[Federal Register Volume 59, Number 130 (Friday, July 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16608]


[[Page Unknown]]

[Federal Register: July 8, 1994]


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DEPARTMENT OF COMMERCE
[A-580-807]

 

Polyethylene Terephthalate Film, Sheet, and Strip From the 
Republic of Korea; Preliminary Results of Antidumping Duty 
Administrative Review

AGENCY: Import Administration/International Trade Administration/
Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: In response to requests from three respondents, three U.S. 
producers, and one interested party, the Department of Commerce (the 
Department) has conducted an administrative review of the antidumping 
duty order on polyethylene terephthalate film, sheet, and strip from 
the Republic of Korea. The review covers four manufacturers/exporters 
of the subject merchandise to the United States generally for the 
period November 30, 1990 through May 31, 1992.
    We have preliminarily determined that sales have been made below 
the foreign market value (FMV). If these preliminary results are 
adopted in our final results of administrative review, we will instruct 
U.S. Customs to assess antidumping duties equal to the difference 
between the United States price (USP) and the FMV.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: July 8, 1994.

FOR FURTHER INFORMATION CONTACT: Roy F. Unger, Jr., or Thomas F. 
Futtner, Office of Antidumping Compliance, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue NW., Washington, DC 20230, telephone: 
(202) 482-0651/3814.

SUPPLEMENTARY INFORMATION:

Background

    On June 5, 1991, the Department of Commerce published in the 
Federal Register (56 FR 25660) the antidumping duty order on 
polyethylene terephthalate (PET) film from the Republic of Korea. On 
June 8, 1992, the Department published (57 FR 24244) a notice of 
``Opportunity to Request an Administrative Review'' of this antidumping 
duty order for the period November 30, 1990, through May 31, 1992 (56 
FR 25660). We received timely requests for review from Cheil 
Synthetics, Inc. (Cheil), SKC Limited (SKC), Kolon Industries, Inc. 
(Kolon), and STC Corporation (STC). The petitioners, E.I. DuPont 
Nemours & Co., Inc., Hoechst Celanese Corporation and ICI Americas, 
Inc., requested an administrative review for the same four Korean 
manufacturers/exporters of PET film.
    For most of the respondents the review period covers November 30, 
1990 through May 31, 1992, on July 22, 1992 (57 FR 32521). Because 
Cheil was determined to have a de minimis margin in the Preliminary 
Determination of Sales at Less-Than-Fair-Value (LTFV) (56 FR 16305), 
Cheil's period of review (POR) begins on April 22, 1991, when 
suspension of its merchandise was first ordered, and runs through May 
31, 1992. The Department has now conducted this review in accordance 
with section 751 of the Tariff Act of 1930, as amended (the Act).

Scope of the Review

    Imports covered by the 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 POR 
was November 30, 1990, through May 31, 1992, for SKC, Kolon, and STC. 
Cheil's POR was April 22, 1991, through May 31, 1992.

United States Price

    In calculating USP, the Department treated respondents' sales as 
purchase price (PP), as defined in section 772 of the Act, when the 
merchandise was sold to unrelated U.S. purchasers prior to importation. 
The Department treated respondents' sales as exporter's sale price 
(ESP), as defined in section 772 of the Act, when the merchandise was 
sold to unrelated U.S. purchasers after importation.
    PP was based on ex-factory, f.o.b. Korean port, f.o.b. customer's 
specific delivery point, c.i.f. U.S. port, or packed and delivered 
price to unrelated purchasers in the United States. We made 
adjustments, where applicable, for Korean and U.S. brokerage and 
handling, terminal handling charges, Korean and U.S. inland freight, 
ocean freight, marine insurance, containerization expenses and taxes, 
sample movement charges, return movement charges, discounts, wharfage 
expense, consolidated freight charges, and U.S. duties in accordance 
with section 772(d)(2) of the Act.
    ESP was based on ex-warehouse, f.o.b. customer's specific delivery 
point, or packed and delivered prices to unrelated purchasers in the 
United States. We made adjustments, where applicable, for Korean and 
U.S. brokerage and handling, Korean and U.S. inland freight, ocean 
freight, marine insurance, consolidated freight charges, miscellaneous 
handling charges, containerization expenses and taxes, wharfage 
expenses, warranty expenses, rebates, discounts, U.S. duties, U.S. 
commissions, U.S. credit expense and indirect selling expenses (which 
include inventory carrying costs and pre-sale warehousing expenses), in 
accordance with section 772(d)(2) of the Act.
    For ESP sales, we deducted indirect selling expenses which included 
U.S. inventory carrying expenses and U.S. pre-sale warehousing 
expenses. We allowed an ESP offset to FMV, where appropriate, amounting 
to the lesser of the weighted-average total of home market indirect 
selling expenses, or the total U.S. indirect selling expenses in 
accordance with 19 CFR 353.56(b)(2).
    For both PP and ESP, we added duty drawback, where applicable, 
pursuant to section 772(d)(1)(B) of the Act.
    Kolon paid an unrelated insurance company a percentage of sales 
value on all of its sales to U.S. customers. During verification, we 
discovered that Kolon reported the incorrect rate for this insurance. 
We corrected Kolon's reported U.S. inland insurance expense to reflect 
the correct rate.
    We adjusted USP for taxes in accordance with our practice as 
outlined in Siliconmanganese from Venezuela, Preliminary Determination 
of Sales at Less Than Fair Value, 59 FR 31204, June 17, 1994.
    With respect to subject merchandise to which value was added in the 
United States by SKC and STC prior to sale to unrelated U.S. customers, 
we deducted any increased value in accordance with section 772(e)(3) of 
the Act. The value added consists of the cost associated with the 
production and sale of the further-processed merchandise, other than 
the cost associated with the imported PET film, and a proportional 
amount of profit or loss related to the value added. Profit or loss was 
calculated by deducting from the sales price of the further-processed 
merchandise all production and selling costs incurred by SKC and STC in 
the value-added process. The profit or loss was then allocated 
proportionally to all components of cost.
    No other adjustments were claimed or allowed.

Foreign Market Value

    In order to determine whether there were sufficient sales of PET 
film in the home market to serve as a viable basis for calculating 
foreign market value (FMV), we compared the volume of home market sales 
of PET film to the volume of third country sales of PET film, in 
accordance with section 773(a)(1) of the Act. All four respondents had 
viable home markets with respect to sales of PET film made during the 
POR.
    In general, the Department relies on monthly weighted-average 
prices in the calculation of FMV. However, in accordance with the test 
described in the following paragraph, we determined that the annual 
weighted-average FMVs did not vary significantly from the monthly 
weighted-average FMVs. Therefore, in accordance with section 353.44 of 
the Department's regulations, we calculated FMVs for each model based 
on annual weighted-average prices.
    To determine whether a POR weighted-average price was 
representative of the transactions under consideration, we performed a 
three-step test. See Antifriction Bearings from Japan, et al.; Final 
Results of Review, 58 FR 42289 (1993). First, we compared the monthly 
weighted-average home market price for each model with the weighted-
average POR price of that model. We calculated the proportion of each 
model's sales whose POR weighted-average price did not vary more than 
plus or minus ten percent from the monthly weighted-average prices. We 
did this test for each model of PET film. Second, we compared the 
volume of sales of all models of PET film whose POR weighted-average 
price did not vary more than plus or minus ten percent from the monthly 
weighted-average price with the total volume of sales of PET film. If 
the POR weighted-average price of at least 90 percent of sales of PET 
film did not vary more than plus or minus ten percent from the monthly 
weighted-average price, we considered the POR weighted-average price to 
be representative of the transactions under consideration. Third, we 
tested whether there was any correlation between fluctuations in price 
and time for each model. Where the correlation coefficient was less 
than 0.05 (where a coefficient approaching 1.0 indicates a direct 
relation between price and time), we concluded that there was no 
significant relation between price and time.
    Based on this analysis, we determined that the POR weighted-average 
price of sales of PET film by respondents did not vary more than plus 
or minus ten percent from the monthly weighted-average price, 
indicating that the POR weighted-average price was representative of 
the transactions under consideration. Additionally, we determined that 
there was no significant relation between price and time during the 
POR. Therefore, we used the POR weighted-average price for purposes of 
our calculation.
    Because SKC and STC made some home market sales to related parties 
during the POR we tested these sales to ensure that, on average, the 
related party sales were at ``arms-length.'' See Antifriction Bearings 
from France et al.; Final Results of Review, 57 FR 28388 (1992). We 
determined that SKC's home market sales of PET film to related parties 
were on average at ``arms-length'', while STC's home market sales of 
PET film to related parties on average were not at ``arms-length.'' 
Accordingly, we did not use STC's related party home market sales for 
comparison to U.S. sales.
    Because many of Cheil's and SKC's sales were determined to have 
been made below cost of production (COP) during the original LTFV 
investigation, the Department, pursuant to section 773(b) of the Act, 
initiated COP investigations of Cheil and SKC for purposes of this 
administrative review. Furthermore, based on an allegation by 
petitioners, we also determined that reasonable grounds existed to 
believe or suspect that sales below cost had been made by Kolon and STC 
of PET film. Thus, we initiated a COP investigation with respect to 
Kolon and STC.
    We performed a model-specific cost of production test, in which we 
examined whether each home market sale was priced below the 
merchandise's cost of production. The Department defines the cost of 
production as the sum of direct material, direct labor, variable and 
fixed factory overhead, general expenses, and packaging. For each 
model, we compared this sum to the reported home market unit price, net 
of price adjustments and movement expenses. In accordance with Section 
773(b) of the Tariff Act, we also examined whether the home market 
sales of each model were made at prices below their cost of production 
in substantial quantities over an extended period of time, and whether 
such sales were made at prices which would permit recovery of all costs 
within a reasonable period of time in the normal course of trade.
    For each model where less than ten percent, by quantity, of the 
home market sales during the period of review were made at prices below 
the cost of production, we included all sales of that model in the 
computation of FMV. For each model where ten percent or more, but less 
than ninety percent, of the home market sales during the period of 
review were priced below the merchandise's cost of production, we 
excluded from the calculation of FMV those home market sales which were 
priced below the merchandise's cost of production, provided that these 
below-cost sales were made over an extended period of time. For each 
model where ninety percent or more of the home market sales during the 
period of review were priced below the cost of production, we 
disregarded all sales of that model from our analysis.
    In order to determine whether below-cost sales had been made over 
an extended period of time, we compared the number of months in which 
below-cost sales occurred for each product to the number of months 
during the period of review in which each model was sold. If a product 
was sold in fewer than three months during the review period, we did 
not exclude the below-cost sales unless there were below-cost sales in 
each month of sale. If a product was sold in three or more months, we 
did not exclude the below-cost sales unless there were below-cost sales 
in at least three months during the period of review.
    We calculated the COP for the merchandise using Cheil's, SKC's, 
Kolon's and STC's cost of manufacturing (COM) and general expenses, in 
accordance with section 353.51(c) of the Department's regulations (19 
CFR 353.51(c)(1993)). Respondents' COM consisted of materials, labor, 
and overhead costs incurred during film manufacturing. General expenses 
consisted of general and administrative expenses as well as net 
interest expenses normally included in general expenses for COP. In our 
analysis, we discovered that Cheil did not include home market packing 
costs in its calculation of COP. Accordingly, we added Cheil's reported 
home market packing costs to each model's COP.
    Based upon data collected during verification of Kolon and STC, we 
made the following cost adjustments: We reallocated STC's technical 
revenues offset against STC's reported general expenses instead of 
against STC's materials cost, as reported. We readjusted the reported 
labor costs to include all those labor costs actually reported in the 
general ledger. We reallocated STC's reported variable overhead cost on 
the basis of actual PET film output rather than relying on the reported 
basis of production capacity. We disallowed STC's claim for a start-up 
costs adjustment because the costs were not actually reflected in STC's 
financial records. We readjusted STC's materials costs to reflect arms-
length prices paid to unrelated parties for raw PET chips. For Kolon, 
we corrected errors in reported interest rate ratios contained in 
Kolon's net interest expense reported for CV purposes.
    When all home market sales of a such or similar product in the 
contemporaneous month (as identified in the model match) were excluded 
from our analysis because the home market sales were priced below the 
cost of production, or when no home market sales of such or similar 
merchandise were found, then we used the constructed value of the 
merchandise sold in the United States as the basis for FMV. We 
calculated the constructed value, in accordance with Section 773(e) of 
the Tariff Act, as the sum of the cost of manufacture of the product 
sold in the United States, home market selling, general and 
administrative (SG&A) expenses, and home market profit. The cost of 
manufacture of the product sold in the United States is the sum of 
direct material, direct labor, and variable and fixed factory overhead 
expenses. For home market SG&A expenses, we used the larger of the 
actual SG&A expenses reported by the respondents or ten percent of the 
cost of manufacture, the statutory minimum for foreign SG&A expenses. 
For home market profit, we used the larger of the actual profit 
reported by the respondents or the statutory minimum of eight percent 
of the sum of cost of manufacture and SG&A expenses.
    We calculated FMV based on delivered prices to unrelated customers 
and, where appropriate, to related customers in the home market. In 
calculating FMV, we made adjustments, where appropriate, for rebates, 
Korean inland freight and insurance, Korean brokerage and loading 
charges, home market credit expenses. We adjusted for Korean 
consumption tax in accordance with our decision in Siliconmanganese 
from Venezuela, Preliminary Determination of Sales at Less Than Fair 
Value, 59 FR 31204, June 17, 1994. We deducted home market packing 
costs from the home market price and added U.S. packing costs to the 
FMV. We also made, where applicable, difference-in-merchandise 
adjustments. For SKC, we added a duty adjustment where the price SKC 
reported did not include import duties.
    Due to a clerical error, Kolon incorrectly reported its home market 
freight expense in its questionnaire response. During verification, we 
determined the actual home market freight expense charge and adjusted 
Kolon's home market sales data accordingly.
    For comparison to PP sales, pursuant to 19 CFR 353.56, we made 
circumstance-of-sale adjustments to FMV, where appropriate, for post-
sale warehousing expenses, Korean and U.S. bank charges, U.S. credit 
expenses, and U.S. warranty expenses. We made further adjustments, 
where appropriate, for U.S. commissions in accordance with 19 CFR 
353.56(a)(2). Where commissions were paid on U.S. sales and not paid on 
home market sales, we allowed an offset to FMV amounting to the lesser 
of the weighted-average home market indirect selling expenses, or the 
U.S. commissions in accordance with 19 CFR 353.56(b) of the 
regulations.
    For comparison to ESP sales, we allowed an ESP offset to FMV, 
amounting to the lesser of the weighted-average total of home market 
indirect selling expenses, or the total U.S. indirect selling expenses 
in accordance with 19 CFR 353.56(b)(2).
    No other adjustments were claimed or allowed.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following margins exist for the periods indicated: 

------------------------------------------------------------------------
           Manufacturer exporter                    Percent margin      
------------------------------------------------------------------------
November 30, 1990 through May 31, 1992:                                 
  SKC Limited...............................  1.03.                     
  Kolon Industries..........................  0.44 (de minimis).        
  STC Corporation...........................  5.86.                     
April 22, 1991 through May 31, 1992:                                    
  Cheil Synthetics..........................  0.05 (de minimis).        
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries.
    Individual differences between United States price and foreign 
market value may vary from the percentages stated above. Upon 
completion of the review the Department will issue appraisement 
instructions on each exporter directly to the U.S. Customs Service.
    Furthermore, the following deposit requirements will be effective 
for all shipments of polyethylene terephthalate film, sheet, and strip, 
entered, or withdrawn from warehouse, for consumption on or after the 
publication date of the final results of this administrative review, as 
provided by section 751(a)(1) of the Act.
    (1) The cash deposit rate for the reviewed companies will be those 
rates established in the final results of this review. Since the rates 
for Cheil and Kolon were de minimis, there will be no cash deposits on 
shipments from these firms of subject merchandise;
    (2) For previously reviewed or investigated companies not listed 
above, the cash deposit rate will continue to be the company-specific 
rate published for the most recent period;
    (3) If the exporter is not a firm covered in this review, a prior 
review, or in the original LTFV investigation, but the manufacturer is, 
the cash deposit rate will be the rate established for the most recent 
period for the manufacturer of the merchandise; and
    (4) If neither the exporter nor the manufacturer is a firm covered 
in this or any previous review conducted by the Department, the cash 
deposit rates will be 4.82%, the all other rate established in the LTFV 
investigation.
    These deposit requirements shall remain in effect until publication 
of the final results of the next administrative review.
    Interested parties may request disclosure within five days of the 
date of publication of this notice, and may request a hearing within 
ten days of the date of publication. Any hearing, if requested, will be 
held as early as convenient for the parties but not later than 44 days 
after the date of publication or the first work day thereafter. Case 
briefs or other written comments from interested parties may be 
submitted not later than 30 days after the date of publication of this 
notice. Rebuttal briefs and rebuttal comments, limited to issues in the 
case briefs, may be filed not later than 37 days after the date of 
publication. The Department will publish the final results of this 
administrative review, including the results of its analysis of issues 
raised in any such written comments.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: June 29, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-16608 Filed 7-7-94; 8:45 am]
BILLING CODE 3510-DS-P