 56046 (November 6, 1995).
        In sum, in prior cases, the Department has analyzed the Chinese
    laws and regulations on the record in this case, and found that they
    establish an absence of de jure control. We have no new information in
    these proceedings which would cause us to reconsider this
    determination.
    2. De Facto Control
        The Department typically considers four factors in evaluating
    whether each respondent is subject to de facto governmental control of
    its export functions: (1) Whether the export prices are set by or are
    subject to the approval of a governmental authority; (2) whether the
    respondent has authority to negotiate and sign contracts and other
    agreements; (3) whether the respondent has autonomy from the government
    in making decisions regarding the selection of management; and (4)
    whether the respondent retains the proceeds of its export sales and
    makes independent decisions regarding disposition of profits or
    financing of

    [[Page 31975]]

    losses. See, e.g., Silicon Carbide and Furfuryl Alcohol.
        Respondents have asserted the following: (1) They establish their
    own export prices independently of the government and without the
    approval of a government authority; (2) they negotiate contracts,
    without guidance from any governmental entities or organizations; (3)
    they make their own personnel decisions including the selection of
    management; and (4) they retain the proceeds of their export sales, use
    profits according to their business needs, and have the authority to
    obtain loans. In addition, respondents' questionnaire responses
    indicate that company-specific pricing during the POI does not suggest
    coordination among exporters. The subject merchandise appears on the
    ``List of Products Subject to Export Permit Administration at Different
    Levels'' issued by the Ministry of Foreign Trade and Economic
    Cooperation (``MOFTEC'') on November 9, 1995. Respondents stated that,
    to the best of their knowledge, steel plate is included on the list
    because it is considered an important raw material for the economic
    development of China (e.g., for the use in the construction of basic
    infrastructure), and the Chinese government wishes to have a mechanism
    in place to ensure adequate domestic supply in the event of a shortage.
    Despite inclusion of the subject merchandise on this list, we have
    found no indication from the respondents' business licences that the
    issuing authority imposes any type of restriction on respondents'
    business (for a more complete explanation of this issue, see the
    Concurrence Memorandum).
        Consequently, we preliminarily determine that the five responding
    exporters have met the criteria for the application of separate rates.
    We will examine this matter further at verification.
        For non-responsive exporters, we preliminarily determine, as facts
    available, that they have not met the criteria for application of
    separate rates.

    Facts Available: China-Wide Rate

        The petition filed on November 5, 1996 identified 28 steel
    producers with the capacity to produce cut-to-length carbon steel plate
    during the POI. We received adequate responses from the five
    respondents identified above. We received certification of non-shipment
    by seven companies from the China Chamber of Commerce for Metals and
    Chemicals (CCCMC). Additionally, we received a letter from one
    respondent factory indicating shipments through parties who have not
    responded to the questionnaire. See Non-Responsive Exporters section
    above. All other companies did not respond to our questionnaire.
    Further, U.S. import statistics indicate that the total quantity and
    value of U.S. imports of cut-to-length carbon steel plate from the PRC
    is greater that the total quantity and value of plate reported by all
    PRC companies that submitted questionnaire responses. Given these
    discrepancies, we conclude that not all exporters of PRC plate
    responded to our questionnaire. Accordingly, we are applying a single
    antidumping deposit rate--the China-wide rate--to all exporters in the
    PRC (other than those receiving an individual rate), based on our
    presumption that those respondents who failed to respond constitute a
    single enterprise, and are under common control by the PRC government.
    See, e.g., Final Determination of Sales at Less Than Fair Value:
    Bicycles From the People's Republic of China, 61 FR 19026 (April 30,
    1996) (Bicycles).
        This China-wide antidumping rate is based on facts available.
    Section 776(a)(2) of the Act provides that ``if an interested party or
    any other person--(A) withholds information that has been requested by
    the administering authority; (B) fails to provide such information by
    the deadlines for the submission of the information or in the form and
    manner requested, subject to subsections (c)(1) and (e) of section 782;
    (C) significantly impedes a proceeding under this title; or (D)
    provides such information but the information cannot be verified as
    provided in section 782(i), the administering authority * * * shall,
    subject to section 782(d), use the facts otherwise available in
    reaching the applicable determination under this title.''
        In addition, section 776(b) of the Act provides that, if the
    Department finds that an interested party ``has failed to cooperate by
    not acting to the best of its ability to comply with a request for
    information,'' the Department may use information that is adverse to
    the interests of that party as the facts otherwise available. The
    statute also provides that such an adverse inference may be based on
    secondary information, including information drawn from the petition.
        As discussed above, all PRC exporters that do not qualify for a
    separate rate are treated as a single enterprise. Because some
    exporters of the single enterprise failed to respond to the
    Department's requests for information, that single enterprise is
    considered to be uncooperative. Accordingly, consistent with section
    776(b)(1) of the Act, we have applied, as total adverse facts
    available, the highest margin calculated for a respondent in this
    proceeding. Based on our comparison of the calculated margins for the
    other respondents in this proceeding to the average margin in the
    petition, we have concluded that the highest calculated margin is the
    most appropriate record information on which to form the basis for
    dumping calculations in this investigation. Accordingly, the Department
    has based the China-wide rate on information from respondents. In this
    case, the highest calculated margin is 172.20 percent.
        Section 776(c) of the Act provides that where the Department relies
    on ``secondary information,'' the Department shall, to the extent
    practicable, corroborate that information from independent sources
    reasonably at the Department's disposal. The Statement of
    Administrative Action (SAA), accompanying the URAA clarifies that the
    petition is ``secondary information.'' See SAA at 870. The SAA also
    clarifies that ``corroborate'' means to determine that the information
    used has probative value. Id. However, where corroboration is not
    practicable, the Department may use uncorroborated information.
        The information contained in the petition shows that petitioners
    calculated export price based on two methods: (1) The import values
    declared to the U.S. Customs Service; and (2) an average Chinese export
    price derived from actual U.S. selling prices of Chinese exporters,
    known to petitioners. Petitioners stated that in order to ensure a fair
    value comparison, import and export values from the same HTS categories
    as subject merchandise were used to calculate the export price and the
    factor consumption rates were used as a basis for normal value. In
    addition, petitioners only used those HTS categories for subject
    products which included only subject merchandise. Petitioners made
    adjustments for foreign inland freight to FAS values to derive ex
    factory prices. They also submitted supporting documentation including
    an affidavit referring to sources and how petitioners obtained
    information concerning adjustments and that these adjustments
    represented current actual charges or expenses associated with the
    importation and sale of cut-to-length carbon steel plate into the U.S.
    market.
        The information in the petition with respect to the normal value
    (NV) is based on factors of production used by the petitioners in the
    production of steel plate. Petitioners submitted usage amounts for
    materials, labor and energy, adjusted for known differences in

    [[Page 31976]]

    production efficiencies. Petitioners submitted three cost models in the
    petition: (1) Basic Oxygen Furnace (BOF) Cost Model; (2) Open-Hearth
    Furnace Cost Model; and (3) Weighted-Average Normal Value of the BOF
    and Open-Hearth methods to account for differences between the
    production processes of petitioners and potential respondents. We
    determine that this information has probative value and that we have
    corroborated, to the extent practicable, the data contained in the
    petition. See Corroboration Memorandum.

    Fair Value Comparisons

        To determine whether sales of certain cut-to-length carbon steel
    plate from the PRC to the United States were made at less than fair
    value, we compared the United States price (USP) to the foreign market
    value (FMV), as specified in the ``United States Price'' and ``Normal
    Value'' sections of this notice.

    Export Price

        We based USP on export price (EP) in accordance with section 772(a)
    of the Act, because the subject merchandise was sold to unrelated
    purchasers in the United States prior to importation and because
    constructed export price methodology was not otherwise indicated. In
    accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI-
    wide weighted-average export prices (EPs) to the factors of production.
    See Company specific Calculation Memoranda, June 3,1997.
        For those exporters that responded to the Department's
    questionnaire, we calculated EP based on prices to unaffiliated
    purchasers in the United States. We made deductions, where appropriate,
    for foreign inland freight, ocean freight, marine insurance, and
    foreign brokerage. See ``Factor Valuations'' section of this notice.

    Normal Value

        In accordance with section 773(c) of the Act, we calculated NV
    based on the value of the factors of production reported by the
    factories in the PRC which produced subject merchandise for the five
    exporters. Where an input was sourced from a market economy and paid
    for in market economy currency, we have used the actual price paid for
    the input to calculate the factors-based NV in accordance with our
    practice. See Lasko Metal Products v. United States (Lasko), 437 F. 3d
    1442 (Fed. Cir. 1994). Otherwise, we used publicly available
    information from India where possible. Where appropriate Indian values
    were not available, we used publicly available information from
    Indonesia.
        Certain respondents purchase certain raw materials through
    affiliated parties in Hong Kong. The Hong Kong parties also receive
    payment, and transfer the funds to the PRC respondents, from U.S.
    customers for the respondents' sales of plate. The amount of funds
    transferred to the PRC respondents is reduced by the cost of any inputs
    purchased on behalf of the PRC respondents. The Hong Kong affiliates
    also reduce the payment by administrative costs it charges the PRC
    respondents. In their responses, respondents provided sample contracts
    for market economy purchases. They included contracts between the Hong
    Kong affiliates and the original raw material suppliers as well as
    contracts between the material suppliers and the PRC respondents. They
    did not provide documentation of the transactions occurring between the
    PRC respondents and the Hong Kong affiliates. We valued the relevant
    inputs at the contract, market-economy, prices provided in the
    responses for the preliminary determination. We will seek additional
    clarification of these contracts and administrative costs at
    verification.
        Shanghai Pudong's questionnaire response indicates that, within the
    meaning of section 771(33) of the Act, it may be affiliated with
    Shanghai No. 1 based on the fact that Shanghai Metallurgical serves as
    ``trustee'' for both companies and thus may exercise control over the
    two producers. Further, because both Shanghai Pudong and Shanghai No. 1
    produce subject merchandise, the Department will consider whether these
    two firms should be treated as a single entity (i.e., ``collapsed'').
    In order for the Department to treat two or more producers as a single
    entity, the Department relies on a test set forth in Nihon Cement v.
    United States, 17 CIT 400, 425 (1993). Pursuant to that test, the
    Department will only collapse the producers if each of these criteria
    are met: (1) The producers must be affiliated, (2) the producers must
    have production facilities for similar or identical products that would
    not require substantial retooling in order to restructure manufacturing
    priorities, and (3) there must be a significant potential for the
    manipulation of price or production. Because we lacked sufficient
    information to make the affiliation and collapsing decisions, we
    requested additional information from Shanghai Pudong regarding both
    its relationship with Shanghai No. 1 and Shanghai's No. 1's factors of
    production. At Shanghai Pudong's request, we granted an extension on
    the reporting of this information. Shanghai Pudong responded on May 23
    advising that it does not control Shanghai No.1 and therefore could not
    obtain its factors of production. Based on the data received prior to
    the preliminary determination, including portions of the response
    regarding Shanghai No. 1, we have determined that it is not clear from
    the current record whether Shanghai Metallurgical controls Shanghai
    Pudong and Shanghai No. 1. Therefore, we will not collapse Shanghai
    Pudong and Shanghai No. 1 for the purposes of the preliminary
    determination. We will continue to examine this issue and we will
    verify the reported information of both Shanghai Pudong and Shanghai
    No. 1, and consider the information with respect to both producers for
    our final determination.
        Four respondents identified a significant number of raw material
    inputs. Certain of these inputs appeared to be variations or subsets of
    larger inputs. We were unable to locate publicly available surrogate
    values for these inputs for this preliminary determination. See each
    responding firm's Calculation Memorandum. Based on the steel production
    process, we combined the inputs into the larger subcategories for which
    we have located a surrogate value in our preliminary determination. We
    will continue to try to locate a surrogate value for these inputs for
    our final determination.
        Four respondents have identified a number of gases either produced
    and reused in the production process or purchased from outside sources
    for use in the production of subject merchandise. These respondents
    have argued that all of these gases should be treated as overhead
    items. Petitioners argue that these gases are direct inputs in the
    steelmaking process and should not be considered as overhead items. In
    previous cases in which the Department has used the same surrogate
    value, power and fuel are specifically removed from the overhead
    calculation so as to be treated as direct inputs. See Final Results of
    Antidumping Duty Administrative Review: Sebacic Acid from the PRC, 62
    FR 10530, March 7, 1997. We treated these gases as direct inputs as
    they, in general, serve as power and fuel to the production process. We
    offset the cost of production by the amount of any by-product
    generated. This offset is based on our assumption that the by-products
    either are re-used as an input to the production processes or has a
    market for its uses. See Calculation Memoranda.

    [[Page 31977]]

    Factor Valuations

        The selection of the surrogate values was based on the quality and
    contemporaneity of the data. Where possible, we attempted to value
    material inputs on the basis of tax-exclusive domestic prices. Where we
    were not able to rely on domestic prices, we used import prices to
    value factors. We removed from the import data import prices from
    countries which the Department has previously determined to be NMEs. As
    appropriate, we adjusted input prices to make them delivered prices.
    For those values not contemporaneous with the POI, we adjusted for
    inflation using wholesale price indices (WPI), or, in the case of labor
    rates, consumer price indices (CPI), published in the International
    Monetary Fund's International Financial Statistics. For a complete
    analysis of surrogate values, see each company's Factors Valuation
    Memorandum, dated June 3, 1997.
        For certain raw material surrogate values, we used values as
    reported in the Monthly Statistics of Foreign Trade of India, Vol. II--
    Imports, Directorate General of Commercial Intelligence & Statistics,
    Ministry of Commerce, Government of India, Calcutta. The price
    information from Monthly Statistics of Foreign Trade of India
    represents cumulative values for the period of April 1995 through
    January 1996. For each input value obtained from the above publication,
    we used the average value per one kilogram for that input from market
    economies. Import statistics from non-market economies were excluded in
    the calculation of the average value. Since the data from this
    publication is not contemporaneous with the POI, we adjusted material
    values for inflation by using WPI rate for India. We then converted
    each of the raw material inputs to U.S. dollars using an exchange rate
    conversion factor.
        For certain material inputs, we were unable to obtain specific
    price information from India. Therefore, for these inputs, we resorted
    to public information from Indonesia. The values for these inputs were
    obtained from the publication Foreign Trade Statistics Bulletin
    Imports, March 1996. The price information represents cumulative values
    from January to March 1996. These inputs were adjusted for inflation.
        Certain respondents reported the amount of slag, a by-product of
    the plate production process, produced in the production of subject
    merchandise and sold in China by some respondents. Normally, the
    Department offsets the calculated cost of manufacturing by the value of
    any by-products. The only surrogate value for slag from India or
    Indonesia was aberrationally high when compared to an available U.S.
    rate. Based on our knowledge of the steelmaking process, we know that
    slag is a by-product with a relatively low value (compared to the price
    of steel plate). We were able to locate an appropriate value for slag
    from the U.S. Geological Survey, Mineral Commodities Summaries from
    February 1997. We used the U.S. slag value for the preliminary
    determination. We will continue to try to locate an appropriate
    surrogate value from India, Indonesia, or another country at a
    comparable level of development for our final determination.
        We were unable to locate specific surrogate values for each of the
    reported gases. Specifically, we were unable to locate surrogate values
    for the gases generated in the production facilities (e.g., furnace
    gas). We will continue to search for surrogate values for each of the
    gases for the final determination. For our preliminary determination,
    we applied surrogate gas values for gases for which we could find a
    surrogate value and applied a natural gas surrogate value to the other
    gases for which we could not locate a value.
        For certain factors for which we could not locate import values, we
    used values provided by petitioners which represent market values
    reported in the 1995-96 Annual Report for Steel Authority of India
    Limited (``SAIL''), a producer in India of cut-to-length carbon steel
    plate. We adjusted these values for inflation.
        For materials purchased from market economy country suppliers that
    are paid for in a market economy currency and if the portion of the
    input from the market economy was significant, we used the actual
    purchase price paid during the POI as reported in the questionnaire
    responses. This practice is consistent with the Department's new
    regulations and with Lasko. In cases in which the same producer
    reported several different market economy suppliers for the same input,
    we used the average market economy price paid for that input.
        For labor, we used the average labor cost per man-day worked for
    the Basic Metal and Alloys Industries as reported in the Ministry of
    Labour Government of India Annual Report 1994-1995. This source
    included in its calculation of labor values ``a sum of various
    components like wages and salaries; all types of bonus; money value of
    benefits in kind; old age benefits; maternity benefits; social security
    charges such as ESI compensation for injuries, family pension, lay-off/
    retrenchment benefits, and other group benefits.'' We applied a single
    labor rate for all levels of labor, i.e., skilled, unskilled, and
    indirect labor. Accordingly, we adjusted for inflation from the time
    period of the information (1990-1991) to the POI using the CPI, as
    reported in the International Monetary Fund's International Financial
    Statistics. The work day in India is an eight-hour day. See Coumarin
    from PRC; Preliminary Determination of Sales at Less Than Fair Value,
    59 FR 39727 (Aug. 4, 1994), citing to Country Reports: Human Rights
    Practices for 1990; Coumarin from the PRC; Final Determination of Sales
    at Less than Fair Value, 59 FR 66895 (Dec. 28, 1994) (Coumarin).
    Therefore, we then divided the surrogate value by 8 hours to arrive at
    an hourly wage rate. Petitioners have argued that the labor usage rates
    reported by respondents are abnormally low for steel production. We
    will carefully review the reported labor rates at verification and for
    our final determination.
        For overhead, profit and SG&A expenses, we used information
    reported in the April 1995 Reserve Bank of India Bulletin. See
    Statement 1--``Combined Income, Value of Production, Expenditure and
    Appropriation Accounts, Industry Group-Wise, 1992-93.''
        Respondents allocated a majority of the labor employed in their
    facilities to overhead and selling and general administrative (SG&A)
    tasks. Only a small percentage of the labor employed in respondents'
    facilities has been reported as direct costs of production and
    therefore included in our NV calculations. Conversely, the Indian
    surrogate values for overhead and SG&A do not include a separate
    allowance for labor. See Factor Valuation Memoranda. We therefore
    increased the surrogate overhead value to include the significant labor
    resources respondents allocated to overhead. See, Calculation
    Memoranda.
        We included certain indirect materials as part of ``overhead
    expenses.'' In previous final determinations, the Department has
    considered inputs which ``are not direct materials consumed in the
    production process'' as part of factory overhead. See Brake Drums and
    Brake Rotors From the PRC; Notice of Preliminary Determination, 61 FR,
    53190, 63196 (Oct. 10, 1996); Brake Drums and Brake Rotors From the
    PRC; Final Determination of Sales at Less than Fair Value, 62 FR 9154,
    9160 (Feb. 24, 1997). The treatment of indirect materials as
    ``overhead'' is consistent with Compendium of Statements and Standards:
    Accounting (India).

    [[Page 31978]]

        In calculating the cost of raw material inputs in NME cases, we
    include an adjustment for the cost of transporting the input from the
    supplier to the respondent. This adjustment is based on the distance
    from the supplier to the producing factory and the mode of
    transportation; see, e.g., Sulfanilic Acid from the People's Republic
    of China; Final Results and Partial Recission of Antidumping Duty
    Administrative Review, 61 Fed. Reg. 53702, 53705 (Comment 3) (October
    15, 1996). We determine a value from the surrogate country based on
    this distance and on mode of transportation used. While all respondents
    provided distances for some of their inputs, only one of the
    respondents provided distances and mode of transportation for all
    material inputs. We requested this information for all inputs in our
    original and supplemental questionnaires. For each respondent that did
    not comply with our requests for this information, as to some inputs,
    we applied, as facts available, the highest freight cost calculated for
    any input of that respondent to those inputs for which we did not
    receive the required freight information. This presumes that the
    respondents chose not to provide information that would be adverse to
    them.
        For the preliminary determination, we were unable to find specific
    surrogate values for a small number of inputs. Therefore, we excluded
    them from our calculations for the preliminary determination. We will
    continue to research price information for these inputs for the final
    determination.

    Critical Circumstances

        On January 10, 1997, petitioners alleged that there is a reasonable
    basis to believe or suspect that critical circumstances exist with
    respect to subject merchandise. In accordance with 19 C.F.R.
    353.16(b)(2)(i) (1996), since these allegations were filed earlier than
    the deadline for the Department's preliminary determination, we must
    issue our preliminary critical circumstances determinations not later
    than the preliminary determination.
        Section 733(e)(1) of the Act provides that the Department will
    determine that there is a reasonable basis to believe or suspect that:
    (A)(i) There is a history of dumping and material injury by reason of
    dumped imports in the United States or elsewhere of the subject
    merchandise, or (ii) the person by whom, or for whose account, the
    merchandise was imported knew or should have known that the exporter
    was selling the subject merchandise at less than its fair value and
    that there was likely to be material injury by reason of such sales,
    and (B) there have been massive imports of the subject merchandise over
    a relatively short period.
        The statute and the Statement of Administrative Action (SAA) which
    accompanies the Uruguay Round Agreements Act are silent as to how we
    are to make a finding that there was knowledge that there was likely to
    be material injury. Therefore, Congress has left the method of
    implementing this provision to the Department's discretion.
        In determining whether there is a reasonable basis to believe or
    suspect that an importer knew or should have known that the exporter
    was selling the plate at less than fair value, the Department normally
    considers margins of 15 percent or more sufficient to impute knowledge
    of dumping for constructed export price (CEP) sales, and margins of 25
    percent or more for export price (EP) sales. See, e.g., Preliminary
    Critical Circumstances Determination: Honey from the People's Republic
    of China (PRC), 60 FR 29824 (June 6, 1995) (Honey). Since the company
    specific margins for EP sales in our preliminary determination for
    carbon steel plate are greater than 25 percent for Anshan, Shanghai
    Pudong and WISCO, we have imputed knowledge of dumping. We found that
    Baoshan and Liaoning had margins below 25 percent. Because we found
    margins to be below 25 percent, we do not impute importer knowledge of
    dumping. Therefore for Baoshan and Liaoning, we find that critical
    circumstances do not exist with respect to the subject merchandise.
        In determining whether there is a reasonable basis to believe or
    suspect that an importer knew or should have known that there was
    likely to be material injury by reason of dumped imports, the
    Department normally will look to the preliminary injury determination
    of the ITC. If the ITC finds a reasonable indication of present
    material injury to the relevant U.S. industry, the Department will
    determine that a reasonable basis exists to impute importer knowledge
    that there was likely to be material injury by reason of dumped imports
    during the critical circumstances period--the 90-day period beginning
    with the initiation of the investigation (see 19 C.F.R. 351.16(g). If,
    as in this case, the ITC preliminarily finds threat of material injury
    (See, Cut-to-Length Carbon Steel Plate from China, Russia, South
    Africa, and Ukraine, U.S. International Trade Commission, December
    1996), the Department will also consider the extent of the increase in
    the volume of imports of the subject merchandise during the critical
    circumstances period and the magnitude of the margins in determining
    whether a reasonable basis exists to impute knowledge that material
    injury was likely.
        In this case, imports of Chinese plate increased 29 percent in the
    three months following the initiation of the investigation when
    compared to the three months preceding initiation, or nearly two times
    the level of increase needed to find ``massive imports'' during the
    same period (see below). Furthermore, we have preliminarily found
    margins of 40.35 percent for Shanghai Pudong, 172.20 percent for Anshan
    and 51.70 for WISCO.
        Based on the ITC's preliminary determination of threat of injury,
    the increase in imports noted above, and the high preliminary margins,
    the Department determines that there is a reasonable basis to believe
    or suspect that the importer knew or should have known that there was
    likely to be material injury by means of sales of the subject
    merchandise at less than fair value.
        To determine whether imports were massive over a relatively short
    time period, the Department typically compares the import volume of the
    subject merchandise for the three months immediately preceding and
    following the initiation of the proceeding. See 19 C.F.R. 353.16(g).
    Pursuant to 19 C.F.R. 353.16(f)(2), the Department will consider an
    increase of 15 percent or more in the imports of the subject
    merchandise over the relevant period to be massive. As noted, imports
    of the subject merchandise increased 29 percent during the relevant
    period, and thus we determine that imports have been massive.
        Thus, because we determine that there is a reasonable basis to
    believe or suspect that the importer knew or should have known that
    Anshan, Shanghai Pudong and WISCO were selling the subject merchandise
    at less than its fair value and that there was likely to be material
    injury by reason of such sales, and that there have been massive
    imports of the subject merchandise over a relatively short time period,
    we preliminarily determine that critical circumstances exist for
    Anshan, Shanghai Pudong and WISCO.
        For companies subject to the China-wide rate (i.e., companies which
    did not respond to the Department's questionnaire), we are imputing
    knowledge based on the China-wide rate, and determine, based on facts
    available, that there were massive imports of certain cut-to-length
    carbon steel plate by companies that did not

    [[Page 31979]]

    respond to the Department's questionnaire.
        Therefore, we preliminarily determine that critical circumstances
    exist with regard to these companies.

    Verification

        As provided in section 782(i) of the Act, we will verify the
    information used 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 from Baoshan and Liaoning, entered, or withdrawn from
    warehouse, for consumption on or after the date of publication of this
    notice in the Federal Register. For Anshan, Shanghai Pudong, WISCO and
    companies subject to the China-wide rate, we are directing Customs to
    suspend liquidation of all imports of subject merchandise entered, or
    withdrawn from warehouse, for consumption on or after the date 90 days
    prior to the date of publication of this notice in the Federal
    Register. We will instruct Customs Service to require a cash deposit or
    the posting of a bond equal to the weighted-average amount by which the
    NV exceeds the export price, as indicated 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
                       Manufacturer/exporter                        margin
                                                                  (percent)
    ------------------------------------------------------------------------
    Anshan (AISCO/Anshan International/Sincerely Asia Ltd).....       172.20
    Baoshan (Bao/Bao Steel International Trade Corp/Bao Steel
     Metals Trading Corp)......................................        14.20
    Liaoning...................................................         8.19
    Shanghai Pudong............................................        40.35
    WISCO (Wuhan/International Economic and Trading Corp/
     Cheerwu Trader Ltd).......................................        51.70
    China-wide Rate <SUP>1..........................................       172.20
    ------------------------------------------------------------------------
    \1\ The China-wide rate applies to all entries of the subject
      merchandise except for entries from exporters that are identified
      individually above.

    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 the domestic industry in the United States is materially
    injured, or threatened with material injury, by reason of imports, or
    sales (or the likelihood of sales) for importation, of the subject
    merchandise.

    Public Comment

        In accordance with 19 CFR 353.38, case briefs or other written
    comments in at least ten copies must be submitted to the Assistant
    Secretary for Import Administration no later than 50 days after the
    publication of this preliminary determination, and rebuttal briefs, no
    later than five days after the filing of case briefs. A list of
    authorities used and a summary of arguments made in the briefs should
    accompany these briefs. Such summary should be limited to five pages
    total, including footnotes. We will hold a public hearing, if requested
    within 10 days of publication of this notice, to afford interested
    parties an opportunity to comment on arguments raised in case or
    rebuttal briefs. The hearing will be held at the U.S. Department of
    Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
    20230, time, date and room to be determined. 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 ten 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. In accordance with 19 CFR 353.38(b), oral presentations will
    be limited to issues raised in the briefs. If this investigation
    proceeds normally, we will make our final determination by August 18,
    1997.
        This determination is published pursuant to section 733(f) of the
    Act.

        Dated: June 3, 1997.
    Robert S. LaRussa,
    Acting Assistant Secretary for Import Administration.
    [FR Doc. 97-15294 Filed 6-10-97; 8:45 am]
    BILLING CODE 3510-DS-P