IN THE MATTER OF:
Oil Country Tubular Goods from
Mexico; Final Determination of Sales
At Less Than Fair Value
DECISION OF THE PANEL
REVIEWING THE FINAL DETERMINATION OF THE INTERNATIONAL TRADE ADMINISTRATION,
U.S. DEPARTMENT OF COMMERCE
July 31, 1996
Before: Harry B. Endsley (Chairman)
Héctor Cuadra y Moreno
Frank G. Evans
Daniel G. Partan
Charles Owen Verrill, Jr. and John R. Shane, Wiley, Rein & Fielding,
on behalf of the Petitioner, North Star Steel Ohio. With them on brief
were Alan H. Price and Peter S. Jordan.
Linda S. Chang, Attorney-Advisor, Office of the Chief Counsel for Import
Elizabeth C. Seastrum, Senior Counsel for Countervailing Duty Litigation,
Office of the Chief Counsel for Import Administration, on behalf of the
Investigating Authority, the International Trade Administration, U.S. Department
of Commerce. With them on brief was Stephen J. Powell.
Christopher F. Corr and Richard King, White & Case, on behalf of
the Respondent, Tubos de Acero de México, S.A. With them on brief
were David P. Houlihan, Richard J. Burke and Kristina Zissis.
TABLE OF CONTENTS
II. STATEMENT OF FACTS
A. General Background
III. STANDARD OF REVIEW
IV. SUMMARY OF PANEL DECISION
B. The Final Determination
C. Facts Pertinent to the Challenges to the Final Determination
1. Calculation of Financial Expense
2. Calculation of General and Administrative (G&A) Expense
3. Allocation Methodology for Nonstandard Costs
4. Offset for Non-Operating Income
A. Calculation of Financial Expense
VI. REMAND ORDER
B. Calculation of General and Administrative (G&A) Expense.
C. Allocation Methodology for Nonstandard Costs
D. Offset for Non-Operating Income
OPINION AND ORDER OF THE PANEL
This Binational Panel ("Panel") was constituted under Article 1904(2)
of the North American Free Trade Agreement ("NAFTA" 1)
and Title IV of the North American Free Trade Agreement Implementation
Act 2 in response to
a request for panel review of the Final Determination of Sales at Less
Than Fair Value: Oil Country Tubular Goods from Mexico ("Final Determination")
made by the International Trade Administration of the U.S. Department of
Commerce ("the Department") on June 28, 1995. 3
In the Final Determination, the Department determined that oil country
tubular goods ("OCGT") 4
from Mexico are being, or are likely to be, sold in the United States at
less than fair value, as provided in Section 735 of the Tariff Act of 1930,
as amended (the "Act"). The period of investigation ("POI") was specified
as the six-month period commencing January 1, 1994 and ending June 30,
The Request for Panel Review was filed by Tubos de Acero de México,
S.A. ("TAMSA"), the sole Mexican respondent in the underlying investigation,
on July 25, 1995. 6 Complaintís 7
contesting certain aspects of the Final Determination were then filed on
August 25, 1995 by both TAMSA 8
and North Star Steel Ohio, a division of North Star Steel Company ("North
Star") 9 who was the
Petitioner in the underlying investigation. For purposes of Rule 7 of the
Rules of subheadings of the Harmonized Tariff Schedule of the United States,
which were listed in full in the Final Determination. Id., at 33568. Procedure
for Article 1904 Binational Panel Review ("Panel Rules"), the Panel finds
that the allegations of errors of fact and law set forth in the Complaints
are adequate to permit panel review of such allegations. 10
In the Final Determination, the Department calculated the estimated
final dumping margin for TAMSA and "all others" to be 23.79 percent (weighted
Accordingly, this was the rate that the Department directed the U.S.
Customs Service to apply against TAMSA and "all others" in the Departmentís
Antidumping Duty Order, published on August 11, 1995. 12
II. STATEMENT OF FACTS
A. General Background
At the administrative level, this case began on June 30, 1994 when North
Star filed with the Department its Petition for the Imposition of Antidumping
Duties Pursuant to Sections 731 and 732(b) of the Act. 13
On July 20, 1994, the Department concluded that the Petition met the
requirements of Section 732(b) of the Act and of 19 CFR § 353.12 and
formally initiated its investigation of OCTG from Mexico. 14
Discovery by the Department commenced on August 26, 1994 when the Department
issued an antidumping questionnaire to TAMSA. 15
This antidumping questionnaire consisted of a 4- page cover letter,
a separate page identifying, inter alia, the official in charge and the
POI, and all four sections of the standard questionnaire, Sections A, B,
C and D. 16
The cover letter requested that TAMSA respond "in full" to the antidumping
questionnaire, indicating that the response to Section A "must be received
no later than September 9, 1994" and that the responses to the remaining
sections "must be received no later than September 23, 1994." 17
Elsewhere in the cover letter, the Department cited statutory time constraints
as compelling TAMSAís response "by the due dates noted above" and emphasized
at another point that the requested information should be provided "within
the required time period." 18
In addition, the Department expressly noted that "if the response is
not submitted in a timely fashion, we may have to make our determination
on the basis of the best information available." 19
Having asked for and received an extension of time. 20
TAMSA presented its response to Section A of the Departmentís questionnaire
on September 23, 1994. 21
Similarly 22 TAMSAís
Section C response was submitted to the Department on October 11, 1994, 23
and its Section B response was submitted on November 18, 1994. 24
Based on TAMSAís Section A response, the Department decided to issue
its standard Section E questionnaire (costs associated with further processing
operations in the United States), which occurred on September 27, 1994. 25
The cover letter to this request required that TAMSA respond in full
"no later than 5:00 p.m. on October 27, 1994." Based upon an approved extension
of time, TAMSA filed its Section E response on November 10, 1994. 26
On October 3, 1994, the Department issued the first of three requests
concerning particular issues: home market viability, extending the period
of investigation, and third country sales 27
TAMSA filed its responses to these requests on October 4, 1994, October
7, 1994, October 17, 1994, October 31, 1994, and January 4, 1995. 28
Subsequently on October 20, 1994, the Department issued a deficiency
questionnaire 29 posing
various questions concerning TAMSAís Section A response and requiring that
the response to this deficiency questionnaire "must be received no later
than 5:00 p.m., November 3, 1994." 30
TAMSA filed its Section A deficiency response on this date. 31
On December 7, 1994, having found various deficiencies in TAMSAís Sections
B and C responses, the Department issued another deficiency questionnaire 32
which was required to be submitted "no later than 5:00 p.m. on December
21, 1994." 33
Having received an approved extension of time, TAMSA filed its Sections
B and C deficiency responses on December 30, 1994. 34
On December 28, 1994, the Department informed TAMSA that, based on Petitionerís
November 29, 1994 sales below cost of production allegation 35
it was initiating a cost-of-production ("COP") investigation. 36
The Department enclosed Section D of the questionnaire 37
and required that it be responded to "no later than 5:00 p.m. on Wednesday,
January 25, 1995." 38
The Section D questionnaire requested combined COP and constructed value
("CV") data. Having received an approved extension of time, TAMSA submitted
its Section D response on February 1, 1995. 39
On February 3, 1995, the Department issued a deficiency questionnaire
with respect to TAMSAís Section E response, as well as its Sections B and
C responses 40 and
required this deficiency response to be submitted "no later than 5:00 p.m.
on Friday, February 17, 1995." 41
Finally, on February 10, 1995, the Department issued another deficiency
questionnaire with respect to TAMSAís Section D response 42
requiring a supplemental response to be submitted "no later than 5:00 p.m.
on March 3, 1995." 43 TAMSA
filed its responses to the Sections B, C, D and E deficiency questionnaires
on this latter date. 44
Preliminary Findings and Determination
On September 27, 1994, the Department determined TAMSA to be the sole
mandatory respondent in this case, on the basis of the fact that TAMSA
accounted for at least 60 percent of the exports of OCTG from Mexico during
the POI. 45
On November 3, 1994, based upon information contained in TAMSAís Section
A response, the Department determined that TAMSAís home market was not
viable within the meaning of section 773(a)(1)(B) of the Act (19 U.S.C.
§ 1677b(a)(1)(B)) and 19 CFR § 353.48 46
and that Saudi Arabia was the appropriate third country market for this
At this stage in the investigation, therefore, the Departmentís focus
was on the data for TAMSAís sales to Saudi Arabia, which would be used
whenever data on sales in the home market would otherwise be used.
On November 29, 1994, however, North Star alleged that TAMSAís sales
to Saudi Arabia included sales below COP. 48
After examining the sufficiency of this allegation, the Department initiated
a COP investigation on December 22, 1994, 49
in connection with which it issued a Section D (COP/CV data) questionnaire
to TAMSA on December 28, 1994. 50
Because of the home market nonviability finding, the COP data requested
from TAMSA involved the cost-of-production of merchandise sold to Saudi
Arabia, while the CV data involved the costs associated with merchandise
sold to the United States. The Department issued its preliminary determination
on February 2, 1995. 51
Because the Section D questionnaire response was not due until February
1, 1995, 52 the Department
was unable to use any of the results of the COP investigation in its preliminary
determination. Instead, the dumping margin was calculated solely on the
basis of a comparison of the prices for TAMSAís U.S. sales to the prices
for TAMSAís sales to Saudi Arabia. 53
None of the cost data (relating to financial expense, general and administrative
expense, or the allocation of nonstandard costs) which are of central importance
in this case were used. The preliminary dumping margin was zero. 54
From March 13-18, 1995, the Department conducted a cost verification
at TAMSAís plant in Veracruz, Mexico. 55
The Department also verified TAMSAís sales data, which are not directly
at issue in this case, from March 20-23, 1995 in Veracruz. 56
From April 10-12, 1995, the Department conducted a further manufacturing
price verification at the facilities of Texas Pipe Threaders ("TPT"), TAMSAís
subsidiary in Houston Texas. 57
From April 18-20, 1995, the Department conducted a further manufacturing
cost verification at TPT in Houston. 58
Three verification reports were issued: one on April 28, 1995 (respecting
TAMSAís sales and covering both the Veracruz and Houston sales verifications),
a second on May 1, 1995 (respecting TAMSAís COP/CV submissions), and a
third, also on May 1, 1995 (respecting TPTís further manufacturing). 59
Hearing The Department held a public hearing on May 19, 1995, in which
both TAMSA and North Star participated. 60
In anticipation of the public hearing, on May 9 and 16, 1995, the interested
parties submitted case and rebuttal briefs. 61
In its Case Brief, North Star attached a copy of TAMSAís 1994 unaudited
financial statement which TAMSA had filed with the Mexican Stock Exchange
(Bolsa Mexicana de Valores) on March 23, 1995. 62
This document has become of central importance to this proceeding. It
is a matter of record that TAMSA did not submit this Mexican stock exchange
filing to the Department at the Houston cost or sales verification or otherwise. 63
B. The Final Determination
The Departmentís Final Determination was published June 28, 1995. 64
In making this determination, the Department used the results of the
COP investigation for the first time. Based on those results. 65
the Department determined that there were no remaining above-cost sales
to Saudi Arabia. Pursuant to the regulations, 66
the Department therefore compared the prices of U.S. sales for the POI
to the constructed value of the products sold to the United States. 67
Based on this comparison, the final dumping margin for TAMSA was calculated
to be 23.79%. 68
In making its Final Determination, the Department accepted the COP/CV
data as submitted by TAMSA in its Section D response, with three important
(1) The Department revised TAMSAís financial or interest expense ("financial
expense") rate to reflect TAMSAís consolidated results for the first two
quarters of 1994, rather than TAMSAís 1993 audited consolidated financial
These three changes form the basis of TAMSAís and North Starís principal
challenges to the Final Determination. 70
(2) The Department rejected TAMSAís methodology for allocating fixed
costs and variances ("nonstandard costs") in arriving at TAMSAís cost-of-manufacturing
("COM"), which had been based on finishing line machine time, and substituted
another methodology, which was based on standard costs; and
(3) The Department also revised TAMSAís general and administrative ("G&A")
expense rate to reflect TAMSAís half-year 1994 unconsolidated results,
rather than TAMSAís 1993 audited unconsolidated financial statement. 69
In its Final Determination, the Department explained its positions with
respect to the modifications it had made to the COP/CV data submitted by
TAMSA. As to the issue of financial expense, the Department stated that
it had rejected TAMSAís calculation based on 1993 data because that was
not the most current information available and was not indicative of expenses
during the POI. 71
In addition, citing TAMSAís failure to produce the Mexican Stock Exchange
filing 72 as independent
justification for its application of partial best information available
("BIA"), 73 the Department
concluded that using the 1993 data would, in effect, reward TAMSA for "withholding"
the Mexican Stock Exchange filing at the time of verification, a result
incompatible with BIA principles. 74
At the same time, however, the Department stated that it was rejecting
North Starís choice for partial BIA, which was TAMSAís full-year 1994 financial
expense costs, noting that the sudden and severe peso devaluation in December
of 1994, well after the POI, made full-year 1994 results unrepresentative
of financial expense for the POI. 75
As to the issue regarding allocation of nonstandard costs 76
the Department explained that it was rejecting TAMSAís finishing time allocation
methodology because it shifted such nonstandard costs to products that
undergo more finishing, thus distorting actual production costs; and because
that methodology neither reflected machine time for other processes performed
nor took into account the real cost drivers for price or efficiency variances
and other fixed costs. 77
Having rejected TAMSAís allocation methodology, the Department used
total standard cost as the allocation basis for the nonstandard costs,
calculating nonstandard costs as a percentage of total standard costs. 78
With respect to G&A expense, which TAMSA had calculated and submitted
based on its unconsolidated 1993 data, North Star once again argued that
partial BIA was appropriate, because TAMSA had "systematically withheld
its 1994 consolidated financial statements from the Department." 79
The Department noted, however, that TAMSA had provided the 1994 unconsolidated
G&A data that the Department had requested and that, therefore, there
was no basis to apply BIA. 80
Nevertheless, the Department once again decided to reject TAMSAís G&A
calculation based on the 1993 data because it considered that the 1994
unconsolidated data was more representative of the actual POI expenses.
Finally, because the Department elected to use the 1994 data, rather
than the 1993 data, for its G&A expense rate calculation, it explicitly
declined to reach, in the Final Determination, any other issues concerning
the use of 1993 G&A data. 81
Continue on to Section C: Facts Pertinent to the Challenges to the Final Determination
1 North American Free Trade
Agreement ("NAFTA"), signed at Washington, Mexico City, and Ottawa, December
17, 1992; supplemental agreements signed September 14, 1993; reprinted
in H. Doc. 103-159, Vol. I and in 32 I.L.M. 605 (1993) (entered into force
January 1, 1994).
2 Pub. Law. No. 103-182,
approved December 8, 1993, 107 Stat. 2057; codified at various sections
of title 19 and several other titles.
3 The Final Determination
("Fin. Det.") was published in the Federal Register at 60 Fed. Reg. 33567
(June 28, 1995) and is also contained in the administrative record in this
case at Pub. Doc. 256, Fiche 46, Frame 79. Citations to public documents
on the administrative record are designated herein as "Pub. Doc. __, Fiche
__, Frame __." Citations to documents containing proprietary (confidential)
information are designated as "Prop. Doc.__, Fiche __, Frame __."
4 In its scope analysis,
the Department determined that oil country tubular goods ("OCTG") are hollow
steel products of circular cross-section, including oil well casing, tubing,
and drill pipe, of iron (other than cast iron) or steel (both carbon and
alloy), whether seamless or welded, whether or not conforming to American
Petroleum Institute ("API") or non-API specifications, whether finished
or unfinished (including green tubes and limited service OCTG products).
The scope of these products does not cover casing, tubing, or drill pipe
containing 10.5 percent or more of chromium. These products fall into numerous
6 On file at the Secretariat,
U.S. Section. See Rule 34 of the Rules of Procedure for Article 1904 Binational
Panel Review ("Panel Rules").
7 On file at the Secretariat,
U.S. Section. See Panel Rule 39.
8 The Complaint filed by
Tubos de Acero de México, S.A. ("TAMSA") alleges four different
errors of fact or law with respect to the Final Determination, pertaining
to (i) the Departmentís selection of an appropriate financial or interest
expense, (ii) the Departmentís method of calculating general and administrative
expenses, (iii) the Departmentís chosen allocation methodology for nonstandard
costs, and (iv) a statement made by the Department in an underlying document
with respect to a claimed offset for non-operating income, an issue expressly
found to be moot in the Final Determination.See TAMSA Complaint, pp. 2-3.
9 The Complaint filed by
North Star Steel Ohio, a division of North Star Steel Company ("North Star")
alleges a single error of law in the Final Determination, pertaining to
the Departmentís choice of partial best information available ("BIA") in
the calculation of TAMSAís financial expense. See North Star Complaint,
10 Panel Rule 7(a) states
that "[a] panel review shall be limited to [ ] the allegations of error
of fact or law, including challenges to the jurisdiction of the investigating
authority, that are set out in the Complaints filed in the panel review..."
11 Fin. Det., 60 Fed.
Reg. at 33575.
12 Antidumping Duty Order,
60 Fed. Reg. at 41056-57.
13 Pub. Doc. 1, Fiche
2, Frame 1. As required by statute (Section 732(b) of the Act, 19 U.S.C.
§ 1673b), the Petition was also filed with the U.S. International
Trade Commission ("ITC"). Volume I of the Petition concerned issues of
relevance to the Department while Volume II concerned issues of relevance
to the ITC, in particular, material injury and threat of material injury
by reason of less-than-fair-value imports of OCTG from Mexico.
14See Decision Memo,
Pub. Doc. 6, Fiche 4, Frame 74. This determination was published in the
Federal Register on July 26, 1994.See 59 Fed. Reg. 37962 (July 26, 1994),
Pub. Doc. 9, Fiche 5, Frame 7.
15 Pub. Doc. 42, Fiche
11 , Frame 1.
16Section A of the Departmentís
standard antidumping questionnaire concerns general corporate information;
Section B deals with home market or third country sales, price and expense
information; Section C pertains to sales, price and expense information
with respect to sales to the United States; and Section D concerns cost-of-production
("COP") and constructed value ("CV"). In a subsequent telephone call, dated
August 29, 1994, the Department informed TAMSA that it was not necessary
to prepare a response to Section D at that time. Pub. Doc. 43, Fiche 11,
17 Standard antidumping
questionnaire cover letter, Pub. Doc. 42, Fiche 11, Frame 1, at 1.
18 Id., at 2, 4.
19 Id., at 2. The Departmentís
BIA rule appears in 19 CFR § 353.37, which is based on Section 776(b)
(19 U.S.C. § 1677e) of the Act. The Departmentís cover letters typically
state that complete and accurate information must be received by the date
and time indicated, absent which the Department may be required to resort
to BIA. Such statements were included in the various cover letters sent
to TAMSA in this case.
20 The Department granted
TAMSA an extension of time for this filing on September 7, 1994. Pub. Doc.
52, Fiche 12, Frame 46. See 19 CFR § 353.31(b)(3).
21 Pub. Doc. 72, Fiche
14, Frame 1.
22 TAMSA appears to have
timely requested, and received, extensions of time for all filings or submissions
not submitted by the original deadline set forth in the questionnaire.
The Department has not, in this panel review, suggested otherwise.
23 Pub. Doc. 92, Fiche
17, Frame 1.
24 Pub. Doc. 124, Fiche
24, Frame 15.
25 Pub. Doc. 78, Fiche
14, Frame 25.
26 Pub. Doc. 116, Fiche
23, Frame 1.
27 Pub. Doc. 116, Fiche
23, Frame 1.
28See Pub. Doc. 84, Fiche
16, Frame 1; Prop. Doc. 16, Fiche 63, Frame 53; Prop. Doc. 19, Fiche 65,
Frame 1; Prop. Doc. 23, Fiche 67, Frame 1; and Prop. Doc. 50, Fiche 83,
29 Pub. Doc. 100, Fiche
18, Frame 23.
30 Id., Section A deficiency
questionnaire cover letter.
31 Pub. Doc. 110, Fiche
21, Frame 1.
32 Pub. Doc. 133, Fiche
25, Frame 76.
33 Id., Sections B and
C deficiency questionnaire cover letter.
34 Pub. Doc. 147, Fiche
27, Frame 1.
35 Pub. Doc. 130, Fiche
25, Frame 25.
36 Pursuant to Section
773(b) of the Act (19 U.S.C. § 1677b(b)) and 19 C.F.R. § 353.51,
if the Department has reasonable grounds to believe or suspect that the
sales on which it could base the calculation of foreign market value (either
home market or third country sales) are at prices below the COP, the Department
may, under specified circumstances, disregard those sales. See infra notes
48 and 65. If the remaining above-cost sales are inadequate to calculate
foreign market value, the Department will then calculate foreign market
value on the basis of CV. COP, as calculated by the Department, will include
the cost-of-manufacturing ("COM") (including materials, labor and variable
overhead) the subject products sold in the home market or third country,
applicable average selling expenses incurred in selling the covered merchandise,
and the general and administrative ("G&A") expenses, including financial
or interest expense and other non-operating items related to production,
that were incurred in the most recently completed fiscal year. This same
data would be utilized, if appropriate, to calculate CV, but the latter
would also include an addition for profit.
37 Pub. Doc. 146, Fiche
26, Frame 35.
38 Id., Section D questionnaire
39 Pub. Doc. 176, Fiche
31, Frame 1.
40 Pub. Doc. 181, Fiche
32, Frame 7.
41 Id., Sections B, C
and E deficiency questionnaire cover letter.
42 Pub. Doc. 190, Fiche
32, Frame 62.
43 Id., Section D deficiency
questionnaire cover letter.
44 Pub. Doc. 197, Fiche
33, Frame 1.
45 Preliminary Determination
("Prel. Det."), 60 Fed. Reg. 6510 (February 2, 1995). Initially, in addition
to the full antidumping questionnaire sent to TAMSA, the Department also
issued antidumping surveys to three other potential respondents: Tubacero,
S.A. de C.V., Hylsa, S.A. de C.V., and Villacero Tuberia Nacional, S.A.
de C.V. None of these companies were made respondents in this investigation.
46 Under 19 C.F.R. §
353.48(a), if, during the period of investigation ("POI"), the quantity
of "such or similar merchandise" sold for consumption in the home market
country is so small in relation to the quantity sold for exportation to
third countries (normally, less than five percent of the amount sold to
third countries) that it is an inadequate basis for determining the foreign
market value of the merchandise, the Department will calculate the foreign
market value ("FMV") of the merchandise based on either third-country sales
47Prel. Det., 60 Fed.
Reg. 6510. Pursuant to 19 C.F.R. § 353.49(b), the selection of a third
country is based on the following criteria:
(1) Such or similar merchandise exported to the country is more similar
to the merchandise exported to the United States than is such or similar
merchandise exported to other countries, and the Secretary decides that
the volume of sales to the country is adequate;
(2) The volume of sales to the country is the largest to any country
other than the home market country or the United States; and
(3) The market in the country, in terms of organization and development,
is most like the United States market.
48 Under the applicable
provisions, the Department must eliminate from the pool of home market
or third country sales available for price-to-price matching to sales to
the United States any sales which are made below cost over an extended
period of time, in substantial quantities, and at prices that do not permit
recovery of all costs within a reasonable period of time in the normal
course of trade. If the remaining above-cost sales are insufficient for
price-to-price matching purposes, the Department must match each U.S. sale
to its CV, i.e., to the COP for that model as calculated pursuant to Section
773(e) of the Act (19 U.S.C. § 1677b(e). See supra note 36 and accompanying
49 Pub. Doc. 145, Fiche
26, Frame 32.
50 See supra note 37.
51 Prel. Det., 60 Fed.
52 See supra text accompanying
53 Prel. Det., 60 Fed.
55Cost Verification Report,
Pub. Doc. 220, Fiche 39, Frame 1. The Departmentís Team Concurrence Memorandum,
Pub. Doc. 251, Fiche 46, Frame 51, states that the Veracruz cost verification
ended on March 17, 1995 and that the Veracruz sales verification was extended
to March 24, 1995.
56 Sales Verification
Report, Prop. Doc. 79, Fiche 95, Frame 1.
58 Further Manufacturing
Cost Verification Report, Prop. Doc. 81, Fiche 97, Frame 24. The Team Concurrence
Memorandum, Pub. Doc. 251, Fiche 46, Frame 1, states that the further manufacturing
cost verification at TPT took place on April 17-19, 1995.
59 See supra notes 55,
56, and 58.
60 Public Hearing Transcript,
Pub. Doc. 231, Fiche 44, Frame 1.
61 See TAMSAís Case Brief,
Pub. Doc. 223, Fiche 39, Frame 36, and Rebuttal Brief, Pub. Doc. 227, Fiche
42, Frame 7. See also North Starís Case Brief, Pub. Doc. 224, Fiche 40,
Frame 1, and Rebuttal Brief, Pub. Doc. 228, Fiche 42, Frame 61.
62 See Pub. Doc. 224,
Fiche 40, Frame 1, at Exhibit 1. In the form attached to North Starís Case
Brief, this document is entitled "BOLSA MEXICANA DE VALORES, INFORMACION
FINANCIERA TRIMESTRAL, CORRESPONDIENTE AL 4to TRIMESTRE DE 1994-1994."
TAMSAís Panel Rule 57(1) Brief, at 16, refers to this document as "the
unaudited 1994 financial results that TAMSA filed with the Mexican securities
oversight authority (Comisión Nacional de Valores)."In its Panel
Rule 57(2) Brief, at 36, the Department states that TAMSA filed this document
with two Mexican agencies in March of 1995, treating the Commission and
the Mexican Stock Exchange as separate entities. As background for this
issue, the Panel will take the opportunity to set out the following excerpt
from "SymposiumóThe New Latin American Debt RegimeóRestructuring Strategies
for Mexican Eurobond Debt," Duncan M. Darrow, et al., 16 J. Intíl L. Bus.
117 (Fall, 1995): "The Comisión Nacional Bancaria y de Valores (CNBV),
the principal securities regulator in Mexico, and the Bolsa Mexicana de
Valores, the Mexican stock exchange (the Bolsa), require most Mexican public
companies to file annual audited financial statements (within 120 days
after the end of the calendar year), quarterly unaudited financial statements
(within twenty business days after the end of the first, second and third
quarters and within forty-five business days after the end of the fourth
quarter), and announcements regarding material corporate events and other
material events which may affect the market value of the publicly traded
securities they shall have issued [citing in footnote 34 the Ley del Mercado
de Valores, Diario Oficial de la Federación (January 2, 1975), arts.
14(VI) and 16; Circulares 11-11, 11-11 Bis 2, 11-11 Bis 3, 11-23, 11-24
and 11- 25 issued by the CNBV].... These filings are publicly available
through the Bolsa." This article notes that "Mexican companies are often
late in providing the required information to the Bolsa." Id.
63 Fin. Det., 60 Fed.
Reg. at 33572.
64 Id., at 33567.
65 As reported in the
Final Determination, it is the Departmentís standard practice, when it
finds that less than 10 percent of a companyís sales are at prices below
the COP, not to disregard any below-cost sales because they were not made
in substantial quantities. When it finds between 10 and 90 percent of the
companyís sales are at prices below the COP, and the below-cost sales are
made over an extended period of time, it disregards only the below-cost
sales. When it finds that more than 90 percent of the companyís sales are
at prices below the COP, and the sales were made over an extended period
of time, it disregards all sales for that product and calculates FMV based
on CV. Id., citing Section 773(b) of the Act. In this instance, the Department
found that there were no sales to Saudi Arabia above COP; thus, it became
necessary to compare United States Price ("USP") to CV to determine the
dumping margin. Fin. Det., 60 Fed. Reg. at 33568-69.
66 19 CFR §§
353.51(b) and 353.50.
67 Fin. Det., 60 Fed.
Reg. at 33569. See supra note 48. CV includes the COM, G&A expense
(including financial expense), profit, and packing expenses. See also 19
CFR § 353.50 and Section D questionnaire, Pub. Doc. 146, Fiche 26,
Frame 35, at 2-3.
68 Fin. Det., 60 Fed.
Reg. at 33575.
69 Id., at 33568-69.
70 TAMSA also challenges
a statement made by the Department in a preliminary document regarding
a claimed offset for non-operating income, an issue expressly found to
be moot in the Final Determination. See supra note 8.
71 In response to Comment
6, the Department noted that "[t]he January¾June 1994 financing
expense is substantially higher than the 1993 amount, in part due to the
fact that the Mexican peso lost approximately nine percent of its value
during the POI." Fin. Det., 60 Fed. Reg. at 33572. The suggested other
causes underlying the higher 1994 financial expense rate were not identified
by the Department.
72 See supra text accompanying
73The Department applied,
as partial BIA, a financial expense rate that reflected the consolidated
results for the first two quarters of 1994. Fin. Det., 60 Fed. Reg. at
74 In response to Comment
6, the Department stated that use of the 1993 financial data "would reward
the respondent for not fully cooperating in the investigation." Id.
76 In response to Comment
7, the Department noted that TAMSAís normal accounting system did not allocate
variances, depreciation and other fixed costs (which TAMSA termed "nonstandard"
costs) to individual products. Thus, for purposes of responding to the
Departmentís questionnaire, TAMSA was compelled to develop a methodology
to allocate such nonstandard costs to its calculation of per unit COP and
CV. TAMSA did so, utilizing as a base the machine time for its finishing
line process only (not all machine time). Id., at 33572-73.
77Id., at 33573. The
Department further stated that machine time was not an appropriate allocation
basis for costs other than depreciation.
78 The Department stated
that total standard cost appropriately factors in machine time, labor hours,
direct and indirect material cost and usage, labor cost and usage, energy
cost and usage, other variable costs, maintenance, and other services.
80 In response to Comment
8, the Department indicated that "it is the Departmentís standard practice
to calculate G&A based on the financial statements of the producing
company that most closely relates to the POI...." Id.