[Federal Register Volume 64, Number 215 (Monday, November 8, 1999)]
[Notices]
[Pages 60776-60784]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29208]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-839]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of the Final Determination: Certain Polyester
Staple Fiber From the Republic of Korea
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: November 8, 1999.
FOR FURTHER INFORMATION CONTACT: Vincent Kane, Craig Matney, or Suresh
Maniam, Office 1, AD/CVD Enforcement, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-2815, (202) 482-1778, or (202) 482-0176,
respectively.
The Applicable Statute and Regulations
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 of Commerce's (the
Department's) regulations refer to the regulations codified at 19 CFR
Part 351 (April 1998).
Preliminary Determination
We preliminarily determine that certain polyester staple fiber
(PSF) from the Republic of Korea (Korea) is being sold, or is likely to
be sold, in the United States at less than fair value (LTFV), as
provided in section 733 of the Act. The estimated margins are shown in
the Suspension of Liquidation section of this notice.
Case History
This investigation was initiated on April 22, 1999 (see Initiation
of Antidumping Duty Investigations: Certain Polyester Staple Fiber from
the Republic of Korea and Taiwan, 64 FR 23053 (April 29, 1999)
(Initiation Notice)). Since the initiation of this investigation, the
following events have occurred:
On May 17, 1999, the United States International Trade Commission
(ITC) preliminarily determined that there is a reasonable indication
that imports of PSF are materially injuring the United States industry.
On May 24, 1999, the Department requested comments from interested
parties regarding the criteria to be used for model matching purposes.
The parties submitted comments on our proposed model matching criteria
on May 26, 1999.
On June 4 and 8, 1999, the Department issued antidumping
questionnaires to Samyang Corporation (Samyang), Sam Young Synthetics
Co. (Sam Young), and Geum Poong Corporation (Geum Poong) (see
memorandum dated June 17, 1999, to Deputy Assistant Secretary Richard
W. Moreland (Respondent Selection Memorandum), which is on file in
Import Administration's Central Records Unit). The respondents
submitted their initial responses to the questionnaires between July 2
and 30, 1999. Between July 14 and August 5, 1999, E.I. DuPont de
Nemours, Inc.; Arteva Specialities S.a.r.l., d/b/a KoSa; Wellman, Inc.;
and Intercontinental Polymers, Inc. (hereinafter collectively referred
to as ``the petitioners'') filed comments on the questionnaire
responses. After analyzing the initial responses and the petitioners'
comments, we issued supplemental questionnaires to the respondents
between August 9 and 11, 1999. We received responses to these
supplemental questionnaires between August 31 and September 3, 1999.
On July 28 and August 10, 1999, the petitioners requested that the
Department initiate an investigation of sales below the cost of
production (COP) for Samyang and Sam Young, respectively. On August 17
and 18, 1999, based on our review of the petitioners' below cost
allegation, we initiated a cost investigation for Samyang and Sam Young
(see memoranda dated August 17, 1999 and August 18, 1999, to Senior
Director Susan Kuhbach, which is on file in Import Administration's
Central Records Unit). On August 19, 1999, we requested that these two
companies respond to Section D of the antidumping questionnaires
concerning COP and constructed value (CV). We received the responses on
September 9, 1999.
On August 16, 1999, the petitioners made a timely request for a
postponement of the preliminary determination pursuant to section
[[Page 60777]]
733(c)(1)(A) of the Act. On August 25, 1999, the Department extended
the preliminary determination until no later than September 29, 1999.
See Notice of Postponement of Preliminary Antidumping Duty
Determinations: Certain Polyester Staple Fiber from the Republic of
Korea and Taiwan, 64 FR 47766 (September 1, 1999). On September 29,
1999, the petitioners requested another extension. In response, the
Department extended the preliminary determination until no later than
October 4, 1999. See Notice of Postponement of Preliminary Antidumping
Duty Determinations: Certain Polyester Staple Fiber from the Republic
of Korea and Taiwan, 64 FR 55248 (October 12, 1999). On October 4,
1999, based on petitioners' September 29, 1999 request for extension,
the Department further extended the preliminary determination until no
later than October, 29, 1999. See Notice of Postponement of Preliminary
Antidumping Duty Determinations: Certain Polyester Staple Fiber from
the Republic of Korea and Taiwan, 64 FR 55700 (October 14, 1999).
Between September 16 and October 20, 1999, the petitioners
requested that the Department use quarterly averaging periods in our
analysis rather than annual averaging periods (see Fair Value
Comparisons section below).
On October 8 and October 15, 1999, we issued Section D supplemental
questionnaires to Sam Young and Samyang, respectively. We received
responses to these questionnaires between October 15 and October 22,
1999.
Postponement of Final Determination and Extension of Provisional
Measures
Pursuant to section 735(a)(2) of the Act, on October 4, Samyang
requested that, in the event of an affirmative preliminary
determination, the Department postpone its final determination in this
investigation. On October 6, Sam Young and Geum Poong also requested
that, in the event of an affirmative preliminary determination, the
Department postpone its final determination in this investigation. In
accordance with 19 CFR 351.210(b), because (1) our preliminary
determination is affirmative, (2) the requesting exporters account for
a significant proportion of exports of the subject merchandise, and (3)
no compelling reasons for denial exist, we are granting the
respondents' request and are postponing the final determination until
no later than 135 days after the publication of this notice in the
Federal Register. The respondents have further requested that the
Department extend provisional measures from a four-month period to not
more than six months. Suspension of liquidation will be extended
accordingly.
Period of Investigation
The period of investigation (POI) is April 1, 1998, through March
31, 1999.
This period corresponds to each respondent's four most recent
fiscal quarters prior to the filing of the petition.
Scope of Investigation
For the purposes of this investigation, the product covered is
certain polyester staple fiber. Certain polyester staple fiber is
defined as synthetic staple fibers, not carded, combed or otherwise
processed for spinning, of polyesters measuring 3.3 decitex (3 denier,
inclusive) or more in diameter. This merchandise is cut to lengths
varying from one inch (25 mm) to five inches (127 mm). The merchandise
subject to this investigation may be coated, usually with a silicon or
other finish, or not coated. Certain polyester staple fiber is
generally used as stuffing in sleeping bags, mattresses, ski jackets,
comforters, cushions, pillows, and furniture. Merchandise of less than
3.3 decitex (less than 3 denier) classified under the Harmonized Tariff
Schedule of the United States (HTSUS) at subheading 5503.20.00.20 is
specifically excluded from this investigation. Also specifically
excluded from this investigation are polyester staple fibers of 10 to
18 denier that are cut to lengths of 6 to 8 inches (fibers used in the
manufacture of carpeting).
The merchandise subject to this investigation is classified in the
HTSUS at subheadings 5503.20.00.40 and 5503.20.00.60. Although the
HTSUS subheadings are provided for convenience and customs purposes,
the written description of the merchandise under investigation is
dispositive.
Scope Comments
As stated in the Initiation Notice, we set aside a period for
parties to raise issues regarding product coverage. We received
comments on the scope from various interested parties on May 12, 1999,
and rebuttal comments on June 7, 1999.
Stein Fibers, an importer of PSF from Korea, argued that under the
criteria set forth in the Department's regulations at 19 CFR
351.225(k)(2) to determine whether products are covered or excluded by
the scope (also known as the ``Diversified Products'' criteria),
regenerated fiber does not fall under the scope of this investigation.
First, Stein Fibers asserted that regenerated fiber is a low-quality
product that is not comparable to U.S.-produced high-quality virgin and
recycled PSF. Second, Stein Fibers contended that the quality
differences result in different expectations by the ultimate user and
in the product's ultimate use. Third, Stein Fibers stated that
regenerated PSF and U.S.-made virgin or recycled PSF do not compete
with each other and, therefore, their channels of trade are dissimilar.
Finally, Stein Fibers claimed that regenerated fiber is never
advertised or displayed, while particular brands of U.S.-made virgin or
recycled 1PSF are prominently displayed and advertised in the bedding
departments of many department stores.
Gates Formed-Fibre Products, Inc. (Gates), a PSF importer, stated
that the black and colored fiber extruded from textile fiber waste that
it imports for the manufacture of substrate for automobile trunk liners
is a different class or kind of merchandise than the products covered
by the petition. Therefore, Gates argued, black automotive substrate
(BAS) should be excluded from the scope of the investigation because:
(1) It cannot be used for the fill applications described in the
petition; (2) it is distinct from other fiber products; (3) it should
be excluded based on consideration of the ``Diversified Products''
criteria as set forth in the Department's regulations; (4) the
petitioners are considering its exclusion; and (5) if excluded, there
would be no risk of circumvention.
With respect to the ``Diversified Products'' criteria, Gates
submitted specific comments on each of the criteria. First, Gates
claimed that BAS differs from fiber fill product in all possible model
matching criteria. Second, Gates stated that the ultimate purchaser
would not accept BAS for use in the manufacture of merchandise such as
pillows and ski jackets which require fiber fill. Third, Gates asserted
that fiber fill is distributed by importers to manufacturers of
pillows, comforters, jackets, etc., which then resell their products to
distributors and large retailers. BAS is used in the manufacture of
trunk liners which are then sold to original equipment manufacturers or
their suppliers. Fourth, BAS cannot be used for fill applications.
Fifth, products using fiber fill are advertised directly to consumers
while BAS for trunk liners is not advertised to consumers.
Far Eastern Textile Ltd. (Far Eastern) and Nan Ya Plastics
Corporation (Nan Ya), the respondents in the companion antidumping
investigation of PSF from Taiwan, noted that low-melt PSF is used
[[Page 60778]]
exclusively for bonding and acts as an adhesive to hold other fibers
together for non-woven batting in high-loft products. Since low-melt
PSF itself is not used as filling and is not similar in appearance to
cotton or wool, Far Eastern and Nan Ya stated that low-melt PSF is
clearly outside the scope of investigation. Moreover, Far Eastern and
Nan Ya asserted that low-melt PSF is outside the scope of investigation
in consideration of the ``Diversified Products'' criteria set forth in
section 351.225(k)(2) of the Department's regulations. First, according
to Far Eastern and Nan Ya, with respect to product characteristics,
low-melt PSF consists of an outer sheath and an inner core as opposed
to single-component PSF. Second, with respect to the expectations of
the ultimate user and the ultimate use, Far Eastern and Nan Ya pointed
out that low-melt PSF is used as a bonding agent, not as a filler or
loft material, which is the expectation of the ultimate purchaser for
polyester staple fibers. Third, Far Eastern and Nan Ya stated that
while the channels of trade may be similar, the Department has
consistently recognized that no single criterion is dispositive.
Finally, Far Eastern and Nan Ya noted that they supply the U.S. market
with a particular specification of low-melt PSF suitable for furniture
and bedding manufacturing that is not available domestically in the
United States.
Saehan Industries Inc. and Samyang Corporation (Saehan/Samyang),
Korean producers and exporters of PSF, stated that conjugate polyester
staple fiber (conjugate PSF) and low-melt polyester staple fiber (low-
melt PSF) do not fall under the scope of this investigation. Saehan/
Samyang argued that conjugate PSF should be excluded from the scope
because there is no U.S. industry producing this product. 1Saehan/
Samyang stated that low-melt PSF is not ``fiber for fill'' and is,
thus, not the product targeted by the petitioners. Moreover, Saehan/
Samyang claimed that under the ``Diversified Products'' criteria,
conjugate PSF and low-melt PSF are outside the scope of this
investigation. First, Saehan/Samyang noted that the manufacturing
process for conjugate fiber creates a natural curl or spiral, resulting
in greater ``fluff.'' ``Regular'' fibers, produced by the petitioners,
are straight or mechanically crimped and lack the loft of conjugate
fiber. Second, Saehan/Samyang cited testimony given before the ITC
asserting that end-users expect greater loft and a down-like quality
from conjugate fibers which is not characteristic of the mechanically-
crimped fibers produced by DuPont, one of the petitioners. Third,
Saehan/Samyang stated that ``regular'' PSF and conjugate PSF are both
used in the production of furniture and home furnishings and,
therefore, they are not sold in different channels of trade. However,
Saehan/Samyang argued that channels of trade is less significant as a
criterion in this case because there are no different channels of trade
for any products used in this industry. Fourth, the ultimate use of
conjugate PSF is to create a certain level of loft. In the United
States, it is either used to provide high-loft characteristics, or it
is mixed with ``regular'' fiber to achieve different levels of loft,
and these two fibers are not interchangeable. Fifth, Saehan/Samyang
stated that although these products are not advertised or displayed in
the same way as products sold directly in the retail market,
manufacturers and customers treat the two products very differently.
The petitioners objected to the interested parties' requests that
regenerated, low-melt, BAS, and conjugate PSF be excluded from the
scope of the investigation. According to the petitioners, these
products are all PSF, meet the definition of the scope, and are
captured within the scope intended by the petitioners. Furthermore, the
petitioners claimed that all of these imported products are
domestically available. The petitioners added that there is no basis
for creating a separate class or kind of merchandise relating to the
PSF under consideration.
For purposes of this preliminary determination and in consideration
of comments by interested parties, the Department has not modified the
scope of this investigation because the current language reflects the
product coverage requested by the petitioners, and we have determined
that regenerated, low-melt, BAS, and conjugate PSF fall within that
scope. On the issue of whether BAS is a separate class or kind of
merchandise under the ``Diversified Products'' criteria, we will make a
determination in the final determination of this investigation.
Selection of Respondents
Section 777A(c)(1) of the Act directs the Department to calculate
individual dumping margins for each known exporter and producer of the
subject merchandise. However, section 777A(c)(2) of the Act gives the
Department discretion, when faced with a large number of exporters/
producers, to limit its examination to a reasonable number of such
companies if it is not practicable to examine all companies. Where it
is not practicable to examine all known producers/exporters of the
subject merchandise, this provision permits the Department to
investigate either: (1) a sample of exporters, producers, or types of
products that is statistically valid based on the information available
at the time of selection; or (2) exporters and producers accounting for
the largest volume of the subject merchandise that can reasonably be
examined.
On June 7, 1999, we received a request from Sung Lim Company Ltd.
to participate as a voluntary respondent in this investigation. On June
17, 1999, we received a similar request from Estal Industrial Company.
However, we determined that it was not practicable in this
investigation to examine all known producers/exporters of the subject
merchandise. Instead we found that, given our resources, we would be
able to investigate the three producers/exporters with the greatest
export volume (see Case History section above). For a more detailed
discussion of respondent selection in this investigation, see our
Respondent Selection Memorandum.
Critical Circumstances
On July 30, 1999, the petitioners alleged that there is a
reasonable basis to believe or suspect that critical circumstances
exist with respect to the subject merchandise. In accordance with 19
CFR 351.206(c)(2)(i), because this allegation was filed at least 20
days prior to our preliminary determination, we must issue our
preliminary critical circumstances determination not later than the
preliminary determination.
Section 733(e)(1) of the Act provides that if a petitioner alleges
critical circumstances, the Department will determine whether there is
a reasonable basis to believe or suspect that: (A)(i) there is a
history of dumping and material injury by reason of dumped imports in
the United States or elsewhere of the subject merchandise; or (ii) the
person by whom, or for whose account, the merchandise was imported knew
or should have known that the exporter was selling the subject
merchandise at less than fair value and that there was likely to be
material injury by reason of such sales; and (B) there have been
massive imports of the subject merchandise over a relatively short
period.
With respect to the first criterion, i.e., a history of dumping and
material injury in the United States or elsewhere, the European Union
(EU) imposed antidumping duties on synthetic polyester fibers from
Korea on January 8, 1993. The merchandise subject to the EU antidumping
duty order was classified under Common Nomenclature
[[Page 60779]]
(CN) 5503.20.00, which is the equivalent of HTSUS subheading 5503.20.00
and, thus, covers the subject merchandise in the instant investigation.
On July 29, 1999, the EU terminated the antidumping duty order.
Based on the recent existence of this order, there is sufficient
evidence to determine that there is a history of dumping of the subject
merchandise and a history of material injury as a result thereof.
Because there is a history of dumping and material injury by reason of
dumped imports in the EU of the subject merchandise, the first
statutory criterion of the test for finding critical circumstances is
met. Therefore, we must consider the second statutory criterion:
whether or not the imports of the subject merchandise have been massive
over a relatively short period.
In determining whether there are ``massive imports'' over a
``relatively short time period,'' the Department ordinarily bases its
analysis on import data for at least the three months preceding (the
``base period'') and following (the ``comparison period'') the filing
of the petition. Imports normally will be considered massive when
imports during the comparison period have increased by 15 percent or
more compared to imports during the base period (see 19 CFR
351.206(h)). The Department examines respondent-specific shipment
information or aggregate import statistics when respondent-specific
shipment information is not available.
To determine whether imports of the subject merchandise have been
massive over a relatively short period, we compared each respondent's
export volume for the three months prior to the filing of the petition
(i.e., January through March 1999) to that during the three months
subsequent to the filing of the petition (i.e., April through June
1999). For the ``all other'' exporters, although we found massive
imports for the mandatory respondents, in this case we also had usable
aggregate import data. Therefore, we performed the analysis using total
imports from Korea, less those imports accounted for by the respondents
(see Notice of Final Determination of Sales at Less Than Fair Value:
Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Japan, 64 FR
24329, 24338 (Comment 2) (May 6, 1999)).
Based on our analysis, we preliminarily determine that the increase
in imports was greater than 15 percent for each of the respondents.
Therefore, because (1) there is a history of dumping and material
injury, and (2) each of the respondents had more than a 15 percent
increase in import volume, we preliminarily determine that critical
circumstances exist for each of the companies under investigation.
Also, based on our analysis of the import data as described above, we
preliminarily determine that critical circumstances do not exist for
the ``all other'' exporters.
We note that Sam Young and Geum Poong have argued that the increase
in imports was a direct result of an anticipated, publicized freight
rate increase and submitted documentation in support of their argument.
In making a determination of whether there have been massive imports
for purposes of a critical circumstances determination under 19 CFR
351.206(h), the Department normally examines the volume and value of
imports, seasonal trends, and the share of domestic consumption
accounted for by the imports. Anticipated increases in freight rates
are not among the factors that the Department normally takes into
consideration when making such a determination. After reviewing the
information submitted by the respondents, we believe that the
respondents have failed to demonstrate that increased freight rates are
a seasonal trend. Therefore, we preliminarily determine that an
increase in freight rates is not relevant for our determination of
whether there have been massive imports of the subject merchandise.
We will make a final determination concerning critical
circumstances when we make our final determination in this
investigation.
Product Comparisons
Pursuant to section 771(16) of the Act, all products produced and
sold by the respondents in the comparison market that fit the
definition contained in the Scope of the Investigation section of this
notice and were sold during the POI comprise the foreign like product.
For purposes of this preliminary determination, we have relied on the
following criteria, in order of significance, to match U.S. sales of
PSF to comparison market sales of the foreign like product: (1) Fiber
composition (conjugate, single component, crimped, low melt, etc.); (2)
fiber type (virgin, recycled, blended, regenerated); (3) cross section;
(4) finish; and (5) denier. Also, because Samyang specified grade of
product in both the comparison market and the U.S. market, we attempted
to make comparisons of the same grade for Samyang (see memorandum to
file on Preliminary Determination Calculations for Samyang, dated
October 29, 1999, (Samyang Calculations Memo) which is on file in
Import Administration's Central Records Unit).
In making our comparisons, we performed the cost test and
disregarded all sales that failed this test (see the Results of the COP
Test section below). We then attempted to compare products sold in the
U.S. and the comparison market that were identical with respect to the
product matching criteria above. Where we did not find any comparison
market sales of merchandise that was identical in these respects to the
merchandise sold in the United States, we compared U.S. products with
the most similar merchandise sold in the comparison market. Where there
were no appropriate comparison market sales of comparable merchandise,
we compared the merchandise sold in the United States to CV, in
accordance with section 773(a)(4) of the Act.
Fair Value Comparisons
To determine whether sales of PSF from Korea to the United States
were made at less than fair value, we compared the export price (EP) to
comparison market prices or CV, as described in the Export Price and
Normal Value sections below.
The petitioners allege that due to a significant change in the
value of the won and declining prices during the POI, the Department
should use quarterly averaging periods rather than a POI average
period. The petitioners cite the Department's determination that there
was a ``sustained movement'' in the exchange rate during the POI.
Furthermore, the petitioners state that the exchange rate appreciated
by 20 to 30 percent over the POI. The petitioners argue that the
Department has in the past used different averaging periods to avoid
the distortive effects on the dumping analysis when there is a
significant change in the exchange rate (see, Notice of Final
Determination of Sales at Less Than Fair Value: Stainless Steel Sheet
and Strip in Coils From the Republic of Korea (``Sheet and Strip from
Korea''), 64 FR 30664, 30676 (June 8, 1999)).
With regard to declining prices, the petitioners contend that, for
the largest volume control numbers, sales prices in both the U.S. and
home market dropped significantly during the POI. The petitioners argue
that in past cases, when there was a ``significant and consistent''
price decline in the market, the Department used different averaging
periods (see, Notice of Final Determination of Sales at Less Than Fair
Value: Static Random Access Memory Semiconductors From the Republic of
Korea (``SRAMS''), 63 FR 8934, 8935 (February 23, 1998). The
[[Page 60780]]
petitioners claim that in the SRAMS case, unit prices of SRAMS fell by
32 percent during the POI.1 In this case, since some
products had a price decline as high as 40 percent, the petitioners
request the Department to use quarterly averaging periods to avoid the
combined distortive effects that exchange rate and price changes would
have on the dumping analysis if POI averaging was used.
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\1\ See petitioners' submission dated October 20, 1999, at 3.
The percentage change in price was derived by calculating unit
prices on the basis of import statistics.
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Section 773A(a) of the Act directs the Department to use a daily
exchange rate in order to convert foreign currencies into U.S. dollars.
However, when a currency has undergone a sustained movement, section
773A(b) of the Act directs the Department to allow a 60-day adjustment
period. A sustained movement has occurred when the weekly average of
the actual daily rates exceeds the weekly average of the benchmark
rates by more than five percent for eight consecutive weeks. The
benchmark is defined as the moving average of exchange rates for the
past 40 business days (see Policy Bulletin 96-1: Currency Conversions,
61 FR 9434, March 8, 1996). This adjustment is only required when the
foreign currency is appreciating against the U.S. dollar. In this case,
the Department found a sustained exchange rate movement in the won
during March and April of 1998. We therefore used a fixed exchange rate
for a period of 60 days after the ``sustained movement'' (i.e., from
May 5 to July 5, 1998).
As noted, the ``sustained movement'' of the won occurred in March
and April of 1998. Our POI is April 1998 to March 1999. Therefore, half
of the ``sustained movement'' occurred outside the POI. In looking only
at the month of April 1998, the won appreciated roughly 8.5
percent.2 The resulting effect on normal value is minimal in
comparison to the effect on normal value caused by the exchange rate
decline during November and December of 1997. That decline was the
change in currency value that prompted the Department to use different
averaging periods in Sheet and Strip from Korea. Furthermore, we found
that, while the actual exchange rate varied over the POI and at one
point appreciated by over 20 percent compared to the beginning of the
POI, on average, the actual exchange rate did not appreciate out of the
ordinary. For example, the average exchange rate for the last month of
the POI was only 13 percent higher than the average exchange rate for
the first month. Also, this movement did not occur abruptly.
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\2\ Calculated by subtracting the dollar/won rate on April 1,
1998 from the dollar/won rate on April 30, 1998 and dividing the
result by the dollar/won rate on April 1, 1998.
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Because the gradual movement of the exchange rate during our POI
differs from the situation which occurred in Sheet and Strip from
Korea, and because the magnitude of the exchange rate change is not
large, we find that the change in the value of the won relative to the
dollar is not a basis for adopting a different averaging period.
With regard to the petitioners' claim concerning declining prices
during the POI, section 777A(d)(1)(A)(i) of the Act allows the
Department to use a weighted average-to-average comparison when
comparing export prices to home market prices. Section 351.414(d)(3) of
the Department's regulations, which discusses the length of averaging
periods, states that the Department normally will use weighted averages
for the entire POI, but that when prices differ significantly over the
course of the POI, the Department may calculate weighted averages for
shorter periods.
In this case, for Samyang, we examined changes in the average
monthly gross unit price for the subject merchandise sold in the United
States and the average monthly gross unit price for the subject
merchandise sold in the home market. For Sam Young, we performed the
same analysis, except we examined the average monthly U.S. sales prices
and the average monthly gross unit prices for the subject merchandise
sold in the Canadian market.3 In analyzing the data, we did
not find a significant and consistent price decline during the POI.
While monthly average prices were higher at the beginning of the POI
than at the end, several months during the POI showed either price
increases or virtually no change at all, while other months showed
price decreases. Further, we did not find a significant divergence
between the two markets.
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\3\ Geum Poong did not have a viable home or third country
market and, therefore, we analyzed price movements only for its U.S.
sales..
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In addition to our market-to-market analysis, we also examined, for
Samyang, the data on an individual control number basis. We first
examined changes in the average monthly prices of the three largest
U.S. control numbers (representing a significant percentage of total
U.S. sales) and their respective matching home market control numbers.
Second, we examined the price trends for the four largest home market
control numbers (representing a significant percentage of total home
market sales). A similar analysis was performed for Sam Young, using
the Canadian price in lieu of home market prices. Because Geum Poong
did not have a viable home or third country market, we looked at only
the movement of prices in the U.S. market. In analyzing the individual
control number data for Samyang, Sam Young, and Geum Poong, we found
that there was not a significant and consistent decrease in prices.
Prices fluctuated both upward and downward throughout the POI.
Based on our analysis, we find that there was not a significant and
consistent decline in prices over the POI (see Samyang Calculations
Memo, and memoranda to file on Preliminary Determination Calculations
for Sam Young, dated October 29, 1999 (Sam Young Calculations Memo),
and Preliminary Determination Calculations for Guem Poong, dated
October 29, 1999 (Geum Poong Calculations Memo), which are on file in
Import Administration's Central Records Unit). Therefore, in accordance
with section 777A(d)(1)(A)(i) of the Act, we calculated POI weighted-
average EPs for comparison to POI weighted-average NVs.
Date of Sale
Samyang and Sam Young reported that the date on which the material
terms of sale were set was the invoice date for sales in both the
comparison market and the U.S. market. For its sales in the U.S.
market, Geum Poong reported the invoice date as the date on which the
material terms of sale were set. As noted above, Geum Poong did not
have a viable comparison market. The basis for the companies' reporting
invoice date as the date of sale is described below.
Samyang reported that it negotiated price and quantity with its
U.S. customers, and that a purchase order or other initial sales
agreement document was generated confirming the order. However,
according to Samyang, changes in price and quantity occurred after the
initial sales document was issued and the terms of sale were not fixed
until the invoice was issued. Therefore, Samyang reported its U.S.
sales prices based on invoice date. Regarding home market sales,
Samyang reported that purchase orders were seldom issued. Consequently,
Samyang also reported its home market sales based on invoice date.
Sam Young reported that it negotiated price and quantity with its
U.S. and Canadian customers. Once agreement was reached, Sam Young
faxed a confirmation to its customer and the customer then issued a
purchase order to Sam Young. Sam Young claimed,
[[Page 60781]]
however, that changes in price and quantity occurred after the purchase
order had been issued and, therefore, price and quantity were not fixed
until the date on which the invoice was issued. For this reason, Sam
Young initially reported invoice date as the date of sale. For certain
comparison market sales, Sam Young used the tax invoice date as the
date of sale.
Geum Poong reported that it negotiated price and quantity with its
U.S. customers by telephone or by fax. For sales negotiated by fax,
once an agreement was reached, a purchase order or order acceptance
sheet was issued. However, according to Geum Poong, changes in price
and quantity occurred after the order was accepted and the purchase
order was issued and that the terms of sale were not fixed until the
invoice was issued. Therefore, Geum Poong reported its U.S. sales based
on invoice date.
The petitioners questioned all three respondents' use of invoice
date as the date of sale. Based on our review of the information
submitted, we determined that neither Samyang, Sam Young, nor Geum
Poong provided sufficient evidence of significant changes in price and
quantity between the issuance of the order confirmation and invoice
date. Therefore, on September 14, 1999, we requested that Samyang
report its U.S. sales based on initial purchase order date. On
September 16, 1999, we requested that Sam Young report U.S. and
Canadian sales and that Geum Poong report U.S. sales based on initial
order confirmation date. For purposes of this preliminary
determination, we used initial order confirmation date as the date of
sale for all three respondents' U.S. sales and for Sam Young's Canadian
sales. For Samyang's home market sales, since no purchase order was
issued, we used the sales reported on the basis of invoice date. We
will consider this issue further for purposes of the final
determination.
Export Price
In accordance with section 772 of the Act, we based U.S. price on
EP. Section 772(a) of the Act defines EP as the price at which the
subject merchandise is first sold before the date of importation by the
exporter or producer outside the United States to an unaffiliated
purchaser in the United States, or to an unaffiliated purchaser for
exportation to the United States. Consistent with these definitions, we
found that all of the respondents' sales during the POI were EP sales.
For all respondents, we calculated EP based on prices charged to the
first unaffiliated customer in the United States.
As the starting U.S. price, we relied on the gross unit price shown
on sales invoices. These prices were delivered and FOB prices to
unaffiliated customers in the United States. In accordance with section
772(c)(2) of the Act, we reduced the EP, where appropriate, by movement
expenses, including foreign inland freight, international freight,
brokerage, export taxes, U.S. customs duties, and other miscellaneous
charges. We increased EP, where appropriate, for duty drawback in
accordance with section 772(c)(1)(B) of the Act.
Normal Value
A. Selection of Comparison Markets
In order to determine whether there was a sufficient volume of
sales in the home market to serve as a viable basis for calculating NV,
we compared each respondent's volume of home market sales of the
foreign like product to the volume of their U.S. sales of the subject
merchandise.
Samyang had a viable home market for PSF and reported home market
sale for purposes of calculating normal value. Sam Young did not have a
viable home market. However, it had a viable third country market and
reported third country sales for purposes of calculating normal value.
For Geum Poong, which had no viable home or third country market, we
compared EPs to CV in accordance with section 773(a)(4) of the Act. See
the section on Calculation of Normal Value Based on Constructed Value
below.
Adjustments made in deriving the normal values for each company are
described in detail in the sections on Calculation of Normal Value
Based on Comparison Market Prices and Calculation of Normal Value Based
on Constructed Value, below.
B. Cost of Production Analysis
Based on the timely cost allegations filed on July 28 and August
10, 1999, and in accordance with section 773(b)(2)(A)(i) of the Act, we
found reasonable grounds to believe or suspect that Samyang's PSF sales
made in Korea and Sam Young's PSF sales made to Canada were made at
prices below COP. As a result, the Department has conducted
investigations to determine whether these respondents made sales in
their respective comparison markets at prices below their respective
COPs during the POI within the meaning of section 773(b) of the Act. We
conducted the COP analysis described below.
1. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated a
weighted-average COP for PSF, based on the sum of the cost of materials
and fabrication for the foreign like product, plus amounts for general
and administrative (G&A) expenses and packing costs. For Samyang, we
adjusted reported direct material costs to reflect the market price of
inputs purchased from unaffiliated sellers, because cost of production
data was not provided by the affiliated suppliers (see Samyang
Calculations Memo). For Sam Young, we revised the reported per unit
total materials costs because we noted an apparent discrepancy in the
total production quantity used by Sam Young to calculate its per-unit
costs (see Sam Young Calculations Memo). For Geum Poong, we revised the
reported per unit total materials costs to correct for an apparent
discrepancy in its duty drawback adjustment (see Geum Poong
Calculations Memo). In addition, for all three companies, we revised
general and administrative expenses and interest expenses based on our
corrections to their reported cost of manufacturing.
2. Test of Home Market Sales Prices
We compared the adjusted, weighted-average, COP for Samyang and Sam
Young to its home market or Canadian market sales of the foreign like
product. The prices were net of movement charges, taxes, rebates,
commissions, and other direct and indirect selling expenses. This is
accordance with 773(b) of the Act, and was done to determine whether
these sales had been made at prices below the COP within an extended
period of time (i.e., a period of one year) in substantial quantities
4 and whether such prices were sufficient to permit the
recovery of all costs within a reasonable period of time.
---------------------------------------------------------------------------
\4\ In accordance with section 773(b)(2)(C)(i) of the Act, we
determined that sales made below the COP were made in substantial
quantities if the volume of such sales represented 20 percent or
more of the volume of sales under consideration for the
determination of normal value.
---------------------------------------------------------------------------
3. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of a 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 POI were at prices less than the
COP, we determined such sales to have been made in ``substantial
quantities'' within an extended period of time in accordance with
section 773(b)(2)(B) of the Act. Because we compared prices to
[[Page 60782]]
the POI average COP, we also determined that such sales were not made
at prices which would permit recovery of all costs within a reasonable
period of time, in accordance with section 773(b)(2)(D) of the Act.
We found that, for certain models of PSF, more than 20 percent of
Samyang's and Sam Young's respective comparison market sales were made
within an extended period of time at prices less than the COP. Further,
the prices did not provide for the recovery of costs within a
reasonable period of time. We, therefore, disregarded the below-cost
sales and used the remaining sales as the basis for determining normal
value, in accordance with section 773(b)(1) of the Act.
For those U.S. sales of PSF for which there were no comparable
comparison market sales in the ordinary course of trade, we compared
EPs to CV in accordance with section 773(a)(4) of the Act. See the
section on Calculation of Normal Value Based on Constructed Value
below.
C. Calculation of Normal Value Based on Comparison Market Prices
We performed price-to-price comparisons where there were sales of
comparable merchandise in the comparison market that did not fail the
cost test. We calculated NV based on FOB or delivered prices to
comparison market customers. We made deductions from the starting
price, where appropriate, for movement expenses and discounts. In
accordance with sections 773(a)(6) (A) and (B) of the Act, we deducted
comparison market packing costs and added U.S. packing costs. In
addition, we made circumstances of sale (COS) adjustments for direct
expenses in accordance with section 773(a)(6)(C)(iii) of the Act.
When comparing U.S. sales with comparison market sales of similar,
but not identical, merchandise, we also made adjustments to NV for
physical differences in the merchandise pursuant to section
773(a)(6)(C)(ii) of the Act. We based this adjustment on the difference
in the variable costs of manufacturing for the foreign like product and
the subject merchandise, using POI-average costs.
We also made adjustments, in accordance with 19 CFR 351.410(e), for
indirect selling expenses incurred in the comparison market or U.S.
sales where commissions were granted on sales in one market but not in
the other (the ``commission offset''). Specifically, where commissions
were granted in the comparison market but not in the U.S. market, we
made an upward adjustment to NV for the lesser of (1) the amount of the
commission paid in the comparison market, or (2) the amount of indirect
selling expenses incurred in the U.S. market. Company-specific
adjustments of NV are described below.
Samyang
We calculated normal value based on FOB or delivered prices to
unaffiliated purchasers in the home market and made deductions for the
following movement expenses: foreign inland freight and loading fees.
We made COS adjustments by deducting direct selling expenses incurred
for home market sales (credit expenses, technical services charges, and
bank negotiation fees) and adding U.S. direct selling expenses (credit
expenses, letter of credit fees, bank charges, and postage charges) in
accordance with section 773(a)(6)(C)(iii) of the Act.
Sam Young
We calculated normal value based on FOB prices to unaffiliated
purchasers in the Canadian market and made deductions for the following
movement expenses: foreign inland freight, wharfage, container taxes,
terminal handling fees, and brokerage and handling. We made COS
adjustments by deducting direct selling expenses incurred for third-
country market sales (credit expenses, bill of lading charges, letter
of credit fees, wire transfer fees, and document handling fees) and
adding U.S. direct selling expenses (credit expenses, bill of lading
charges, letter of credit fees, wire transfer fees, and document
handling fees) in accordance with section 773(a)(6)(C)(iii) of the Act.
We offset commission expenses in accordance with section 351.410(e) of
the Department's regulations in the manner described above.
D. Calculation of Normal Value Based on Constructed Value
Section 773(a)(4) of the Act provides that where normal value
cannot be based on comparison market sales, normal value may be based
on the constructed value. Accordingly, for Samyang and Sam Young, for
those models of PSF for which we could not determine the NV based on
comparison market sales, either because (1) there were no sales of a
comparable product, or (2) all sales of comparison products failed the
COP test, we based NV on the CV. In addition, for Geum Poong, which did
not have a viable comparison market, we based NV on CV.
Sections 773 (e)(1) and (e)(2)(A) of the Act provide that the CV
shall be based on the sum of the cost of materials and fabrication for
the foreign like product, plus amounts for selling, general, and
administrative expenses (SG&A), profit, and U.S. packing costs. For
Samyang and Sam Young, we calculated the cost of materials and
fabrication based on the methodology described in the Calculation of
COP section above. We based SG&A and profit for Samyang and Sam Young
on the actual amounts reported as 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 comparison market,
in accordance with section 773(e)(2)(A) of the Act. Because there is no
viable comparison market for Geum Poong and, hence, no company-specific
profit or non-U.S. selling expenses, we calculated Geum Poong's profit
and selling expenses in accordance with section 773(e)(2)(B)(iii) of
the Act. Specifically, we calculated weighted average amounts for
selling expenses and profit based on the selling expenses incurred and
profit earned by Samyang and Sam Young in their respective comparison
markets on sales in the ordinary course of trade. Consistent with
section 351.405(b)(2) of the Department's regulations and section
773(e)(2)(B)(iii) of the Act, this profit amount does not exceed the
amount normally realized by exporters or producers in connection with
the sale for consumption in the home market of merchandise that is in
the same general category of products as the subject merchandise,
represented by Samyang's home market profit.
In addition, for each respondent we added U.S. packing costs as
described in the Export Price section of this notice.
We made adjustments to CV for differences in COS in accordance with
section 773(e)(8) of the Act and 19 CFR 351.410. We made COS
adjustments by deducting direct selling expenses incurred on comparison
market sales and adding U.S. direct selling expenses.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade as the EP or constructed export price (CEP)
transaction. The normal value level of trade 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. level of trade is also the level of the starting-price sale, which
is usually from exporter to importer. For CEP, it is the level of the
constructed sale from the exporter to the importer.
[[Page 60783]]
In this case, the respondents made only EP sales in the United
States during the POI. To determine whether normal value sales are at a
different level of trade than EP, 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 level of trade and the difference affects
price comparability, as manifested in a pattern of consistent price
differences between the sales on which normal value is based and
comparison market sales at the level of trade of the export
transaction, we make a level-of-trade adjustment under section
773(a)(7)(A) of the Act. See Notice of Final Determination of Sales at
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from
South Africa, 62 FR 61731 (November 19, 1997).
In implementing these principles in this investigation, we obtained
information from Samyang and Sam Young about the channels of
distribution involved in the reported U.S. and comparison market sales,
including a description of the selling activities performed by the
respondents for each channel of distribution. In identifying levels of
trade for EP and comparison market sales, we considered the selling
functions reflected in the starting price before any adjustments.
Samyang
In this investigation, we found that Samyang has three channels of
distribution in the home market and two channels for U.S. sales. In
both the U.S. and home markets, Samyang sells to end users and
distributors. In the home market, Samyang also sells to distributors
which not only distribute PSF, but also use it for their own
production. For each of the channels of distribution in the U.S. and
home markets, Samyang provides the same selling functions, though it
provides the functions to varying degrees. We found that these selling
functions were minimal in both the U.S. and home markets.
Because the same selling functions are performed in each channel in
each market, despite variations in degree for certain functions, we
found a single level of trade in the United States, and a single,
identical level of trade in the home market. Thus, it was unnecessary
to make any level-of-trade adjustment for comparison of EP and home
market prices.
Sam Young
In this investigation, we found that Sam Young has one channel of
distribution in the comparison market and one channel in the U.S.
market. In both the U.S. and comparison markets, Sam Young sells to
distributors. For each of these channels of distribution, Sam Young
provides the same selling functions and to the same degree. In both the
comparison market and the U.S. market, Sam Young generally makes the
same freight and delivery arrangements. Packing is also the same in
both markets.
Because the single channel of distribution in the Canadian market
is the same as the single channel of distribution in the U.S. market,
we found a single level of trade in the United States, and a single,
identical level of trade in the comparison market. It was, thus,
unnecessary to make any level-of-trade adjustment for comparison of EP
and comparison market prices.
Geum Poong
In this investigation, we found that Geum Poong has one channel of
distribution in the U.S. market. Geum Poong had no viable home or third
country markets. When normal value is based on constructed value, the
normal value level of trade is that of the sales from which we derive
SG&A expenses and profit (see Notice of Preliminary Determination of
Sales at Less Than Fair Value and Postponement of Final Determination:
Fresh Atlantic Salmon from Chile, 63 FR 2664 (January 16, 1998)). For
Geum Poong, we based selling expenses and profit on a weighted average
of selling expenses incurred and profits earned by Samyang and Sam
Young. Because Sam Young's and Samyang's comparison market selling
functions do not vary significantly from Geum Poong's U.S. selling
functions, we made no level-of-trade adjustment for Geum Poong.
Currency Conversions
We made currency conversions in accordance with section 773A of the
Act. From early March to early May 1998, there was a sustained movement
(appreciation) in the value of the Korean won (see Policy Bulletin 96-
1, Notice: Change in Policy Regarding Currency Conversions, 61 FR 9434
(March 8, 1996)). In accordance with the policy described in the Policy
Bulletin, we applied a fixed exchange rate for the 60-calendar day
period following the sustained movement. That exchange rate was taken
from the last day of the sustained movement period, i.e., the last day
of the so-called ``recognition period.''
For the remainder of the POI, we followed the Department's practice
of using daily exchange rates from the Federal Reserve Bank to convert
foreign currencies into U.S. dollars, except where the daily rate
involves a fluctuation. A fluctuation occurs where the actual daily
rate differs from the benchmark rate by 2.25 percent. The benchmark is
defined as the moving average of daily rates for the past 40 business
days. When we determine that a fluctuation exists, we substitute the
benchmark rate for the daily rate.
Verification
In accordance with section 782(i) of the Act, we intend to verify
information to be used in making our final determination.
Suspension of Liquidation
In accordance with section 733(d) of the Act, we are directing the
Customs Service to suspend liquidation of all entries of PSF from Korea
produced or exported by the companies listed below that are entered, or
withdrawn from warehouse, for consumption on or after 90 days prior to
the date of publication of this notice in the Federal Register. For
companies not listed below (i.e., ``all others''), we are directing the
Customs Service to suspend liquidation of all entries of PSF from Korea
that are entered, or withdrawn from warehouse, for consumption on or
after the date of publication of this notice in the Federal Register.
We are also instructing the Customs Service to require a cash deposit
or the posting of a bond equal to the weighted-average amount by which
the normal value exceeds the EP, as indicated in the chart below. These
instructions suspending liquidation will remain in effect until further
notice.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter/producer margin
(percent)
------------------------------------------------------------------------
Samyang Corporation..................................... 3.51
Sam Young Synthetics Co................................. 6.33
Geum Poong Corporation.................................. 26.39
All Others.............................................. 7.99
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our preliminary determination. If our final antidumping
determination is affirmative, the ITC will determine whether these
imports are materially injuring, or threaten material injury to, the
U.S. industry. The deadline for that
[[Page 60784]]
ITC determination would be the later of 120 days after the date of this
preliminary determination or 45 days after the date of our final
determination.
Disclosure
We will disclose the calculations used in our analysis to parties
in this proceeding within five days of the publication of this notice.
See 19 CFR 351.224(b).
Public Comment
For this investigation, case briefs must be submitted no later than
February 15, 2000. Rebuttal briefs must be filed no later than February
22, 2000. A list of authorities used, a table of contents, and an
executive summary of issues should accompany any briefs submitted to
the Department. Executive summaries should be limited to five pages
total, including footnotes.
Section 774 of the Act provides that the Department will hold a
hearing to afford interested parties an opportunity to comment on
arguments raised in case of rebuttal briefs, provided that such a
hearing is requested by any interested party. Interested parties who
wish to request a hearing, or to participate if one is requested, must
submit a written request within 30 days of the publication of this
notice. Requests should specify the number of participants and provide
a list of the issues to be discussed. Oral presentations will be
limited to issues raised in the briefs. If a hearing is requested, it
will be held on February 25, 2000, at the U.S. Department of Commerce,
14th Street and Constitution Avenue, N.W., Washington, D.C. 20230.
Parties should confirm by telephone the time, date, and place of the
hearing 48 hours before the scheduled time.
If this investigation proceeds normally, we will make our final
determination no later than 135 days after the publication of this
notice in the Federal Register.
This determination is published pursuant to sections 733(d) and
777(i)(1) of the Act.
Dated: October 28, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-29208 Filed 11-5-99; 8:45 am]
BILLING CODE 3510-DS-P
