66 FR 49625, September 28, 2001 A-485-806 Investigation Public Document G2O5: CDR/TRLV MEMORANDUM TO: Faryar Shirzad Assistant Secretary for Import Administration FROM: Bernard T. Carreau Deputy Assistant Secretary for Group II, Import Administration SUBJECT: Issues and Decision Memorandum for the Final Determination of the Antidumping Duty Investigation: Certain Hot-rolled Carbon Steel Flat Products from Romania Summary We have analyzed the case briefs and rebuttal briefs of interested parties for the final determination of this antidumping duty investigation covering certain hot-rolled carbon steel flat products (HRS) from Romania. Comments were received from the petitioners and the respondents. We recommend that you approve the positions we have developed in the Department Position sections of this memorandum. Background On May 3, 2001, the Department of Commerce (the Department) published the preliminary determination of the antidumping duty investigation of HRS from Romania. See Notice of Preliminary Determination of Sales at Less than Fair Value and Postponement of Final Determination: Certain Hot- Rolled Carbon Steel Flat Products from Romania, 66 FR 22194 (May 3, 2001) (Preliminary Determination). After analyzing allegations of ministerial errors in the preliminary determination by some of the petitioners, (1) we published an amended preliminary determination on June 6, 2001. See Notice of Amended Preliminary Antidumping Duty Determination of Sales at Less than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products from Romania, 66 FR 30411 (June 6, 2001) (Amended Preliminary Determination). The period of investigation (POI) is April 1 through September 30, 2000. The respondents in this case are: Sidex S.A. (Sidex), Sidex Trading SRL (Sidex Trading), Sidex International, Plc (Sidex Intl.), Metalexportimport, S.A. (MEI), Metanef, S.A. (Metanef) and Metagrimex Business Group, S.A. (Metagrimex) (collectively, the respondents). We verified the information submitted on the record by the respondents, and issued verification reports on August 2, 2001. On August 17 and 24, 2001, we received case briefs and/or rebuttal briefs, respectively, from the petitioners (2) as well as the respondents. Certain petitioners and the respondents requested a public hearing, which was held on August 28, 2001. List of Comments in the Issues and Decision Memorandum I. ISSUES SPECIFIC TO SIDEX Comment 1: Surrogate Statistics Comment 2: Labor Hours Comment 3: Electricity Comment 4: Acuterm and Quartz Sand Comment 5: Water Comment 6: Limestone Comment 7: Sulphuric Acid Comment 8: Ferromanganese Comment 9: Iron Lumps and Pellets Comment 10: Iron Slag Comment 11: Coke Comment 12: Caustic Soda Comment 13: Raw Tar Comment 14: Coal Powder Comment 15: Demineralized Water Comment 16: Manganese Ore Comment 17: Methane Comment 18: Furnace and Coke Gas Comment 19: Overhead, SG&A, Interest and Profit Ratios ISSUES SPECIFIC TO MEI Comment 20: Export Licenses Comment 21: Freight Terms ISSUES SPECIFIC TO METANEF Comment 22: Freight Terms GENERAL ISSUES Comment 23: Romania-Wide Rate Comment 24: Separate Rates for Metanef, MEI and Metagrimex Comment 25: Brokerage and Freight Comment 26: Barter Transactions Comment 27: Expenses Incurred from Imported Inputs from Market Economy Suppliers DISCUSSION OF ISSUES ISSUES SPECIFIC TO SIDEX: Comment 1: Surrogate Statistics The respondents argue that because it is the Department's longstanding policy to use contemporaneous data where possible, the Department should not use 1998 Egyptian data to value factors, as was done in the Department's preliminary determination. Rather, the Department should value factors using both 1999 and 2000 data from the Philippines. The respondents argue that the Egyptian surrogate data are aberrational and should be disregarded. Specifically, the respondents argue that where Filipino data are unavailable "the Department should rely on data from the United States or the European Union, or, if it chooses to rely on Egyptian data, to rely only on accurate 1999 data." See Rebuttal Case Brief submitted on behalf of the respondents, at 4 (August 24, 2001) (Respondents' Rebuttal Case Brief). Certain petitioners request that the Department use 1999 Egyptian United Nations Commodity Trade Statistics (UNCTS) data in the Final Determination. In the Preliminary Determination, the Department had utilized Egyptian values taken from 1998 UNCTS. See Case Brief submitted on behalf of Bethlehem Steel Corporation, LTV Steel Company, Inc., National Steel Corporation and United States Steel LLC, at 21 and 22 (August 17, 2001) (Bethlehem's Case Brief). Certain other petitioners also argue that the Department should reject the Philippines as the primary surrogate because the Philippines is no longer a "significant producer of comparable merchandise," as required by the statute at section 773(c)(4) of the Tariff Act of 1930, as amended (the Act). Specifically, they argue that with the closure, in November 1999, of National Steel Corporation, the Philippines' largest steel producer, the Philippines no longer produces a significant amount of hot- rolled steel. They argue that this fact alone disqualifies the Philippines as a superior surrogate to Egypt. See Rebuttal Case Brief submitted on behalf of Gallatin Steel Company, IPSCO Steel Inc., Nucor Corporation, Steel Dynamics, Inc., Weirton Steel Corporation and the Independent Steelworkers Union, at 3 (August 24, 2001) (Gallatin's Rebuttal Case Brief). They also argue that because the Department is unable to verify whether the quantity and value of imports used to calculate the Filipino data are accurate, the respondents' submitted Filipino data cannot be relied upon. See Notice of Final Determination of Sales at Less than Fair Value: Steel Concrete Reinforcing Bars from Moldova, 66 FR 33525 (June 22, 2001) (Issues and Decision Memorandum for the Final Determination), where the Department did not use data submitted on the record of the proceeding because the Department was unable to "determine whether the quantity and value of imports used to calculate values for these factors were the final adjusted figures . . . ." Furthermore, they argue that since neither the United States nor the EU were considered as potential surrogate countries, the Department should not use these prices as the benchmark for the Egyptian data. See Gallatin's Rebuttal Case Brief, at 6 and 7. Department Position: The Department will use, to the extent possible, prices or costs of factors of production for countries which are 1) at a comparable level of economic development to the non-market economy country and 2) significant producers of merchandise comparable to the subject merchandise. See 773(c)(4) of the Act. For purposes of the final determination, we find that Egypt remains the appropriate surrogate country for Romania. As stated in our preliminary determination, we used Egypt as the surrogate country for Romania because it provided surrogate value information for the factors of production and is a significant producer of products comparable to the subject merchandise. See Preliminary Determination and Amended Preliminary Determination. In our preliminary determination we used 1998 data obtained from the United Nations to value the factors of production. Since the preliminary determination, 1999 data, which are more contemporaneous to the period of investigation, have become available. Therefore, we agree with the petitioners that we should use 1999 UNCTS data to value factors for the final determination. When non-aberrational Egyptian information was unavailable, we used weighted-average unit values calculated from 1999 UNCTS data from Algeria, Ecuador and El Salvador. It was specifically noted that the Department would consider Algeria, Ecuador and El Salvador for surrogate value purposes as all three are at a comparable economic level to Romania. See Memoranda to Gary Taverman, Director, Office 5, from Jeffrey May, Director, Office of Policy, regarding the selection of surrogate countries (January 22, 2001 and March 30, 2001). We disagree with the respondents' argument that the Philippines should be used as the surrogate country for Romania. We agree with the petitioners that it is not the preferred surrogate country because the Filipino hot- rolled steel industry was in a precarious economic situation during the POI with its largest producer of steel, National Steel Corporation, liquidating its assets just after the close of the POI, October 2000. See Gov't Eyes NSC Foreclosure, ABS-CBN News (August 30, 2001), and SEC Orders Steel Firm's Liquidation, Philippine Daily Inquirer (October 4, 2000). Furthermore, and more importantly, while we agree that the Department prefers to value factors using the data most contemporaneous to the POI, the 1999 and 2000 data submitted by the respondents from the Philippines are lacking supporting published source documentation. Additionally, our preference is to value all factors of production in a single surrogate country, when possible. See section 351.408(c)(2) of the Department's regulations (". . . the Secretary normally will value all factors in a single surrogate country"). Therefore, we have determined that Egypt remains the appropriate surrogate country for Romania and have calculated the normal value, when possible, based on Egyptian surrogate values. Comment 2: Labor Hours Sidex argues that the Department should accept its methodology for reporting labor hours. Specifically, Sidex states that it has reported two distinct forms of labor: 1) labor attributable to specific production shops involved in the production of subject merchandise (e.g., cokery, steelmaking plant and the sintering plant) and 2) labor hours allocated to specific cost centers within production shops (e.g., quality control, laboratories and transportation). For example, Sidex has reported labor for any section of the flat-rolling plant that was involved in the production of subject merchandise, and did not report labor for sections involved in the production of other products (e.g., heavy plate, cold- rolled steel, welded pipe). However, Sidex did not report certain indirect hours attributable to specific lines in production, as it has categorized them as administrative. Certain petitioners allege that Sidex under-reported in its Section D Response the number of labor hours used in the production of the subject merchandise. The petitioners state that the "July Sidex Monthly Time Report" (Exhibit SD-18 of the Factors of Production Verification Report) obtained by the Department during verification suggests that Sidex reported only a portion of the total labor hours in the aforementioned response. Therefore, these petitioners propose that the Department increase Sidex's reported labor hours attributable to subject merchandise in order to account for all of the labor hours incurred by Sidex during the POI. See Bethlehem's Case Brief, at 16 and 17. Sidex argues that the petitioners' methodology forces it to report not only labor attributable to the subject merchandise, but labor associated with all of the company's merchandise. Sidex argues that its methodology "makes a thorough accounting of all the labor hours which are arguably associated with the production of subject merchandise." See Respondents' Rebuttal Case Brief, at 3. Therefore, Sidex states that, should the Department decide to adjust the labor factor, it should use Sidex's methodology. Certain petitioners argue that, should the Department decide not to include all unreported hours in Sidex's labor costs, the Department should at least include all hours which are labeled by the respondents as "arguably" related to the subject merchandise. See Rebuttal Brief submitted on behalf of Bethlehem Steel Corporation, LTV Steel Company, Inc., National Steel Corporation and United States Steel LLC, at 14 (August 24, 2001) (Bethlehem's Rebuttal Case Brief). Other petitioners argue that because these allocations weren't explained in detail until verification, the Department should make a facts available determination to value labor. They argue that "Sidex had ample opportunity to fully explain its direct labor and indirect labor accounting practices in questionnaire responses but did not do so." See Gallatin's Rebuttal Brief, at 6. Department Position: We agree with the petitioners in part. At verification, we determined that the respondents had reported only a portion of the labor hours, allocable to the subject merchandise, from all of the production shops involved in the production of the subject merchandise. We discovered at verification that additional labor hours pertaining to specific divisions within a production shop should have been reported. Further, we noted in our verification report that, "Sidex was unable to provide a clear rule by which it was able to explain the reasons for which it backed out {or did not include} certain labor from each production division." See Memorandum on the Sales and Factors of Production Verification of the Questionnaire Responses of Sidex S.A. and Sidex Trading SRL, in the Antidumping Duty Investigation of Certain Hot- rolled Carbon Steel Flat Products from Romania at 13 and Exhibit SD-18 (August 2, 2001) (Sidex Factors Verification Memorandum). Therefore, we agree with the petitioners that additional labor must be reported in order to account for these missing labor hours. Although certain petitioners have provided the Department with a methodology to calculate the unreported labor hours, we believe that this calculation would unfairly allocate to the merchandise under investigation a large portion of labor hours not attributable to the production of the subject merchandise, specifically hours attributable to heavy plate, welded pipe and cold-rolled steel production. Although the respondents have suggested a methodology for reporting the relevant unreported data, we believe their methodology only accounts for a portion of the labor hours not reported to the Department. Specifically, the respondents methodology accounts for missing labor from the flat-rolling mill, but does not take into account this labor associated with the other production divisions. See Case Brief submitted on behalf of the respondents at 4 (August 17, 2001) (Respondents' Case Brief). Through our analysis of Sidex's "July Sidex Monthly Time Report" at verification, we determined that Sidex neglected to report approximately 20 percent of the labor hours that should have been included in its original calculations for the flat-rolling mill. Furthermore we determined that the labor in question was not reported for any of the company's other production shops. Therefore, based on our analysis of the flat-rolling mill, we are increasing the labor hours for all of the production divisions in order to account for these unreported activities not only for the flat-rolling mill, but all of the production shops. We divided the number of hours that Sidex defined as arguably reportable for the flat- rolling mill by the total number of hours initially reported to the Department from this production shop, and applied this ratio to the total labor hours attributable to scope merchandise already submitted on the record to determine an augmented labor amount. We have not adjusted the labor hours to include hours attributable to Sidex's auxiliary shops such as transportation, quality control or laboratories. It is the Department's practice to treat these costs as a part of the surrogate overhead cost. Therefore, the Department's adjustment revises the data to include hours that should have been reported from the production shops, based on the detailed information provided to the Department for Sidex's flat-rolling mill. We believe that this is the most objective method available to augment the information already submitted on the record. Comment 3: Electricity Sidex argues that a portion of its electricity usage, associated with the raw material storage facilities, is attributable to a "kind of 'indirect' electricity not associated with the subject merchandise and need not be reported." See Respondents' Case Brief submitted, at 12; see, also, Respondents' Rebuttal Case Brief, at 3 and 28. The petitioners contend that Sidex's energy costs utilized in the constructed value computation should be increased by 10 percent. This argument is based on the fact that during verification the Department learned from Sidex that the amount of energy consumed in the production of the subject merchandise was under-reported by 10 percent. Sidex also argues that the information used to value electricity in the preliminary determination is no longer the most accurate information available. Sidex argues that the data used in the preliminary determination was draft data and has not been approved by the World Bank. See Respondent's Case Brief, at 37. They argue that the information they submitted on the record on July 2, 2001, provided by the U.S. Foreign Commercial Service, is more accurate and should be used to value electricity in the final determination. The petitioners argue that the information submitted by the respondents on July 2, 2001 should not be used to value electricity. According to the petitioners, this information is applicable to "Very High Voltage" users, and not "large industrial users" as the respondents have suggested. The petitioners state that the former "measures the intensity of electrical current" while the latter measures the wattage, or "the amount of current." See Bethlehem's Rebuttal Brief at 5. While the petitioners agree that Sidex is a large user of electricity, they assert that there is no reason to assume that Sidex is also a user of high voltage electricity. Therefore, the petitioners request that the Department continue to use the value they submitted which was obtained from World Bank data. In the absence of that, the petitioners suggest that the Department use the value for medium voltage users that use over 500 kilowatt hours per month, included in the price schedule submitted by the respondents. Department Position: We have confirmed that the data made available by the World Bank are draft data, while the data published by the U.S. Foreign Commercial Service (USFCS) are in their approved final form. Therefore, we agree with Sidex that the surrogate value for electricity it has submitted on the record is more reliable than that used by the Department in its preliminary determination. Furthermore, we believe that Sidex should be considered a "very high voltage" user due to the fact that its an integrated steel mill with energy-intensive operations similar to that of the energy-intensive operations of the aluminum factory referenced in the utility rates chart as a "very high voltage" user as published by the USFCS. We continue to believe, however, that Sidex should have reported a portion of the electricity associated with its raw material storage facilities, as was discovered at verification. According to company officials at verification, their failure to report this electricity was an oversight attributable to the fact that the energy consumption associated with the storage facilities is not normally allocated to any specific stage of production or any specific production divisions. See Sidex Factors Verification Memorandum, at 10. Therefore, we have increased the respondents' reported electricity value by a factor of 10 percent in order to account for the disparity we discovered at verification. See Factors Valuation Memorandum for the Final Determination from Christopher Riker and Tisha Loeper-Viti, Case Analysts, to Gary Taverman, Director, Office 5 at Exhibit G (September 17, 2001) (Factors Valuation Memorandum for the Final Determination). Comment 4: Acuterm and Quartz Sand Sidex argues that Acuterm and quartz sand should not be reported as raw material inputs. Sidex states that Acuterm is an "auxiliary material put in the casters and is used to regulate heat in the caster as well as to prevent oxidization." See Respondent's Case Brief at 12. Sidex further argues that, although parties are required to provide raw materials needed in the production of a unit of the subject merchandise, Acuterm and quartz sand are both indirect materials and, therefore, should be reported as part of overhead as was previously done in Brake Drums and Brake Rotors from the People's Republic of China. See Notice of Final Determination of Sales at Less Than Fair Value: Brake Drums and Brake Rotors from the People's Republic of China, 62 FR 9160, 9169 (February 28, 1997). The petitioners argue that the Department should calculate a value for both Acuterm and quartz sand because they "are direct materials used in the steel processing." See Gallatin's Rebuttal Case Brief, at 4. Specifically, they argue that because these materials are "not used to service equipment," but are "essential to the production process itself and consumed in that process," the Department should classify them as direct materials. The petitioners argue that quartz sand would not be incorporated in the surrogate value for overhead, and should be assigned a surrogate value. Furthermore, the petitioners argue that as an input into the production process to assist in the production of slag, a surrogate cost must be assigned to quartz sand to offset the credit that Sidex is receiving for monies received from the sale of slag as a by-product. Department Position: We agree with Sidex that Acuterm is an indirect material that does not become part of the subject merchandise nor part of a saleable by-product. Although this substance is applied directly to the subject merchandise, it is not incorporated into the steel, but instead is lost in further processing. Further, it is not a significant production input. For this reason, we did not assign Acuterm a surrogate value but will consider it part of overhead. Regarding assigning a value to quartz sand, we agree with the petitioners that "{i}n the brake drum case cited by Sidex, the molding materials used in the production of steel brake drums were treated as overhead because they were used to 'assist in the manufacturing process', {and} were not related to the actual transformation of the raw materials into {a} product." See Gallatin's Rebuttal Case Brief, at 4 and 5, see also Notice of Final Determination of Sales at Less Than Fair Value: Brake Drums and Brake Rotors from the People's Republic of China, 62 FR 9160, 9169 (February 28, 1997), and Notice of Final Determination of Sales at Less Than Fair Value: Steel Concrete Reinforcing Bars from the People's Republic of China, 66 FR 33522 (June 22, 2001) (Issues and Decision Memorandum Comment 5D). We noted at verification that quartz sand was incorporated into the production process in order to assist in the production of slag, a by-product. Therefore, we agree with the petitioners that this is something that would not normally be incorporated into overhead. However, the petitioners have not provided any information in their petition or suggestions in their case briefs on which the Department could base a value for quartz sand. Due to the absence of a value on the record with which to value quartz sand, and the fact that this input represents a small portion of the cost associated with making iron slag, a very low valued by-product, we have not assigned a value to this factor. Comment 5: Water Sidex argues that water should not be valued as a raw material, as the company has already reported the labor hours and electricity associated with obtaining the industrial water. Sidex argues that valuing water as an input would result in a "double-reporting" for this factor. See Respondent's Case Brief, at 14. Department Position: We agree that the Department should not value water as a raw material. At verification the Department was able to confirm that Sidex pumps water from the Danube and that the only cost incurred is in the form of a nominal tax, for the right to pump the water from the river. Since Sidex has reported the labor and electricity associated with pumping the water from the river, we believe that the proper costs associated with these activities have already been accounted for. Comment 6: Limestone Sidex argues that the value for limestone used by the Department in its preliminary determination is aberrational. Specifically, Sidex states that the Department based its value for limestone in the preliminary determination on only US$9,000 of imports into the Philippines. The respondents further argue that the 1999 Egyptian value submitted by the petitioners shows an even more aberrational value, approximately US$1,600 per metric ton based on 10 metric tons of imports, when compared with the US$171.64 per metric ton used in the preliminary determination. Sidex argues that antidumping margins of over 10 percent resulted from the Department's use of this aberrational value for limestone. Therefore, Sidex argues that the Department should value limestone on either U.S. or EU data. The petitioners argue that the Department should not use U.S. or European data for determining a value for Romanian limestone. They point out that the Department specifically rejected the use of U.S. or EU data for valuing Romanian limestone in the Administrative Review of Cut-To-Length Carbon Steel Plate from Romania. See Bethlehem's Rebuttal Brief, at 4. The petitioners request that the Department use the 1998 value they previously submitted for Egyptian limestone under the Harmonized Tariff Schedule of the United States (HTSUS) Code 2522 (Petitioners' March 23 Letter at Exhibit 2) which they claim is very similar to HTSUS Code 2521 for limestone designated by Sidex as the product consumed. Department Position: We agree with Sidex that the 1999 Egyptian value for limestone submitted by the petitioners appears to be aberrational. Although we agree with the petitioners that U.S. and EU data should not be used for valuing purposes as neither are appropriate surrogate countries for Romania, we have deemed the Egyptian value of US$1,600.00 per metric ton aberrational when compared to the surrogate value assigned in the Department's concurrent investigation of HRS from the People's Republic of China (US$17.62/MT based on Indian imports) and the value obtained from 5,127 metric tons of limestone imported into El Salvador during 1999 (US$72.31). Therefore, we are using the value of limestone from a second surrogate country, El Salvador. See Factors Valuation Memorandum for the Final Determination at Exhibit D. Comment 7: Sulphuric Acid In one of its submissions, Sidex presented data indicating the price it paid to a Bulgarian supplier for sulphuric acid. It then argued in its case brief that a proper surrogate value for sulphuric acid should be no more than US$25.00 per metric ton based on U.S. and EU import statistics placed on the record. Sidex contends that the information used by the Department for the preliminary determination, as well as the information submitted on the record by the petitioners for valuing sulphuric acid, is aberrationally high. Department Position: The Department has identified Bulgaria as a non- market economy, along with several other countries, in Carbon Steel Wire Rod from Poland: Preliminary Negative Countervailing Duty Determination, 49 FR 6768 (February 23, 1984). This identification was not changed in the final determination. See Carbon Steel Wire Rod from Poland: Final Negative Countervailing Duty Determination, 49 FR 19374 (May 7, 1984). Accordingly, the Department has determined that it is not appropriate to use the price Sidex paid to a Bulgarian sulphuric acid supplier to value this input. For the final determination, we have used 1999 Ecuadorian import data, which is more contemporaneous than the data used for the preliminary determination. The contemporaneous 1999 Egyptian import data, which shows a weighted-average price of approximately US$2,124.91 per metric ton, is aberrationally high when compared to 1999 Ecuadorian import statistics as well as U.S. and EU data. Therefore, we have valued sulphuric acid based on the non-aberrational Ecuadorian value. Comment 8: Ferromanganese Sidex argues, based on U.S. and Filipino import prices, that a proper surrogate value for ferromanganese would be approximately US$423.31 per metric ton. Sidex argues that the information used by the Department, as well as the information submitted on the record by the petitioners for valuing ferromanganese, is aberrationally high. Specifically, Sidex argues that the Department cannot turn to the 1999 Egyptian data submitted by the petitioners as it contains imports from Turkey that are over 1000 percent higher than the other prices on the record for this time period. See Respondents' Rebuttal Case Brief, at 37. Therefore, Sidex argues that the Department should value the input on U.S. data or, alternatively, on Filipino data. Department Position: We disagree with Sidex that either U.S. or Filipino data should be used in valuing ferromanganese as the United States is not being considered for surrogate purposes, and the Department was unable to obtain publicly available Filipino data. While Sidex submitted Filipino data on the record of this proceeding, this information lacked documentation substantiating its accuracy. However, we do agree with Sidex that the 1999 Egyptian imports of ferromanganese from Turkey appear to be aberrational as they are 11 times higher than the next highest weighted- average unit value. Therefore, we have removed the imports from Turkey, as well as those from non-market economy countries, from our calculation and have calculated a surrogate value of US$516.96 for ferromanganese based on the remaining Egyptian imports. See Factors Valuation Memorandum for the Final Determination at Exhibit D. Comment 9: Iron Lumps and Pellets Sidex argues that, not only should pellets and lumps be assigned the same surrogate value, but the surrogate value used by the Department in its preliminary determination was substantially higher than world prices, and should be revised accordingly. Sidex argues that the United States Geological Service (USGS) values iron ore at US$26.00 per metric ton. Sidex argues that since the Department used values from the USGS to value slag, the Department should either value iron lumps at the market economy price paid by Sidex, or use a surrogate value from a country such as the United States with which to value pellets. Department Position: While we have valued iron ore lumps based on Sidex's price paid to a market-economy supplier, we continue to value iron ore pellets using a surrogate value. Specifically, Sidex reported both of these as separate inputs added to the production of hot-rolled steel. Therefore, the price Sidex paid to market-economy suppliers for iron lumps has not been assigned to iron ore pellets. Regarding the surrogate value assigned to iron ore pellets, we have removed the data pertaining to imports from Norway because the value is aberrational. See Factors Valuation Memorandum for the Final Determination at Exhibit B and E. Comment 10: Iron Slag Sidex claimed that the Department has used an aberrational value for iron slag. Department Position: In an effort to use more contemporaneous data to value inputs for the final determination, we reviewed 1999 UNCTS data and determined that the 1999 value for Egyptian imports of slag appears to be aberrational based upon the small quantity of slag imported into Egypt (18 MT) when compared to the quantity imported into Algeria (approximately 161,000 MT). Therefore, we are using 1999 data from a secondary surrogate country, Algeria, to calculate a value for iron slag of US$31.20 per metric ton. See Factors Valuation Memorandum for the Final Determination at Exhibit F. Comment 11: Coke Sidex stated that the value used by the Department to value coke in the preliminary determination, as well as the 1999 Egyptian data submitted by the petitioners, is aberrational. Sidex has suggested that Filipino data of US$49.21 per metric ton would be a value which is reflective of existing market conditions. Department Position: We do not agree with Sidex that the 1999 Egyptian data is aberrational in its totality. However, after analyzing the data, we have determined that the imports from the United States into Egypt are priced aberrationally. The price per metric ton is approximately US$84,000, or approximately 210 times higher than the next highest weighted-average unit value. After removing these data, consistent with the Department's decision in Steel Wire Rope from the People's Republic of China and Chrome-Plated Lug Nuts from the People's Republic of China, we are left with information that is consistent and non-aberrational. See Notice of Final Determination of Sales at Less Than Fair Value: Steel Wire Rope from India the People's Republic of China, Notice of Final Determination of Sales at Not Less Than Fair Value: Steel Wire Rope from Malaysia, 66 FR 12759 (February 28, 2001) (Issues and Decision Memorandum for the Investigation of Steel Wire Rope from the People's Republic of China at Comment 1) (February 14, 2001) (SWR from the PRC), see, also, Chrome-Plated Lug Nuts from the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 63 FR 53872 (October 7, 1998) (Chrome-Plated Lug Nuts from the PRC). Therefore, we have valued coke based on the adjusted 1999 Egyptian weighted-average unit value of imports from Australia, Germany, Japan, Norway, Spain and the United Kingdom at US$147.95. For a more detailed calculation, see Factors Valuation Memorandum for the Final Determination at Exhibit D. Comment 12: Caustic Soda Sidex argues that the value used by the Department to value caustic soda, as well as the 1999 Egyptian data submitted by the petitioners, are aberrational. Sidex has suggested that Filipino data of US$56.11 per metric ton would be a value which is reflective of the international price of caustic soda. Department Position: First, we were unable to confirm the accuracy of the information presented by Sidex from the Philippines as we were unable to obtain support documentation for the figures presented on the record. Additionally, we do not agree with Sidex that the 1999 Egyptian data is aberrational in its totality. However, after analyzing the data, we have determined that the information related to a small amount of imports from Greece, Switzerland and the United Kingdom is aberrational. The weighted- average price per metric ton based on the imported material from these three countries is approximately US$4,600.00 compared to a weighted- average of imports from 12 other market-economy countries at US$396.30 based on a significantly greater quantity of imported caustic soda. After removing the aberrational data, consistent with the Department's decision in SWR from the PRC and Chrome-Plated Lug Nuts from the PRC, we have valued caustic soda based on the adjusted 1999 Egyptian weighted-average unit value of imports inflated to a value of US$419.90. For a more detailed calculation, see Factors Valuation Memorandum for the Final Determination at Exhibit D. Comment 13: Raw Tar Sidex argues that the Department valued raw tar in an incorrect manner. The company states that the Department erred in valuing raw tar at US$0.15 per metric ton when the data used by the Department to value raw tar was actually reported in liters. It further argues that this value conflicts with data it has submitted on the record and that raw tar should be valued at a minimum of US$160.28 per thousand liters. Department Position: We agree with Sidex. The data used by the Department in its preliminary determination were reported in liters and should have been converted to metric tons. However, as stated earlier, U.S. and EU data should not be used for valuing purposes as neither are appropriate surrogate countries for Romania. Therefore, we have valued raw tar at US$663.84 per metric ton based on 1999 Egyptian import statistics. For a more detailed calculation, see Factors Valuation Memorandum for the Final Determination at Exhibit F. Comment 14: Coal Powder Sidex argues that the Department should value injected coal powder based on its reported price of purchased coal powder from a market economy in its amended chart of April 6, 2001. See Respondents' Case Brief, at 32. Department Position: The Department agrees with Sidex and has valued coal powder based on the price the respondents paid to a market-economy supplier. As noted in our verification report, we reviewed various entries from the company's import journal, as well as customs documentation, invoices, and other related documentation to confirm the origin, value and quantity of reported market-economy purchases. Since we found no discrepancies with any information submitted on the record as it relates to market-economy purchases of coal powder, we are basing the value on the price Sidex paid to market-economy suppliers. Comment 15: Demineralized Water Sidex argues that no value should be assigned to demineralized water. The company argues that it is not directly used in the production process, nor is it an energy source, but rather it is an auxiliary material used to produce steam and is also used in the cokery. See Respondents' Case Brief, at 32. Sidex further argues that, as an auxiliary material, it should properly be reported as part of overhead. Sidex also states that, should a surrogate value be assigned to value demineralized water, it must be assigned based on an accurate HTSUS number. Sidex states that the water it used in its production receives a minor amount of filtering and does not fall under HTSUS 2201.90, which it argues clearly covers expensive drinking water. See Respondents' Case Brief, at 33. Further, Sidex states that, since it has obtained the water as an offset against sales of de-carbonated water, coke gas and furnace gas, the water should not have a cost associated with it. Department Position: In our verification report, we noted that Sidex provides coke gas and furnace gas to the on-site electrical facility in exchange for de-mineralized water. Furthermore, "Sidex informed us that it does not sell coke gas and furnace gas to any other entities." See Sidex Factors Verification Memorandum at 10. Therefore, we have not assigned a cost to the de-mineralized water, nor have we have assigned a credit to the sales of coke gas and furnace gas. Comment 16: Manganese Ore Sidex argues that the value it initially submitted on the record for a market economy purchase of manganese was inaccurate as it was reflective of a purchase of electrolytic manganese. The company states that the Department corroborated this information at verification, and should, in turn, assign a surrogate value to manganese ore. Further, Sidex argues that the cost of manganese ore is based on the grade of manganese within the ore. Specifically, the company argues that international prices demonstrate the prices for manganese ore, with a manganese content of less than 47 percent, are less than US$70.00 per metric ton, and the Department should value this input accordingly. See Respondents' Rebuttal Case Brief, at 31. Furthermore, Sidex argues that the surrogate value suggested by the petitioners is "based on a basket category that includes manganese ore of various concentration{s} and {is} based on a relatively small amount of imports." See Respondents' Rebuttal Brief, at 3. Finally, the company argues that the 1998 and 1999 data, provided by the petitioners, differs so greatly for Egypt that a non-aberrational value for the input cannot be ascertained from these data. See Respondents' Rebuttal Brief, at 31. The petitioners argue that a surrogate value should be used for costs incurred by Sidex for manganese ore. Whereas it was determined at verification that Sidex obtained all of its manganese ore domestically, the values for manganese that had been originally reported by Sidex as purchased from a market-economy supplier are not valid. Furthermore, the petitioners argue against using the surrogate values which have since been provided by Sidex. These values are based on U.S. imports of manganese ore and the petitioners assert that the United States is not an appropriate surrogate country for Romania. The petitioners claim that their information submitted on July 2, 2001, based on 1999 UNCTS data, are the best on record and should be used for the cost of manganese ore in the Department's constructed value. See Bethlehem's Case Brief, at 20. Department Position: We agree with Sidex that the initial information submitted on the record to value manganese ore, based on market-economy purchases of electrolytic manganese from the People's Republic of China, should not be used to value manganese ore for purposes of this investigation. See Sidex Factors Verification Memorandum, at 14. We confirmed at verification that Sidex is consuming manganese ore with a manganese content ranging from 20-30 percent. However, we disagree with Sidex that the Egyptian data from 1998 differs so significantly from the data for 1999 that it is unusable. We agree with petitioners that a surrogate value should be assigned to value the respondents' reported value for manganese ore and have used the inflated 1999 Egyptian weighted- average unit value of US$397.00, calculated from the UNCTS. The apparent aberrational character of the petitioners' data resulted from the fact that they erred in their unit value calculation in their March 23, 2001 submission. The weighted-average unit value for imports of manganese ore into Egypt during 1998 was actually approximately US$400.00, based on 674 metric tons of imports valued at a total of US$271,000. See surrogate values submission filed on behalf of the petitioners, at Exhibit 2 (March 23, 2001). Comment 17: Methane Sidex argues that the Department should value methane based on Egyptian data they submitted on July 2, 2001. In that submission, Sidex presented information valuing methane at approximately US$.04 per cubic meter. See Respondents' Case Brief, at 37. Sidex further argues that the information submitted by the petitioners is based on "a very large basket category that also includes propane, butanes, ethylenes and other types of gases." See Respondents' Rebuttal Case Brief, at 4. The petitioners argue that the Department should utilize the surrogate value for methane gas they provided in their March 23, 2001, surrogate value submission at Exhibit 2. They claim that the surrogate value for natural gas provided by Sidex does not include stamps, duties, and other government charges and, therefore, should not be used. See Bethlehem's Case Brief, at 21. The respondents, however, argue that "there is no proof on the record of any such charges." See Respondents' Rebuttal Case Brief, at 32. Department Position: As we have been unable to obtain a value for methane gas from the United Nations for 1999, we are basing our value on the information submitted by Sidex in its surrogate factor values submission of July 2, 2001. Although the petitioners submitted reliable and verifiable 1998 data from the United Nations for Egypt, we agree with respondents that the petitioners' information includes "propane, butanes, ethylenes and other types of gases" which includes gases not consumed by Sidex. Furthermore, it is the Department's practice, where available, to use the most contemporaneous surrogate import values that are free of any taxes. See Manganese Metal from the People's Republic of China: Final Results of Second Antidumping Administrative Review, 64 FR 49447 (September 13, 1999). Therefore, we are basing our value on the Egyptian non-household price for natural gas, from the Minister of Petroleum and effective January 1, 1998, which was provided by Sidex, and is the most accurate information on the record of this investigation. Comment 18: Furnace and Coke Gas Sidex argues that the Department should calculate values for both furnace and coke gas. To support its argument, Sidex refers to the Department's decision in its preliminary determination of sales at less than fair value in hot-rolled steel from the People's Republic of China, where both were valued in the Department's normal value calculations,. See Factors of Production Valuation for Preliminary Determination, Hot-rolled Steel from the People's Republic of China (A-570-865) (April 23, 2001). Furthermore, it argues that the Department verified that these products were sold, as noted in its verification report. The petitioners argue that the Department should disregard the value for furnace and coke gas provided by Sidex in its submission of July 2, 2001. The petitioners also argue that the respondents' surrogate information fails to define the quantity of furnace gas imported into the United States, nor does it permit the Department to confirm the accuracy of the information submitted on the record. Department Position: In our verification report, we noted that Sidex provides coke gas and furnace gas to the on-site electrical facility in exchange for de-mineralized water. Furthermore, "Sidex informed us that it does not sell coke gas and furnace gas to any other entities." See Sidex Factors Verification Memorandum at 10. Therefore, we have not assigned a cost to the de-mineralized water, nor have we assigned a credit to the sales of coke gas and furnace gas. See Department Position to Comment 15. Comment 19: Overhead, SG&A, Interest and Profit Ratios Sidex argues that the Department should base its ratios for overhead, SG&A, interest and profit on the financial statements from the Filipino pipe and tube industry submitted on the record by Sidex after the Department's preliminary determination. See Respondents' Rebuttal Case Brief, at 23. Sidex further argues that this information is comparable to the Romanian hot-rolled steel industry. In support, the respondents cite to Seamless Pipe from Romania where the Department determined that information from an Indonesian hot-rolled steel producer was comparable to the Romanian pipe industry. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Small Diameter Carbon and Alloy Seamless Standard, Line and Pressure Pipe from Romania, 65 FR 39125 (June 23, 2000). Sidex further argues that if the Department disregards the Filipino financial statements, and chooses to value surrogate financial ratios from Egyptian financial statements, it should use the Egyptian financial statements as the sole source for deriving the surrogate ratios. See Respondents' Rebuttal Case Brief, at 2. Sidex argues that the Department's policy and precedent mandate the use of financial statements without adding additional data which may skew the results. Specifically, Sidex argues that the Department has calculated overhead solely on depreciation where the data contained in the single financial statements were not as specific as preferred. See Titanium Sponge from Republic of Kazakhstan: Notice of Final Results of Antidumping Duty Administrative Review, 64 FR 66169 (November 24, 1999) as discussed in Titanium Sponge from Republic of Kazakhstan: Notice of Preliminary Results of Antidumping Duty Administrative Review, 64 FR 48793 (September 8, 1999), see also Steel Concrete Reinforcing Bars from Belarus: Final Results of Antidumping Duty Administrative Review, 66 FR 8329 (January 30, 2001), and Persulfates from the People's Republic of China: Final Results of Antidumping Administrative Review, 66 FR 42628 (August 14, 2001). The petitioners argue that it was inappropriate for the Department to calculate an overhead ratio for Sidex in its constructed value computation using only depreciation because there is also a significant non- depreciation component in overhead. See Bethlehem's Case Brief, at 12-14. The petitioners believe that a comprehensive overhead ratio was not utilized because the Department was unable to obtain one for the primary surrogate country. However, the petitioners contend, the Department should then turn to a second surrogate country's data in order to calculate an appropriate ratio, rather than omit an important aspect of the constructed value. See Notice of Final Determination of Sales at Less Than Fair Value: Beryllium Metal and High Beryllium from the Republic of Kazakhstan, 62 FR 2648 (January 17, 1997) (Beryllium from Kazakhstan). The petitioners further argue that the surrogate values provided by Sidex for three Filipino companies are not suitable for calculating overhead as these companies are not producers of integrated steel products. One of these companies is a wire and bar rolling mill and the other two are steel pipe welders. See Bethlehem's Case Brief, at 14, see also Gallatin's Rebuttal Case Brief, at 3. The petitioners point out that the Department had declined to use surrogate values from mini-mills in the concurrent investigation of Hot-Rolled Carbon Steel Flat Products from the People's Republic of China and contend that the Philippine companies are even less comparable to integrated steel producers than are mini-mills. The petitioners state that they have placed on the record financial statements from integrated steel producers in Indonesia, Turkey, and India which they claim the Department should utilize in order to calculate the non- depreciation component of overhead. Department Position: Although in the past the Department had determined that the hot-rolled steel industry is comparable to the pipe industry, we are not basing our surrogate values for financial ratios on the Filipino data because we have surrogate financial information on the record of this proceeding for fully integrated steel companies which produces HRS. We have continued to base the surrogate ratios on the financial statements of Alexandria Iron and Steel Company (AISC). To estimate AISC's amount of non-depreciation overhead expense we have calculated company- specific non-depreciation overhead rates (non-depreciation overhead amounts/cost of sales) from the financial statements of three other fully integrated HRS producers (Steel Authority of India Limited, the Tata Iron and Steel Company Limited and PT Krakatau Steel and Subsidiaries). We then took a simple average of the ratios for all three companies (8.08 %) and applied it to AISC's total cost of sales resulting in a non-depreciation value for AISC. We added the non-depreciation value for AISC to the depreciation and amortization amount taken from AISC's cost flow statement to obtain a total overhead value. We then divided the total overhead value by AISC's cost of sales minus total overhead value, resulting in an all- inclusive overhead ratio. Furthermore, we have continued to value SG&A, profit and interest on the AISC financial statements as was done in the preliminary determination. ISSUES SPECIFIC TO MEI: Comment 20: Export Licenses MEI not only argues that export licenses are granted automatically, consistent with the ordinance governing the importing-exporting system of goods, but the notations on the export license were simply a formality informing Romanian companies that they have an obligation to obey Romanian law. Furthermore, the respondents argue that the notation from the government recommending an improvement of the price represents "an informal 'recommendation' by a government bureaucrat." See Respondents' Case Brief, at 42. Since there is no evidence that the Government of Romania forced a price increase, but rather granted the export license based on the terms submitted, there is no evidence that the Government of Romania sets prices. Department Position: Although there is no evidence to support that the notation made on MEI's export license was "an informal 'recommendation' by a government bureaucrat," we agree with the respondents that there is also no evidence that the Government of Romania forced a price increase on this shipment. In fact, we noted that this shipment was processed based on the details laid out in the license and was not subject to any further review by the government. See MEI Verification Report at 3. Therefore, we agree with the respondents that there is no factual evidence on the record of this proceeding that the Government of Romania is involved in setting prices and determine that separate rates should be granted. Comment 21: Freight Terms The respondent argues that the Department incorrectly calculated a cost for barge freight for observation numbers 65 through 71 whose terms of delivery were FOB Galati. Therefore, the respondents argue that the Department should not calculate a freight cost for these observation numbers in its final determination. Department Position: Because the terms of delivery were on an FOB basis, we agree with the respondent and have not calculated freight costs for these observations. ISSUES SPECIFIC TO METANEF: Comment 22: Freight Terms The respondent argues that the Department incorrectly calculated a cost for barge freight for observation numbers 64 through 161 whose terms of delivery were FOB Galati. Therefore, Metanef argues that the Department should not calculate a cost for these observation numbers in its final determination. Department Position: Because the terms of delivery were on an FOB basis, we agree with the respondent and have not calculated freight costs for these observations. GENERAL ISSUES Comment 23: Romania-Wide Rate The respondents argue that there is no information on the record which demonstrates that any non-respondent had made shipments of HRS from Romania during the POI. The respondents argue that if "Sidex is the only producer of HRS from Romania and the Department verified that all Sidex- produced steel exports to the U.S. were reported, then there is no basis upon which to determine that not all exports were reported." See Respondents' Case Brief, at 47. The respondents further state that in cases where a margin was assigned based on facts available, the Department did so because there was information on the record suggesting that not all of the imported goods were accounted for by the respondents. Id. The petitioners argue that the Department should use adverse facts available in the calculation of the Romania-wide rate. They claim that there is no evidence on the record which adequately explains the discrepancy between U.S. Customs data and total sales reported by Sidex and its trading companies. See Bethlehem's Rebuttal Brief, at 20. Although the respondents argue that "{t}here is no evidence that the sales amounts reported by Sidex and the trading companies are less than the total for all of Romania," the petitioners cite to the Department's preliminary determination where the Department stated that "{c}ustoms data indicate that these exporters do not account for all of the exports of the subject merchandise to the United States during the POI." See Respondents' Case Brief, at 47, as well as Bethlehem's Rebuttal Brief, at 20. Because the petitioners argue that the respondents' speculations regarding the discrepancy between reported shipments and actual shipments are not supported by any factual analysis, and the customs data on the record indicate that the respondents do not account for all imports into the United States of subject merchandise from Romania, the Department must continue to base its Romania-wide rate on the facts available. See Bethlehem's Rebuttal Case Brief, at 20 and 21. Department Position: We agree with the petitioners that the respondents' speculations are not supported by any factual basis, and the data on the record indicate that the respondents do not account for all imports of subject merchandise from Romania. See Memorandum to the file from the case analyst, comparing total shipments during the POI with total sales reported by the respondents (April 19, 2001). Therefore, we continue to base the Romania-wide rate on the facts available. Comment 24: Separate Rates for Metanef, MEI, and Metagrimex The petitioners argue that Metanef, MEI, and Metagrimex should not receive separate rates due to the fact that they did not make any sales of subject merchandise during the POI. The petitioners claim that these companies were acting purely as sales agents on behalf of Sidex, and did not make any sales of their own. The petitioners reason that because Sidex did not sell the subject merchandise to Metanef, MEI, and Metagrimex, these trading companies could not have, in turn, made any sales themselves to U.S. customers. The respondents argue that the "exporters have established their independence of government control and meet the legal test entitling each of them to a separate antidumping rate." See Respondents' Rebuttal Case Brief, at 1. They argue that the reported sales were between the exporters and U.S. importers, and to assign a rate to a non-exporter (i.e., the producer) would contradict the Department's normal practices. The respondents further argued that the petitioners have ignored the facts that "{t}here is an invoice between the exporters and unrelated U.S. importers," that "{t}he exporters have the authority to negotiate and sign contracts," that "{t}he exporters were the official exporters of record" and that "{t}he exporters were paid directly by the importers." See Respondents' Rebuttal Case Brief, at 5. Thus, the respondents argue that these transactions easily satisfy the requirements of section 772(a) of the Tariff Act of 1930, as amended. Department Position: We agree with the respondents that the margins should be assigned to MEI, Metanef, Metagrimex as well as Sidex Trading and Sidex Intl. (jointly, the Sidex Exporters). First, consistent with the Department's determination in its Notice of Final Determination of Sales at Less Than Fair Value: Certain Small Diameter Carbon and Alloy Seamless Standard, Line and Pressure Pipe from Romania, 65 FR 39125 (June 23, 2000), as discussed in Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Small Diameter Carbon and Alloy Seamless Standard, Line and Pressure Pipe from Romania, 65 FR 5594 (February 4, 2000), the transfer between the producer and the exporter is between two companies located in Romania, in terms of physical location, place of incorporation and place of business. As discussed in other NME cases, we will not base export price on internal transactions between two companies located in the NME country. (See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Creatine Monohydrate From the People's Republic of China, 64 FR 71104, 71109 (December 20, 1999) and Fresh Garlic from the People's Republic of China: Final Results of Antidumping Duty Administrative Review and Partial Termination of Administrative Review, 62 Fed. Reg. 23758, 23759 (May 1, 1997).) Second, the facts of the record show that MEI, Metanef, Metagrimex, Sidex Trading and Sidex Intl. are the official exporters of record who enter into contracts with their foreign customers, and who negotiated prices with the U.S. customers, arranged for shipment, issued invoices to, and received payment in U.S. dollars from, the customers. These facts were confirmed during the Department's verification of the exporters, in the context of the Department's examination of the companies' sales processes and sales documentation. See exhibits MEI-7 through MEI-9 of the August 2, 2001, memoranda, Sales Verification of the Questionnaire Responses of Metalexportimport S.A. (MEI) in the Antidumping Duty Investigation of Certain Hot-rolled Carbon Steel Flat Products from Romania. See also exhibits MBG-6 and MBG-7 of the August 2, 2001, memorandum, Sales Verification of the Questionnaire Responses of Metagrimex Business Group, S.A. (Metagrimex) in the Antidumping Duty Investigation of Certain Hot- rolled Carbon Steel Flat Products from Romania; exhibits MN-8 and MN-9 of the August 2, 2001, memorandum, Sales Verification of the Questionnaire Responses of Metanef, S.A. (Metanef) in the Antidumping Duty Investigation of Certain Hot-rolled Carbon Steel Flat Products from Romania; exhibits ST- 9 and ST-10 of the August 2, 2001, memoranda, Sales and Factors of Production Verification of the Questionnaire Responses of Sidex S.A. and Sidex Trading SRL, in the Antidumping Duty Investigation of Certain Hot- rolled Carbon Steel Flat Products from Romania; and exhibits SI-7 and SI-8 of the August 2, 2001, memoranda, Sales Verification of the Questionnaire Responses of Sidex International, Plc (Sidex Intl.) in the Antidumping Duty Investigation of Certain Hot-rolled Carbon Steel Flat Products from Romania. Therefore, for the above-referenced reasons, we continue to assign the dumping margins to the exporters, not the producer of the subject merchandise. Comment 25: Brokerage and Freight The respondents argue that their submitted barge, train, trucking and brokerage charges, on July 2, 2001, serve as better surrogate values than the information used in the Department's preliminary determination. Specifically, the respondents argue that the information used in the preliminary determination, as submitted by the petitioners, was based on an e-mail from an unknown source and is unreliable. The respondents argue that the barge rate they have submitted is similar to the rates used in previous Romanian steel plate cases handled by the Department where Indonesia was used as a surrogate country. See Respondents' Case Brief, at 48. The petitioners state that the respondents' most recent barge freight calculations omit the cost of stevedoring. The petitioners argue that the Department should include stevedoring expenses in barge freight costs. See Bethlehem's Rebuttal Case Brief, at 7. The petitioners also argue that the Department should dismiss Indonesian values for freight in favor of Egyptian barge rates already on the record. Department Position: We agree with the petitioners that Indonesian barge rates should not be considered for valuing freight in this investigation. It was specifically noted that the Department would not consider Indonesia as a suitable surrogate for Romania in this proceeding. See Memorandum to Gary Taverman, Director, Office 5, from Jeffrey May, Director, Office of Policy, regarding the selection of a surrogate country (January 22, 2001). Furthermore, because the respondents have omitted the cost of stevedoring from their barge rate calculations, we deem the information used by the Department to value freight in its preliminary determination to be more comprehensive, and have therefore used this information for the Department's final determination as well. We noted in our factors of production memorandum for the preliminary determination that the information used in this proceeding to value both rail and trucking rates was accepted to value freight in the Department's prior investigation of Titanium Sponge from the Republic of Kazakhstan. See Factors of Production Valuation for Preliminary Determination Memorandum from Christopher Riker, Case Analyst, to Gary Taverman, Director, Office 5 (April 23, 2001), see also Titanium Sponge from the Republic of Kazakhstan: Final Results of Antidumping Duty Administrative Review, 64 FR 66169 (November 24, 1999), as discussed in Titanium Sponge from the Republic of Kazakhstan: Preliminary Results of Antidumping Duty Administrative Review, 64 FR 48793 (September 8, 1999) (Titanium Sponge from the Republic of Kazakhstan). Comment 26: Barter Transactions According to the petitioners, the use of barter transactions in calculating the respondents' rates would both violate the Department's regulations and be inconsistent with previous practice. In the case of valuing factors of production, the petitioners cite section 351.408 (c)(1) of the Department's regulations which states that "where a factor is purchased from a market economy supplier and paid for in a market economy currency, the . . . {Department} normally will use the price paid to the market economy supplier." The petitioners assert that in barter transactions, the factor is not "purchased" and it is not paid for "in a market economy currency," but in kind. Furthermore, the petitioners stress that in the fifth and sixth administrative reviews of Cut-to-Length Carbon Steel Plate from Romania, the Department declined to use barter transactions in its calculations. The petitioners also point out that Sidex has re-identified several transactions as cash transactions in its April 6 response which had originally been described as barter transactions in its February 26 submission and, therefore, argues that these transactions should not be used to value raw material purchases. The respondents argue, after first introducing the term in their questionnaire responses, that the term "barter transaction" is a misnomer. The respondents argue that MEI issued invoices for steel and received monies in accordance with those invoices, and the transactions are as simple as that. See Respondents' Case Brief, at 45, see also Respondents' Rebuttal Case Brief, at 2. Therefore, the respondents argue that the Department has an obligation to use MEI's prices as reported on the record. The petitioners argue that should the Department decide to assign separate rates to Metanef, MEI, and Metagrimex, it must disregard all barter transactions undertaken by these companies in the calculation of constructed value and export price. The petitioners claim that any nominal monetary values assigned by Sidex to barter transactions, even those with market economy producers, would be arbitrary. See Bethlehem's Case Brief, at 7. The respondents argue that purchases were made on a cash basis. See Respondents' Rebuttal Brief, at 2. They further argue, that as cash transactions, these purchases satisfy the Department's regulatory requirements and should be used to value the respective inputs. In fact, the respondents argue that the Department has recently accepted sales where part of the price was paid to the exporter and part of the price was paid to a supplier of raw materials. See Notice of Final Determination of Sales at Less than Fair Value: Solid Agricultural Grade Ammonium Nitrate from Ukraine, 66 FR 38632 (July 25, 2001), see also Notice of Final Determination of Sales at Less than Fair Value: Certain Preserved Mushrooms from Indonesia, 63 FR 72268, 73380 (December 31, 1998). Department Position: Although we agree with the petitioners that the respondents re-identified several purchases of raw materials as cash transactions which were originally described as barter transactions, we do not believe the Department should disregard all such parallel transactions undertaken by these companies in the calculation of constructed value and export price. We noted that cash was exchanged between the trading companies and the customers. See Sales and Factors of Production Verification of the Questionnaire Responses of Sidex S.A. and Sidex Trading SRL, in the Antidumping Duty Investigation of Certain Hot-rolled Carbon Steel Flat Products from Romania at 14 (August 2, 2001). The respondent simply mis-classified these sales in its initial responses; this became apparent at verification. Therefore, we have valued the raw materials that were purchased from market-economy suppliers at the respective prices paid by Sidex pursuant to the Department's regulations. Comment 27: Expenses Incurred from Imported Inputs from Market Economy Suppliers The petitioners argue that the all expenses, including commissions, incurred by Sidex for imports of raw materials from market-economy suppliers should be accounted for in the cost of inputs for the subject merchandise. The respondents argue that commissions represent a part of SG&A and thus should not be included in the surrogate values for material inputs in the Department's calculations. See Respondents' Rebuttal Case Brief, at 28. Department Position: We agree that the commissions represent a part of the company's surrogate SG&A figure. The Department has previously determined that commissions are standard selling expenses, and deemed all commission expenses to be included in SG&A. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China: Final Results of 1997-1998 Antidumping Duty Administrative Review and Final Results of New Shipper Review, 64 FR 61837 (November 15, 1999). Recommendation Based on our analysis of the comments received, we recommend adopting the above positions. If this recommendation is accepted, we will publish the final determination in the Federal Register. AGREE____ DISAGREE____ _________________________ Faryar Shirzad Assistant Secretary for Import Administration _________________________ Date _________________________________________________________________________ footnotes: 1. The petitioners who alleged ministerial errors were Bethlehem Steel Corporation, LTC Steel Company, Inc., National Steel Corporation, and United States Steel LLC. 2. The petitioners in this investigation are Bethlehem Steel Corporation, Gallatin Steel Company, IPSCO Steel Inc., LTV Steel Company, Inc., National Steel Corporation, Nucor Corporation, Steel Dynamics, Inc., United States Steel LLC, Weirton Steel Corporation, the Independent Steelworkers Union, and the United Steelworkers of America (collectively, the petitioners).