E6-22642. Initiation of Antidumping Duty Changed Circumstances Review: Polyethylene Terphthalate Film Sheet and Strip from Korea

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In accordance with section 751(b) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.216(b), DuPont Teijin Films (DuPont), Mitsubishi Polyester Film, Inc. (Mitsubishi), and Toray Plastics (America) (Toray), Inc. (collectively DuPont, Mitsubishi, and Toray are the Petitioners), filed a request for the Department to initiate a changed circumstances review of the antidumping duty order on polyethylene terephthalate film, sheet, and strip (PET film) from Korea. Petitioners allege that Kolon Industries Inc. (Kolon), a Korean PET film producer previously revoked from the antidumping duty order, has resumed selling subject merchandise at prices below normal value (NV). Petitioners explain that Kolon has agreed in writing to reinstatement in the antidumping duty order if Kolon were found to have resumed dumping. Petitioners contend that Kolon has violated its agreement not to sell PET film at prices below NV in the United States subsequent to Kolon's revocation from the order. Therefore, Petitioners request that the Department reinstate the antidumping duty order with respect to Kolon. Petitioners further request that the Department of Commerce (the Department) immediately order suspension of liquidation for all entries of Korean PET film manufactured and exported by Kolon.

The Department finds the information submitted by Petitioners is sufficient to warrant initiation of a changed circumstances review of the antidumping duty order on PET film from Korea. In this changed circumstances review, we will determine whether Kolon is selling PET film at less than NV subsequent to its revocation from the order. If we determine in this changed circumstances review that Kolon sold at less than NV and resumed dumping PET film, we will direct Customs and Border Protection (CBP) to suspend liquidation of all entries of Korean PET film manufactured and exported by Kolon.

EFFECTIVE DATE:

January 5, 2007.

FOR FURTHER INFORMATION CONTACT:

Michael J. Heaney or Robert James, AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Ave., NW, Washington, DC 20230; telephone: [phone] and [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On June 5, 1991, the Department published the antidumping duty order on PET film from Korea. See Antidumping Duty Order: Polyethylene Terephthalate Film Sheet and Strip from Korea, 56 FR 25660 (June 5, 1991) (Order). In June of 1995, in the course of the 1994 - 1995 administrative review, Kolon requested revocation of the Order with respect to its sales of subject merchandise. See Polyethylene Terephthalate Film from Korea: Preliminary results of Antidumping Duty Administrative Review, Intent to Revoke the Order in Part, and Termination in Part, 61 FR 36032, 36033 (July 9, 1996).

As part of its request for revocation, on June 28, 1996, Kolon agreed to immediate reinstatement in the Order pursuant to 19 CFR 353.25(b) of the regulations in effect at the time.^[1] See Kolon's June 30, 1995 letter to the Department requesting revocation. In its revocation request, Kolon agreed to immediate reinstatement in the Order as long as any producer or reseller is subject to the order, should the Department determine that Kolon “sold polyethylene terephthalate film, sheet, and strip from Korea at less than foreign market value.” Id. On November 14, 1996, the Department revoked the antidumping duty order with respect to Kolon after having determined that Kolon sold the merchandise at not less than normal value for a period of at least three consecutive years.² See Polyethylene Terephthalate Film Sheet and Strip from the Republic of Korea: Final Results of Antidumping Duty Administrative Review and Notice of Revocation in Part, 61 FR 58374 (November 14, 1996) (Revocation).

On July 19, 2006, Petitioners submitted an allegation (accompanied by the supporting documentation summarized below) suggesting Kolon has resumed dumping PET film in the United States since revocation in part from of the Order, and requested a changed circumstances review. See Petitioners' July 19, 2006 letter to the Department. Petitioners requested that the Department reinstate the Order with respect to Kolon's exports to the United States of PET film produced by Kolon. Petitioners also requested that the Department immediately order suspension of liquidation for all entries of Korean PET film manufactured and exported by Kolon. Id.

On August 4, 2006, Kolon filed a letter contesting Petitioner's request for a changed circumstances review. See Kolon's August 4, 2006 comments. Kolon asserted that section 751(b) of the Act, the statutory provision governing changed circumstance reviews, does not cover an attempt to reinstate a revoked company into an antidumping duty order. Kolon further argued that the reinstatement provisions in effect when Kolon was revoked were impeached by Asahi Chemical Industry Co., Ltd. v. United States, 727 F. Supp. 625 (CIT 1989) (Asahi). Kolon asserted the Department's “new” regulations promulgated on May 19, 1997, codified at 19 CFR section 351, constituted a failed “fix” of the Department's invalid reinstatement procedures in response to Asahi. See Kolon's August 2006 Comments at 6. Kolon also noted the Department's current regulations governing revocation came into effect in 1997, which was subsequent to Kolon's revocation. Kolon thus argued that the Department cannot rely on these 1997 regulations to remedy the earlier flaws identified by the Court in Asahi. Finally, Kolon insisted that during the history of the antidumping duty order, the company had never itself been found to be dumping. Kolon asserted the 0.60 percent margin that the Department determined for Kolon in the first administrative review, the sole above de minimis margin found for Kolon, was based upon an incorrect method for adjusting for home market value added taxes. See Polyethylene Terephthate Film, Sheet and Strip from the Republic of Korea; Final Results of Antidumping Duty Administrative Review, 60 FR 42835 (August 17, 1995), amended by Polyethylene Terephthalate Film, Sheet, and Strip from the Republic of Korea; Amended Final Results of Antidumping Duty Administrative Review, 61 FR 5375 (February 12, 1996) (finding a margin of 0.60 percent for Kolon for the period November 30, 1990 through May 31, 1992). Kolon noted the Department determined de minimis margins for the three subsequent reviews, and asserted the margin for the first administrative review would also have been de minimis had the Department completed a pending remand of this review. Kolon maintained that it agreed to dismiss its court action contesting the results of the first administrative review “subject to the explicit condition that its agreement to withdraw the appeal not be deemed an admission that Kolon had been dumping in the first administrative review.” Id. at 9.

On August 14, 2006, Petitioners filed rebuttal comments to Kolon's August 4, 2006 comments. Petitioners asserted that a changed circumstances request is the proper venue for considering whether a revoked company should be reinstated within the scope of an order. Petitioners argued that a reinstatement request is “a review of a final affirmative determination that resulted in an antidumping order,” and that the “identities of the producers and exporters who are subject to the order is part and parcel of that affirmative determination.” Petitioners' August 14, 2006 comments at 3. Additionally, Petitioners accused Kolon of “misinterpreting” Asahi, explaining that Asahi dealt with the Department's earlier 1980 regulations. Id. at 5. Petitioners argued that the March 1989 regulations in effect when Kolon signed its agreement to reinstatement fully addressed the concerns the Court expressed in Asahi. Petitioners asserted the Court's concerns are addressed because reinstatement will only occur if: 1) a producer or reseller is still subject to the order, 2) if a revoked respondent “sold the merchandise at less than foreign market value”, and 3) where an order has been revoked in part. Petitioners thus maintained the revised March 1989 regulations applicable when the Department revoked the order with respect to Kolon cured the flaws identified in Asahi and are thus valid. Moreover, Petitioners insisted that the 1997 regulations adopted by the Department “in connection with the Uruguay Round Agreements Act did not alter the revocation and reinstatement provisions of the March 1989 regulations in any material way.” Id. at 7. Accordingly, Petitioners asserted Kolon's suggestion that the 1997 regulations somehow constitute a failed “fix"of the reinstatement procedures is misplaced. Finally, Petitioners characterized Kolon's argument concerning whether it was ever found to be dumping as a “red herring.” Id. at 10. Petitioners suggested Kolon's assertion that it did not dump PET film during the first administrative review is immaterial. Petitioners argued that the controlling issue is that Kolon signed a “certification that contained a reinstatement agreement and that the Department revoked the order with respect to the company based on that certification.” Id. Moreover, Petitioners asserted that even had the Department concluded that the margin for Kolon for the November 1, 1990 through March 31, 1992 review was de minimis, the reinstatement agreement is still legally binding because Kolon of its own volition signed the reinstatement agreement.

Allegation of Resumed Dumping

On September 20, 2006, we sent a letter to Petitioners requesting additional information concerning the U.S., home market and cost data provided by Petitioners in their July 19, 2006 submission. Petitioners provided their response on October 5, 2006. On November 1, 2006, we requested additional information from Petitioners concerning their submissions of July 19, 2006 and October 5, 2006. Petitioners submitted their response to our second request for additional information on November 9, 2006.

In their July 19, 2006, October 5, 2006 and November 9, 2006 submissions, Petitioners provided price quotes concerning Kolon's sales activity in the U.S. and home market and argued that Kolon had sold PET film at less than NV during the period July 1, 2005 through June 30, 2006. Petitioners also provided cost data in these submissions suggesting Kolon made home market sales at prices below the cost of production (COP). The allegation of resumed dumping upon which the Department has based its decision to initiate a changed circumstances review is detailed below. The sources of data for the deductions and adjustments relating to NV and U.S. price are discussed in greater detail in the Changed Circumstances Review Initiation Checklist dated concurrently with this notice. Should the need arise to use any of this information as facts available under section 776 of the Act, we may reexamine the information and revise the margin calculation, if appropriate.

1. Export Price (EP)

Petitioners based their calculation of U.S. price upon price quotes they obtained for three types of PET film commonly sold in the United States. In their July 19, 2006 submission, Petitioners made a deduction to EP for international freight and insurance, U.S. duties, and U.S. inland freight. Petitioners also made a downward adjustment to U.S. price for slitting costs and material losses. Petitioners provided price quotes to end-users. To approximate a price to distributors, Petitioners made a deduction from EP to approximate the distributor's mark-up. In their November 9, 2006 submission, Petitioners provided first-person affidavits from the individuals who collected the price quotes referenced in Petitioners' July 19, 2006 submission. Also, Petitioners removed the deduction for slitting costs from their calculation of EP in their November 9, 2006 calculation of U.S. price.

2. Normal Value

To calculate NV, Petitioners provided in their July 19, 2006 submission information on Kolon's pricing of PET film in the Korean market. This information was obtained through a Korean manufacturer of PET film and covered sales of three types of PET film commonly offered for sale by Kolon in the Korean market. The Korean pricing information covered the same types of PET film as those serving as the basis for EP. In their July 19, 2006 submission, Petitioners made a circumstance of sale adjustment for differences in advertising expenses between the U.S. and the home market (i.e., Korea). (Petitioners removed this adjustment for advertising from their November 9, 2006 calculation of NV.) In their November 9, 2006 letter, Petitioners provided first-person affidavits from the individuals who collected the pricing information. Petitioners made adjustments to NV for differences in U.S. and Korean credit expenses and for packing expenses.

3. Sales Below Cost of Production and Constructed Value

Petitioners also alleged that Kolon's sales of PET film in the home market were made at prices below the fully absorbed COP, within the meaning of section 773(b) of the Act, and requested that the Department conduct a sales-below-cost investigation. Pursuant to section 773(b)(3) of the Act, COP consists of the cost of manufacture (COM), selling, general and administrative (SG&A) expenses, and financial and packing expenses. Based upon a comparison of the gross price of the foreign like product in the home market to the COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP, within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a sales-below-cost investigation.

Because Petitioners alleged that Kolon sold PET film below the COP in the home market, Petitioners provided a comparison of EP to constructed value (CV). Petitioners based CV upon the sum of COM, SG&A expenses, financial expenses, profit and packing.

4. Alleged Margins of Dumping

Based upon the information summarized above, Petitioners suggest Kolon is dumping the subject merchandise. Depending upon the type of PET film, petitioners estimate margins of 29 to 62 percent for price to price comparisons, and margins of 43 to 72 percent for comparisons of EP to CV.

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.

PET film is currently classifiable under Harmonized Tariff Schedule (HTS) subheading 3920.62.00.00. The HTS subheading is provided for convenience and for customs purposes. The written description remains dispositive as to the scope of the product coverage.

This changed circumstances review covers Kolon and the period July 1, 2005 through June 30, 2006.

Initiation of Changed Circumstances Review

We find Petitioners have provided sufficient evidence to initiate a changed circumstances review in which we will determine whether Kolon should be reinstated within the order of PET film from Korea. Kolon has argued that in Asahi the CIT ruled the Department is not permitted by the statute to reinstate a revoked order without a new injury finding by the International Trade Commission (the Commission). Kolon also contends that under Asahi the Department has no authority to reinstate a revoked order, and has further argued that the statutory provision governing changed circumstance reviews does not cover an attempt to reinstate a revoked company into an antidumping duty order. Finally, Kolon insists it has never been found by the Department to be dumping. For the reasons, outlined below, we disagree with Kolon.

Pursuant to section 751(b) of the Act, the Department will conduct a changed circumstances review upon receipt of a request “from an interested party for review of an antidumping duty order which shows changed circumstances sufficient to warrant a review of the order.” Petitioners' documented allegation that Kolon has resumed dumping PET film subsequent to its revocation from the order is an appropriate basis for a changed circumstances review.

The Department's authority to reinstate a revoked company into an antidumping duty order derives from sections 751(b) and (d) of the Act and 19 CFR 351.222(b) and (e). In particular, the Department's authority to partially revoke an order is expressed in section 751(d) of the Act. The statute, however, provides no detailed description of the criteria, procedures or conditions relating to the Department's exercise of this authority. Accordingly, the Department has issued regulations setting forth in detail how the Department will exercise the authority granted to it under the statute. In particular, the Department has reasonably interpreted the authority to partially revoke the antidumping duty order with respect to a particular company it finds to be no longer dumping to include authority to impose a condition that the partial revocation may be withdrawn (i.e., the company may be reinstated) if dumping is resumed. To interpret the statute otherwise would permit the Department to abdicate its responsibility to ensure that injurious dumping is remedied by imposition of offsetting antidumping duties. Therefore, our determination to conduct this changed circumstances review to determine whether Kolon should be reinstated under the Order is supported by the statute and regulations. Additionally, as noted by both Kolon and the petitioner, conducting a changed circumstances review pursuant to section 751(b) of the Act to reinstate a company previously revoked from an antidumping duty order is consistent with the agency's practice. See Sebacic Acid from the People's Republic of China: Final Results of Antidumping Duty Administrative Review and Reinstatement of the Antidumping Order 70 FR 16218, March 30, 2005.

Moreover, we find Kolon's reliance on Asahi to support its assertion that the Department lacks legal authority to reinstate a company in an antidumping duty order is misplaced. The Court in Asahi was reviewing an earlier regulation (19 CFR 353.54(e)(1988)), which provided:

Before the Secretary may tentatively revoke a Finding or an Order or terminate a suspended investigation pursuant to paragraph (a) of this section, the parties who are subject to the revocation or the termination must agree in writing to an immediate suspension of liquidation and reinstatement of the Finding or Order or continuation of the investigation, as appropriate, if circumstances which indicate that the merchandise thereafter imported into the United States is being sold at less than fair value. Opportunity for interested parties to present views with respect to the tentative revocation will be provided.

19 CFR 353.54(e)(1988).

The Court in Asahi acknowledged that the purpose of the 1988 regulation was to discourage the resumption of dumping after revocation, and that there were policy concerns about having to undertake an entirely new investigation. See Asahi, 727 F. Supp. at 628. The Court found the old regulation was so ambiguous as to make the standard of reinstatement conjectural. Id. However, the Court did not address whether reinstatement could be accomplished through an amendment to 19 CFR 353.54, or through a new regulatory provision. Id.

We find that our current regulation governing reinstatement (as did the earlier 1989 regulation in effect at the time of Kolon's revocation) addresses the concerns enumerated by the Court in Asahi. This regulation places exporters and producers which the Department has previously found to be dumping, on notice that they are subject to immediate reinstatement once they are revoked from an order, if the Secretary later concludes they have resumed dumping. 19 CFR 351.222(b)(2)(i)(B) and (e). Indeed, revoked companies agree in writing to immediate reinstatement upon a finding of resumed dumping. 19 CFR 351.222(b)(2)(i)(B) and 351.222(e)(1). The present regulation makes clear that reinstatement can only occur as long as any exporter or producer is subject to the order. Thus, the Commission's determination that subject merchandise sold at less than NV is injurious to the domestic industry continues to support application of antidumping duties to subject merchandise sold at less than NV.

Moreover, any guidance provided by Asahi must be read in light of general principles of administrative law. One such basic principle of administrative law is that an administering agency must abide by its own rules to safeguard expectations. Thus, section 351.222(b)(2)(i)(B) of the Department's regulations suggests that a partial revocation determination is not a dispositive administrative pronouncement. Such a conclusion logically follows from the terms of the regulation, which directs the Department to rescind its partial revocation determination and to reinstate the revoked company under the existing antidumping duty order. In the instant case, the order on PET film from Korea has not been revoked. The Department's partial revocation with respect to Kolon was expressly conditioned upon the possibility of reinstatement should dumping resume. The Department's regulation is reasonable because it imposes a reasonable condition upon partial revocation which is limited to circumstances under which the statute authorizes the Department to impose antidumping duties to remedy injurious dumping of subject merchandise. Therefore, Asahi lends no support to Kolon's arguments.

Kolon's claim that the Department's reinstatement regulation has no statutory authority is without merit. Specifically, Kolon implies that the Act requires an injury determination by the Commission prior to the imposition of an order, and that, because the order on PET film from Korea has been partially revoked as to Kolon, a new petition must be filed with respect to Kolon, and separate affirmative determinations must be made by the Commission and the Department concerning injury and dumping. We find this argument unavailing. In the instant case, the Department made its final determination of dumping and the Commission made its final injury determination. See Order. Additionally, the antidumping duty order on PET film from Korea remains in place. Therefore, the Commission has found that dumping of PET film from Korea causes material injury to the domestic industry; that finding was undisturbed by the partial revocation of Kolon. Further, that revocation was premised on the absence of dumping rather than the absence of injury and was expressly conditioned on the possibility of reinstatement should dumping resume.

The partial revocation of the order with respect to Kolon did not nullify the validity of the underlying injury and less than fair value determinations that resulted in the issuance of an antidumping duty order which remains in force, particularly when the partial revocation is the result of behavior subsequent to those earlier determinations. The Commission's injury determination, furthermore, does not examine the injury caused by discrete companies, but rather the injury caused by all dumped exports originating in a particular exporting country. Even if one or more exporters in that country may have been revoked from the order on the basis of absence of dumping, all dumped exports of subject merchandise from that country continue to cause or threaten material injury, pursuant to the Commission's affirmative injury determination. Thus, unless all exporters are revoked from the order, the order continues to exist, as does the potential for reinstatement. Kolon itself agreed to such a reinstatement as a condition of its partial revocation, if the Department were to conclude that it has sold the merchandise at below NV. Thus, a new injury finding specific to Kolon is neither necessary nor appropriate for reinstatement pursuant to 19 CFR 351.222(h)(2)(i)(B).

In requesting revocation, Kolon filed a certification from a company official pursuant to the Department's regulations that it agree to the immediate reinstatement of the order, so long as any exporter or producer is subject to the order, if the Secretary concludes that it, subsequent to the revocation, sold PET film at less than NV. See Revocation. Several other companies remain subject to the antidumping duty order on PET film from Korea. The information submitted by Petitioners in their letters of July 19, 2006, September 20, 2006, and November 9, 2006 concerning Kolon's COP, and home market and U.S. sales activity, suggest Kolon might have resumed dumping subsequent to Kolon's revocation from the order. Petitioners allege underselling of PET film in the United States at prices between 29 percent and 72 percent below NV during the July 1, 2005, through June 30, 2006 period. Accordingly, the Department has properly determined to initiate a changed circumstances review to determine whether to reinstate Kolon in the order.

Moreover, Kolon's claim that it was never found by the Department to be dumping is also misplaced. First, Kolon dropped its court challenge to the first administrative review. Thus, Kolon's argument that the Department would have calculated a de minimis margin for Kolon for the first administrative review is speculation unsubstantiated by the record. More importantly, whether Kolon was or was not found to be dumping during the first administrative review is irrelevant to our basis for initiating a changed circumstances review. Petitioners have provided credible evidence that Kolon has resumed selling subject merchandise at prices below NV subsequent to its revocation from the Order. Moreover, Kolon voluntarily agreed to reinstatement in the order upon evidence that it had resumed dumping in the United States, provided that other companies remain subject to the Order. Presently, several companies remain subject to the Order. The standard for initiation of a changed circumstances review under section 751(b) of the Act is whether the request shows changed circumstances that warrant review. The Department finds that the Petitioners' changed circumstances review request, which suggests above de minimis dumping margins for Kolon, satisfies that standard.

Based on the foregoing, we find that Petitioners have provided sufficient evidence to initiate a changed circumstances review in which we will determine whether Kolon should be reinstated within the order of PET film from Korea. However, as the Department has yet to make a finding that Kolon did, in fact, sell subject merchandise at below NV, we will not order any border measures at this time.

The Department will publish in the Federal Register a notice of preliminary results of changed circumstances review in accordance with 19 CFR 351.221(b)(4) and 351.221(c)(3)(i), which will set forth the Department's preliminary factual and legal conclusions. Pursuant to 19 CFR 351.221(b)(4)(ii), interested parties will have an opportunity to comment on the preliminary results. The Department will issue its final results of review in accordance with the time limits set forth in 19 CFR 351.216(e).

This notice is published in accordance with sections 751(b)(1) and 777(i)(1) of the Act and 19 CFR 351.221(b) of the Department's regulations.

Dated: December 27, 2006.

Stephen J. Claeys,

Acting Assistant Secretary for Import Administration.

Footnotes

1.  As described more fully below, 19 CFR 353.25(b) has subsequently been superceded by 19 CFR 351.222(b)(2)(i)(B). However, the language in 19 CFR 351.222(b)(2)(i)(B) is largely unchanged from 19 CFR 353.25(b).

2.  The three administrative reviews forming the basis of the revocation are the June 1,1992 through May 31, 1993 review; the June 1, 1993 through May 31, 1994 review; and the June 1, 1994 through May 31, 1995 review. The final results of the June 1992 through May 31, 1993 and the June 1993 through May 31, 1994 administrative reviews of Kolon were published on July 5, 1996. See Polyethylene Terephthalate Film Sheet and Strip from Korea; Final Results of Antidumping Duty Administrative Review and Notice of Revocation in Part 61 FR 35177, July 5, 1996 (second and third administrative reviews). The final results of the June 1,1994 through May 31,1995 administrative review of Kolon were published on November 14, 1996. See Polyethylene Terephthalate Film Sheet and Strip from Korea; Final Results of Antidumping Duty Administrative Review and Notice of Revocation in Part 61 FR 58374 (November 14, 1996) (fourth administrative review).