01-31514. Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Polyethylene Terephthalate Film, Sheet, and Strip (PET Film) From Taiwan

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

December 21, 2001.

FOR FURTHER INFORMATION:

Ron Trentham or Tom Futtner at [phone] and [phone], respectively; AD/CVD Enforcement Office IV, Group II, Import Administration, Room 1870, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

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 (the Department) regulations refer to the regulations codified at 19 CFR part 351 (April 2001).

Preliminary Determination

We preliminarily determine that polyethylene terephthalate film, sheet, and strip (PET Film) from Taiwan 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 of sales at LTFV are shown in the Suspension of Liquidation section of this notice.

Case History

The investigation was initiated on June 6, 2001.^[1] See Notice of Initiation of Antidumping Duty Investigation: Polyethylene Terephthalate Film, Sheet, and Strip (PET Film) from India and Taiwan, 66 FR 31888 (June 13, 2001) (Initiation Notice). Since the initiation of the investigation, the following events have occurred.

The Department set aside a period for all interested parties to raise issues regarding product coverage. See Initiation Notice, at 66 FR 31889. We received no comments from any parties on this matter.

On July 2, 2001 the United States International Trade Commission (ITC) transmitted to the Department its preliminarily determination that there is a reasonable indication that an industry in the United States is materially injured by reason of imports from Taiwan of PET film that are alleged to be sold in the United States at LTFV. See Polyethylene Terephthalate Film, Sheet, and Strip and Taiwan, 66 FR 36296 (July 11, 2001).

On July 3, 2001 the Department issued the antidumping duty questionnaire ^[2] to Nan Ya Plastics Corporation, Ltd. (Nan Ya) and Shinkong Synthetic Fibers Corporation (Shinkong). See Selection of Respondents section below. We received responses to our questionnaire from both respondents. We issued supplemental questionnaires, pertaining to sections A, B, C, and D of the antidumping questionnaire, to Nan Ya and Shinkong in September, October and November 2001. Nan Ya and Shinkong responded to these supplemental questionnaires in September, October, November, and December 2001.

On October 4, 2001, pursuant to section 733(c)(1)(B) of the Act, the Department postponed the preliminary determination of this investigation 50 days, from October 24, 2001 until December 13, 2001. See Polyethylene Terephthalate Film, Sheet, and Strip from India and Taiwan: Notice of Postponement of Preliminary Antidumping Duty Determinations; 66 FR 52108 (October 12, 2001).

During the course of this investigation, questions have arisen concerning affiliation between Nan Ya and its U.S. customers. Nan Ya has claimed that it is not affiliated with its U.S. customers. The petitioners have argued that Nan Ya is affiliated with several of its U.S. customers through a family grouping that includes collateral relatives. The Department has examined this issue by requesting and receiving information from Nan Ya and analyzing publicly available information. For these preliminary results, we are not treating Nan Ya as affiliated with its U.S. customers. We are still collecting and analyzing information on this matter and will determine whether these transactions are considered affiliated under the statute for purposes of the final results of this investigation. Interested parties are invited to submit comments on this specific issue, especially with regard to affiliation through a family group.

Postponement of the Final Determination

Section 735(a)(2) of the Act provides that a final determination may be postponed until not later than 135 days after the date of the publication of the preliminary determination if, in the event of an affirmative preliminary determination, a request for such postponement is made by exporters who account for a significant proportion of exports of the subject merchandise, or in the event of a negative preliminary determination, a request for such postponement is made by the petitioners. The Department's regulations, at 19 CFR 351.210(e)(2), require that requests by respondents for postponement of a final determination be accompanied by a request for extension of provisional measures from a four-month period to not more than six months.

On November 30, 2001 Shinkong requested that, in the event of an affirmative preliminary determination in this investigation, the Department postpone its final determination until 135 days after the publication of the preliminary determination. Shinkong also included a request to extend the provisional measures to not more than 135 days after the publication of the preliminary determination. Accordingly, since we have made an affirmative preliminary determination, and the requesting party accounts for a significant proportion of exports of the subject merchandise, we have postponed the final determination until not later than 135 days after the date of the publication of the preliminary determination.

Period of Investigation (POI)

The POI is April 1, 2000 through March 31, 2001. This period corresponds to the four most recent fiscal quarters prior to the month of the filing of the petition (i.e., May 2001).

Scope of Investigation

For purposes of these investigations, the products covered are all gauges of raw, pretreated, or primed PET film, whether extruded or coextruded. Excluded are metallized films and other finished films that have had at least one of their surfaces modified by the application of a performance-enhancing resinous or inorganic layer of more than 0.00001 inches thick. Imports of PET film are classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) under item number 3920.62.00. HTSUS subheadings are provided for convenience and Customs purposes. The written description of the scope of this proceeding is dispositive.

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. Where it is not practicable to examine all known producers/exporters of subject merchandise, section 777A(c)(2) of the Act 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 from the exporting country that can reasonably be examined. The petition identified two producers (Nan Ya and Shinkong) of PET film in Taiwan that export to the United States. Information on the record indicates that Nan Ya and Shinkong were the two largest producer/exporters of PET film from Taiwan to the United States during the POI. Due to limited resources we determined that we could investigate only the two largest producers/exporters, accounting for nearly 70 percent of total exports to the United States during the POI. See Memorandum regarding Selection of Respondents, dated June 22, 2001. Therefore, we designated Nan Ya and Shinkong as mandatory respondents and sent them the antidumping questionnaire.

Product Comparisons

In accordance with section 771(16) of the Act, all products produced by the respondents covered by the description in the Scope of Investigation section, above, and sold in Taiwan during the POI are considered to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. We have relied upon product type, product application, product thickness, and product grade to match U.S. sales of subject merchandise to comparison-market sales of the foreign like product or constructed value (CV). 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 above.

Fair Value Comparisons

During the POI, U.S. sales by the Taiwanese respondents were export price (EP) sales. To determine whether sales of PET Film were made in the United States at LTFV, we compared EP to the normal value (NV), as described in the EP and NV sections of this notice. In accordance with section 777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs and compared these to weighted-average home market prices during the POI.

Export Price

For the price to the United States, we used EP, in accordance with section 772(a) of the Act, because Nan Ya and Shinkong reported that they sold the merchandise directly to unaffiliated U.S. customers or sold the merchandise to unaffiliated trading companies in Taiwan with knowledge that these companies in turn sold the merchandise to U.S. customers, and constructed export price was not otherwise warranted for these transactions. For both Nan Ya and Shinkong, we calculated EP using the packed prices charged to the unaffiliated trading companies or the first unaffiliated customer in the United States (the starting price).

We deducted from the starting price, where applicable, amounts for movement expenses in accordance with section 772(c)(2)(A) of the Act. In this case, movement expenses include foreign inland freight, international freight, brokerage and handling charges, marine insurance, harbor duties and U.S. inland freight.

Normal Value

A. Selection of Comparison Market

Section 773(a)(1) of the Act directs that NV be based on the price at which the foreign like product is sold in the home market, provided that the merchandise is sold in sufficient quantities (or has sufficient aggregate value, if quantity is inappropriate) and that there is no particular market situation in the home market that prevents a proper comparison with the EP or CEP transaction. The statute contemplates that quantities (or value) will normally be considered insufficient if they are less than five percent of the aggregate quantity (or value) of sales of the subject merchandise to the United States.

For this investigation, we found that Nan Ya and Shinkong each had a viable home market for PET film. Thus, the home market is the appropriate comparison market in this investigation, and we used the respondents' submitted home market sales data for purposes of calculating NV.

In deriving NV, we made adjustments as detailed in the Calculation of NV Based on Home Market Prices section below.

B. Cost of Production Analysis

On September 19 and September 26, 2001 the petitioners alleged that sales of PET Film in the home market were made at prices below the fully absorbed cost of production (COP) with regard to Shinkong and Nan Ya, respectively. Accordingly, the petitioners requested that the Department conduct company-specific sales-below-cost investigations. Based upon the comparison of adjusted prices for the foreign like product to COP, and in accordance with section 773(b)(2)(A)(i) of the Act, we found reasonable grounds to believe or suspect that sales of PET film produced in Taiwan were made at prices below the COP with regard to both respondents. As a result, the Department has conducted an investigation to determine whether the respondents made sales in the home market at prices below their respective COPs during the POI within the meaning of section 773(b) of the Act. The COP analysis the Department performed is described below. See Memorandum to Holly A. Kuga “Petitioner's Allegation of Sales Below the Cost of Production for Shinkong Synthetic Fibers Corporation, (September 28, 2001); Memorandum to Holly A. Kuga “Petitioner's Allegation of Sales Below the Cost of Production for Nan Ya Plastics Corporation, Ltd. (October 2, 2001), both on file in the CRU.

1. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated a weighted-average COP for each respondent based on the sum of the cost of materials and fabrication for the foreign like product, plus amounts for the home market general and administrative (G&A) expenses, including interest expenses. We relied on the COP data submitted by Shinkong and Nan Ya in their cost questionnaire responses, except, as noted below, in specific instances where the submitted costs were not appropriately quantified or valued.

Shinkong

We recalculated Shinkong's total cost of manufacture to include a portion for “Other Production-CPA adjust” attributable to subject merchandise. See Calculation Memorandum of the Preliminary Determination of the Investigation of Shinkong Synthetic Fibers Corporation, dated December 12, 2001.

Nan Ya

In accordance with sections 773(f)(2) and (3) of the Act, we recalculated Nan Ya's reported material adjustment to reflect the highest of the transfer price, COP, or market price of the inputs received from affiliated suppliers. In addition, we included a portion of “cost difference” and “stop loss” expenses attributable to Nan Ya's reported cost. See Memorandum from Ernest Gziryan, dated December 13, 2001.

2. Test of Home Market Sales Prices

On a model-specific basis, we compared the reported COP to the home market prices, adjusted for any applicable discounts and rebates, movement charges, selling expenses, and packing. We then compared the adjusted weighted-average COP for Shinkong and Nan Ya to the adjusted home market sales prices of the foreign like product, as required under section 773(b) of the Act, in order to determine whether these sales had been made at prices below the COP in substantial quantities within an extended period of time (i.e., a period of one year), and, whether below-cost prices were sufficient to permit the recovery of all costs within a reasonable period of time.

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 during the POI are at prices less than the COP, we do not disregard any below-cost sales of that product because we determine that the below-cost sales were not made in “substantial quantities” within an extended period of time. Where 20 percent or more of a respondent's sales of a given product during the POI are at prices less than the COP, we determine such sales to have been made in “substantial quantities” within an extended period of time in accordance with sections 773(b)(2)(B) and 773(b)(2)(C) of the Act. In such cases, because we compare prices to POI average costs, we also determine that such sales were not made at prices that would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act.

In this case, we found that, for certain specific products, more than 20 percent of Shinkong's and Nan Ya's home market sales, within an extended period of time, were at prices less than the COP in accordance with section 773(b)(1)(A) of the Act. For these certain specific products we compared Shinkong's and Nan Ya's home market prices to POI average costs and determined that such sales were not made at prices that would permit recovery of all costs within a reasonable period of time pursuant to section 773(b)(2)(B) of the Act. We therefore excluded these sales and used the remaining sales as the basis for determining NV, in accordance with section 773(b)(1) of the Act.

C. Calculation of NV Based on Home Market Prices

We based home market prices on the packed prices to unaffiliated purchasers in Taiwan. We adjusted, where applicable, the starting price for discounts and rebates. We made adjustments for any differences in packing, in accordance with sections 773(a)(6)(A) and 773(a)(6)(B)(i) of the Act, and we deducted movement expenses pursuant to section 773(a)(6)(B)(ii) of the Act. In addition, where applicable, we made adjustments for differences in circumstances of sale (COS) pursuant to section 773(a)(6)(C)(iii) of the Act by deducting direct selling expenses (credit expense) incurred for home market sales, and adding U.S. direct selling expenses (credit expenses). No other adjustments to NV were claimed or allowed.

D. Level of Trade (LOT)/Constructed Export Price (CEP) Offset

In accordance with section 773(a)(1)(B)(i) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same LOT as the EP or CEP transactions as appropriate. The NV LOT is that of the starting-price of sales in the comparison market or, when NV is based on CV, that of the sales from which we derive selling, general, and administrative (SG&A) expenses and profit. For EP sales, the U.S. LOT 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 an affiliated importer after the deductions required under section 772(d) of the Act. In this case, both Nan Ya and Shinkong had only EP sales.

To determine whether NV sales are at a different LOT than EP or CEP transactions, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison market sales are at a different LOT and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison market sales at the LOT of the export transaction, we make a LOT adjustment under section 773(a)(7)(A) of the Act.

We obtained information from the respondents about the marketing stages involved in the reported U.S. and home market sales, including a description of the selling activities performed by the respondents for each channel of distribution. In identifying LOTs for EP and home market sales, we considered the selling functions reflected in the starting price before any adjustments. We expect that, if claimed LOTs are the same, the functions and activities of the seller should be similar. Conversely, if a party claims that LOTs are different for different groups of sales, the functions and activities of the seller should be dissimilar. In this investigation, none of the respondents requested a LOT adjustment.

Shinkong reported that it made EP sales of subject merchandise to a single type of customer through a single channel of distribution in the U.S. market. Further, Shinkong indicated that it performed certain types of selling functions (freight and delivery arrangements, and warranty services) for the U.S. customers. Because there is only one type of customer, a single channel of distribution, and the same selling functions are performed for every customer, we preliminarily determine that there is a single LOT with respect to Shinkong's EP sales. In the home market, Shinkong reported that it sold subject merchandise to two types of customers (distributors and end-users). Further, it indicated that, for each of the two reported channels of distribution, it provided the same types of selling functions (freight and delivery arrangements and warranty services) in the same degree for each of the two types of customers. Because these selling functions are provided in equal degrees to all home market customers, we preliminary find that there is only one LOT in the home market.

Upon review of the record, we found that Shinkong performed the same selling functions for EP sales as compared to home market sales. As such, we preliminarily find that there is no difference in the number, type, and degree of selling functions that Shinkong performs in the home market as compared to its EP sales. Because EP sales are made at the same LOT as home market sales, no LOT adjustment is warranted and we have not made a LOT adjustment for Shinkong's sales. See Memorandum to the File Re: Level of Trade Analysis for Shinkong Synthetic Fibers Corporation, dated December 13, 2001.

Nan Ya reported that it sold subject merchandise to two types of customers (distributors and end-users) in the home market. Further, it indicated that, for each of the two reported channels of distribution, it provided the same types of selling functions in the same degree for each of the two types of customers. Because these selling functions are provided in equal degrees to all home market customers, we preliminarily find that there is only one LOT in the home market.

Nan Ya reported that it sold subject merchandise to two types of customers (distributors and end-users) in the United States. Further, it indicated that, for each of the two reported channels of distribution, it provided the same types of selling functions in the same degree for each of the two types of customers. Because these selling functions are provided in equal degrees to all U.S. customers, we preliminarily find that there is only one LOT in the U.S. market.

Upon review of the record we find that Nan Ya performed substantially similar selling functions for EP sales as compared to home market sales. The record indicates that there are minor differences between the selling functions performed for EP sales and home market sales. For example, Nan Ya provided some technical service for home market customers but not EP customers. However the information on the record indicates that there is insufficient qualitative differences in the selling functions performed by Nan Ya in making sales in the home market and United States to find them to be distinct LOTs. Therefore, using the information on the record, we preliminarily determine that Nan Ya makes home market and EP sales at the same LOT.

Because Nan Ya's EP sales are made at the same LOT as home market sales, we did not make a LOT adjustment for any sales of subject merchandise by Nan Ya. See Memorandum to the File Re: Level of Trade Analysis for Nan Ya Plastics Corporation, Ltd., dated December 13, 2001.

Currency Conversions

We made currency conversions into U.S. dollars in accordance with section 773A of the Act based on exchange rates in effect on the dates of the U.S. sales, as obtained from the Federal Reserve Bank, the Department's preferred source for exchange rates.

Verification

In accordance with section 782(i) of the Act, we intend to verify all information relied upon in making our final determination.

All Others Rate

Section 735(c)(5)(A) of the Act provides for the use of an “all others” rate, which is applied to non-investigated firms. See Statement of Administrative Actions, Uruguay Round Agreements Act, Pub. L. 103-465, 103rd Cong. 2d Sess., H. Doc. 103-316, vol. I (1994) (SAA) at 873. This section states that the all others rate shall generally be an amount equal to the weighted average of the weighted-average dumping margins established for exporters and producers individually investigated, excluding any zero and de minimis margins, and any margins based entirely upon the facts available. Therefore, since Nan Ya has a de minimis margin, we have preliminarily assigned to all other exporters of PET Film from Taiwan, a margin that is based on the weighted-average margin calculated for Shinkong.

Suspension of Liquidation

In accordance with section 733(d) of the Act, we are directing the U.S. Customs Service to suspend liquidation of all entries of PET Film from Taiwan, except for exports by Nan Ya, that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. Because the estimated weighted-average dumping margin for Nan Ya is de minimis, we are not directing the Customs Service to suspend liquidation of entries of merchandise from this company from Taiwan. We are also instructing the Customs Service to require a cash deposit or the posting of a bond equal to the dumping margin for all entries of PET Film from Taiwan, except for exports by Nan Ya.

	Margin (percent)
Manufacturer/exporter:
Shinkong Synthetic Fibers Corporation	9.19
Nan Ya Plastics Corporation, Ltd.	1.70
All Others	9.19

Disclosure

The Department will disclose calculations performed within five days of the date of publication of this notice to the parties to the proceeding in accordance with 19 CFR 351.224(b).

International Trade Commission Notification

In accordance with section 733(f) of the Act, we have notified the ITC of our sales at LTFV determination. If our final antidumping determination is affirmative, the ITC will determine whether the imports covered by that determination are materially injuring, or threatening material injury to, the U.S. industry. The deadline for that 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.

Public Comment

Case briefs for this investigation must be submitted no later than one week after the issuance of the last verification report. Rebuttal briefs must be filed within five days after the deadline for submission of case briefs. 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. Further, we would appreciate it if parties submitting written comments would provide the Department with an additional copy of the public version of any such comments on diskette.

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 or rebuttal briefs, provided that such a hearing is requested by an interested party. If a request for a hearing is made in an investigation, the hearing normally will be held two days after the deadline for submission of the rebuttal briefs, at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. In the event that the Department receives requests for hearings from parties to more than one PET film case, the Department may schedule a single hearing to encompass all those cases. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time.

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.

As noted above, the final determination will be issued within 135 days after the date of the publication of the preliminary determination.

This determination is issued and published pursuant to sections 733(f) and 777(i)(1) of the Act.

Dated: December 13, 2001.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Footnotes

1.  The petitioners in this investigation are DuPont Teijin Films, Mitsubishi Polyester Film of America and Toray Plastics (America), Inc.

2.  Section A of the questionnaire requests general information concerning a company's corporate structure and business practices, the merchandise under investigation that it sells, and the manner in which it sells that merchandise in all of its markets. Section B requests a complete listing of all home market sales, or, if the home market is not viable, of sales in the most appropriate third-country market (this section is not applicable to respondents in non-market economy (NME) cases). Section C requests a complete listing of U.S. sales. Section D requests information on the cost of production (COP) of the foreign like product and the constructed value (CV) of the merchandise under investigation. Section E requests information on further manufacturing.