[Federal Register Volume 62, Number 45 (Friday, March 7, 1997)]
[Notices]
[Pages 10527-10530]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5710]


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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 and Termination in Part

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce and Termination in Part.

ACTION: Notice of preliminary results of antidumping duty 
administrative review, and termination in part.

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SUMMARY: In response to a request from two respondents 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 two manufacturers/exporters of the subject 
merchandise to the United States and the period June 1, 1995 through 
May 31, 1996. The review indicates the existence

[[Page 10528]]

of sales below normal value 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 equal to the difference between the United States Price and NV.
    On November 14, 1996, in accordance with 19 CFR 353.25, we issued a 
revocation of the order with respect to Kolon Industries (Kolon). 
Accordingly, we are terminating this review of Kolon.
    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 7, 1997.

FOR FURTHER INFORMATION CONTACT:
Michael J. Heaney or Linda Ludwig, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
4475/3833.

APPLICABLE STATUTE: Unless otherwise indicted, 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 current regulations, as amended by 
the interim regulations published in the Federal Register on May 11, 
1995 (60 FR 25130).

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). The Department 
published a notice of ``Opportunity To Request Administrative Review'' 
of the antidumping duty order for the 1995/1996 review period on June 
6, 1996 (61 FR 28840). On June 29, 1996, the petitioners, E.I. DuPont 
Nemours & Co., Inc., Hoescht Celanese Corporation, and ICI Americas, 
Inc. requested reviews of Kolon, SKC Limited (SKC), and STC Corporation 
(STC). SKC and Kolon filed requests for review on June 27, 1996 and 
June 28, 1996, respectively. We initiated the review on August 8, 1996 
(61 FR 41373).
    On November 14, 1996, the Department revoked the order in part with 
respect to Kolon. Accordingly, we are terminating this review with 
respect to Kolon.

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, 1995 through May 31, 1996. The 
Department is conducting this review in accordance with section 751 of 
the Act, as amended.

United States Price (USP)

    In calculating USP, the Department treated respondents' 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 respondents' sales as 
constructed export price (CEP) sales, as defined in section 772(b) of 
the Act, when the merchandise was sold to unrelated U.S. purchasers 
after importation.
    EP was based on the f.o.b. or delivered, packed prices to unrelated 
purchasers in the United States. We made adjustments, where applicable, 
for Korean and U.S. brokerage charges, terminal handling charges, truck 
loading charges, containerization charges, Korean and U.S. inland 
freight, ocean freight, wharfage expenses, U.S. duties, and rebates in 
accordance with section 772(c) of the Act.
    CEP was based on f.o.b. customer's specific delivery point, or 
delivered, packed prices to unrelated purchasers in the United States. 
We made adjustments, where applicable, for Korean and U.S. brokerage 
charges, terminal handling charges, Korean and U.S. inland freight, 
ocean freight, rebates, wharfage expenses, and U.S. duties, in 
accordance with section 772(c) of the Act. 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, commissions, postage expenses, 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.
    For SKC, we made an offset to interest of interest revenue, and for 
post-sale cost and quantity adjustments that were not reflected in the 
gross price. With respect to subject merchandise to which value was 
added in the United States by SKC prior to sale to unrelated customers, 
we deducted any increased value 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. Each respondent'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 
third administrative review because they were made below the cost of 
production (COP), the Department initiated a sales-below-cost of 
production (COP) investigation for each of the respondents in 
accordance with section 773(b) of the Act. (The third 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, and STC's cost of materials and 
fabrication for the foreign like product, plus amounts for home market 
selling, general and administrative (SG&A) expenses and packing costs 
in accordance with section 773(b)(3) of the Act.
    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

[[Page 10529]]

permit recovery of all costs within a reasonable period of time. We 
compared model-specific prices less any applicable movement charges.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given model where 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, 
within an extended period of time. 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 
found that, for certain models of PET film, 20 percent or more of the 
home market sales were sold at below-cost prices. We therefore excluded 
these sales from our analysis and used the remaining above-cost sales 
as the basis of determining NV if such sales existed, in accordance 
with section 773(b)(1). For those models of the subject merchandise for 
which there were no above-cost sales available for matching purposes, 
we compared U.S. price to constructed value (CV).
    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 SG&A expenses. In accordance with section 773(e)(2)(A) of the Act, 
we based SG&A expenses and profit on the amounts incurred and realized 
by the respondents 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 to reflect deductions for HM 
inland freight, loading charges, and credit expenses. For comparisons 
to EP, we made an addition to NV for differences in 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

    As set forth in section 773(a)(1)(B)(i) of the Act and in the 
Statement of Administrative Action (SAA) accompanying the URAA, 
reprinted in H.R. Doc. No. 316, 103d Cong., 2d Session 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. sale(s), the Department may compare sales in the U.S. 
and foreign markets at a different level of trade.
    In accordance with section 773(a)(7)(A) of the Act, if we compare a 
U.S. sale at one level of trade to NV sales at a different level of 
trade, the Department will adjust the NV to account for differences in 
level of trade if two conditions are met. First there must be 
differences between the actual selling functions performed by the 
seller at the level of trade of the U.S. sale and at the level of trade 
of comparison market sale used to determine NV. Second, the differences 
must affect price comparability as evidenced by a pattern of consistent 
price differences between sales at the different levels of trade in the 
market in which NV is determined. When CEP is applicable, section 
773(a)(7)(B) of the Act establishes the procedures or making a CEP 
``offset'' when two conditions exist: (1) NV is established at a level 
of trade which constitutes a more advanced stage of distribution than 
the level of trade of the CEP; and (2) the data available do not 
provide an appropriate basis for a level-of-trade adjustment.
    In order to determine whether sales in the comparison market are at 
a different level of trade than the CEP, we examined whether the 
comparison sales were at different stages in the marketing process than 
the CEP. We made this determination on the basis of a review of the 
distribution system in the comparison market, including selling 
functions, class of customer, and the level of selling expenses for 
each type of sale. Different stages of marketing necessarily involve 
differences in selling functions, but differences in selling functions, 
even substantial ones, are not alone sufficient to establish a 
difference in level of trade. Similarly, while customer categories such 
as ``distributor'' and ``wholesaler'' may be useful in identifying 
different levels of trade, they are insufficient in themselves to 
establish that there is a difference in level of trade. See Certain 
Corrosion Resistant Carbon Steel Flat Products and Certain Cut-to-
Length Carbon Steel Plate from Canada: Preliminary Results of 
Antidumping Duty Administrative Review, 61 FR 51896 (October 4, 1996).
    In order to implement these principles, each of the respondents 
provided information with respect to its selling activities associated 
with each stage of marketing. Both of the respondents identified two 
stages of marketing in the home market: (1) wholesalers/distributors 
and (2) end-users. For both stages, SKC and STC perform similar selling 
functions such as market research and after sales warranty services. 
Because customer description do not necessarily 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 each of the respondent's home market sales. Because 
STC and SKC performed similar marketing functions on EP and home market 
sales, we determined that EP and HM sales were at the same the level of 
trade for both respondents.
    SKC made CEP and EP sales to the United States market and claimed 
either a level of trade adjustment for its CEP sales, or a CEP offset. 
For both EP and CEP the relevant transaction for determining the level 
of trade is the sale from the exporter to the importer, whether 
unaffiliated or affiliated. Based on SKC's questionnaire responses and 
response to our request for supplemental information, we determined a 
difference between the actual selling functions performed by SKC for 
the CEP sales and those performed for HM sales. SKC provides 
engineering services, and inventory maintenance services on its HM 
sales. SKC does not provide these services on its CEP sales. SKC also 
provides a greater degree of computer, legal, accounting, audit and/or 
business systems development services on its home market sales than it 
does on its CEP sales. Therefore, the selling functions performed by 
SKC for CEP sales are sufficiently different than for HM sales so as to 
establish different levels of trade. In addition, these differences in 
selling functions indicated that the home market sales occur at a more 
advanced stage of distribution than the CEP sales.
    Because we compared SKC's 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 only sold at one level of trade in the 
home market; therefore, there is no basis upon which to discern whether 
there is a pattern of consistent price differences between levels of

[[Page 10530]]

trade. Further, we do not have the information which would allow us to 
examine pricing patterns of SKC's sales of other products, and there is 
no other respondent's or other information on the record to analyze 
whether the adjustment is appropriate.
    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. SKC claimed a CEP offset, which we applied to 
NV. To calculate the CEP offset, we took the amount of home market 
indirect selling expenses, and deducted this amount from NV, on home 
market comparison sales. We limited HM indirect selling expenses to the 
amount of indirect selling expenses incurred on sales in the United 
States.

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 777(A) of the Act, we calculated 
monthly weighted-average prices for NV and compared these to individual 
U.S. transactions.

Preliminary Results of Review

    We preliminarily determine that the following margins exist for the 
period June 1, 1995 through May 31, 1996:

------------------------------------------------------------------------
                Manufacturer/exporter                        Margin     
------------------------------------------------------------------------
SKC..................................................               1.57
STC..................................................               0.37
------------------------------------------------------------------------

    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 publication of this notice.
    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. Because the inability to 
link sales with specific entries prevents calculation of duties on an 
entry-by-entry basis, we have calculated an importer specific ad 
valorem duty assessment rate for the merchandise based on the ratio of 
the total amount of antidumping duties calculated for the examined 
sales made during the POR to the total customs value of the sales used 
to calculate these duties. This rate will be assessed uniformly on all 
entries of that particular importer made during the POR. (This is 
equivalent to dividing the total amount of antidumping duties, which 
are calculated by taking the difference between NV and U.S. Price, by 
the total U.S. value of the sales compared, and adjusting the result by 
the average difference between U.S. price and customs value for all 
merchandise examined 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, except if the rate was less than 0.50 percent, 
and therefore, de minimis within the meaning of 19 CFR 353.6, in which 
case the cash deposit rate will be zero; (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 4.82%, 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 3, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-5710 Filed 3-6-97; 8:45 am]
BILLING CODE 3510-DS-M