[Federal Register Volume 61, Number 93 (Monday, May 13, 1996)]
[Notices]
[Pages 22020-22025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11822]
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[[Page 22021]]
DEPARTMENT OF COMMERCE
International Trade Administration
[A-412-817]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Foam Extruded PVC and
Polystyrene Framing Stock From the United Kingdom
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: May 13, 1996.
FOR FURTHER INFORMATION CONTACT: Ellen Grebasch, Dorothy Tomaszewski,
or Erik Warga, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)
482-3773, (202) 482-0631, or (202) 482-0922, respectively.
The 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 Rounds Agreements Act (``URAA'').
Preliminary Determination
As explained in the memoranda from the Assistant Secretary for
Import Administration dated November 22, 1995, and January 11, 1996,
the Department of Commerce (``the Department'') has exercised its
discretion to toll all deadlines for the duration of the partial
shutdowns of the Federal Government from November 15 through November
21, 1995, and December 16, 1995, through January 6, 1996. Thus, the
deadline for the preliminary determination in this investigation has
been extended by 28 days, i.e., one day for each day (or partial day)
the Department was closed. As such, the deadline for this determination
is no later than May 3, 1996.
We preliminarily determine that foam extruded PVC and polystyrene
framing stock (``framing stock'') from the United Kingdom (``U.K.'') is
being, 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
Since the initiation of this investigation (Notice of Initiation of
Antidumping Duty Investigation: Foam Extruded PVC and Polystyrene
Framing Stock from the United Kingdom (60 FR 52370, October 6, 1995),
the following events have occurred:
On October 25, 1995, the United States International Trade
Commission (``ITC'') issued an affirmative preliminary injury
determination in this case (see ITC Investigation No. 731-TA-738).
On November 9, 1995, the Department issued an antidumping duty
questionnaire to each of the three U.K. companies (Ecoframe Ltd.,
(``Ecoframe'') Magnolia Group PLC, (``Magnolia'') and Robobond Ltd.,
(``Robobond'')) that produced and sold the subject merchandise during
the period of investigation (``POI''), September 1, 1994, through
August 31, 1995. The questionnaire is divided into four sections.
Section A requests general information concerning a company's corporate
structure and business practices, the merchandise under investigation
that it sells, and the sales of the merchandise in all of its markets.
Sections B and C request home market sales listings and U.S. sales
listings, respectively. Section D requests information on the cost of
production (``COP'') of the foreign like product and constructed value
(``CV'') of the subject merchandise.
On January 11, 1996, Robobond submitted a letter requesting that it
be excused from reporting its home market and U.S. sales made from
inventory, referred to as ``501 stock'' sales, on the grounds that the
transactions were small quantities, represented a small percentage of
overall sales, and would be burdensome to report and verify. See
``Export Price'' and ``Normal Value'' sections of this notice, below.
Ecoframe requested on January 11 and March 3, 1996, that the
Department exclude from its margin analysis ``ecopasta,'' ``special
offer'' and scrap sales in both the United States and home markets, as
well as a ``special circumstance'' sale to one U.S. customer. See
``Export Price'' and ``Normal Value'' sections of this notice, below.
On February 9, 1996, Magnolia requested (1) a quantity adjustment
(see ``Normal Value'' section of this notice, below) and (2) the
exclusion of certain home market sales from reporting requirements. The
Department granted Magnolia's exclusion request by a March 25, 1996,
letter.
Based on timely allegations by petitioner, Marley Mouldings, the
Department began investigations into whether the three respondents had
made sales in the home market at prices that were below COP pursuant to
section 773(b) of the Act (see February 28 and March 4, 1996, memoranda
from team to Gary Taverman).
On February 16, 1996, petitioner made a timely request that,
pursuant to section 733(c)(1)(A) of the Act, the Department postpone
its preliminary determination in this proceeding. Accordingly, we
postponed the preliminary determination until not later than May 3,
1996 (61 FR 7240, February 27, 1996). (As noted above, all deadlines
were tolled 28 days as a result of the two federal government shutdowns
totaling 28 days; therefore, the original deadline of February 15,
1996, had already been extended to March 14, 1996.)
Respondents submitted responses to the various sections of the
questionnaire from December 1995 through April 1996. For respondents'
responses to sections A, B and C, the Department issued supplemental
requests for information from February through April 1996. Responses to
these supplemental requests were received in March and April 1996.
Robobond and Ecoframe also filed supplements to their section D
responses on April 17 and May 1, 1996, respectively.
Petitioner filed comments on Robobond's response to section D on
April 29, 1996. Robobond argued in April 30 and May 2, 1996, letters
that petitioner's comments were too late to be considered for the
preliminary determination.
Postponement of Final Determination
On April 25, 1996, Robobond requested that, pursuant to section
735(a)(2)(A) of the Act, in the event of an affirmative preliminary
determination in this investigation, the Department postpone its final
determination until not later than 135 days after the publication of
the affirmative preliminary determination in the Federal Register. In
accordance with 19 CFR 353.20(b), inasmuch as our preliminary
determination is affirmative, Robobond accounts for a significant
proportion of exports of the subject merchandise, and we are not aware
of the existence of any compelling reasons for denying the request, we
are granting Robobond's request and postponing the final determination.
Consistent with the General Agreement on Tariffs and Trade
(``GATT''), section 773(d) of the Act permits the Department to extend
suspension of liquidation from four to six months at the request of
exporters representing a significant proportion of exports of the
subject merchandise. The structure of the statute integrally links a
[[Page 22022]]
request to extend the final determination and extension of suspension
of liquidation. This linkage balances the goals of providing an
expeditious remedy to the domestic industry against the desire to avoid
undue harm to the exporters who have requested extension of the final
determination. Accordingly, we consider a request by an exporter to
extend the final determination as containing an implied request to
extend suspension of liquidation. We are, therefore, extending
suspension of liquidation in this case.
Scope of Investigation
This investigation covers all extruded PVC and polystyrene framing
stock regardless of color, finish, width or length. Finished frames
assembled from foam extruded PVC and polystyrene framing stock are
excluded. The merchandise under investigation is currently classifiable
under subheadings 3924.90.20.00; 3926.90.90.90; 3926.90.95.90; and
3926.90.98.90 of the Harmonized Tariff Schedules of the United States
(``HTS''). Although the HTS subheadings are provided for convenience
and customs purposes, our written description of the scope of these
investigations is dispositive.
Period of Investigation
The POI is September 1, 1994, through August 31, 1995.
Fair Value Comparisons
To determine whether sales of the subject merchandise by
respondents to the United States were made at less than fair value, we
compared the export price (``EP'') to the Normal Value (``NV''), as
described in the ``Export Price'' and ``Normal Value'' sections of this
notice. In accordance with section 777A(d)(1)(A)(i), we compared POI-
wide weighted-average EPs to weighted-average NVs. In determining
averaging groups for comparison purposes, we considered the
appropriateness of such factors as physical characteristics and level
of trade.
A. Physical Characteristics
In accordance with section 771(16) of the Act, we considered all
products covered by the description in the Scope of Investigation
section, above, produced in the United Kingdom and sold in the home
market during the POI, to be foreign like products for purposes of
determining appropriate product comparisons to U.S. sales. 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 in the
Department's antidumping questionnaire. In making the product
comparisons, we relied on the following criteria (in order of
preference): material; weight per linear foot; profile type; width;
finish type (pasta/compo, foil, mylar, laminated/wrapped, embossed
plain substrate, embossed substrate with foil, embossed substrate with
mylar, wet system (e.g., paint), or other); and total number of
finishes.
B. Level of Trade
In accordance with section 773(a)(7)(A) of the Act and the
Statement of Administrative Action accompanying the Uruguay Round
Agreements Act (``SAA''), H.R. Doc. No. 316, 103d Cong., 2d Sess. 829-
831 (1994), to the extent practicable, the Department will calculate NV
based on sales at the same level of trade as the U.S. sale. When the
Department is unable to find sale(s) in the comparison market at the
same level of trade as the U.S. sales(s), the Department may compare
sales in the U.S. and foreign markets at one or more different levels
of trade.
Of the three respondents in this proceeding, only Robobond reported
that different levels of trade existed, claiming that its sales from
inventory are at a different level than its non-inventory sales.
We preliminarily find that different levels of trade do not exist
for Robobond. In its level-of-trade claim, Robobond stated that sales
from inventory constituted a separate level from non-inventory sales.
We are not satisfied that this difference rises to the level of a
different level of trade. See May 3, 1996, memorandum, on file in Room
B-099 of the Main Commerce Building. However, we will examine this
issue further at verification and consider arguments that parties may
make during the briefing process.
What Robobond has characterized as a level-of-trade difference
appears to stem from a concern that comparisons be made using
comparable quantities. However, Robobond has not explained how
comparable quantities might be defined or whether price comparability
is affected by comparing different quantities. The Department must, in
considering the question of level of trade categorization, ensure there
are different selling functions at the alleged different levels, and
distinguish differences in level of trade from other differences among
sales, such as quantity differences. See SAA at 830. While differences
in quantity may be an appropriate factor to consider in making fair
value comparisons, such differences do not constitute level-of-trade
differences.
Accordingly, we preliminarily find that no level of trade
differences exist and that level of trade does not need to be
considered in price averaging.
Export Price
We calculated EP, in accordance with subsections 772(a) and (c) of
the Act, for each of the respondents, where the subject merchandise was
sold directly to the first unaffiliated purchaser in the United States
prior to importation and use of constructed export price was not
otherwise warranted based on the facts of record.
We made company-specific adjustments as follows:
Ecoframe
We calculated EP based on packed, ex-works, FOB port, and delivered
prices to unaffiliated customers in the United States. Where
appropriate, we made deductions from the starting price (gross unit
price) for the following charges: international freight (including
plant-to-port-of-exit freight; brokerage and handling; and ocean
freight).
For sales of a particular model to one U.S. customer, Ecoframe
requested exclusion because certain designing and tooling costs had
been paid separately by the customer. Rather than exclude these sales,
we increased export price to account for the revenue. The Department
may consider such revenue to be a component of the price charged to the
customer. See Final Results of Antidumping Duty Administrative Review:
Certain Forged Steel Crankshafts from the United Kingdom (56 FR 5975,
February 14, 1991). We will fully examine the nature of this revenue
during verification of Ecoframe's questionnaire response.
We excluded Ecoframe's scrap sales to U.S. customers. These were
sales that were discounted when it was discovered after sale that the
merchandise sold as prime merchandise was actually substandard. The
sales involved relatively insignificant quantities. We did not exclude
``ecopasta'' or ``special offer'' sales because Ecoframe did not
adequately explain why such sales should be excluded nor does the
record indicate that the sales were extraordinary.
Finally, we recalculated credit expenses because the reported
figure did not comport with the narrative description.
Magnolia
We calculated EP based on packed, delivered prices to unaffiliated
customers in the United States. Where
[[Page 22023]]
appropriate, we made deductions from the starting price (gross unit
price) for the following charges: international freight (including
plant-to-port-of-exit freight; U.K. inland insurance; brokerage and
handling; ocean freight; marine insurance; U.S. inland port-to-
warehouse freight; U.S. inland warehouse-to-customer freight; U.S.
inland insurance; and other U.S. transportation charges) and U.S. duty.
Robobond
We calculated EP based on packed, delivered/duty unpaid and ex-
works prices to unaffiliated customers in the United States. Where
appropriate, we made deductions from the starting price (gross unit
price) for the following charges: international freight (including UK
inland freight, UK brokerage & handling, ocean freight, U.S. brokerage
and handling, and U.S. inland freight). We added to the starting price
an amount for reported freight revenue, where appropriate. We
recalculated reported credit expenses using the average U.S.-dollar
prime interest rate because the interest rate used for the reported
figures was not based on information from the POI but rather on
information provided by a bank for purposes of the questionnaire
response.
We did not exclude ``501 stock'' sales because the record does not
indicate that these sales were materially different from Robobond's
other U.S. sales. Although Robobond characterized these sales as being
a separate level of trade based on seller function, such a difference,
if found to exist, is properly considered in the context of making fair
value comparisons rather than by exclusions. As discussed above,
Robobond has not established that these sales are at a different level
of trade.
Normal Value
Cost of Production Analysis
As noted in the ``Case History'' section above, based on the
petitioners' allegations, the Department found reasonable grounds to
believe or suspect that each respondent made sales in the home market
at prices below the cost of producing the merchandise. As a result, the
Department initiated investigations to determine whether the
respondents made home market sales during the POI at prices below their
respective COPs within the meaning of section 773(b) of the Act.
Before making any fair value comparisons, we conducted the COP
analysis described below.
A. Calculation of COP
We calculated the COP based on the sum of each respondent's cost of
materials and fabrication for the foreign like product, plus amounts
for home market general, and administrative expenses (``G&A'') and
packing costs in accordance with section 773(b)(3) of the Act. We
relied on the respondents' submitted COP amounts except in the
following specific instances wherein the reported costs were improperly
valued:
Ecoframe: different costs had been reported for identical
products and were weight averaged to derive a single, product-
specific cost; and the reported amount for variable overhead was
recalculated to exclude packing expenses.
Magnolia: indirect selling expenses were recalculated to adjust
for improper allocation.
Robobond: reported G&A expenses were adjusted to reflect
expenses for all affiliated companies; and reported depreciation
expenses were revised to reflect Robobond's historical treatment of
depreciation rather than an accounting practice adopted after the
filing of the petition.
B. Test of Home Market Prices
We used the respondents' adjusted weighted-average COP for the POI.
We compared the weighted-average COP figures to home market sales 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 below-cost
prices within an extended period of time in substantial quantities, and
were not at prices which permit recovery of all costs within a
reasonable period of time. On a product-specific basis, we compared the
COP to the home market prices, less any applicable movement charges and
direct and indirect selling expenses.
C. Results of COP Test
Pursuant to section 773(b)(2)(C) where less than 20 percent of a
respondent's sales of a given product were at prices less than the COP,
we did not disregard any below-cost sales of that product because we
determined that the below-cost sales were not made in ``substantial
quantities.'' Where 20 percent or more of a respondent's sales of a
given product during the POI were at prices less than the COP, we
disregarded the below-cost sales because such sales were found to be
made in substantial quantities within an extended period of time (in
accordance with section 773(b)(2)(B) of the Act) and 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).
Where there were no above-cost sales available for matching
purposes, export prices that would have been compared to home market
prices for these models were instead compared to CV.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of a respondent's cost of materials, fabrication,
selling, general, and administrative expenses (``SG&A'') and U.S.
packing costs as reported in the U.S. sales databases. In accordance
with section 773(e)(2)(A) of the Act, we based SG&A and profit on the
amounts incurred and realized by the respondent in connection with the
production and sale of the foreign like product in the ordinary course
of trade, for consumption in the foreign country. Where appropriate, we
calculated each respondent's CV based on the methodology described in
the calculation of COP above. For selling expenses, we used the
weighted-average home market selling expenses. For Robobond, we
calculated interest based on actual interest expenses incurred rather
than the reported figure, which improperly included an adjustment for
imputed interest.
Adjustments to Prices
We made company-specific adjustments to prices used as NV, as
follows:
Ecoframe
We calculated NV based on packed, delivered prices to unaffiliated
customers. We made deductions from the starting price for inland
freight. In addition, where appropriate, we adjusted for differences in
circumstances of sale for imputed credit expenses, credit insurance
expenses, and commissions (including appropriate offsets). We adjusted
reported gross unit prices to reflect the actual unit price of the
quantity delivered.
We excluded Ecoframe's scrap sales to home market customers. Some
were sales that were discounted when it was discovered after sale that
the merchandise sold as prime merchandise was actually substandard;
others were off-prime production sold as scrap. All types of excluded
sales involved relatively insignificant quantities. We did not exclude
``ecopasta'' or ``special offer'' sales because Ecoframe did not
adequately explain why such sales should be excluded nor does the
record indicate that the sales were extraordinary.
Magnolia
We calculated NV based on packed, delivered prices to unaffiliated
customers. We made deductions from the starting price for inland
freight and early payment discounts. In addition, we adjusted for
differences in circumstances of sale for imputed credit
[[Page 22024]]
expenses (which we recalculated using the proper base price). Magnolia
also reported an amount upon which to base an adjustment for
differences in quantities sold between the U.S. and U.K. markets,
pursuant to 19 CFR 353.55(a). Although Magnolia claimed that it
incurred differing manufacturing costs depending on quantity, it did
not demonstrate, nor did data on the record show, that pricing
differences were related to quantity. Accordingly, we have not made the
requested adjustment.
Robobond
We calculated NV based on packed, ex-works or delivered prices to
unaffiliated customers. We made deductions from the starting price for
inland freight, where appropriate. We added to the starting price an
amount for reported freight revenue, where appropriate. In addition, we
adjusted for differences in circumstances of sale for imputed credit
expenses, post-sale clearing of accounts receivable (U.S. and home
market), bank charges (U.S. and home market), post-sale
``overcharging'' credits, post-sale ``shortage'' credits, and customer-
specific freight charges not allocable to specific sales. We
reclassified as indirect selling expenses reported direct selling
expenses for bad debt and for net expense freight on return
merchandise. Neither expense was attributable to specific customers. We
recalculated reported credit expenses using the average U.K.-pound-
sterling lending rate because the interest rate used for the reported
figures was not based on information from the POI but rather on
information provided by a bank for purposes of the questionnaire
response.
For each respondent, we made adjustments, where appropriate, for
physical differences in the merchandise in accordance with section
773(a)(6)(C)(ii) of the Act. Where the difference in merchandise
adjustment for every comparison product exceeded 20 percent, we based
NV on CV. In addition, in accordance with section 773(a)(6)(B), we
deducted home market packing costs and added U.S. packing costs for all
respondents.
We did not exclude ``501 stock'' sales from the home market sales
listing for the reasons described in the ``Export Price'' section of
this notice, above.
Price to CV Comparisons
Where we compared CV to export prices, we deducted from CV the
weighted-average home market direct selling expenses and added the
weighted-average U.S. product-specific direct selling expenses (where
appropriate) in accordance with section 773(a)(8) of the Act.
Currency Conversion
We made currency conversions into U.S. dollars based on the
official exchange rates in effect on the dates of the U.S. sales as
certified by the Federal Reserve Bank. Section 773A(a) of the Act
directs the Department to use a daily exchange rate in order to convert
foreign currencies into U.S. dollars. Further, section 773A(b) directs
the Department to allow a 60-day adjustment period when a currency has
undergone a sustained movement. A sustained movement has occurred when
the weekly average of actual daily rates exceeds the weekly average of
benchmark rates by more than five percent for eight consecutive weeks.
The benchmark is defined as the moving average of rates for the past 40
business days. (For an explanation of this method, see Policy Bulletin
96-1: Currency Conversions (61 FR 9434, March 8, 1996)). Such an
adjustment period is required only when a foreign currency is
appreciating against the U.S. dollar. The use of an adjustment period
was not warranted in this case because the U.K. pound did not undergo a
sustained movement, nor were there currency fluctuations during the
POI.
Verification
As provided in section 782(i) of the Act, we will verify all
information determined to be acceptable for use in making our final
determination.
Suspension of Liquidation
In accordance with section 733(d) of the Act, we are directing the
Customs Service to suspend liquidation of all imports of subject
merchandise that are entered, or withdrawn from warehouse, for
consumption on or after the date of publication of this notice in the
Federal Register. We will instruct the Customs Service to require a
cash deposit or the posting of a bond equal to the weighted-average
amount by which the NV exceeds the export price, as indicated in the
chart below. These suspension of liquidation instructions will remain
in effect until further notice.
------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer margin
percentage
------------------------------------------------------------------------
Ecoframe................................................... 27.26
Robobond/Simons............................................ 2.60
Magnolia................................................... 81.24
All Others................................................. 4.29
------------------------------------------------------------------------
Pursuant to section 733(d)(1)(A) and section 735(c)(5) of the Act,
the Department has not included zero and de minimis weighted-average
dumping margins and margins determined entirely under section 776 of
the Act, from the calculation of the ``all others'' deposit rate.
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
Public Comment
Case briefs or other written comments in at least ten copies must
be submitted to the Assistant Secretary for Import Administration no
later than August 1, 1996, and rebuttal briefs, no later than August 8,
1996. A list of authorities used and an executive summary of issues
should accompany any briefs submitted to the Department. Such summary
should be limited to five pages total, including footnotes. In
accordance with section 774 of the Act, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs. Tentatively, the hearing
will be held on August 15, 1996, the time and place to be determined,
at the U.S. Department of Commerce, 14th Street and Constitution
Avenue, N.W., Washington, D.C. 20230. Parties should confirm by
telephone the time, date, and place of the hearing 48 hours before the
scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
B-099, within ten days of the publication of this notice. Requests
should contain: (1) the party's name, address, and telephone number;
(2) the number of participants; and (3) a list of the issues to be
discussed. Oral presentations will be limited to issues raised in the
briefs. If this investigation proceeds normally, we will make our final
determination by 135 days after the publication of this notice in the
Federal Register.
This determination is published pursuant to section 733(f) of the
Act.
[[Page 22025]]
Dated: May 3, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-11822 Filed 5-10-96; 8:45 am]
BILLING CODE 3510-DS-P