[Federal Register Volume 63, Number 44 (Friday, March 6, 1998)]
[Notices]
[Pages 11214-11217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5866]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-807]
Polyethylene Terephthalate Film From Korea: Preliminary Results
of Antidumping Duty Administrative Review and Partial Rescission of
Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumpting duty
administrative review and partial rescission of review.
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SUMMARY: In response to a request from one respondent and three U.S.
producers, the Department of Commerce (the Department) is conducting an
administrative review of the antidumping duty order on polyethylene
terephthalate film, sheet, and strip (PET film) from the Republic of
Korea. The review covers one manufacturer/exporter of the subject
merchandise to the United States and the period June 1, 1996 through
May 31, 1997. We preliminarily determine that SKC Limited (SKC) sold
subject merchandise below normal value (NV) during the period of
review. If these preliminary results are adopted in our final results
of review, we will instruct the U.S. Customs Service to assess
antidumping duties based on the difference between the United States
Price and NV. STC Corporation (STC) made no sales or shipments during
the POR. Accordingly, we are resinding the review with respect to STC.
Interested parties are invited to comment on these preliminary
results. Parties who submit argument in this proceeding are requested
to submit with the argument (1) a statement of the issue and (2) a
brief summary of the argument (no longer than five pages, including
footnotes).
EFFECTIVE DATE: March 6, 1998.
FOR FURTHER INFORMATION CONTACT: Michael J. Heaney or Linda Ludwig, AD/
CVD Enforcement Group III, Office 8, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone
(202) 482-4475/3833.
APPLICABLE STATUTE: Unless otherwise indicated, all citations to the
Tariff Act of 1930, as amended (the Act) are references to the
provisions effective January 1, 1995, the effective date of the
amendments made to the Act by the Uruguay Round Agreements Act (URAA).
In addition, unless otherwise indicated, all citations to the
Department's regulations are to the regulations, codified at 19 CFR
Part 353 (1997).
SUPPLEMENTARY INFORMATION:
Background
The Department published an antidumping duty order on PET film from
the Republic of Korea on June 5, 1991 (56 FR 25660). On June 23, 1997,
the petitioners, E.I. DuPont Nemours & Co., Inc., Hoescht Celanese
Corporation, and ICI Americas, Inc. requested reviews of SKC, and STC.
On June 27, 1997, SKC requested an administrative review of its sales.
We published a notice of initiation of the review on August 1, 1997 (62
FR 41339).
In its June 27, 1997 request for review, SKC requested revocation
pursuant to 19 CFR 353.25(b). We are not considering SKC's request for
revocation at this time because SKC has not sold the subject
merchandise at not less than fair value for three consecutive years.
In response to our request for information, STC reported that it
had no sales or shipments during the period of review. On November 25,
1997, the Department sent a no-shipment inquiry regarding STC to the
U.S. Customs Service. Customs did not report any shipments by STC
during the POR.
[[Page 11215]]
Accordingly, we are rescinding the review with respect to STC.
Scope of the Review
Imports covered by this review are shipments of all gauges of raw,
pretreated, or primed polyethylene terephthalate film, sheet, and
strip, whether extruded or coextruded. The films excluded from this
review are metallized films and other finished films that have had at
least one of their surfaces modified by the application of a
performance-enhancing resinous or inorganic layer of more than 0.00001
inches (0.254 micrometers) thick. Roller transport cleaning film which
has at least one of its surfaces modified by the application of 0.5
micrometers of SBR latex has also been ruled as not within the scope of
the order.
PET film is currently classifiable under Harmonized Tariff Schedule
(HTS) subheading 3920.62.00.00. The HTS subheading is provided for
convenience and for U.S. Customs purposes. The written description
remains dispositive as to the scope of the product coverage.
The review covers the period June 1, 1996 through May 31, 1997. The
Department is conducting this review in accordance with section 751 of
the Act, as amended.
Fair Value Comparisons
To determine whether sales of PET film in the United States were
made at less than fair value, we compared USP to the NV, as described
in the ``United States Price'' and ``Normal Value'' sections of this
notice. In accordance with section 777A(d)(2) of the Act, we calculated
monthly weighted-average prices for NV and compared these to individual
U.S. transactions.
United States Price (USP)
In calculating USP, the Department treated SKC's sales as export
price (EP) sales, as defined in section 772(a) of the Act, when the
merchandise was sold to unaffiliated U.S. purchasers prior to the date
of importation. The Department treated SKC's sales as constructed
export price (CEP) sales, as defined in section 772(b) of the Act, when
the merchandise was sold to unaffiliated U.S. purchasers after
importation.
EP was based on the delivered, or c.i.f. U.S. port, packed prices
to unaffiliated purchasers in the United States. We made adjustments,
where applicable, for Korean and U.S. brokerage charges, Korean and
U.S. inland freight, ocean freight, U.S. duties, and rebates in
accordance with section 772(c) of the Act. We made an addition to EP
for duty drawback pursuant to section 772(c)(1)(B) of the Act.
CEP was based on the delivered, packed prices to unaffiliated
purchasers in the United States. We made adjustments, where applicable,
for Korean and U.S. brokerage charges, Korean and U.S. inland freight,
ocean freight, rebates, U.S. duties and rebates, in accordance with
section 772(c) of the Act. We made an offset to interest expense and
adjustments for post-sale cost and quantity adjustments that were not
reflected in the gross price. Pursuant to section 772(c)(1)(B) of the
Act, we made an addition to CEP for duty drawback. In accordance with
section 772(d)(1) of the Act, we made deductions for selling expenses
associated with economic activities in the United States, including
warranties, credit, bank charges, and indirect selling expenses.
Pursuant to section 772(d)(3) of the Act, the price was further reduced
by an amount for profit to arrive at the CEP.
With respect to subject merchandise to which value was added in the
United States by SKC prior to sale to unaffiliated customers, we
deducted the cost of further manufacturing in accordance with section
772(d)(2) of the Act.
Normal Value
In order to determine whether there were sufficient sales of PET
film in the home market (HM) to serve as a viable basis for calculating
NV, we compared the volume of home market sales of PET film to the
volume of PET film sold in the United States, in accordance with
section 773(a)(1)(C) of the Act. SKC's aggregate volume of HM sales of
the foreign like product was greater than five percent of its
respective aggregate volume of U.S. sales of the subject merchandise.
Therefore, we have based NV on HM sales.
Based on the fact that the Department had disregarded sales in the
fourth administrative review because they were made below the cost of
production (COP), the Department initiated a sales-below-cost of
production (COP) investigation for SKC in accordance with section
773(b) of the Act. (The fourth administrative review was the most
recently completed review at the time that we issued our antidumping
questionnaire.)
We performed a model-specific COP test in which we examined whether
each HM sale was priced below the merchandise's COP. We calculated the
COP of the merchandise using SKC's cost of materials and fabrication
for the foreign like product, plus amounts for home market general
expenses and packing costs in accordance with section 773(b)(3) of the
Act. We allocated yield losses equally between A-Grade and B-grade film
because these grades have identical production costs. This is
consistent with the methodology employed in past reviews of this case.
(See e.g., Polyethylene Terephthalate Film, Sheet and Strip from the
Republic of Korea; Final Results of Antidumping Duty Administrative
Review, 62 FR 38064, (July 16, 1997).)
In accordance with section 773(b)(1) of the Act, in determining
whether to disregard home market sales made at prices below COP, we
examined whether such sales were made within an extended period of time
in substantial quantities, and whether such sales were made at prices
which would permit recovery of all costs within a reasonable period of
time.
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of a respondent's sales of a given model were at prices less
than COP, we did not disregard any below-cost sales of that model
because these below-cost sales were not made in substantial quantities.
We found that, for certain models of PET film, 20 percent or more of
the home market sales were sold at below-cost prices. Where 20 percent
or more of a respondent's home market sales of a given model were at
prices less than the COP, we disregarded the below-cost sales because
such sales were found to be made (1) in substantial quantities within
the POR (i.e., within an extended period of time) and (2) at prices
which would not permit recovery of all costs within a reasonable period
of time, in accordance with section 773(b)(2)(D) of the Act (i.e., the
sales were made at prices below the weighted-average per unit COP for
the POR). We used the remaining above-cost sales as the basis of
determining NV if such sales existed, in accordance with section
773(b)(1).
On January 8, 1998 the U.S. Court of Appeals for the Federal
Circuit issued a decision in Cemex v. United States, WL 3626 (Fed.Cir).
In that case, based on the pre-URAA version of the Act, the Court
discussed the appropriateness of using constructed value (CV) as the
basis for foreign market value when the Department finds foreign market
sales to be outside ``the ordinary course of trade.'' This issue was
not raised by any party in this proceeding. However, the URAA amended
the definition of sales outside the ``ordinary course of trade'' to
include sales below cost. See Section 771(15) of the Act. consequently,
the Department has reconsidered its practice in accordance with this
court decision and has determined that it would be inappropriate to
resort
[[Page 11216]]
directly to CV, in lieu of foreign market sales, as the basis for NV if
the Department finds foreign market sales of merchandise identical or
most similar to that sold in the United States to be outside the
``ordinary course of trade.'' Instead, the Department will use sales of
similar merchandise, if such sales exist. The Department will use CV as
the basis for NV only when there are no above-cost sales that are
otherwise suitable for comparison. Therefore, in this proceeding, when
making comparisons in accordance with section 771(16) of the Act, we
considered all products sold in the home market as described in the
``Scope of Investigation'' section of this notice, above, that were in
the ordinary course of trade for purposes of determining appropriate
product comparisons to U.S. sales. Where there were no sales of
identical merchandise in the home market made in the ordinary course of
trade to compare to U.S. sales, we compared U.S. sales to sales of the
most similar foreign like product made in the ordinary course of trade,
based on the information provided by SKC in response to our antidumping
questionnaire. We have implemented the Court's decision in this case to
the extent that the data on the record permitted.
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of the respondent's cost of materials, fabrication,
and general expenses. We allocated yield losses equally between A-grade
and B-grade film. In accordance with section 773(e)(2)(A) of the Act,
we based selling, general, and administrative (SG&A) expenses and
profit on the amounts incurred and realized by SKC in connection with
the production and sale of the foreign like product in the ordinary
course of trade for consumption in the foreign country. For selling
expenses, we used the weighted-average HM selling expenses. Pursuant to
section 773(e)(3) of the Act, we included U.S. packing.
In accordance with section 773(a)(6), we adjusted NV, where
appropriate, by deducting home market packing expenses and adding U.S.
packing expenses. We also adjusted NV for credit expenses. When NV was
based upon home market sales, we made an adjustment for inland freight.
For SKC's local export sales, we also made an addition to home market
price for duty drawback. For comparisons to EP, we made an addition to
NV for U.S. warranty and credit expenses as circumstance-of-sale
adjustments pursuant to section 773(a)(6)(C) of the Act.
Level of Trade and CEP Offset
In accordance with section 773(a)(1)(B)(i) of the Act, to the
extent practicable, we determine NV based on sales in the comparison
market at the same level of trade (``LOT'') as the EP or CEP
transaction. The NV LOT is that of the starting price sales in the
comparison market or, when NV is based on CV, that of the sales from
which we derive SG&A expenses and profit. For EP, the US LOT is also
the level of the starting price sale, which is usually from the
exporter to the importer. For CEP, it is the level of the constructed
sale from the exporter to the importer.
To determine whether NV sales are at a different LOT than EP or
CEP, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the
unaffiliated customer. If the comparison market sales are at a
different LOT, and the difference affects price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison market sales at the LOT of
the export transaction, we make a LOT adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is
more remote from the factory than the CEP level and there is no basis
for determining whether the differences in the levels between NV and
CEP affects price comparability, we adjust NV under section
773(A)(7)(B) of the Act (the CEP offset provision). (See e.g., Certain
Carbon Steel Plate from South Africa, Final Determination of Sales at
Less Than Fair Value, 62 FR 61731 (November 19, 1997).)
In implementing these principles in this review, we asked SKC to
identify the specific differences and similarities in selling functions
and/or support services between all phases of marketing in the home
market and the United States. SKC identified two channels of
distribution in the home market: (1) wholesalers/distributors and (2)
end-users. For both channels, SKC performs similar selling functions
such as market research and after-sales warranty services. Because
channels of distribution do not qualify as separate levels of trade
when the selling functions performed for each customer class are
sufficiently similar, we determined that there exists one level of
trade for SKC's home market sales.
For the U.S. market, SKC reported two LOTs: (1) EP sales made
directly to its U.S. customers, and (2) CEP sales made through Sunkyong
America Ltd., SKC's wholly owned U.S. subsidiary (CEP sales). The
Department examined the selling functions performed by SKC for both EP
and CEP sales. These selling functions included customer sales contacts
(i.e., visiting current or potential customers receiving orders,
promotion of new products, collection of unpaid invoices), technical
services, inventory maintenance, and or business system development. We
found that SKC provided a greater degree of these services on EP sales
than it did on CEP sales, and that the selling functions were
sufficiently different to warrant two separate LOTs in the United
States.
When we compared EP sales to home market sales, we determined that
both sales were made at the same LOT. For both EP and home market
transactions, SKC sold directly to the customer, and provided similar
levels of customer sales contacts, technical services, inventory
maintenance and business system development. For CEP sales, SKC
performed fewer customer sales contacts, technical services, inventory
maintenance, and computer legal, audit and business system development.
In addition, the differences in selling functions performed for home
market and CEP transactions indicates that home market sales involved a
more advanced stage of distribution than CEP sales.
Because we compared these CEP sales to HM sales at a different
level of trade, we examined whether a level-of-trade adjustment may be
appropriate. In this case SKC sold at one level of trade in the home
market; therefore, there is no basis upon which SKC has demonstrated a
pattern of consistent price differences between levels of trade.
Further, we do not have the information which would allow us to examine
pricing patterns of SKC's sales of other similar products, and there
are no other respondent's or other record evidence on which such an
analysis could be based.
Because the data available do not provide an appropriate basis for
making a level-of-trade adjustment but the level of trade in Korea for
SKC is at a more advanced stage than the level of trade of the CEP
sales, a CEP offset is appropriate in accordance with section
773(a)(7)(B) of the Act, as claimed by SKC. We based the CEP offset
amount on the amount of home market indirect selling expenses, and
limited the deduction for HM indirect selling expenses to the amount of
indirect selling expenses deducted from CEP in accordance with section
772(d)(1)(D) of the Act. We applied the CEP offset to NV, whether based
on home market prices or CV.
[[Page 11217]]
Preliminary Results of Review
We preliminarily determine that a margin of 6.83 percent exists fro
SKC for the period June 1, 1996 through May 31, 1997. 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. The Department will publish the final results of this
administrative review, which will include the results of its analysis
of issues raised in any such written comments or at a hearing, within
120 days after the date of publication of these preliminary results.
The Department shall determine, and Customs shall assess,
antidumping duties on all appropriate entries. We have calculated
importer-specific ad valorem duty assessment rates based on the total
amount of dumping margins calculated for the examined sales during the
POR to the total customs of the sales used to calculate these duties.
These rates will be assessed uniformly on all entries made during the
POR. (This is equivalent to dividing the total amount of antidumping
duties, which are calculated by taking the difference between statutory
NV and statutory EP or CEP, by the total statutory EP or CEP of the
sales compared, and adjusting the average differences between EP or CEP
and the entered value for all merchandise entered during the POR.) The
Department will issue appraisement instructions directly to Customs.
The final results of this review shall be the basis for the assessment
of antidumping duties on entries of merchandise covered by the
determination and for future deposits of estimated duties.
Furthermore, the following deposit requirements will be effective
upon completion of the final results of these administrative reviews
for all shipments of PET film from the Republic of Korea entered, or
withdrawn from warehouse, for consumption on or after the publication
date of the final results of these administrative reviews, as provided
by section 751(a)(1) of the Act: (1) the cash deposit rate for reviewed
firms will be the rate established in the final results of
administrative review; (2) for merchandise exported by manufacturers or
exporters not covered in these reviews but covered in the original
less-than-fair-value (LTFV) investigation or a previous review, the
cash deposit will continue to be the most recent rate published in the
final determination or final results for which the manufacturer or
exporter received a company-specific rate; (3) if the exporter is not a
firm covered in these reviews, or the original investigation, but the
manufacturer is, the cash deposit rate will be that established for the
manufacturer of the merchandise in the final results of these reviews,
or the LTFV investigation; and (4) if neither the exporter nor the
manufacturer is a firm covered in these or any previous reviews, the
cash deposit rate will be 21.5%, the ``all others'' rate established in
the LTFV investigation.
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 353.26(b) to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during these review periods. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).
Dated: March 2, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-5866 Filed 3-5-98; 8:45 am]
BILLING CODE 3510-DS-M
