67 FR 35484, May 20, 2002 A-583-838 Investigation POI: 4/1/00 - 3/31/01 Public Document IA I/2: RT MEMORANDUM TO: Faryar Shirzad Assistant Secretary for Import Administration FROM: Richard W. Moreland Deputy Assistant Secretary, Group I Office of AD/CVD Enforcement DATE: May 13, 2002 SUBJECT: Issues and Decision Memorandum for the Antidumping Duty Investigation of Structural Steel Beams from Taiwan Summary We have analyzed the case and rebuttal briefs of interested parties in the investigation of sales at less than fair value of structural steel beams from Taiwan. As a result of our analysis, we have made changes in the margin calculations for the final determination. 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 from interested parties: Tung Ho Comment 1: Total Cost of Manufacturing Reconciliation Comment 2: Scrap Offset Comment 3: General and Administrative Expense Ratio Comment 4: Home Market Payment Dates Kuei Yi Comment 5: Interest Expense Comment 6: Correction to Interest Expense Ratio Comment 7: Rental Expenses Comment 8: Minor Correction to Rental Expenses Comment 9: U.S. Imputed Credit Expenses Comment 10: Correction of Clerical Error Background On December 28, 2001, the Department of Commerce (the Department) published the Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Structural Steel Beams From Taiwan, 66 FR 67202 (Preliminary Determination). We invited parties to comment on our preliminary determination. We received case briefs and rebuttal briefs from the petitioners and the respondents, Kuei Yi Industrial Co., Ltd. (Kuei Yi) and Tung Ho Enterprise Corp. (Tung Ho). No hearing was held in this investigation. The period of investigation (POI) is April 1, 2000, through March 31, 2001. Margin Calculations We calculated export price and normal value using the same methodology as stated in the preliminary determination, except as follows: Tung Ho 1. We corrected two clerical errors with respect to home market imputed credit. We corrected a typographical error in the interest rate, and deleted the variable WARRH from the IMPCREDH field. 2. We corrected a clerical error that subtracted the variable MUSPACK from the FUPDOL rather than adding it. Kuei Yi 1. We recalculated U.S. brokerage and handling expenses because the reported expense included bank charges. We created a separate variable for bank charges (BNKCHRG). Discussion of the Issues Tung Ho Comment 1: Total Cost of Manufacturing Reconciliation The petitioners argue that Tung Ho underreported its cost of manufacturing ("COM"); therefore, the Department should increase total COM by the percentage that Tung Ho was unable to reconcile adjusted cost of goods sold ("COGS") from the COM reconciliation worksheet to the submitted cost of production (COP)/constructed value (CV) cost file. The respondent argues that the difference between COGS and COM for the POI was due to rounding differences, because COGS consisted of weighted- average inventory amounts while the COM consisted of actual manufacturing amounts. Tung Ho notes that in its normal accounting, it calculates COGS based on the weighted-average inventory cost. Thus for purposes of reconciling the reported COMs, the COGS included some higher costs incurred prior to the POI. Due to this timing difference, Tung Ho argues that COM will be slightly lower than COGS as the Department determined at verification. Tung Ho maintains that the difference between COM and COGS is merely the result of rounding differences and the Department should not make an adjustment. Department's Position: We agree with the petitioners that Tung Ho was unable to reconcile the total adjusted COGS amount presented on the cost of manufacturing reconciliation worksheet to the submitted cost file at verification. See Tung Ho Cost Verification Report at 9. Tung Ho's explanation that the unreconciled difference relates solely to rounding differences is not supported by what we found at verification. Verification exhibit (Exhibit CVE A-2) references a methodological difference in addition to rounding differences. Because Tung Ho was unable to demonstrate that its total costs were absorbed by the product-specific costs, we increased total COM by the unreconciled difference. Comment 2: Scrap Offset The petitioners argue that the Department should not include as a cost offset scrap revenue from the re-sale of certain scrap inventory because the cost of this scrap was never included in the COM. The petitioners contend that, since Tung Ho's direct material cost was based on consumption rather than purchases, the Department should reduce the scrap offset by the re-sale stock revenue amount. The respondent argues that the re-sold purchased scrap at issue related to non-metallic materials which could not be used in the production of subject merchandise. Tung Ho states that it calculated the direct material per-unit cost based on all purchased materials inclusive of the non- metallic scrap. Therefore, in order to avoid an inflated direct material per-unit cost, Tung Ho states that it applied the entire scrap revenue offset inclusive of re-sold purchased scrap. Furthermore, Tung Ho claims to have excluded the entire scrap revenue amount from its other income offset in the general and administrative ("G&A") rate calculation. Therefore, Tung Ho asserts that the Department should allow its scrap revenue offset methodology. Department's Position: We agree with the petitioners that the scrap offset should relate to scrap generated from the production process and then sold rather than scrap purchased and then re-sold. Scrap that is purchased and then re-sold never enters the production process and thus the cost is never captured in the cost of manufacturing. Because the cost is never recorded, an offset should not be recorded. For the final determination, we reduced the scrap offset by the re-sale scrap revenue amount. Comment 3: General and Administrative Expense Ratio The petitioners argue for four adjustments to the G&A rate calculation. First, depreciation on two idled assets should be included. The petitioners assert that these idled facilities related to the production and distribution of steel, and are company-wide rather than product- specific expenses. Second, packing expenses should be removed from the COGS denominator. The petitioners state that because COM does not contain packing expenses, the G&A rate applied to COM should not be based on a COGS denominator inclusive of packing expenses. Third, the net foreign exchange gain on accounts receivable should be excluded. The petitioners argue that it is normal Department practice to exclude from the financial expense rate calculation, foreign exchange gains and losses on accounts receivable, citing to Notice of Final Determinations of Sales at Less Than Fair Value; Stainless Steel Bar from Italy, 67 FR 3155 (January 23, 2002) (Stainless Steel Bar from Italy) and accompanying Decision Memorandum at Comment 23. Fourth, the petitioners claim that premium amortization on forward contracts for raw material purchases should be included. The petitioners state that the forward premium amortization amount was unreported, as Tung Ho did not include it in the G&A rate calculation, nor does the record show that it was recorded elsewhere in the cost response. The petitioners argue that the Department should include the forward premium amortization amount in its recalculation of Tung Ho's G&A rate. Tung Ho argues that the Department should exclude depreciation on idled assets and include the net foreign exchange gains on accounts receivable. Tung Ho states that the first idled asset, a distribution center, was rented to one of its affiliates, and the associated rental income was excluded as an offset in the G&A rate calculation. Therefore, Tung Ho asserts, it is proper to exclude the depreciation expense associated with this facility. Furthermore, Tung Ho claims that its independent auditor reclassified this depreciation expense from G&A to another category. Tung Ho states that the second idled asset was related to steel-production equipment used solely for re-bar production, and has been idled since 1997. Tung Ho cites Certain Steel Concrete Reinforcing Bars From Turkey; Final Results of Antidumping Duty Administrative Review, 66 FR 56274 (November 7, 2001) (Re-bar from Turkey) and accompanying Decision Memorandum at Comments 11 and 16, as support for its claim for excluding depreciation related to equipment used in the production of non-subject merchandise. With regard to foreign exchange gains, Tung Ho contends that the Department must use the company's normal accounting practices unless it was shown that production costs were distorted as a result of these practices. See Final Determination of Sales at Less Than Fair Value: Polyethylene Terephalate Film, Sheet and Strip from the Republic of Korea, 56 FR 16305, 16312 (April 22, 1991). Tung Ho asserts that the net foreign exchange gain on accounts receivable was related to U.S. sales of subject merchandise and was, therefore, directly tied to the financial expense for the subject merchandise. Tung Ho contends that the net foreign exchange gain should be removed from the G&A rate calculation and incorporated in the financial expense rate calculation. Department's Position: For the final determination, we have recalculated Tung Ho's G&A expense rate to include depreciation on steel production idled assets, and to exclude the net foreign exchange gain on accounts receivable. We also subtracted packing expenses from the COGS denominator. We did not add an amount for the amortized forward premium, as this expense was already included in the G&A rate calculation before any adjustments. We also did not include depreciation expenses for the idled distribution center as explained below. In keeping with our general practice of including depreciation on idled assets as part of G&A (see Stainless Steel Bar from Italy at Comment 23), we included the depreciation expense on the idled assets associated with steel production. Although Tung Ho argues that this equipment was used only in the production of non-subject merchandise, these idled assets were used for steel production, an activity that continues at Tung Ho. Therefore, the idled assets represent a company-wide operational expense rather than a current manufacturing cost for specific products. Re-bar from Turkey at Comments 11 and 16, cited by Tung Ho is inapplicable because it refers to cost centers capturing depreciation expenses on a product-specific basis (i.e., overhead charges). In the instant case, in Tung Ho's accounting records, the idled assets depreciation amount was reflected in "other non-operating losses," an account that contained many company-wide miscellaneous charges rather than product-specific charges. We excluded from the G&A rate calculation the depreciation expense related to the idled distribution facility because of Tung Ho's handling of the rental income associated with this facility. Based upon our review of the unconsolidated audited financial statements, rental income is irrelevant to Tung Ho's core business, which is steel production and not property leasing, and was properly excluded from non-operating income in the G&A rate calculation analysis. We subtracted packing expenses from the COGS denominator as it is our normal practice to apply the G&A rate on the same basis as the COM (i.e., without packing expenses). See Notice of Final Results of Antidumping Duty Administrative Review: Certain Pasta from Italy, 65 FR 7349 (February 14, 2000). We excluded the net foreign exchange gain on accounts receivable because this net gain related to sales transactions. It is the Department's practice to differentiate between exchange gains and losses incurred through sales transactions and those incurred through manufacturing activities. We only include foreign exchange gains and losses on manufacturing activities. See Final Determination of Sales at Less Than Fair Value: Stainless Steel Bar From Italy, 67 FR 3155 (January 23, 2002) and accompanying Decision Memorandum at Comment 23. Comment 4: Payment Dates Tung Ho states that the Department incorrectly deducted 365 days from the payment dates reported for certain transactions, because it apparently felt that the payment dates for 167 home market transactions had been reported incorrectly. Tung Ho argues that the Department did not find at verification that any of these transactions had a payment date 365 days earlier than reported. Thus, the Department should use the original payment dates in its calculations for the final determination. Department's Position: We agree with Tung Ho that the payment dates as submitted are correct. We have used the original payment dates for the final determination. Kuei Yi Comment 5: Interest Expense For purposes of the preliminary determination, we revised Kuei Yi's interest expense ratio to include interest expenses Kuei Yi claimed were associated with loans resulting from the embezzlement of company funds and incurred during the POI. Kuei Yi argues that it appropriately reduced the total interest expenses by the amount of interest paid on loans that were taken out to cover embezzlement-related losses. According to Kuei Yi, these expenses were not incurred in the ordinary course of business and were not related to the production of the subject merchandise, but rather were incurred solely in response to the highly unusual and unforeseeable circumstance of embezzlement of company assets and funds. Kuei Yi contends that the Department's practice is to exclude expense items as extraordinary when the expenses are both "unusual in nature and infrequent in occurrence," citing Floral Trade Council v. United States, 16 CIT 1014, 1016-17 (1992). Kuei Yi also argues that the Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act (URAA) H.R. Rep. No. 103-316 at 832 (1994) states that "when an unforeseen disruption in production occurs which is beyond the management's control" the Department may ignore the additional costs incurred in determining the cost of production. Accordingly, Kuei Yi cites the Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Wire Rod from Taiwan, 63 FR 40461, 40467 (July 29, 1998) (Wire Rod), where the Department excluded respondent's flood damage loss from the calculation of COP and CV, noting that the flood and the damages resulting from the flood were beyond respondent's control. Similarly, in the Notice of Final Determination of Sales at Less Than Fair Value: Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, from Japan, 61 FR 38139, 38153 (July 23, 1996), Kuei Yi submits that the Department excluded from the CV calculation certain additional expenses incurred as a result of delivery accidents, irrespective of insurance coverage. Kuei Yi maintains that the circumstances in the instant investigation are unusual and unforeseen to the extent that they appear never to have arisen previously in any case before the Department, and as such may be distinguished from cases of losses due to bad weather where the Department has refused to exclude costs. According to Kuei Yi, these expenses were highly infrequent and non-recurring and, therefore, nothing about these extraordinary interest expenses reasonably reflected Kuei Yi's costs of production of the subject merchandise. Kuei Yi contends that the fact that these additional expenses were treated as interest expenses under Taiwanese GAAP does not address the issue of whether they were unforeseen and infrequent extraordinary costs within the meaning of the Department's practice. Also, Kuei Yi asserts that the Department has made it clear in previous cases that it is not required to follow local GAAP in cases where it does not accurately reflect the costs of the subject merchandise. Finally, Kuei Yi argues that to include these costs in the calculation would unnecessarily and unfairly distort the margin calculation. The petitioners argue that, regardless of Kuei Yi's claims that these expenses were not related to the production of subject merchandise, and were not in the ordinary course of business, this imputed interest offset is contrary to the statute. See, e.g., section 773(b)(3)(B) of the Act. According to the petitioners, the statute directs the Department to deduct "an amount for selling, general, and administrative expenses based on actual data pertaining to production and sales of the foreign like product. See, id. The petitioners submit that Kuei Yi's attempts to reconstruct what its interest expenses might have been is not based on actual data and, therefore, is not in accordance with the statute. Moreover, according to the petitioners, the statute also directs that, in calculating COP and CV, "costs shall normally be calculated based on the records of the exporter or producer of the merchandise, if such records are kept in accordance with the generally accepted accounting principles (GAAP) of the exporting country. . . " See, e.g., 773(f)(1)(A) of the Act. The petitioners claim that the record shows that Kuei Yi's financing costs reported in its audited financial statements were in accordance with Taiwanese GAAP, and its auditors rejected Kuei Yi's claims and treated all of its financing costs as ordinary operating expenses. (See Kuei Yi Sales and Cost Verification Report at 18). In addition, the petitioners claim that in several instances Kuei Yi misconstrued the verification report (e.g.,by insinuating that the Department verified its claimed offset and accepted its methodology). The petitioners argue that the Department is merely repeating Kuei Yi's claim rather than accepting its position. Moreover, the petitioners contend that Kuei Yi is proposing an "imputed" offset to its actual costs, which is contrary to the statute. See, e.g., section 773(b)(3)(B) of the Act. Thus, the petitioners believe the Department should disallow Kuei Yi's claimed "imputed" interest offset for the final determination because it is not in accordance with the statute. Department's Position: While we agree that the actual loss associated with the embezzlement, which is reported as an expense on Kuei Yi's audited financial statements, should be excluded in calculating Kuei Yi's COP and CV, we disagree that its actual financing costs should be reduced by a theoretical imputed amount associated with this loss. In effect, Kuei Yi wants the Department to allow it to offset its actual financing costs incurred by the theoretical opportunity cost of the lost capital. That is, Kuei Yi claims that had it not lost the capital due to the embezzlement scheme, it would not have had to borrow as much money to fund its general operations. This opportunity cost argument ignores the Department's normal practice of relying on actual costs as recorded by a company in its normal books and records. In addition, because money is fungible, the Department cannot, and does not, distinguish between funds borrowed to finance ordinary production operations and funds borrowed to cover other types of losses or expenses. Accordingly, based on our practice of including financing expenses on the activities of the entire corporate entity in our calculation of the financing expense rate, see Re-bar from Turkey at Comment 13 and Gulf States Tube Division of Guanex Corp. v. United States, 981 F. Supp. 630, 647-648 (CIT 1997), we included in the interest expense calculation the entire amount of interest Kuei Yi paid on loans regardless of their claimed purpose. We disagree with the respondent that these expenses should be treated as non-recurring expenses. Section 773(f)(1)(B) of the Act is clear that for non-recurring costs to be adjusted, those costs must benefit current and future periods. The interest expense at issue here does not benefit future periods. Comment 6: Correction to Interest Expense Ratio Kuei Yi asserts that, if the Department rejects its arguments set forth in Comment 5, above, the Department should correct a clerical error in the interest expense calculation which double-counted the portion of the interest expenses for which Kuei Yi had requested an exclusion. The petitioners agree with Kuei Yi that the Department incorrectly calculated the interest expense ratio for the preliminary determination. Department's Position: We agree with Kuei Yi and have corrected our calculation. Comment 7: Rental Expenses In its original section D response, Kuei Yi excluded from its overhead costs the rent associated with land that was adjacent to the production facility. However, at the Department's request, Kuei Yi included all rental expenses, including that associated with the land, in overhead expenses in its supplemental section D response. Accordingly, for purposes of the preliminary determination, we included all rental expenses in our overhead cost calculation. Kuei Yi argues that while it leased land to be used in the production of both subject and non-subject merchandise, it has developed and used only a small portion of that land in the production of subject merchandise, and the remainder of the leased property was never used. Kuei Yi further claims that the evidence is clear from the cost verification exhibits that it never intended to use the additional land for the production of subject merchandise. Kuei Yi maintains that its application for return of the excess leased land was approved by the Taichung Harbor Bureau on October 11, 2001. Kuei Yi reasons that rental expenses associated with land that is not used in the production of subject merchandise cannot be considered as reasonably reflecting the cost of production of the subject merchandise and, therefore, should not be included in the cost of manufacture of that merchandise. Accordingly, for purposes of the final determination, Kuei Yi advocates the use of the rental expenses as reported in its original section D response. The petitioners argue that the Department correctly treated Kuei Yi's land lease costs as being related to subject merchandise. The petitioners point out that, with the exception of a small quantity of billets, Kuei Yi does not produce anything but subject merchandise. In addition, the petitioners maintain that Kuei Yi's argument for disregarding part of its rental expenses during the POI ignores the "matching" principle in accounting in two respects. First, expenses are matched to the sales that generate them. Since Kuei Yi only produced and sold subject merchandise, the petitioners argue that there are no other sales to which these expenses can be allocated. Second, Kuei Yi's argument contradicts the "matching" principle with respect to timing because the change in its lease conditions is outside the POI as well as outside Kuei Yi's cost reporting period. Therefore, the petitioners state, the Department should continue to treat these expenses as being solely attributable to the subject merchandise. Department's Position: We agree with the petitioners. As verified, Kuei Yi produced and sold only subject merchandise during the POI. See Memorandum from Kate Johnson and Rebecca Trainor re: Sales and Cost of Production Verifications in Taichung, Taiwan of Kuei Yi Industrial Co., Ltd. (Kuei Yi) in the Investigation of Structural Steel Beams from Taiwan, at 2 (April 8, 2002) (Kuei Yi Verification Report). Thus, all of the expenses incurred during the POI are associated with merchandise under consideration. Although Kuei Yi changed its lease conditions subsequent to the POI, it incurred leasing expenses on both the portion of the land in use and the unused portion during the POI. See Kuei Yi Verification Report at 1. Therefore, we have continued to include the entire land lease expense incurred during the POI in our calculation of overhead. Comment 8: Minor Correction to Rental Expenses Kuei Yi argues that, regardless of whether the Department determines to eliminate rental expenses incurred for land rented for the production of non-subject merchandise, as discussed above in Comment 7, the Department should reduce the total rental expense to reflect a minor correction made at verification. Kuei Yi maintains that the Department verified that it received a refund on its lease payments to its landlord and, therefore, for the final determination, the Department should reduce Kuei Yi's rental expenses by this amount. The petitioners argue that because this claimed rebate is both beneficial to Kuei Yi and was granted after the date on which the petition was filed, the Department should disallow it for the final determination. The petitioners disagree that the requested adjustment, which was first presented at verification, is a minor correction to data previously submitted, and submit that it should have been presented in the context of a questionnaire response rather than at verification. The petitioners further argue that because the adjustment is not entirely related to Kuei Yi's reporting period, it would not be appropriate to offset expenses that were not reported in the first place by deducting the entire amount of the refund. Finally, the petitioners maintain that the POI-specific portion of this adjustment is de minimis, and the Department should use its discretion to disregard it under section 777A(a)(2) of the Act (as further defined in 19 CFR 351.413). Department's Position: The Department recognizes income as an offset to specific costs when that income can be directly traced to those costs in the company's financial statements. See Notice of Final Determination of Sales at Less Than Fair Value: Structural Steel Beams from South Korea, 65 FR 41437 (July 5, 2000) and accompanying Decision Memorandum at Comment 27 (Structural Steel Beams from Korea). The refund in question was presented at verification in the form of a statement from the Port Authority, however, we did not see evidence that the funds had been received and recorded in Kuei Yi's accounting records as an offset to lease expenses. Therefore, we have declined to make this adjustment for the final determination. Comment 9: Calculation of U.S. Imputed Credit Expenses For purposes of the preliminary determination, Kuei Yi reported as credit expenses either the amount of negotiation interest it paid for letters of credit, or an imputed credit amount, if there was no negotiation interest incurred for the sale. When imputing credit expenses, Kuei Yi used the interest rates noted on the letters of credit where negotiation interest was incurred. The petitioners argue that Kuei Yi's methodology is flawed on two accounts. First, the petitioners cite "Import Administration Policy Bulletin No. 98.2 re: Imputed Credit Expenses and Interest Rates" (February 23, 1998) in support of their contention that in instances where the respondent had no borrowings in the same currency as the sale, the Department will use "the Federal Reserve's weighted-average rate for commercial and industrial loans maturing between one month and one year from the time the loan is made." The petitioners maintain that Kuei Yi's methodology is not consistent with that policy. Second, the petitioners contend that Kuei Yi reported certain direct selling expenses (i.e., bank fees or negotiation interest) in the imputed credit expenses field. Accordingly, for purposes of the final determination, the petitioners submit that the Department should recalculate Kuei Yi's imputed credit expenses using the appropriate Federal Reserve rate and treat the bank fees/negotiation interest as direct selling expenses. Kuei Yi argues that there is no support either in the evidence on the record or Department practice for the petitioners' argument that the Department treat the reported credit expenses on U.S. sales as direct selling expenses, while also calculating an imputed credit expense to cover the same cost of accounts receivable for the same period between shipment and payment. Kuei Yi maintains that the Department fully verified the accuracy of its U.S. credit expenses and found no discrepancies. Moreover, according to Kuei Yi, its practice of selling pursuant to letters of credit means that it does not have outstanding accounts receivable and, therefore, does not incur opportunity costs associated with accounts receivable, on many of its sales. Instead, Kuei Yi contends that it pays negotiated interest to the bank to cover the bank's cost in financing the transaction. In addition, Kuei Yi submits that its manner of reporting credit expenses results in the calculation of exactly the same expenses as would be determined under Department policy in a normal case where the seller incurred an imputed cost to finance the transaction, rather than reimbursing the bank for the actual cost of doing so. According to Kuei Yi, the time between the date of negotiation of the letter of credit and the date on which the bank is reimbursed by the issuing bank is the same as the time between date of shipment and date of payment on which the Department normally calculates credit expenses. Furthermore, Kuei Yi asserts that the rate at which the banks charged interest on the outstanding letters of credit is determined in exactly the same manner as the type of short-term borrowing rate on which the Department normally calculates credit expenses. Finally, Kuei Yi objects to the petitioners' attempted distinction that imputed credit expenses represent the opportunity cost of not receiving payment at the time of shipment while the negotiated interest on the letters of credit are "actual cash expenses related to Kuei Yi's cash collection process." Kuei Yi argues that to make two adjustments for the same cost would result in a double-counting of these expenses. Accordingly, Kuei Yi contends that the Department should reject the petitioners' argument and rely on its U.S. credit expenses as reported and verified. Department's Position: The negotiated interest expense is an actual credit expense incurred by Kuei Yi to cover the period between when Kuei Yi received payment from its Taiwanese bank and when that bank was reimbursed by the U.S. bank issuing the letter of credit. There still remains a period of time, however, between when Kuei Yi shipped the goods to its customers and when Kuei Yi received payment for those goods from its bank. The opportunity cost associated with the loss of the use of the monies involved is quantified by the imputed credit expense. Because the two time periods do not overlap, credit costs are not double-counted as Kuei-Yi claims. Therefore, for the final determination, we imputed credit for all U.S. sales, and treated the negotiated interest expense as a direct selling expense. See Structural Steel Beams from Korea at Comment 31. As Kuei Yi had no short term dollar borrowings during the POI, we used the average interest rate published by the Federal Reserve for the POI. Comment 10: Correction of Clerical Error Kuei Yi argues that the Department's preliminary computer program failed to convert U.S. credit expenses to U.S. dollars, leading to the inflation of normal value. The petitioners did not comment on this issue. Department's Position: We agree with Kuei Yi that our preliminary computer program contained a clerical error in the calculation of U.S. credit expenses. However, based on information obtained at verification, we have not used the reported U.S. credit expenses for purposes of the final determination. At verification, we determined that Kuei Yi reported either negotiation interest or imputed credit for U.S. credit expenses. For purposes of the final determination, we imputed U.S. credit expenses for all sales, in accordance with our normal methodology, and treated negotiation interest as a direct selling expense. See Comment 9, above. RECOMMENDATION Based on our analysis of the comments received, we recommend adopting all of the above positions and adjusting all related margin calculations accordingly. If these recommendations are accepted, we will publish the final determination in the Federal Register. Agree ______ Disagree ______ ______________________ Faryar Shirzad Assistant Secretary for Import Administration ______________________ (Date)