[Federal Register Volume 64, Number 132 (Monday, July 12, 1999)]
[Notices]
[Pages 37501-37504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17642]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-807]
Polyethylene Terephthalate Film From Korea: Preliminary Results
of Antidumping Duty Administrative Review, and Partial Recission of
Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review, and partial recission of review.
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SUMMARY: In response to a request from one respondent and two U.S.
producers, the Department of Commerce (the Department) is conducting an
administrative review of the antidumping duty order on polyethylene
terephthalate film, sheet, and strip (PET film) from the Republic of
Korea. The review covers one manufacturer/exporter of the subject
merchandise to the United States and the period June 1, 1997 through
May 31, 1998.
We preliminarily determine that there is a dumping margin for SKC
Limited (SKC) during the period June 1, 1997 through May 31, 1998. We
therefore preliminarily are denying SKC's request for revocation.
If these preliminary results are adopted in our final results of
review, we will instruct the U.S. Customs Service to assess antidumping
duties based on the difference between the United States Price (USP)
and normal value (NV). STC Corporation (STC) made no sales or shipments
during the POR. Accordingly, we are rescinding the review with respect
to STC.
Interested parties are invited to comment on these preliminary
results. Parties who submit argument in this proceeding are requested
to submit with the argument: (1) a statement of the issues and (2) a
brief summary of the arguments (no longer than five pages, including
footnotes).
EFFECTIVE DATE: July 12, 1999.
FOR FURTHER INFORMATION CONTACT: Michael J. Heaney or John Kugelman,
AD/CVD Enforcement Group III , Office 8, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone
(202) 482-4475/0649.
Applicable statute: Unless otherwise indicated, all citations to
the Tariff Act of 1930, as amended (the Act) are
[[Page 37502]]
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Act by the Uruguay Round Agreements
Act (URAA). In addition, unless otherwise indicated, all citations to
the Department's regulations are to the regulations codified at 19 CFR
Part 351 (1998).
SUPPLEMENTARY INFORMATION:
Background
The Department published an antidumping duty order on PET film from
the Republic of Korea on June 5, 1991 (56 FR 25660). On June 25, 1998,
two domestic producers, E.I. DuPont Nemours & Co., Inc. and Hoescht
Celanese Corporation, requested reviews of SKC and STC. On June 30,
1998, SKC requested an administrative review of its sales and
revocation of the order for SKC only. We published a notice of
initiation of the review on July 28, 1998 (63 FR 40258).
In response to our request for information, STC reported that it
had no sales or shipments during the period of review (POR). On March
24, 1998, the Department sent a no-shipment inquiry regarding STC to
the U.S. Customs Service. Customs did not report any shipments by STC
during the POR. Therefore, consistent with 19 CFR 351.213(d), we are
rescinding the review with respect to STC.
On December 7, 1998, the Department published a notice extending
the time limits for publication of its preliminary results by 120 days
(63 FR 67456).
Verification
As provided for in section 782(i)(2) of the Act, we verified the
information submitted by SKC. We used standard verification procedures,
including on-site inspection of the manufacturer's facilities and
examination of relevant sales and financial records. Our verification
findings are outlined in the verification reports placed in the case
file.
Intent Not To Revoke
In its submission of June 30, 1998, SKC requested, pursuant to 19
CFR 351.222(b)(2), revocation of the order with respect to its sales of
PET film from Korea. SKC certified that: (1) It sold the subject
merchandise at not less than NV for a period of at least three
consecutive years, (2) that in the future it will not sell the subject
merchandise at less than NV, and (3) that it agreed to its immediate
reinstatement in the order if the Department determines that,
subsequent to revocation, it sold the subject merchandise at less than
NV.
In this case SKC does not meet the first criterion required for
revocation. In this segment of the proceeding the Department
preliminarily has found that SKC sold subject merchandise at less than
NV. Since SKC has not met the first criterion for revocation, i.e.,
zero or de minimis margins for three consecutive reviews, the
Department need not reach a conclusion with respect to the second and
third criteria. Therefore, on this basis, we have preliminarily
determined not to revoke the order on PET film from Korea with respect
to SKC.
Scope of the Review
Imports covered by this review are shipments of all gauges of raw,
pretreated, or primed polyethylene terephthalate film, sheet, and
strip, whether extruded or coextruded. The films excluded from this
review are metallized films and other finished films that have had at
least one of their surfaces modified by the application of a
performance-enhancing resinous or inorganic layer of more than 0.00001
inches (0.254 micrometers) thick. Roller transport cleaning film which
has at least one of its surfaces modified by the application of 0.5
micrometers of SBR latex has also been ruled as not within the scope of
the order.
PET film is currently classifiable under Harmonized Tariff Schedule
(HTS) subheading 3920.62.00.00. The HTS subheading is provided for
convenience and for U.S. Customs purposes. The written description
remains dispositive as to the scope of the product coverage. The review
covers the period June 1, 1997 through May 31, 1998. The Department is
conducting this review in accordance with section 751 of the Act, as
amended.
Currency Conversion
Consistent with the position taken in Stainless Steel Sheet and
Strip in Coils from the Republic of Korea: Notice of Final
Determination of Sales at Less Than Fair Value (June 8, 1998, (64 FR
30664, 30670 )), the Department determined that the decline in the won
at the end of 1997 was so precipitous and large that the dollar-won
exchange rate cannot reasonably be viewed as having simply fluctuated
during this time, i.e., as having experienced only a momentary drop in
value. Therefore, for the final results the Department will use daily
rates exclusively for currency conversion purposes for HM sales matched
to U.S. sales occurring between November 1 and December 31, 1997, and
the standard exchange rate model with a modified benchmark for sales
occurring between January 1, 1999 and February 28, 1999.
Fair Value Comparisons
To determine whether sales of PET film in the United States were
made at less than fair value, we compared USP to the NV, as described
in the ``United States Price'' and ``Normal Value'' sections of this
notice. In accordance with section 777A(d)(2) of the Act, we calculated
monthly weighted-average prices for NV and compared these to individual
U.S. transactions.
United States Price (USP)
In calculating USP, the Department treated SKC's sales as export
price (EP) sales, as defined in section 772(a) of the Act, when the
merchandise was sold to unaffiliated U.S. purchasers prior to the date
of importation, and use of the constructed export price (CEP)
methodology was not otherwise indicated. The Department treated SKC's
sales as CEP sales, as defined in section 772(b) of the Act, when the
merchandise was sold to unaffiliated U.S. purchasers after importation.
EP was based on the delivered or c.i.f. U.S. port, packed prices to
unaffiliated purchasers in the United States. We made adjustments,
where applicable, for Korean and U.S. brokerage charges, Korean and
U.S. inland freight, ocean freight, U.S. duties, and discounts, in
accordance with section 772(c) of the Act. We made an addition to EP
for duty drawback pursuant to section 772(c)(1)(B) of the Act.
CEP was based on the delivered, packed prices to unaffiliated
purchasers in the United States. We made adjustments, where applicable,
for Korean and U.S. brokerage charges, Korean and U.S. inland freight,
ocean freight, and U.S. duties, in accordance with section 772(c) of
the Act. Pursuant to section 772(c)(1)(B) of the Act, we made an
addition to CEP for duty drawback. We also made an addition to CEP for
interest revenue. In accordance with section 772(d)(1) of the Act, we
made deductions for selling expenses associated with economic
activities in the United States, including warranties, credit expenses,
bank charges, and indirect selling expenses.
With respect to subject merchandise to which value was added in the
United States by SKC prior to sale to unaffiliated customers, we
deducted the cost of further manufacturing in accordance with section
772(d)(2) of the Act.
Pursuant to section 772(d)(3) of the Act, the price was further
reduced by an amount for profit to arrive at the CEP.
Based upon our findings at verification, we revised SKC's reported
amounts for brokerage, interest revenue,
[[Page 37503]]
Korean inland freight, and further processing costs. (See Sales
Verification of SKC Co., Inc; PET Film from South Korea, July 6, 1999.)
Normal Value
In order to determine whether there were sufficient sales of PET
film in the home market (HM) to serve as a viable basis for calculating
NV, we compared the volume of HM sales of PET film to the volume of PET
film sold in the United States, in accordance with section 773(a)(1)(C)
of the Act. SKC's aggregate volume of HM sales of the foreign like
product was greater than five percent of its aggregate volume of U.S.
sales of the subject merchandise. Therefore, we have based NV on the
price at which the foreign like product was sold for consumption in the
home market in the usual commercial quantities, in the ordinary course
of trade, and, to the extent practicable, at the same level of trade.
Based on the fact that the Department had disregarded SKC's sales
of the foreign like product in the June 1996-May 1997 administrative
review because they failed the cost test, the Department had reasonable
grounds to believe or suspect that SKC made sales below COP during this
POR. Accordingly, we initiated a sales-below-cost of production
investigation for SKC in accordance with section 773(b) of the Act.
(The June 1996-May 1997 administrative review was the most recently
completed review at the time that we issued our antidumping
questionnaire.)
We performed a model-specific COP test in which we examined whether
each HM sale was priced below the merchandise's COP. We calculated the
COP of the merchandise using SKC's cost of materials and fabrication
for the foreign like product, plus amounts for home market general and
administrative (G&A) expenses and packing costs, in accordance with
section 773(b)(3) of the Act. We allocated yield losses equally between
A-grade and B-grade film because these grades have identical production
costs. This is consistent with the methodology employed in past reviews
of this case. See e.g., Polyethylene Terephthalate Film, Sheet and
Strip from the Republic of Korea; Final Results of Antidumping Duty
Administrative Review, 63 FR 37334, 37335 (July 10, 1998).
Based upon our findings at verification, we revised SKC's reported
amounts for G&A and financing expenses. (See Cost Verification of SKC
Co., Inc; PET Film from South Korea, July 6, 1999.)
In accordance with section 773(b)(1) of the Act, in determining
whether to disregard home market sales made at prices below COP, we
examined whether such sales were made within an extended period of time
in substantial quantities, and whether such sales were made at prices
which would permit recovery of all costs within a reasonable period of
time.
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of SKC's sales of a given model were at prices less than COP,
we did not disregard any below-cost sales of that model because these
below-cost sales were not made in substantial quantities. Where 20
percent or more of SKC's home market sales of a given model were at
prices less than the COP, we disregarded the below-cost sales because
such sales were found to be made: (1) In substantial quantities within
the POR (i.e., within an extended period of time) in accordance with
section 773(b)(2)(B) of the Act, and (2) at prices which would not
permit recovery of all costs within a reasonable period of time, in
accordance with section 773(b)(2)(D) of the Act (i.e., the sales were
made at prices below the weighted-average per-unit COP for the POR). We
used the remaining sales as the basis for determining NV, if such sales
existed, in accordance with section 773(b)(1) of the Act.
In determining NV, we considered comparison market sales of
identical or similar merchandise, or constructed value (CV).
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of the respondent's cost of materials, fabrication, G&
A expenses, and profit. We allocated yield losses equally between A-
grade and B-grade film. In accordance with section 773(e)(2)(A) of the
Act, we based G&A expenses and profit on the amounts incurred and
realized by SKC in connection with the production and sale of the
foreign like product in the ordinary course of trade for consumption in
the foreign country. For selling expenses, we used the weighted-average
HM selling expenses. Pursuant to section 773(e)(3) of the Act, we
included U.S. packing.
In accordance with section 773(a)(6) of the Act, we adjusted NV,
where appropriate, by deducting home market packing expenses and adding
U.S. packing expenses. We also adjusted NV for credit expenses. When NV
was based upon home market sales, we made an adjustment for inland
freight. For SKC's local export sales, we also made an addition to home
market price for duty drawback. For comparisons to EP, we made an
addition to NV for U.S.credit expenses, and bank charges as
circumstance-of-sale adjustments pursuant to section 773(a)(6)(C) of
the Act.
Level of Trade and CEP Offset
In accordance with section 773(a)(1)(B)(i) of the Act, to the
extent practicable, we determine NV based on sales in the comparison
market at the same level of trade (LOT) as the EP or CEP transaction.
The NV LOT is that of the starting price sales in the comparison market
or, when NV is based on CV, that of the sales from which we derive SG&A
expenses and profit. For EP, the U.S. LOT is also the level of the
starting price sale, which is usually from the exporter to the
importer. For CEP, it is the level of the constructed sale from the
exporter to the importer.
To determine whether NV sales are at a different LOT than EP or
CEP, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the
unaffiliated customer. If the comparison market sales are at a
different LOT, and the difference affects price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison market sales at the LOT of
the export transaction, we make a LOT adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is
more remote from the factory than the CEP level and there is no basis
for determining whether the differences in the levels between NV and
CEP affect price comparability, we adjust NV under section 773(A)(7)(B)
of the Act (the CEP offset provision). See e.g., Certain Carbon Steel
Plate from South Africa, Final Determination of Sales at Less Than Fair
Value, 62 FR 61731 (November 19, 1997).
In implementing these principles in this review, we asked SKC to
identify the specific differences and similarities in selling functions
and/or support services between all phases of marketing in the home
market and the United States. SKC identified two channels of
distribution in the home market: (1) Wholesalers/distributors and (2)
end-users. For both channels SKC performs similar selling functions
such as market research and after-sales warranty services. Because
channels of distribution do not qualify as separate LOTs when the
selling functions performed for each customer class are sufficiently
similar, and in this case, we have determined that the selling
functions are similar, we determined
[[Page 37504]]
that there exists one LOT for SKC's home market sales.
For the U.S. market SKC reported two LOTs: (1) EP sales made
directly to its U.S. customers, and (2) CEP sales made through SKC
America, Inc., SKC's wholly-owned U.S. subsidiary. The Department
examined the selling functions performed by SKC for both EP and CEP
sales. These selling functions included customer sales contacts (i.e.,
visiting current or potential customers, receiving orders, promotion of
new products, collection of unpaid invoices), technical services,
inventory maintenance, and/or business system development. We found
that SKC provided a greater degree of these services on EP sales than
it did on CEP sales, and that the selling functions were sufficiently
different to warrant two separate LOTs in the United States.
When we compared EP sales to home market sales, we determined that
both sales were made at the same LOT. For both EP and home market
transactions, SKC sold directly to the customer and provided similar
levels of customer sales contacts, technical services, inventory
maintenance and business system development. Therefore, no LOT
adjustment was warranted.
For CEP sales, SKC performed fewer customer sales contacts,
technical services, inventory maintenance, and computer legal, audit
and business system development. In addition, the differences in
selling functions performed for home market and CEP transactions
indicate that home market sales involved a more advanced stage of
distribution than CEP sales.
Because we compared these CEP sales to HM sales at a different LOT,
we examined whether a LOT adjustment may be appropriate. In this case
SKC sold at one LOT in the home market; therefore, there is no
demonstrated pattern of consistent price differences between LOTs.
Further, we do not have the information which would allow us to examine
pricing patterns of SKC's sales of other similar products, and there
are no other respondent's or other record evidence on which such an
analysis could be based.
Because the data available do not provide an appropriate basis for
making a LOT adjustment but the LOT in Korea for SKC is at a more
advanced stage than the LOT of the CEP sales, a CEP offset is
appropriate in accordance with section 773(a)(7)(B) of the Act, as
claimed by SKC. We based the CEP offset amount on the amount of home
market indirect selling expenses, and limited the deduction for home
market indirect selling expenses to the amount of indirect selling
expenses deducted from CEP in accordance with section 772(d)(1)(D) of
the Act. We applied the CEP offset to NV, whether based on home market
prices or CV.
Preliminary Results of Review
We preliminarily determine that a margin of 1.21 percent exists for
SKC for the period June 1, 1997 through May 31, 1998. We will disclose
calculations performed in connection with this preliminary results of
review within 5 days of the day of publication of this notice.
Interested parties may request a hearing not later than 30 days after
publication of this notice. Interested parties may also submit written
arguments in case briefs on these preliminary results within 30 days of
the date of publication of this notice. Rebuttal briefs, limited to
issues raised in case briefs, may be filed no later than five days
after the time limit for filing case briefs. Parties who submit
arguments are requested to submit with each argument a statement of the
issue and a brief summary of the argument. All memoranda to which we
refer in this notice can be found in the public reading room, located
in the Central Records Unit, room B-009 of the main Department of
Commerce building. Any hearing, if requested, will be held two days
after the scheduled date for submission of rebuttal briefs.
The Department will publish the final results of this
administrative review, including a discussion of its analysis of issues
raised in any case or rebuttal brief or at a hearing. The Department
will issue final results of this review within 120 days of publication
of these preliminary results.
Upon completion of the final results in this review, the Department
shall determine, and the Customs Service shall assess, antidumping
duties on all appropriate entries. In accordance with 19 CFR 351.212
(b), we have calculated an importer/customer-specific assessment rate
based on the ratio of the total amount of antidumping duties calculated
for the examined sales to the entered value of those same sales. This
Department will issue appraisement instructions on each exporter
directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
upon completion of the final results of this administrative review for
all shipments of PET film from the Republic of Korea entered, or
withdrawn from warehouse, for consumption on or after the publication
date of the final results of this administrative review, as provided by
section 751(a)(1) of the Act: (1) The cash deposit rate for the
reviewed firm will be the rate established in the final results of
administrative review; (2) for merchandise exported by manufacturers or
exporters not covered in this review but covered in the original less-
than-fair-value (LTFV) investigation or a previous review, the cash
deposit will continue to be the most recent rate published in the final
determination or final results for which the manufacturer or exporter
received a company-specific rate; (3) if the exporter is not a firm
covered in this review or the original investigation, but the
manufacturer is, the cash deposit rate will be that established for the
manufacturer of the merchandise in the final results of this review or
the LTFV investigation; and (4) if neither the exporter nor the
manufacturer is a firm covered in this or any previous reviews, the
cash deposit rate will be 21.5%, the ``all others'' rate established in
the LTFV investigation.
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 351.402(f) to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during this review period. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This administrative review and notice are in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: June 30, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-17642 Filed 7-9-99; 8:45 am]
BILLING CODE 3510-DS-P