65 FR 34660, May 31, 2000 A-570-854 Investigation Public Document MEMORANDUM TO: Troy H. Cribb Acting Assistant Secretary for Import Administration FROM: Joseph A. Spetrini Deputy Assistant Secretary for Import Administration AD/CVD Enforcement Group III SUBJECT: Issues and Decision Memo for the Antidumping Investigation of Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products from the People's Republic of China ("PRC"); Notice of Final Determination of Sales at Less Than Fair Value (A-570-854) Summary We have analyzed the comments of interested parties in the 1998-1999 antidumping duty investigation of cold-rolled flat-rolled carbon-quality steel products ("cold-rolled steel") from the PRC (A-570-854). As a result of our analysis, we have made changes in the margin calculation. We recommend that you approve the positions we have developed in the Discussion of the Issues section of this memorandum. Below is the complete list of the issues in this investigation for which we received comments by parties: 1. Adverse Facts Available Background We published in the Federal Register the preliminary determination in this investigation on January 7, 2000. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Cold-Rolled Flat-Rolled Carbon Quality Steel Products From The People's Republic of China, 65 FR 1117 (January 7, 2000) ("Preliminary Determination"). The period of investigation ("POI") is October 1, 1998, through March 31, 1999. We issued our antidumping questionnaire on June 22, 1999 (section A) and July 9, 1999 (remainder of questionnaire). We received a response from the Shanghai Baosteel Group Corporation ("Baosteel"). On March 3, 2000, the Department began its verification of Baosteel's sales and factor of production questionnaire responses. On March 16, 2000, Baosteel terminated the verification and requested that the verifiers return all documentation that had been provided by Baosteel in support of the Department's review of certain areas of Baosteel's response. Therefore, the verification team immediately terminated the verification and returned all documents collected during the course of verification to Baosteel's counsel. See Memorandum For Edward Yang; "Verification of Sales and Factors of Production for Shanghai Baosteel Group Corporation (Baosteel) in the Antidumping Duty Investigation of Certain Cold-Rolled Flat-Rolled Carbon Quality Steel Products from the People's Republic of China," (March 22, 2000) ("Verification Memorandum"). We invited parties to comment on our Preliminary Determination. We received a case brief from petitioners, Bethlehem Steel Corporation, Ispat Inland Inc., LTV Steel Company, Inc., National Steel Corporation, and U.S. Steel Group, a unit of USX Corporation (collectively "petitioners"), on March 29, 2000. Baosteel did not provide any comments on our Preliminary Determination. Scope of Investigation For purposes of this investigation, the products covered are certain cold- rolled (cold-reduced) flat-rolled carbon-quality steel products, neither clad, plated, nor coated with metal, but whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances, both in coils, 0.5 inch wide or wider, (whether or not in successively superimposed layers and/or otherwise coiled, such as spirally oscillated coils), and also in straight lengths, which, if less than 4.75 mm in thickness having a width that is 0.5 inch or greater and that measures at least 10 times the thickness; or, if of a thickness of 4.75 mm or more, having a width exceeding 150 mm and measuring at least twice the thickness. The products described above may be rectangular, square, circular or other shape and include products of either rectangular or non- rectangular 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 beveled or rounded at the edges. Specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free ("IF")) steels, high strength low alloy ("HSLA") steels, and motor lamination steels. IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. Motor lamination steels contain micro-alloying levels of elements such as silicon and aluminum. Steel products included in the scope of this investigation, regardless of definitions in the Harmonized Tariff Schedules of the United States ("HTSUS"), are products in which: (1) iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight, and; (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated: 1.80 percent of manganese, or 2.25 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 (also called columbium), or 0.15 percent of vanadium, or 0.15 percent of zirconium. All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products, by way of example, are outside and/or specifically excluded from the scope of this investigation: - SAE grades (formerly also called AISI grades) above 2300; - ball bearing steels, as defined in the HTSUS; - tool steels, as defined in the HTSUS; - silico-manganese steel, as defined in the HTSUS; - silicon-electrical steels, as defined in the HTSUS, that are grain- oriented; - silicon-electrical steels, as defined in the HTSUS, that are not grain- oriented and that have a silicon level exceeding 2.25 percent; - all products (proprietary or otherwise) based on an alloy ASTM specification (sample specifications: ASTM A-506, A-507); - non-rectangular shapes, not in coils, which are the result of having been processed by cutting or stamping and which have assumed the character of articles or products classified outside chapter 72 of the HTSUS. - silicon-electrical steels, as defined in the HTSUS, that are not grain- oriented and that have a silicon level less than 2.25 percent, and a) fully-processed, with a core loss of less than 0.14 watts/pound per mil (0.001 inch), or b) semi-processed, with core loss of less than 0.085 watts/pound per mil (0.001 inch); - certain shadow mask steel, which is aluminum killed cold-rolled steel coil that is open coil annealed, has an ultra-flat, isotropic surface, and which meets the following characteristics: thickness: 0.001 to 0.010 inch, width: 15 to 32 inches, chemical composition: carbon content less than 0.002 percent, by weight. - certain flapper valve steel, which is hardened and tempered, surface polished, and which meets the following characteristics: thickness: less than or equal to 1.0 mm; width: less than or equal to 152.4 mm; chemical composition: carbon content greater than or equal to 0.90 percent and less than or equal to 1.05 percent, by weight; silicon content greater than or equal to 0.15 percent and less than or equal to 0.35 percent by weight; magnesium content greater than or equal to 0.30 percent and less than or equal to 0.50 percent, by weight; phosphorus content of less than or equal to 0.03 percent, by weight; and sulphur content less than or equal to 0.006 percent, by weight; mechanical properties: tensile strength greater than or equal to 162 KgF/square mm; hardness greater than or equal to 475 Vickers hardness number; physical properties: flatness less than 0.2 percent of nominal strip width; microstructure: completely free from decarburization. Carbides are spheroidal and fine within 1 percent to 4 percent (area percentage) and are undissolved in the uniform tempered martensite; non-metallic inclusion: sulfide inclusion with area percentage less than or equal to 0.04 percent, and oxide inclusion with area percentage less than or equal to 0.05 percent; compressive stress: 10 to 40 KgF/square mm; surface roughness specifications: if thickness is less than or equal to 0.209 mm, will have roughness (RZ) less than or equal to 0.5 micrometer; if thickness is greater than 0.209 mm but less than or equal to 0.310 mm, will have roughness (RZ) of less than or equal to 0.6 micrometer; if thickness is greater than 0.310 mm but less than or equal to 0.440 mm , will have roughness (RZ) less than or equal to 0.7 micrometer; if thickness is greater than 0.440 mm but less than or equal to 0.560 mm, will have roughness (RZ) less than or equal to 0.8 micrometer; if thickness is greater than 0.560 mm, will have roughness (RZ) less than or equal to 1.0 micrometer. - certain ultra thin gauge steel strip, which meets the following characteristics: thickness less than or equal to 0.100 mm (+/- 7 percent), width: 100 to 600 mm; chemical composition: carbon content less than or equal to 0.07 percent by weight; manganese content greater than or equal to 0.2 but less than or equal to 0.5 percent by weight; phosphorus content less than or equal to 0.05 percent by weight; sulphur content less than or equal to 0.05 percent by weight; aluminum content less than or equal to 0.07 percent by weight; with the balance iron; mechanical properties: hardness equals full hard (HV 180 minimum); total elongation less than 3 percent; and tensile strength of 600 to 850 n/square mm. Physical properties: surface finish less than or equal to 0.3 micron; camber (in 2.0 m) less than 3.0 mm; flatness (in 2.0 m) less than or equal to 0.5 mm; edge burr less than 0.01 mm greater than thickness; and coil set (in 1.0 m) less than 75.0 mm. - certain silicon steel, which meets the following characteristics: thickness: 0.024 inch +/- 0.0015 inch; width: 33 inches to 45.5 inches; chemical composition: minimum silicon content of 0.65 percent, by weight, maximum carbon content of 0.004 percent, by weight, maximum manganese content of 0.4 percent, by weight; maximum phosphorus content of 0.09 percent, by weight, maximum sulphur content of 0.009 percent, by weight; maximum aluminum content of 0.4 percent, by weight. Mechanical properties: hardness of B 60-75 (aim 65); physical properties: smooth finish (30 - 60 microinches), gamma crown (in 5 inches) of 0.0005 inches, with measurement beginning one- quarter inch from slit edge; flatness of 20 i-unit maximum; coating of c3a - 0.08a maximum (A2 coating acceptable); camber (in any 10 feet) of one-sixteenth inch; coil size inside diameter of 20 inches. Magnetic properties: core loss (1.5t/60 HZ) NAAS of 3.8 watts/pound maximum. Permeability (1.5t/60 HZ) NAAS of 1700 gauss/oersted typical 1500 minimum. - certain aperture mask steel, which has an ultra-flat surface flatness and which meets the following characteristics: thickness: 0.025 mm to 0.245 mm; width: 381 mm - 1000 mm; chemical composition: carbon content of less than 0.01 percent, by weight, nitrogen content greater than or equal to 0.004 and less than or equal to 0.007 percent, by weight, and aluminum content of less than 0.007 percent, by weight. - certain annealed and temper-rolled cold-rolled continuously cast steel, which meets the following characteristics: chemical composition: carbon content of minimum 0.02 and maximum 0.06 percent, by weight; manganese content of minimum 0.20 and maximum 0.40 percent, by weight; maximum phosphorus content of 0.02 percent, by weight; maximum sulphur content of 0.023 (aiming 0.018 maximum) percent, by weight; maximum silicon content of 0.03 percent, by weight; minimum aluminum content of 0.03 percent, by weight and maximum 0.08 (aiming 0.05) percent, by weight; maximum arsenic content of 0.02 percent, by weight; maximum copper content of 0.08 percent, by weight; nitrogen content of minimum 0.003 percent, by weight and maximum 0.008 (aiming 0.005) percent, by weight. Non- metallic inclusions: examination with the S.E.M. shall not reveal individual oxides greater than 1 micron (0.000039 inch) and inclusion groups or clusters shall not exceed 5 microns (0.000197 inch) in length. Surface treatment as follows: the surface finish shall be free of defects (digs, scratches, pits, gouges, slivers, etc.) and suitable for nickel plating. Surface finish shall be extra bright with roughness, of 0 RA microinches (0 micrometers) to 7 RA microinches (0.2 micrometers) with an aim of 5 microinches (0.1 micrometers). - certain annealed and temper-rolled cold-rolled continuously cast steel, which meets the following characteristics: chemical composition: carbon content of less than 0.08 percent, by weight; silicon content of less than 0.04 percent, by weight; manganese content of less than 0.40 percent, by weight; phosphorous content of less than 0.03 percent by weight; sulfur content of less than 0.03 percent, by weight; aluminum content of 0.010 to 0.025 percent, by weight; nitrogen content of less than 0.0025 percent, by weight; additional properties: hardness of hv 85-110; matte surface; width tolerance of -0.0/+7 mm; annealed; tensile strength greater than 275n/square mm; elongation greater than 36 percent; thickness tolerance (guaranteed inside of 15 mm from mill edges) of +/-5 percent (aim of +/- 4 percent). - certain annealed and temper-rolled cold-rolled continuously cast steel, in coils, with a base weight of 55 pounds, which includes a certificate of analysis per cable systems international (CSI) specification 96012 and meets the following characteristics: chemical composition: maximum carbon content of 0.13 percent, by weight; maximum manganese content of 0.60 percent, by weight; maximum phosphorous content of 0.02 percent by weight; maximum sulfur content of 0.05 percent, by weight; additional properties: theoretical thickness of 0.0061 inch,+/- 10 percent of theoretical thickness; width of 31 inches; tensile strength of 45,000 to 55,000 psi; and elongation of a minimum of 15 percent in 2 inches. - certain full hard tin mill black plate, continuously cast, which meets the following characteristics: chemical composition: carbon content of minimum 0.02 percent, by weight and maximum 0.06 percent, by weight; manganese content of minimum 0.20 and maximum 0.40 percent, by weight; maximum phosphorus content of 0.02 percent, by weight; maximum sulphur content of 0.023 (aiming 0.018 maximum) percent, by weight; maximum silicon content of 0.03 percent, by weight; aluminum content of minimum 0.03 and maximum 0.08 (aiming 0.05) percent, by weight; maximum arsenic content of 0.02 percent, by weight; maximum copper content of 0.08 percent, by weight; nitrogen content of minimum 0.003 and maximum 0.008 (aiming 0.005) percent, by weight. Non-metallic inclusions: examination with the S.E.M. shall not reveal individual oxides greater than 1 micron (0.000039 inch) and inclusion groups or clusters shall not exceed 5 microns (0.000197 inch) in length. The surface finish shall be free of defects (digs, scratches, pits, gouges, slivers, etc.) and suitable for nickel plating. Surface finish shall be stone finish with roughness of 8 RA microinches (0.2 micrometers) to 24 RA microinches (0.6 micrometers) with an aim of 16 RA microinches (0.4 micrometers). - certain ultra-bright tin mill black plate meeting ASTM 7a specifications for surface finish and RA of seven micro-inches or lower. - concast cold-rolled drawing quality sheet steel, ASTM a-620-97, Type B, or single reduced black plate, ASTM A-625-92, Type D, T-1, ASTM A-625-76 and ASTM A-366-96, T1-T2-T3 commercial bright/luster 7A both sides, RMS 12 maximum. Thickness range of 0.0088 to 0.038 inches, width of 23.0 inches to 36.875 inches. - certain single reduced black plate, meeting ASTM A-625-98 specifications, 53 pound base weight (0.0058 inch thick) with a temper classification of T-2 (49-57 hardness using the Rockwell 30 T scale). - certain single reduced black plate, meeting ASTM A-625-76 specifications, 55 pound base weight, MR type matte finish, TH basic tolerance as per A263 trimmed. - certain single reduced black plate, meeting ASTM A-625-98 specifications, 65 pound base weight (0.0072 inch thick) with a temper classification of T-3 (53-61 hardness using the Rockwell 30 T scale). - certain cold-rolled black plate bare steel strip, meeting ASTM A-625 specifications, which meet the following characteristics: thickness: 0.0058 inch +/- 0.0003 inch; chemical composition: maximum carbon content of 0.13 percent, by weight; maximum manganese content of 0.60 percent, by weight; maximum phosphorous content of 0.02 percent, by weight; maximum sulfur content of 0.05 percent, by weight; mechanical properties: hardness: T2/hr 30t 50-60 aiming; elongation of greater or equal to fifteen percent; and tensile strength aiming for 51,000 psi +/- 4,000 psi. - certain cold-rolled black plate bare steel strip, in coils, meeting ASTM A-623, table ii, Type MR specifications, which meet the following characteristics: thickness: 0.0060 inch +/- 0.0005 inch; width of up to and including 10 inches +1/4 to 3/8 inch/-0; chemical composition: maximum carbon content of 0.13 percent, by weight; maximum manganese content of 0.60 percent, by weight; maximum phosphorous content of 0.04 percent, by weight; maximum sulfur content of 0.05 percent, by weight; mechanical properties: elongation of 15 percent in 2 inches, minimum; and tensile strength of 55,000 psi maximum. - certain "blued steel" coil (also know as "steamed blue steel" or "blue oxide") with a thickness and size of 0.30 mm x 0.42 mm and width of 609 mm to 1219 mm, in coil form. - certain cold-rolled steel sheet, whether coated or not coated with porcelain enameling prior to importation, which meets the following characteristics: nominal thickness: less than or equal to 0.019 inch; width of 35 inches to 60 inches; chemical composition: maximum carbon content of 0.004 percent, by weight; minimum oxygen content of 0.010 percent, by weight; and minimum boron content of 0.012 percent, by weight. - certain cold-rolled steel, which meets the following characteristics: chemical composition: maximum carbon content of 0.07 percent, by weight; maximum manganese content of 0.67 percent, by weight; maximum phosphorous content of 0.14 percent, by weight; maximum silicon content of 0.03 percent, by weight; physical and mechanical properties: width: 66 inches; thickness range of 0.800 to 2.000 mm; yield point (MPA) of 265 to 365; minimum tensile strength (MPA) of 440; and minimum elongation of 26 percent. - certain band saw steel, which meets the following characteristics: thickness less than or equal to 1.31 mm; width less than or equal to 80 mm; chemical composition: carbon content of 1.2 to 1.3 percent by weight; silicon content of 0.15 to 0.35 percent by weight; manganese content of 0.20 to 0.35 percent by weight; phosphorus content less than or equal to 0.03 percent by weight; sulphur content less than or equal to 0.007 percent by weight; chromium content of 0.30 to 0.5 percent by weight; and nickel content less than or equal to 0.25 percent by weight. Other properties: carbide: fully spheroidized having greater than 80 percent of carbides, which are less than or equal to 0.003 mm and uniformly dispersed; surface finish: bright finish free from pits, scratches, rust, cracks, or seams; smooth edges; edge camber (in each 300 mm of length) of less than or equal to 7 mm arc height; and cross bow (per inch of width) of 0.015 mm max. - certain transformation-induced plasticity (trip) steel, which meets the following characteristics: Variety 1: chemical composition: carbon content of 0.09 to 0.13 percent, by weight; silicon content of 1.0 to 2.1 percent, by weight; manganese content of 0.90 to 1.7 percent, by weight; physical and mechanical properties: thickness range of 1.000 to 2.300 mm (inclusive); yield point (MPA) of 320 to 480; minimum tensile strength (MPA) of 590; minimum elongation of 24 percent if 1.000 to 1.199 mm thickness range; minimum elongation of 25 percent if 1.200 to 1.599 mm thickness range; minimum elongation of 26 percent if 1.600 to 1.999 mm thickness range; and minimum elongation of 27 percent if 2.000 to 2.300 mm thickness range; Variety 2: chemical composition: carbon content of 0.12 to 0.16 percent, by weight; silicon content of 1.5 to 2.1 percent, by weight; manganese content of 1.1 to 1.9 percent, by weight; physical and mechanical properties: thickness range of 1.000 to 2.300 mm (inclusive); yield point (MPA) of 340 to 520; minimum tensile strength (MPA) of 690; minimum elongation of 21 percent if 1.000 to 1.199 mm thickness range; minimum elongation of 22 percent if 1.200 to 1.599 mm thickness range; minimum elongation of 23 percent if 1.600 to 1.999 mm thickness range; and minimum elongation of 24 percent if 2.000 to 2.300 mm thickness range; Variety 3: chemical composition: carbon content of 0.13 to 0.21 percent, by weight; silicon content of 1.3 to 2.0 percent, by weight; manganese content of 1.5 to 2.0 percent, by weight; physical and mechanical properties: thickness range of 1.200 to 2.300 mm (inclusive); yield point (MPA) of 370 to 570; minimum tensile strength (MPA) of 780; minimum elongation of 18 percent if 1.200 to 1.599 mm thickness range; minimum elongation of 19 percent if 1.600 to 1.999 mm thickness range; and minimum elongation of 20 percent if 2.000 to 2.300 mm thickness range. - certain corrosion-resistant cold-rolled steel, which meets the following characteristics: Variety 1: chemical composition: maximum carbon content of 0.10 percent, by weight; maximum manganese content of 0.40 percent, by weight; maximum phosphorous content of 0.10 percent, by weight; copper content of 0.15 to 0.35 percent, by weight; physical and mechanical properties: thickness range of 0.600 to 0.800 mm; yield point (MPA) of 185 to 285; minimum tensile strength (MPA) of 340; and minimum elongation of 31 percent (ASTM standard 31 percent equals JIS standard 35 percent); Variety 2: chemical composition: maximum carbon content of 0.05 percent, by weight; maximum manganese content of 0.40 percent, by weight; maximum phosphorous content of 0.08 percent, by weight; copper content of 0.15 to 0.35 percent, by weight; physical and mechanical properties: thickness range of 0.800 to 1.000 mm; yield point (MPA) of 145 to 245; minimum tensile strength (MPA) of 295; and minimum elongation of 31 percent (ASTM standard 31 percent equals JIS standard 35 percent); Variety 3: chemical composition: maximum carbon content of 0.01 percent, by weight; maximum silicon content of 0.05 percent, by weight; maximum manganese content of 0.40 percent, by weight; maximum phosphorous content of 0.10 percent, by weight; maximum sulfur content of 0.023 percent, by weight; copper content of 0.15 to 0.35 percent, by weight; maximum nickel content of 0.35 percent, by weight; maximum aluminum content of 0.10 percent, by weight; maximum niobium content of 0.10 percent, by weight; maximum titanium content of 0.10 percent, by weight; maximum vanadium content of 0.10 percent, by weight; maximum boron content of 0.10 percent, by weight; maximum molybdenum content of 0.30 percent, by weight; physical and mechanical properties: thickness of 0.7 mm; and elongation of greater than or equal to 35 percent. - certain porcelain enameling sheet, drawing quality, in coils, 0.014 inch in thickness, +0.002,-0.000, meeting ASTM A-424-96 type 1 specifications, and suitable for two coats. The merchandise subject to this investigation is typically classified in the HTSUS at subheadings: 7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0090, 7209.17.0030, 7209.17.0060, 7209.17.0090, 7209.18.1530, 7209.18.1560, 7209.18.2550, 7209.18.6000. 7209.25.0000, 7209.26.0000, 7209.27.0000, 7209.28.0000, 7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.23.1500, 7211.23.2000, 7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060, 7211.23.6085, 7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030, 7211.29.6080, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.19.0000, 7225.50.6000, 7225.50.7000, 7225.50.8010, 7225.50.8085, 7225.99.0090, 7226.19.1000, 7226.19.9000, 7226.92.5000, 7226.92.7050, 7226.92.8050, and 7226.99.0000. Although the HTSUS subheadings are provided for convenience and U.S. Customs Service ("U.S. Customs") purposes, the written description of the merchandise under investigation is dispositive. The Department received comments from a number of parties including importers, respondents, consumers, and the petitioners, aimed at clarifying the scope of these investigations. See Memorandum to Joseph A. Spetrini, January 18, 2000, for a list of all persons submitting comments and a discussion of all scope comments including those exclusion requests under consideration at the time of the preliminary determination in these investigations. Discussion of the Issues Non-Market-Economy Country Status The Department has treated the PRC as a nonmarket economy ("NME"') country in all past antidumping investigations (see, e.g., Final Determination of Sales at Less Than Fair Value: Certain Preserved Mushrooms from the People's Republic of China, 63 FR 72255 (December 31, 1998)). A designation as an NME remains in effect until it is revoked by the Department (see section 771(18)(C) of the Tariff Act of 1930, as amended ("the Act"). Since the Preliminary Determination, we have received no comments on this issue. Therefore, for this final determination, the Department is continuing to treat the PRC as an NME. Separate Rates The Department presumes that a single dumping margin is appropriate for all exporters in an NME country. See Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994). The Department may, however, consider requests for a separate rate from individual exporters. Baosteel requested a separate, company-specific rate. However, because Baosteel withdrew from verification prior to its conclusion, we were not able to verify information provided by Baosteel in support of its request for a separate rate and, thus, we have not considered Baosteel's request for a separate rate for this final determination. Therefore, for this final determination we have presumed that a single dumping margin is appropriate for all exporters of cold-rolled steel from the PRC. 3. PRC-Wide Rate Information on the record of this investigation indicates that there may be producers/exporters of the subject merchandise in the PRC, in addition to Baosteel, as noted in the petition and confirmed by the Department's own analysis of the import statistics in comparison to Baosteel's reported U.S. sales. Also, U.S. import statistics indicate that the total quantity of U.S. imports of cold-rolled steel from the PRC is greater than the total quantity of cold-rolled steel exported to the U.S. as reported by Baosteel. See Corroboration Memorandum to Edward Yang, Office Director from Robert Bolling and Karla Whalen, (December 28, 1999) ("Corroboration Memorandum"). Given this discrepancy, it appears that not all PRC exporters of cold-rolled steel responded to our questionnaire. Additionally, we could not verify Baosteel's questionnaire responses. Accordingly, we are applying a single antidumping rate - the PRC rate - to all exporters in the PRC, based on our presumption that the export activities of the companies that failed to respond to the Department's questionnaire, or for which the submitted data could not be verified (i.e., Baosteel), are controlled 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)). 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 this case, some PRC exporters of cold-rolled steel failed to respond to the Department's request for information. See Corroboration Memorandum. Also, although Baosteel initially responded to the Department's questionnaires, these responses could not be properly verified, given that Baosteel withdrew from verification prior to its conclusion. Specifically, on March 16, 2000, Mr. Chen Delin, Vice-Director of the Legal Department of Baosteel, advised the verifiers that Baosteel was terminating the verification as a result of competing demands on Baosteel's time. Additionally, counsel for Baosteel requested that the verifiers return all documentation that had been provided by Baosteel in support of the Department's review of certain areas of Baosteel's response. Therefore, the verification team immediately terminated the verification and returned all documents collected during the course of verification to Baosteel's counsel. See Verification Memorandum. Baosteel's withdrawal from verification, therefore, renders subsections 782(c)(1) and (e) inapplicable. Accordingly, we have determined that use of facts available is appropriate for this company. Furthermore, all firms that have not demonstrated that they qualify for a separate rate, including Baosteel and other PRC exporters of cold-rolled steel (see "PRC-Wide Rate" above), are deemed to be part of a single enterprise under the common control of the government ("the PRC enterprise"). For the Preliminary Determination, we applied facts otherwise available in accordance with section 776(a)(2)(A) and (C) for the PRC enterprise, which included all PRC exporters of cold- rolled steel other than Baosteel. Consequently, for the final determination, we have determined that the use of facts available continues to be applicable with respect to the PRC-wide rate. Section 776(b) of the Act provides that, in selecting from among the facts available, the Department may employ adverse inferences when an interested party fails to cooperate by not acting to the best of its ability to comply with requests for information. See also "Statement of Administrative Action" accompanying the URAA, H.R. Rep. No. 103-316, 870 ("SAA"). The statute and SAA provide that such an adverse inference may be based on secondary information, including information drawn from the petition. Because Baosteel withdrew from verification prior to its conclusion, we determine that this company failed to cooperate by not acting to the best of its ability and, thus, the use of adverse inference is warranted in selecting facts otherwise available. Additionally, we determine that certain PRC exporters of cold-rolled steel who did not respond to our questionnaire failed to cooperate by not acting to the best of their ability. For the Preliminary Determination, as facts available for the PRC enterprise, the Department applied the highest margin in the petition, as adjusted by the Department in its initiation notice. Accordingly, for the final determination we continue to determine that the use of an adverse inference is warranted in selecting facts available for the PRC enterprise. Consistent with the Department's practice in cases where the respondent refuses to participate, as adverse facts available, we have continued to apply, with respect to Baosteel and other non- responding PRC exporters, a margin based on the highest margin in the petition, as adjusted by the Department in its initiation notice. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Wire Rod from Germany, 63 FR 40433 (July 29, 1998). Section 776(c) of the Act provides that, when the Department relies upon "secondary information" in using facts otherwise available, such as the petition rates, the Department shall, to the extent practicable, corroborate that information from independent sources reasonably at the Department's disposal. The SAA states that "corroborate" means to determine that the information used has probative value. See SAA at 870. As discussed in the Preliminary Determination, the Department has, to the extent practicable, corroborated the information used as adverse facts available. Given that no interested parties have provided comments on the application of adverse facts available for the PRC enterprise in the Preliminary Determination, for the final determination, we are continuing to use, as adverse facts available, the highest margin in the petition, as adjusted by the Department in its notice of initiation. See Corroboration Memorandum. Comment 1: Petitioners argue that the Department must use total adverse facts available for Baosteel in making its final determination because Baosteel terminated verification prior to its conclusion. Citing section 782 of the Act, petitioners contend that the Department must verify all information relied upon in making a final determination. Petitioners continue that when this requirement cannot be satisfied, the Department must use facts available. To support their argument, petitioners cite section 776(a)(2) of the Act, Notice of Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products from Brazil, 65 FR 5554, 5561, 5567 (February 4, 2000) ("Cold-Rolled Steel from Brazil"), and Notice of Final Determination of Sales at Less Than Fair Value: Emulsion Styrene-Butadiene Rubber From Brazil, 64 FR 14863, 14864 (March 29, 1999) ("Emulsion Rubber from Brazil"). Additionally, petitioners maintain that section 776(b) of the Act provides that the Department may apply an adverse inference when a party has "failed to cooperate by not acting to the best of its ability" to comply with the Department's requests. Citing Cold-Rolled Steel from Brazil at 5567 and Emulsion Rubber from Brazil at 14863, petitioners assert that, in this case, by terminating verification, Baosteel failed to cooperate with the Department, and that the Department must apply an adverse inference in selecting the facts available margin. Petitioners argue that in selecting adverse facts available, the statute authorizes the Department to use information from the petition. See section 776(b)(1). They contend that it is the Department's practice, recently confirmed in Cold-Rolled Steel from Brazil, to use the highest margin from the petition as adverse facts available when the respondent withdraws from the investigation. Accordingly, petitioners argue that the Department should apply the highest margin from the petition, as adjusted by the Department in its notice of initiation, namely, 23.72 percent. Baosteel did not comment on this issue. Department's Position: We agree with petitioners. With respect to Baosteel, we find, for the reasons discussed above in the Facts Available section, that the use of total facts available with an adverse inference is appropriate. Accordingly, as adverse facts available, we determine to use the highest margin from the petition, as corroborated by the Department. Recommendation Based on our analysis of the comments received, we recommend adopting all of the positions set forth above and adjusting all related margin calculations accordingly. If these recommendations are accepted, we will publish the final determination and the final weighted-average dumping margins for all firms in the Federal Register. AGREE____ DISAGREE____ _______________________ Troy H. Cribb Acting Assistant Secretary for Import Administration _______________________ Date