[Federal Register Volume 61, Number 194 (Friday, October 4, 1996)]
[Notices]
[Pages 51882-51888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25535]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-815 & A-580-816]
Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat
Products From Korea: Preliminary Results of Antidumping Duty
Administrative Reviews
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative reviews.
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SUMMARY: In response to requests from three respondents and from the
petitioners in the original investigation, the Department of Commerce
(``the Department'') is conducting administrative reviews of the
antidumping duty orders on certain cold-rolled and corrosion-resistant
carbon steel flat products from Korea. These reviews cover three
manufacturers and exporters of the subject merchandise. The period of
review (``POR'') is August 1, 1994, through July 31, 1995.
We preliminarily determine that sales have been made below normal
value (``NV''). If these preliminary results are
[[Page 51883]]
adopted in our final results of administrative reviews, we will
instruct U.S. Customs to assess antidumping duties equal to the
difference between export price (``EP'') or constructed export price
(``CEP'') and NV.
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 issue; and (2) a
brief summary of the argument.
EFFECTIVE DATE: October 4, 1996.
FOR FURTHER INFORMATION CONTACT: Charles Rast (Dongbu), Steve
Bezirganian or Robin Gray (POSCO), Alain Letort (Union), or Linda
Ludwig, Enforcement Group III--Office 8, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Room 7866, Washington, D.C.
20230; telephone (202) 482-0405 (Rast), -1395 (Bezirganian), -0196
(Gray), -4243 (Letort), or -3833 (Ludwig).
SUPPLEMENTARY INFORMATION:
Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (``the Act'') by
the Uruguay Round Agreements Act (``URAA''). In addition, unless
otherwise indicated, all citations to the Department's regulations are
to the current regulations, as amended by the interim regulations
published in the Federal Register on May 11, 1995 (60 FR 25130).
Background
The Department published antidumping duty orders on certain cold-
rolled and corrosion-resistant carbon steel flat products from Korea on
August 19, 1993 (58 FR 44159). The Department published a notice of
``Opportunity to Request an Administrative Review'' of the antidumping
duty orders for the 1994/95 review period on August 1, 1995 (60 FR
39150). On August 31, 1995, respondents Dongbu Steel Co., Ltd.
(``Dongbu''), Union Steel Manufacturing Co., Ltd. (``Union''), and
Pohang Iron and Steel Co., Ltd. (``POSCO''), requested that the
Department conduct administrative reviews of the antidumping duty
orders on cold-rolled and corrosion-resistant carbon steel flat
products from Korea. On the same day, the petitioners in the original
less-than-fair-value (``LTFV'') investigations (Bethlehem Steel
Corporation, U.S. Steel Group--a unit of USX Corporation, Inland Steel
Industries, Inc., Geneva Steel, Gulf States Steel Inc. of Alabama,
Sharon Steel Corporation, and Lukens Steel Company) filed a similar
request. We initiated these reviews on September 5, 1995 (60 FR 46817--
September 8, 1996).
On November 20, 1995, the petitioners requested that the Department
determine whether antidumping duties had been absorbed by the
respondents during the POR, pursuant to section 751(a)(4) of the Act.
Section 751(a)(4) provides for the Department, if requested, to
determine during an administrative review initiated two years or four
years after publication of the orders whether antidumping duties have
been absorbed by a foreign producer or exporter subject to the order if
the subject merchandise is sold in the United States through an
importer who is affiliated with such foreign producer or exporter.
Section 751(a)(4) was added to the Act by the URAA. The Department's
interim regulations do not address this provision of the Act. For
transition orders as defined in section 751(c)(6)(C) of the Act, i.e.,
orders in effect as of January 1, 1995, section 351(213)(j)(2) of the
Department's draft regulations provides that ``* * * [t]he Department
will make a duty absorption determination, if requested, for any
administrative review initiated in 1996 or 1998.'' See Notice of
Proposed Rulemaking and Request for Public Comments, 61 FR 7308, 7366
(February 27, 1996) (``Proposed Regulations''). The commentary to the
proposed regulations explains that reviews initiated in 1996 will be
considered initiated in the second year and reviews initiated in 1998
will be considered initiated in the fourth year. Id. at 7317. Although
these proposed regulations are not yet binding upon the Department,
they do constitute a public statement of how the Department expects to
proceed in construing section 751(a)(4) of the amended statute. This
approach assures that interested parties will have the opportunity to
request a duty absorption determination on entries for which the second
and fourth years following an order have already passed, prior to the
time for sunset review of the order under section 751(c).
Because the orders on certain cold-rolled and corrosion-resistant
carbon steel flat products from Korea have been in effect since 1993,
these are transition reviews. Therefore, based on the policy stated
above, the Department will first consider a request for an absorption
determination if a review is initiated in 1996. Because these reviews
were initiated in 1995, we will not undertake a duty-absorption
investigation.
Under the Act, the Department may extend the deadline for
completion of administrative reviews if it determines that it is not
practicable to complete the review within the statutory time limit of
365 days. On March 22, 1996, the Department extended the time limits
for preliminary and final results in this case. See Extension of Time
Limit for Antidumping Duty Administrative Reviews, 61 FR 14291 (April
1, 1996).
The Department is conducting these administrative reviews in
accordance with section 751 of the Act.
Scope of the Reviews
The review of ``certain cold-rolled carbon steel flat products''
covers cold-rolled (cold-reduced) carbon steel flat-rolled products, of
rectangular shape, neither clad, plated nor coated with metal, whether
or not painted, varnished or coated with plastics or other nonmetallic
substances, in coils (whether or not in successively superimposed
layers) and of a width of 0.5 inch or greater, or in straight lengths
which, if of a thickness less than 4.75 millimeters, are of a width of
0.5 inch or greater and which measures at least 10 times the thickness
or if of a thickness of 4.75 millimeters or more are of a width which
exceeds 150 millimeters and measures at least twice the thickness, as
currently classifiable in the Harmonized Tariff Schedule (``HTS'')
under item numbers 7209.11.0000, 7209.12.0030, 7209.12.0090,
7209.13.0030, 7209.13.0090, 7209.14.0030, 7209.14.0090, 7209.21.0000,
7209.22.0000, 7209.23.0000, 7209.24.1000, 7209.24.5000, 7209.31.0000,
7209.32.0000, 7209.33.0000, 7209.34.0000, 7209.41.0000, 7209.42.0000,
7209.43.0000, 7209.44.0000, 7209.90.0000, 7210.70.3000, 7210.90.9000,
7211.30.1030, 7211.30.1090, 7211.30.3000, 7211.30.5000, 7211.41.1000,
7211.41.3030, 7211.41.3090, 7211.41.5000, 7211.41.7030, 7211.41.7060,
7211.41.7090, 7211.49.1030, 7211.49.1090, 7211.49.3000, 7211.49.5030,
7211.49.5060, 7211.49.5090, 7211.90.0000, 7212.40.1000, 7212.40.5000,
7212.50.0000, 7217.11.1000, 7217.11.2000, 7217.11.3000, 7217.19.1000,
7217.19.5000, 7217.21.1000, 7217.29.1000, 7217.29.5000, 7217.31.1000,
7217.39.1000, and 7217.39.5000. Included in this review are flat-rolled
products of nonrectangular cross-section where
[[Page 51884]]
such cross-section is achieved subsequent to the rolling process (i.e.,
products which have been ``worked after rolling'')--for example,
products which have been bevelled or rounded at the edges. Excluded
from this review is certain shadow mask steel, i.e., aluminum-killed,
cold-rolled steel coil that is open-coil annealed, has a carbon content
of less than 0.002 percent, is of 0.003 to 0.012 inch in thickness, 15
to 30 inches in width, and has an ultra flat, isotropic surface.
The review of ``certain corrosion-resistant carbon steel flat
products'' covers flat-rolled carbon steel products, of rectangular
shape, either clad, plated, or coated with corrosion-resistant metals
such as zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based
alloys, whether or not corrugated or painted, varnished or coated with
plastics or other nonmetallic substances in addition to the metallic
coating, in coils (whether or not in successively superimposed layers)
and of a width of 0.5 inch or greater, or in straight lengths which, if
of a thickness less than 4.75 millimeters, are of a width of 0.5 inch
or greater and which measures at least 10 times the thickness or if of
a thickness of 4.75 millimeters or more are of a width which exceeds
150 millimeters and measures at least twice the thickness, as currently
classifiable in the HTS under item numbers 7210.31.0000, 7210.39.0000,
7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.60.0000, 7210.70.6030,
7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000, 7210.90.9000,
7212.21.0000, 7212.29.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000,
7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000,
7215.90.1000, 7215.90.5000, 7217.12.1000, 7217.13.1000, 7217.19.1000,
7217.19.5000, 7217.22.5000, 7217.23.5000, 7217.29.1000, 7217.29.5000,
7217.32.5000, 7217.33.5000, 7217.39.1000, and 7217.39.5000. Included
are flat-rolled products of nonrectangular cross-section where such
cross-section is achieved subsequent to the rolling process (i.e.,
products which have been ``worked after rolling'')--for example,
products which have been bevelled or rounded at the edges. Excluded are
flat-rolled steel products either plated or coated with tin, lead,
chromium, chromium oxides, both tin and lead (``terne plate''), or both
chromium and chromium oxides (``tin-free steel''), whether or not
painted, varnished or coated with plastics or other nonmetallic
substances in addition to the metallic coating. Also excluded are clad
products in straight lengths of 0.1875 inch or more in composite
thickness and of a width which exceeds 150 millimeters and measures at
least twice the thickness. Also excluded are certain clad stainless
flat-rolled products, which are three-layered corrosion-resistant
carbon steel flat-rolled products less than 4.75 millimeters in
composite thickness that consist of a carbon steel flat-rolled product
clad on both sides with stainless steel in a 20%-60%-20% ratio.
These HTS item numbers are provided for convenience and customs
purposes. The written descriptions remain dispositive.
The POR is August 1, 1994 through July 31, 1995. These reviews
cover sales of certain cold-rolled and corrosion-resistant carbon steel
flat products by Dongbu, Union, and POSCO.
Verification
As provided in section 782(i)(3) of the Act, we verified
information provided by the respondents using standard verification
procedures, including on-site inspection of the manufacturer's
facilities, the examination of relevant sales and financial records,
and selection of original documentation containing relevant
information. Our verification results are outlined in the public
versions of the verification reports.
Transactions Reviewed
In accordance with section 751 of the Act, the Department is
required to determine the EP (or CEP) and NV of each entry of subject
merchandise during the relevant review period.
In determining NV, based on our review of the submissions by
Dongbu, the Department determined that Dongbu need not report
downstream sales in the home market because of their small quantity.
See Memorandum to the File from Alain Letort (November 8, 1996), a copy
of which, as well as copies of other memoranda referred to in this
notice, are available in Room B-099 of the Department's Central Records
Unit. With respect to POSCO, and based on our review of the
respondent's submissions, the Department determined that POSCO need not
report the home market downstream sales of the service centers in which
it owns a minority stake because it appears that they would have a
minimal effect upon the calculation of NV, and such reporting would
constitute an enormous burden. See Memorandum to Joseph A. Spetrini
from Richard O. Weible (September 16, 1996).
For purposes of these reviews, we are treating POSCO, Pohang Coated
Steel Co., Ltd. (``POCOS''), and Pohang Steel Industries Co., Ltd.
(``PSI'') as affiliated parties and have ``collapsed'' them as a single
producer of certain cold-rolled carbon steel flat products (POSCO and
PSI) and certain corrosion-resistant carbon steel flat products (POSCO,
POCOS, and PSI). POSCO, POCOS, and PSI were already collapsed in
previous segments of these proceedings. See Final Determinations of
Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat
Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain
Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-
Length Carbon Steel Plate from Korea, 58 FR 37176 (July 9, 1993).
Likewise, we have collapsed Union with one of its affiliated parties,
Dongkuk Steel Industries Co., Ltd. (``DKI'') for certain cold-rolled
carbon steel products only. Union and DKI were already collapsed in
previous segments of these proceedings. See Certain Cold-Rolled Carbon
Steel Flat Products from Korea: Preliminary Results of Antidumping Duty
Administrative Review, 60 FR 65284 (December 19, 1995). These companies
have submitted no information which would cause us to change that
treatment.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
cold-rolled carbon steel flat products produced by the respondents,
covered by the descriptions in the ``Scope of the Reviews'' section of
this notice, supra, and sold in the home market during the POR, to be
foreign like products for purposes of determining appropriate product
comparisons to U.S. sales of cold-rolled carbon steel flat products.
Likewise, we considered all corrosion-resistant carbon steel flat
products produced by the respondents and sold in the home market during
the POR to be foreign like products of corrosion-resistant carbon steel
flat products sold in the United States. Where there were no sales of
identical merchandise in the home market to compare to U.S. sales, we
compared U.S. sales to the next most similar foreign like product on
the basis of the characteristics listed in Appendix III of the
Department's September 14, 1995 antidumping questionnaire. In making
the product comparisons, we matched foreign like products based on the
physical characteristics reported by the respondent and verified by the
Department. Where sales were made in the home market on a different
weight
[[Page 51885]]
basis from the U.S. market (theoretical versus actual weight), we
converted all quantities to the same weight basis, using the conversion
factors supplied by the respondents, before making our fair-value
comparisons.
Fair-Value Comparisons
To determine whether sales of certain cold-rolled and corrosion-
resistant carbon steel flat products by the respondents to the United
States were made at less than fair value, we compared EP (or CEP) to
NV, as described in the ``Export Price (or Constructed Export Price)''
and ``Normal Value'' sections of this notice. In accordance with
section 777A(d)(2), we calculated monthly weighted-average prices for
NV and compared these to individual U.S. transactions.
Viability of Home Market
On March 25, 1996, the petitioners alleged that the Government of
Korea controls steel prices in Korea and that the home-market prices
reported by respondents are therefore not true market prices. Claiming
that the home market was not ``viable,'' the petitioners requested that
the Department collect third-country sales information for each of the
Korean respondents, and use the respondents' sales of subject
merchandise to third countries for purposes of comparison with prices
in the U.S. market.
On May 23, 1996, the Department issued a supplemental questionnaire
to each of the respondents requesting detailed information relevant to
the issue of the viability of the home market. On June 17, 1996,
Dongbu, POSCO, and Union all submitted responses to the home-market
viability questionnaire. These responses were subjected to thorough
verification in Korea, as were the sales and cost responses.
The petitioners' allegations have presented the Department with new
and complex issues as to whether the facts on the record of these
administrative reviews describe a particular market situation in the
exporting country, Korea, that does not permit a proper comparison with
the export price or constructed export price. We have preliminarily
determined that the home market is viable because the information
submitted by the petitioners, and the questionnaire responses submitted
by the respondents and verified by the Department, do not show that
there is a particular market situation in Korea that warrants a
determination of non-viability in this case. We note, however, that
this is a new issue under the URAA that has not previously been
addressed and the Department will further analyze this issue before
making its final determination. We intend to solicit additional
information and arguments submitted on this issue.
Affiliated-Party Issue
On March 13 and April 15, 1996, petitioners alleged that, because
Dongbu and Union purchase hot-rolled steel coils from POSCO for
purposes of manufacturing certain cold-rolled and corrosion-resistant
carbon steel products and because POSCO has a ``close supplier
relationship'' with Dongbu and Union, the latter should be considered
``affiliates'' of POSCO within the meaning of section 771(33) of the
Act (19 U.S.C. Sec. 1677(33)). Petitioners therefore requested that the
Department (1) collect information on the comparative prices Dongbu and
Union paid POSCO and unaffiliated suppliers for hot-rolled steel coils
in order to ascertain whether POSCO supplied this input to Union at
``arm's-length'' prices; and (2) require Dongbu and Union to submit
cost-of-production (``COP'') information on coil inputs purchased from
POSCO in order to determine whether the transfer prices of hot-rolled
steel coil from POSCO to Dongbu and Union were below or above POSCO's
COP.
In addition, on May 7, 1996, petitioners alleged that Union is
affiliated with POSCO not just through its close supplier relationship
with the latter but also via indirect stock ownership.
On the basis of the information supplied by both petitioners and
respondents, the Department has preliminarily determined that neither
Dongbu or Union can be considered as ``affiliates'' of POSCO within the
meaning of section 771(33) of the Act. See Memorandum to Joseph A.
Spetrini from Richard O. Weible (September 6, 1996). The Department,
therefore, did not request the respondents to provide the information
that the petitioners had suggested.
Date of Sale
Depending on the channel of trade and on the date after which the
key terms of sale could not be changed, we treated one of the following
dates as the date of the sale: the date of the purchase order, the date
of the internal confirmation, the date of the production order, or the
date of shipment.
A. Dongbu
We used the date of shipment as the date of sale for home-market
sales by Dongbu. For Dongbu's U.S. sales, we used the contract date or
the purchase-order date as the date of sale, depending on the channel
of trade and on the date after which the key terms of sale could not be
changed.
B. POSCO
We used the date of shipment as the date of sale for home-market
sales by Pohang Coil Center Co., Ltd. (``PCC'') and PSI because the key
terms of the sale were subject to change before this date. We used the
date of shipment as the date of sale for home-market sales of overrun
merchandise by POSTEEL, Kyung Ahn Co. (``KA'') (now known as
``POSTEEL''), and Keo Yang Co., Ltd. (``KY'') (now known as
``POSTRADE'') because the key terms of sale are fixed on that date. We
used the date of purchase order as the date of sale for all POSCO
sales, all POCOS sales, PSI's U.S. sales, and home-market sales of non-
overrun merchandise by POSTEEL, KA, and KY because the key terms of
sale were not subject to change after that date.
C. Union
We used the date of shipment as the date of sale for Union's home-
market sales, and the contract date as the date of sale for Union's
U.S. sales.
Export Price (or Constructed Export Price)
We calculated the price of United States sales based on EP, in
accordance with section 772(a) of the Act, when the subject merchandise
was sold to unaffiliated purchasers in the United States prior to the
date of importation. In certain instances, however, we determined that
CEP, as defined in section 772(b) of the Act, was a more appropriate
basis for the price of United States sales. These instances involved
sales made prior to importation where the merchandise was further
processed by an outside contractor in the United States on a fee-for-
service basis. In this case, the Department's determination was based
on the following facts: (a) Union America (``UA'') and later Dongkuk
International (``DKA''), Union's sales office in the United States, was
the importer of record and took title to the merchandise; (b) UA or DKA
financed the relevant sales transactions; (c) UA arranged and paid for
the further processing; and (d) UA or DKA assumed the seller's risk.
For all three respondents, we calculated EP based on packed prices
to unaffiliated customers in the United States. Where appropriate, we
made deductions from the starting price for foreign inland freight,
foreign brokerage and handling, international freight, marine
insurance, U.S. inland freight,
[[Page 51886]]
U.S. brokerage and handling, and U.S. Customs duties; we also added
duty drawback to the starting price.
We calculated CEP based on packed prices to unaffiliated customers
in the United States. Where appropriate, we made deductions from the
starting price for foreign inland freight, foreign brokerage and
handling, international freight, marine insurance, U.S. inland freight,
U.S. brokerage and handling, U.S. Customs duties, commissions, credit
expenses, warranty expenses, indirect selling expenses, and further
processing in the United States; we also added duty drawback to the
starting price. Finally, we made an adjustment for the amount of profit
allocated to these expenses, in accordance with section 772(d)(3) of
the Act.
Normal Value
Based on a comparison of the aggregate quantity of home-market and
U.S. sales, we determined that the quantity of the foreign like product
sold in the exporting country was sufficient to permit a proper
comparison with the sales of the subject merchandise to the United
States, pursuant to section 773(a) of the Act. Therefore, in accordance
with section 773(a)(1)(B)(i) of the Act, we based NV on the price at
which the foreign like product was first sold for consumption in the
home market, in the usual commercial quantities and in the ordinary
course of trade.
Where appropriate, we deducted rebates, discounts, inland freight
(offset where applicable by freight revenue), inland insurance, and
packing. We also deducted value-added tax (``VAT'') since the reported
gross unit price included VAT. Based on our verification of home-market
sales responses, we made adjustments to NV, where appropriate, for
differences in credit expenses (offset where applicable by interest
income), post-sale warehousing, and for differences in weight basis. We
also made adjustments, where appropriate, for home-market indirect
selling expenses to offset U.S. commissions in EP and CEP comparisons.
In comparisons to EP and CEP sales, we also increased NV by U.S.
packing costs in accordance with section 773(a)(6)(A) of the Act. We
made adjustments to NV for differences in cost attributable to
differences in physical characteristics of the merchandise, pursuant to
section 773(a)(6)(C)(ii) of the Act. In accordance with the
Department's practice, where for the most similar product match the
difference in merchandise adjustment for any product comparison
exceeded 20 percent, we based NV on constructed value (``CV'').
Differences in Levels of Trade
As set forth in section 773(a)(1)(B)(i) of the Act and in the
Statement of Administrative Action which accompanied the passage of the
URAA (H.R. Doc. No. 316, 103rd Cong., 2nd Sess. 829-831 (1994))
(``SAA''), to the extent practicable, the Department will calculate NV
based on sales at the same level of trade as the U.S. sales. When the
Department is unable to find sales in the comparison market at the same
level of trade as the U.S. sale(s), the Department may compare sales in
the U.S. and foreign markets at different levels of trade. See also
Final Determination of Sales at Less Than Fair Value: Certain Pasta
from Italy (61 FR 30326--June 14, 1996).
In accordance with section 773(a)(7)(A), if sales at different
levels of trade are compared, the Department will adjust the NV to
account for the difference in level of trade if two conditions are met.
First, there must be differences between the actual selling functions
performed by the seller at the level of trade of the U.S. sale and the
level of trade of the normal-value sale. Second, the differences
between the levels of trade must affect price comparability as
evidenced by a pattern of consistent price differences between sales at
the different levels of trade in the market in which NV is determined.
In order to determine that there is a difference in level of trade,
the Department must find that two sales have been made at different
phases of marketing, or the equivalent. Different phases of marketing
necessarily involve differences in selling functions, but differences
in selling functions (even substantial ones) are not alone sufficient
to establish a difference in the level of trade. Similarly, seller and
customer descriptions (such as ``distributor'' and ``wholesaler'') are
useful in identifying different levels of trade, but are insufficient
to establish that there is a difference in the level of trade.
A. Dongbu
In its questionnaire responses, Dongbu stated that there were no
differences in its selling activities by customer categories within
each market. In order independently to confirm the absence of separate
levels of trade within or between the U.S. and home markets, we
examined Dongbu's questionnaire responses for indications that Dongbu's
functions as a seller differed qualitatively and quantitatively among
customer categories. Where possible, we further examined whether each
selling function was performed on a substantial portion of sales. See
Proposed Regulations, 61 FR at 7348.
Dongbu sold to local distributors, service centers, and end-users
in the U.S. market. In the home market, Dongbu sold to local
distributors, service centers, and end-users. Dongbu performed the same
selling and marketing functions at the same stage of distribution on
sales to all its home-market customers, as well as to U.S. customers.
Thus, our analysis of the questionnaire response leads us to conclude
that sales within or between each market are not made at different
levels of trade. Accordingly, we preliminarily find that all sales in
the home market and the U.S. market were made at the same level of
trade. Therefore, all price comparisons are at the same level of trade
and an adjustment pursuant to section 773(a)(7)(A) is unwarranted.
B. POSCO
In its questionnaire responses, POSCO stated that its home-market
sales by affiliated service centers were at a different level of trade
than its other home-market sales and its U.S. sales (regardless of the
customer category). The respondent indicated that the service centers
provide certain selling functions to all of their customers, while
POSCO and its selling arms (e.g., POSTEEL, POCOS, and PSI) provide a
different set of selling functions to all of their customers (including
the service centers).
In order independently to confirm the presence of separate levels
of trade within or between the U.S. and home markets, we examined
POSCO's questionnaire responses for indications of substantive
differences in selling and marketing functions, and reviewed this issue
during the sales verification in Korea. Where possible, we further
examined whether each selling function was performed on a substantial
portion of sales. See Proposed Regulations, 61 FR at 7348.
At verification, the company did not adequately support its claim
that the service centers perform selling functions which, on a
qualitative and quantitative basis, are different from the functions
performed on their U.S. sales. Thus, our analysis of the questionnaire
responses leads us to conclude that sales within or between each market
are not made at different levels of trade. Accordingly, we
preliminarily find that all sales in the home market and the U.S.
market were made at the same level of trade. Therefore, all price
comparisons are at the same level of trade and an
[[Page 51887]]
adjustment pursuant to section 773(a)(7)(A) is unwarranted.
C. Union
In its questionnaire responses, Union stated that there were no
differences in its selling activities by customer categories within
each market. In order independently to confirm the absence of separate
levels of trade within or between the U.S. and home markets, we
examined Union's questionnaire responses for indications that Union's
functions as a seller differed, qualitatively and quantitatively, among
customer categories. Where possible, we further examined whether each
selling function was performed on a substantial portion of sales. See
Proposed Regulations, 61 FR at 7348.
Union sold to unrelated distributors and end-users in the U.S.
market. In the home market, Union sold to unrelated distributors and
end-users and to related distributors for sale to unrelated end-users.
Union performed the same selling and marketing functions at the same
stage of distribution on sales to all its home-market customers, as
well as to U.S. customers. In identifying the level of trade for CEP
sales, we considered only the selling activities reflected in the U.S.
price after deduction of expenses and profit under section 772(d) of
the Act. Pursuant to section 773(a)(1)(B)(i) of the Act, we consider
the selling functions reflected in the starting price of home-market
sales before any adjustments. Our analysis of the questionnaire
response leads us to conclude that sales within and between each market
are not made at different levels of trade. Accordingly, we
preliminarily find that all sales in the home market and the U.S.
market were made at the same level of trade. Therefore, all price
comparisons are at the same level of trade and an adjustment pursuant
to section 773(a)(7)(A) is unwarranted.
Cost-of-Production Analysis
Based on the fact that the Department had disregarded certain sales
by POSCO in the original LTFV investigations because they were made
below the COP, the Department found reasonable grounds in these
reviews, in accordance with section 773(b)(2)(A)(ii) of the Act, to
believe or suspect that POSCO made sales in the home market at prices
below the cost of producing the merchandise. In addition, petitioners
alleged, on January 16, 1996 (with respect to Dongbu), and January 17,
1996 (with respect to Union), that Dongbu and Union sold certain cold-
rolled and corrosion-resistant carbon steel flat products in the home
market at prices below COP. Based on these allegations, the Department
determined, on January 26, 1996 (for Dongbu), and on January 29, 1996
(for Union), that it had reasonable grounds to believe or suspect that
Dongbu and Union had sold the subject merchandise in the home market at
prices below the COP. We therefore initiated cost investigations with
regard to Dongbu, POSCO, and Union in order to determine whether the
respondents made home-market sales during the POR at prices below their
COP within the meaning of section 773(b) of the Act.
Before making any fair-value comparisons, we conducted the COP
analysis described below.
A. Calculation of COP
We calculated the COP based on the sum of each respondent's cost of
materials and fabrication for the foreign like product, plus amounts
for home-market selling, general, and administrative expenses
(``SG&A''), and packing costs in accordance with section 773(b)(3) of
the Act.
1. Dongbu
Based on our verification of Dongbu's cost responses, we revised
Dongbu's general and administrative expense (``G&A'') factor to exclude
foreign exchange translation gains and losses not related to the
production of the subject merchandise. We reduced Dongbu's cost of
sales amount by 1994 scrap revenue that the company used to offset
manufacturing costs.
2. POSCO
Based on our verification of POSCO's cost responses, we revised the
value of substrate sold by POSCO to POCOS, PSI and PCC. We used the
higher of the cost of the substrate, the transfer price or the fair
value.
For certain POCOS and POSCO control numbers, we revised
the cost of manufacturing (``COM'') to reflect differences in quality
and coating weight production costs.
We included donations and prior-period severance benefits
in G&A, and excluded from G&A gains and losses from the disposition of
securities as well as rental income.
We revised the interest expense calculation to reflect the
consolidated interest expense of POSCO, deferred foreign-exchange
losses, and gains and losses from the translation of loans payable
denominated in foreign currencies.
3. Union
Based on our verification of Union's cost responses, we adjusted
Union's reported COP to reflect certain adjustments to the COM, G&A,
and indirect selling expenses:
We increased Union's reported COM by the unreconciled
difference between total production cost and reported production cost.
We revised Union's submitted G&A factor to exclude foreign
exchange gains and losses not related to the production of the subject
merchandise, and to exclude securities disposal loss, dividend income
and rental income because they related to investment activities
unassociated with the production of the subject merchandise.
We reduced Union's reported cost of sales amounts by 1994
scrap revenues that Union used to offset manufacturing costs.
We combined net interest expenses for Union and its
related parties DKI and the Dongkuk Steel Mill group (``DSM'') because
DSM's ownership interest in Union and DKI places it, as the parent
company, in a position to influence Union's financial borrowing and
overall capital structure of the DSM chaebol.
We included foreign currency gains and losses that related
to long-term debt in Union's financing expense and reduced Union's cost
of sales by scrap revenue.
B. Test of Home-Market Prices
We used the respondent's weighted-average COP, as adjusted (see
above), for the period July 1994 to June 1995. We compared the
weighted-average COP figures to home-market sales of the foreign like
product as required under section 773(b) of the Act. In determining
whether to disregard home-market sales made at prices below the COP, we
examined whether (1) within an extended period of time, such sales were
made in substantial quantities, and (2) such sales were made at prices
which permitted the recovery of all costs within a reasonable period of
time. On a product-specific basis, we compared the COP to the home-
market prices (not including VAT), less any applicable movement
charges, discounts, and rebates.
C. Results of COP Test
Pursuant to section 773(b)(2)(C), where less than 20 percent of
respondent's sales of a given product were at prices less than the COP,
we did not disregard any below-cost sales of that product because we
determined that the below-cost sales were not made in ``substantial
quantities.'' Where 20 percent or more of a respondent's sales of a
given product during the POR were at prices less than the COP, we found
that sales of that model were made in
[[Page 51888]]
``substantial quantities'' within an extended period of time, in
accordance with sections 773(b)(2) (B) and (C) of the Act, and were not
at prices which would permit recovery of all costs within an extended
period of time, in accordance with section 773(b)(2)(D) of the Act.
When we found that below-cost sales had been made in ``substantial
quantities'' and were not at prices which would permit recovery of all
costs within a reasonable period of time, we disregarded the below-cost
sales in accordance with section 773(b)(1) of the Act. Where all sales
of a specific product were at prices below the COP, we disregarded all
sales of that product, and calculated NV based on CV.
D. Calculation of CV
In accordance with section 773(e) of the Act, we calculated CV
based on the sum of respondents' cost of materials, fabrication, SG&A,
U.S. packing costs, interest expenses, and profit. In accordance with
sections 773(e)(2)(A), we based SG&A and profit on the amounts incurred
and realized by the respondent 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 home-market selling expenses. Based on our
verification of the cost responses submitted by Dongbu, POSCO, and
Union, we adjusted each company's reported CV to reflect adjustments to
COM and G&A, as detailed in the ``Calculation of COP'' section of this
notice. We also made adjustments, where appropriate, for home-market
indirect selling expenses to offset U.S. commissions in EP and CEP
comparisons.
Currency Conversion
For purposes of the preliminary results, we made currency
conversions based on the official exchange rates in effect on the dates
of the U.S. sales as certified by the Federal Reserve Bank of New York.
Section 773A(a) directs the Department to use a daily exchange rate in
order to convert foreign currencies into U.S. dollars, unless the daily
rate involves a ``fluctuation.'' In accordance with the Department's
practice, we have determined that a fluctuation exists when the daily
exchange rate differs from a benchmark by 2.25 percent. See, e.g.,
Certain Stainless Steel Wire Rods from France: Preliminary Results of
Antidumping Duty Administrative Review (61 FR 8915, 8918--March 6,
1996). The benchmark is defined as the rolling average of rates for the
past 40 business days. When we determined a fluctuation existed, we
substituted the benchmark for the daily rate. However, for the
preliminary results we have not determined that a fluctuation exists,
and we have not substituted the benchmark for the daily rate.
Preliminary Results of the Reviews
As a result of these reviews, we preliminarily determine that the
following weighted-average dumping margins exist:
------------------------------------------------------------------------
Weighted-
average
Producer/manufacturer/exporter margin
(percent)
------------------------------------------------------------------------
Certain Cold-Rolled Carbon Steel Flat Products
------------------------------------------------------------------------
Dongbu....................................................... 0.10
Union........................................................ 0.00
POSCO........................................................ 0.19
------------------------------------------------------------------------
Certain Corrosion-Resistant Carbon Steel Flat Products
------------------------------------------------------------------------
Dongbu....................................................... 0.00
Union........................................................ 1.28
POSCO........................................................ 0.06
------------------------------------------------------------------------
Parties to this proceeding may request disclosure within five days
of publication of this notice and any interested party may request a
hearing within 10 days of publication. Any hearing, if requested, will
be held 44 days after the date of publication, or the first working day
thereafter. Interested parties may submit case briefs and/or written
comments no later than 30 days after the date of publication. Rebuttal
briefs and rebuttals to written comments, limited to issues raised in
such briefs or comments, may be filed no later than 37 days after the
date of publication of this notice. The Department will publish a
notice of the final results of the administrative review, including its
analysis of issues raised in any written comments or at a hearing, not
later than 180 days after the date of publication of this notice.
Cash Deposit
The following deposit requirements will be effective upon
completion of the final results of this administrative review for all
shipments of certain cold-rolled and corrosion-resistant carbon steel
flat products from Korea entered, or withdrawn from warehouse, for
consumption on or after the publication date of the final results of
these administrative reviews, as provided by section 751(a)(1) of the
Act and 19 CFR 353.22: (1) The cash deposit rate for each respondent
will be the rate established in the final results of these
administrative reviews (except that no deposit will be required for
firms with zero or de minimis margins, i.e., margins lower than 0.5
percent; (2) for previously reviewed or investigated companies not
listed above, the cash deposit rate will continue to be the company-
specific rate published for the most recent period; (3) if the exporter
is not a firm covered in these reviews, a prior review, or the original
LTFV investigations, but the manufacturer is, the cash deposit rate
will be the rate established for the most recent period for the
manufacturer of the merchandise; and (4) the cash deposit rate for all
other manufacturers or exporters will be 14.44 percent (for certain
cold-rolled carbon steel flat products) and 17.70 percent (for certain
corrosion-resistant carbon steel flat products, the ``all others''
rates established in the LTFV investigations. These deposit
requirements, when imposed, shall remain in effect until publication of
the final results of the next administrative review.
This notice serves as a preliminary reminder to importers of their
responsibility under 19 CFR 353.26 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.
These administrative reviews and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated: September 25, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-25535 Filed 10-3-96; 8:45 am]
BILLING CODE 3510-DS-P
