[Federal Register Volume 60, Number 164 (Thursday, August 24, 1995)]
[Notices]
[Pages 44006-44009]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21067]



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DEPARTMENT OF COMMERCE
[A-580-816]


Certain Corrosion-Resistant Carbon Steel Flat Products From 
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 by two respondents, the Department of 
Commerce (``the Department'') is conducting an administrative review of 
the antidumping duty order on certain corrosion-resistant carbon steel 
flat products from Korea. The review covers two manufacturers/exporters 
of the subject merchandise to the United States during the period of 
review (``POR'') from February 4, 1993, through July 31, 1994.
    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: August 24, 1995.

FOR FURTHER INFORMATION CONTACT:
Alain Letort or Linda Ludwig, Office of Agreements Compliance, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230, telephone (202) 482-3793 or fax (202) 482-1388.

SUPPLEMENTARY INFORMATION: 

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute and to the 
Department's regulations are references to the provisions as they 
existed on December 31, 1994.

Background

    On July 9, 1993, the Commerce Department published in the Federal 
Register (58 FR 37176) the final affirmative antidumping duty 
determination on certain corrosion-resistant carbon steel flat products 
from Korea, for which we published an antidumping duty order on August 
19, 1993 (58 FR 44159). On August 3, 1994, the Department published the 
``Notice of Opportunity to Request an Administrative Review'' of this 
order the period February 4, 1993 through July 31, 1994 (59 FR 39543). 
We receive a request for an administrative review from Dongbu Steel 
Co., Ltd (``Dongbu''), Union Steel Manufacturing Co., Ltd. (``Union''), 
Pohang Coated Steel Co., Ltd (``PCS'') and Dongkuk International 
(``Dongkuk''). We initiated the administrative review on September 8, 
1994 (59 FR 46391). Subsequently, PCS and Dongkuk made timely requests 
that they be allowed to withdraw from the administrative review 
pursuant to 19 CFR 353.22(a)(5). On April 12, 1995, we published a 
``Notice of Partial Termination of Administrative Review of Antidumping 
Order'' with respect to these respondents (60 FR 18581). The Department 
is conducting this review in accordance with section 751 of the Tariff 
Act of 1930, as amended (``the Act'').

[[Page 44007]]


Scope of the Review

    These products include flat-rolled carbon steel products, of 
rectangular shape, either clad, plated, or coated with corrosion-
resistant metals such as zinc, aluminum, or zinc-, aluminum-, nickel- 
or iron-based alloys, whether or not corrugated or painted, varnished 
or coated with plastics or other nonmetallic substances in addition to 
the metallic coating, in coils (whether or not in successively 
superimposed layers) and of a width of 0.5 inch or greater, or in 
straight lengths which, if of a thickness less than 4.75 millimeters, 
are of a width of 0.5 inch or greater and which measures at least 10 
times the thickness or if of a thickness of 4.75 millimeters or more 
are of a width which exceeds 150 millimeters and measures at least 
twice the thickness, as currently classifiable in the HTS under item 
numbers 7210.31.0000, 7210.39.0000, 7210.41.0000, 7210.49.0030, 
7210.49.0090 7210.60.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 
7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.21.0000, 7212.29.0000, 
7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 
7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000, 7215.90.5000, 
7217.12.1000, 7217.13.1000, 7217.19.1000, 7217.19.5000, 7217.22.5000, 
7217.23.5000, 7217.29.1000, 7217.29.5000, 7217.32.5000, 7217.33.5000, 
7217.39.1000, and 7217.39.5000. Included are flat-rolled products of 
nonrectangular cross-section where such cross-section is achieved 
subsequent to the rolling process (i.e., products which have been 
``worked after rolling'')--for example, products which have been 
bevelled or rounded at the edges. Excluded are flat-rolled steel 
products either plated or coated with tin, lead, chromium, chromium 
oxides, both tin and lead (``terne plate''), or both chromium and 
chromium oxides (``tin-free steel''), whether or not painted, varnished 
or coated with plastics or other nonmetallic substances in addition to 
the metallic coating. Also excluded are clad products in straight 
lengths of 0.1875 inch or more in composite thickness and of a width 
which exceeds 150 millimeters and measures at least twice the 
thickness. Also excluded are certain clad stainless flat-rolled 
products, which are three-layered corrosion-resistant carbon steel 
flat-rolled products less than 4.75 millimeters in composite thickness 
that consist of a carbon steel flat-rolled product clad on both sides 
with stainless steel in a 20%-60%-20% ratio. These HTS item numbers are 
provided for convenience and Customs purposes. The written description 
remains dispositive.
    The POR is February 4, 1993 through July 31, 1994. This review 
covers sales of certain corrosion-resistant carbon steel flat products 
by Dongbu and Union.

United States Price

    The Department used purchase price, in accordance with section 
772(b) of the Act, when the subject merchandise was sold to unrelated 
purchasers in the United States. For Union, however, the Department 
determined, in certain instances, that exporter's sales price 
(``ESP''), as defined in section 772(c) of the Act, was a more 
appropriate basis for calculating USP (see below).
    We adjusted USP for the Korean value-added tax in accordance with 
our practice as outlined in various determinations, including 
Silicomanganese from Venezuela; Final Determination of Sales at Less 
Than Fair Value, 59 FR 55435 (November 7, 1994).
Dongbu

    All of Dongbu's U.S. sales were based on the price to the first 
unrelated purchaser in the United States. The Department determined 
that purchase price, as defined in section 772 of the Act, was the 
appropriate basis for calculating USP. Depending on the channel of 
trade, we treated the date of either the purchase order, the internal 
confirmation or the date of the production order as date of sale. We 
made adjustments to purchase price, where appropriate, for foreign 
inland freight, foreign brokerage, ocean freight, containerization, 
U.S. duty and U.S. brokerage and handling.
    No other adjustments were claimed or allowed.

Union

    All of Union's U.S. sales were based on the price to the first 
unrelated purchaser in the United States. The Department determined 
that, in most instances, purchase price, as defined in section 772(b) 
of the Act, was the appropriate basis for calculating USP. In a very 
few instances, however, the Department determined that exporter's sales 
price (``ESP''), as defined in section 772(c) of the Act, was a more 
appropriate basis for calculating USP. These instances involved either 
(a) sales where the merchandise was resold after entry into the United 
States, or (b) sales made prior to importation where the merchandise 
was further processed by an outside contractor in the United States on 
a fee-for-service basis. In the latter case, the Department's 
determination was based on the following facts: (a) Union America 
(``UA''), Union's sales office in the United States, was the importer 
of record and took title to the merchandise; (b) UA financed the 
relevant sales transactions; (c) UA arranged and paid for the further 
processing; and (d) UA assumed the seller's risk. See the Department's 
analysis memorandum (for Union) dated August 10, 1995, copies of which, 
as well as copies of other memoranda referred to in this notice, are 
available in Room B-099 of the Department's Central Records Unit.
    Because quantities were not finalized until the merchandise was 
actually shipped to the United States, we treated the date of shipment 
as date of sale (see the Department's analysis memorandum referred to 
above). We made adjustments to purchase price, where appropriate, for 
cash discounts and rebates, foreign inland freight, foreign brokerage 
and handling, ocean freight, marine insurance, U.S. duty, U.S. 
brokerage and handling, U.S. inland freight, and duty drawback. We made 
adjustments to ESP, where appropriate, for cash discounts and rebates, 
foreign inland freight, foreign brokerage and handling, ocean freight, 
marine insurance, U.S. duty, U.S. brokerage and handling, U.S. inland 
freight, commissions, credit expenses, warranty expenses, indirect 
selling expenses, further processing in the United States, and duty 
drawback. Because Union had understated its U.S. credit expenses by not 
including bank charges therein, we increased Union's U.S. credit 
expense by the amount of those charges, which we obtained from UA's 
audited financial statement.
    No other adjustments were claimed or allowed.

Foreign Market Value

    Based on a comparison of the volume of home-market sales and third-
country sales, we determined that Dongbu's and Union's home markets 
were viable. Therefore, in accordance with section 773(a)(1)(A) of the 
Act, we based FMV on the packed, delivered price to unrelated 
purchasers in the home market, using the date of the invoice as the 
date of sale.
    Based on a review of Dongbu's and Union's submissions, the 
Department determined that only a small percentage of those companies' 
home-market sales were made to related parties who, in turn, resold the 
merchandise (``downstream sales''). The Department determined that 
Dongbu and Union need not report their home-market 

[[Page 44008]]
downstream sales because of their low volume.
    Petitioners alleged that Dongbu and Union sold corrosion-resistant 
carbon steel flat products in the home market at prices below their 
cost of production (``COP''). Based on this allegation, the Department 
determined that it had reasonable grounds to believe or suspect that 
Dongbu and Union had sold the subject merchandise in the home market at 
prices below the COP. We therefore initiated a cost investigation, in 
accordance with section 773(b) of the Act. As a result, we investigated 
whether Dongbu and Union sold such or similar merchandise in the home 
market at prices below the COP. In accordance with 19 CFR 353.51(c) we 
calculated COP for Dongbu and Union as the sum of reported materials, 
labor, factory overhead, and general expenses, and compared COP to 
home-market prices, net of price adjustments, discounts and movement 
expenses.
    In accordance with section 773(b) of the Act, in determining 
whether to disregard home-market sales made at prices below the COP, we 
examined whether such sales were made in substantial quantities over an 
extended period of time, and whether such sales were made at prices 
which permitted recovery of all costs within a reasonable period of 
time in the normal course of trade.
    To satisfy the requirement of section 773(b)(1) that below-cost 
sales be disregarded only if made in substantial quantities, we applied 
the following methodology. For each model for which less than 10 
percent, by quantity, of the home-market sales during the POR were made 
at prices below the COP, we included all sales of that model in the 
computation of FMV. For each model for which 10 percent or more, but 
less than 90 percent, of the home-market sales during the POR were 
priced below the COP of the merchandise, we excluded from the 
calculation of FMV those home-market sales which were priced below the 
COP, provided that they were made over an extended period of time. For 
each model for which 90 percent or more of the home-market sales during 
the POR were priced below the COP and were made over an extended period 
of time, we disregarded all sales of that model in our calculation and, 
in accordance with section 773(b) of the Act, we used the constructed 
value (``CV'') of those models, as described below. See, e.g., 
Mechanical Transfer Presses from Japan; Final Results of Antidumping 
Duty Administrative Review, 59 FR 9958 (March 2, 1994).
    In accordance with section 773(b)(1) of the Act, to determine 
whether sales below cost had been made over an extended period of time, 
we compared the number of months in which sales below cost occurred for 
a particular model to the number of months in which that model was 
sold. If the model was sold in fewer than three months, we did not 
disregard below-cost sales unless there were below-cost sales of that 
model in each month sold. If a model was sold in three or more months, 
we did not disregard below-cost sales unless there were sales below 
cost in at least three of the months in which the model was sold. We 
used CV as the basis for FMV when an insufficient number of home-market 
sales were made at prices above COP. See Tapered Roller Bearings and 
Parts Thereof, Finished and Unfinished, from Japan and Tapered Roller 
Bearings, Four Inches or Less in Outside Diameter, and Components 
Thereof, from Japan; Final results of Antidumping Duty Administrative 
Reviews, 58 FR 64720, 64729 (December 8, 1993).
    Because Dongbu and Union provided no indication that their below-
cost sales of models within the ``greater than 90 percent'' and the 
``between 10 and 90 percent'' categories were at prices that would 
permit recovery of all costs within a reasonable period of time and in 
the normal course of trade, we disregarded those sales within the ``10 
to 90 percent'' category which were made below cost over an extended 
period of time. In addition, as a result of our COP test for home-
market sales of models within the ``greater than 90 percent'' category, 
we based FMV on CV for all U.S. sales for which there were insufficient 
sales of the comparison home-market model at or above COP. Finally, 
where we found, for certain of Dongbu's and Union's models, home-market 
sales for which less than 10 percent were made below COP, we used all 
home-market sales of those models in our comparisons.
    We also used CV as FMV for those U.S. sales for which there was no 
contemporaneous sale of such or similar merchandise in the home market. 
We calculated CV in accordance with section 773(e) of the Act. We 
included the cost of materials, labor, and factory overhead in our 
calculations. Where the general expenses were less than the statutory 
minimum of 10 percent of the cost of manufacture (``COM''), we 
calculated general expenses as 10 percent of the COM. Where the actual 
profits were less than the statutory minimum of 8 percent of the COM 
plus general expenses, we calculated profit as 8 percent of the sum of 
COM plus general expenses. Based on our verification of Dongbu's and 
Union's cost response, we adjusted Dongbu's reported COP and CV to 
reflect certain adjustments to general and administrative expenses and 
interest expenses. See the Department's separate cost calculation 
memoranda for Dongbu and Union, both dated August 10, 1995.

Dongbu

    In accordance with section 773 of the Act, for those U.S. models 
for which we were able to find a home-market such or similar match that 
had sufficient above-cost sales, we calculated FMV based on the packed, 
f.o.b., ex-factory, or delivered prices to unrelated purchasers in the 
home market. We made adjustments, where applicable, for certain rebates 
tied to specific sales, post-sale inland freight, home-market direct 
selling expenses, i.e., credit and warranty expenses, and for the 
Korean value-added tax. We also adjusted FMV for differences in 
physical characteristics of the merchandise. Finally, we adjusted FMV 
for differences in packing by deducting home-market packing expenses 
from, and adding U.S. packing expenses to, FMV.

Union

    In accordance with section 773 of the Act, for those U.S. models 
for which we were able to find a home-market such or similar match that 
had sufficient above-cost sales, we calculated FMV based on the packed, 
f.o.b., ex-factory, or delivered prices to unrelated purchasers in the 
home market. We made adjustments, where applicable, for post-sale 
inland freight, for home-market direct selling expenses, i.e., credit 
expenses, and for the Korean value-added tax.
    We treated Union's warehousing expense as an indirect selling 
expense, rather than direct, as Union had claimed, because Union evenly 
allocated this expense to all home market sales across-the-board, 
rather than calculating a discrete warehousing expense for each home-
market sale.
    We also treated Union's pre-sale inland freight as an indirect 
selling expense, rather than direct, as Union had claimed, pursuant to 
the decision by the Court of Appeals for the Federal Circuit in Ad Hoc 
Committee v. United States, 13 F.3d 398 (Fed. Cir. 1994). The 
Department considers pre-sale movement expenses as direct selling 
expenses only if the movement expenses in question are directly related 
to the home-market sales under consideration. In order to determine 
whether pre-sale movement expenses 

[[Page 44009]]
are direct under the facts of a particular case, the Department 
examines the respondent's pre-sale warehousing expenses, since the pre-
sale movement charges incurred in positioning the merchandise at the 
warehouse are, for analytical purpose, inextricably linked to pre-sale 
warehousing expenses. If the pre-sale warehousing constitutes an 
indirect expense, the expense involved in getting the merchandise to 
the warehouse must also be indirect. conversely, a direct pre-sale 
warehousing expense necessarily implies a direct pre-sale movement 
expense. We note that, although pre-sale warehousing expenses in most 
cases have been found to be indirect selling expenses, these expenses 
may be deducted from FMV as a circumstance-of-sale adjustment in a 
particular case if the respondent is able to demonstrate that the 
expenses are directly related to the sales under consideration. In the 
instant review, Union did not distinguish between pre- and post-sale 
warehousing expenses, nor did it demonstrate that these expenses were 
directly tied to the home-market sales under consideration. The 
Department, therefore, determined to treat home-market warehousing 
expenses as indirect selling expenses.
    We also adjusted FMV for differences in packing by deducting home-
market packing expenses from, and adding U.S. packing expenses to, FMV.
    During the verification of Union's responses, the Department was 
unable to fully verify the accuracy of Union's reported home-market 
product characteristics, because Union did not retain the relevant 
information in its records, thereby casting doubt on the accuracy of 
the model match. It is the Department's preference to calculate 
antidumping duties on the basis of price-to-price comparisons whenever 
possible. It is also the Department's preference to use as much of 
respondent's data as possible. For purposes of this review, therefore, 
the Department has decided to use Union's model-matching product 
characteristics, but to apply to all of Union's price-to-price sales 
comparisons a flat, across-the-board adjustment for differences in 
physical characteristics of the merchandise (``difmer'') of 20 percent 
as the best information otherwise available (``BIA''). Twenty percent 
is the maximum difmer allowed between U.S. and home-market models for 
the purposes of comparison. See the Department's internal memorandum 
from Joseph A. Spetrini to Susan G. Esserman, dated August 8, 1995.
    In a letter dated May 24, 1995, petitioners formally requested that 
the Department consider Union and Dongkuk Industries Co., Ltd. 
(``DKI''), which is not a respondent, as a single producer of 
corrosion-resistant carbon steel flat products. This request to 
``collapse'' Union and DKI was not made until well after the 180-day 
deadline for the submission of new factual information and after 
verification had been completed. Because petitioner's request was 
untimely, and the record evidence to collapse Union and DKI is 
insufficient, the Department has rejected petitioners' request to 
consider the issue of collapsing Union and DKI as a single producer of 
corrosion-resistant carbon steel flat products (see the Department's 
internal memorandum from Joseph A. Spetrini to Susan G. Esserman, dated 
July 28, 1995).

Preliminary Results of Review

    As a result of our comparison of USP to FMV, we preliminarily 
determine that the following margins exist for the period February 4, 
1993, through July 31, 1994:

         Certain Corrosion-Resistant Carbon Steel Flat Products         
------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
               Producer/manufacturer/exporter                   margin  
                                                              (percent) 
------------------------------------------------------------------------
Dongbu.....................................................         1.74
Union......................................................         5.72
------------------------------------------------------------------------

    Interested parties may request disclosure within 5 days of the date 
of publication of this notice and 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 business day thereafter. Case 
briefs and/or written comments from interested parties may be submitted 
no later than 30 days after the date of publication. Rebuttal briefs 
and rebuttals to written comments, limited to issues raised in those 
comments, may be filed not later than 37 days after the date of 
publication of this notice. 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 or at a hearing.
    The Department shall determine, and the Customer Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between the USP and FMV may vary from the percentages 
stated above.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided for by section 
751(a)(1) of the Act. A cash deposit of estimated antidumping duties 
shall be required on shipments of certain corrosion-resistant carbon 
steel flat products from Korea as follows: (1) The cash deposit rates 
for the reviewed company will be the rate established in the final 
results of this review; (2) for previously 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 or the original less-than-fair-
value (``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 review, the 
cash deposit rate for this case will be 17.88 percent, which is the 
``all others'' rate for the LTFV investigation. See Final Determination 
of Sales at Less Than Fair Value: Certain Corrosion-Resistant Carbon 
Steel Flat Products from Korea, 58 FR 37176 (July 9, 1993).
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR Sec. 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 this notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
Sec. 353.22.

    Dated: August 16, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-21067 Filed 8-23-95; 8:45 am]
BILLING CODE 3510-DS-M