[Federal Register Volume 62, Number 174 (Tuesday, September 9, 1997)]
[Notices]
[Pages 47422-47429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23857]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration
[A-580-815 & A-580-816]


Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat 
Products From Korea: Preliminary Results of Antidumping Duty 
Administrative Reviews

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

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

-----------------------------------------------------------------------

SUMMARY: In response to requests from three respondents and from the 
petitioners in the original investigation, the Department of Commerce 
(``the Department'') is conducting administrative reviews of the 
antidumping duty orders on certain cold-rolled and corrosion-resistant 
carbon steel flat products from Korea. These reviews cover three 
manufacturers and exporters of the subject merchandise. The period of 
review (``POR'') is August 1, 1995, through July 31, 1996.
    We preliminarily determine that sales have been made below normal 
value (``NV''). If these preliminary results are adopted in our final 
results of administrative reviews, we will instruct U.S. Customs to 
assess antidumping duties based on the difference between

[[Page 47423]]

export price (``EP'') or constructed export price (``CEP'') and NV.
    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.

EFFECTIVE DATE: September 9, 1997.

FOR FURTHER INFORMATION CONTACT: Fred Baker (Dongbu), Steve Bezirganian 
(POSCO), Thomas Killiam or Alain Letort (Union), or John Kugelman, 
Enforcement Group III--Office 8, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Room 7866, Washington, DC 20230; telephone 
(202) 482-2924 (Baker), -1395 (Bezirganian), -2704 (Killiam), -4243 
(Letort), or -0649 (Kugelman).

SUPPLEMENTARY INFORMATION:

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (``the Act'') by 
the Uruguay Round Agreements Act (``URAA''). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
references to the provisions codified at 19 CFR part 353 (April 1997). 
Although the Department's new regulations, codified at 19 CFR part 351 
(62 FR 27296--May 19, 1997), do not govern these proceedings, citations 
to those regulations are provided, where appropriate, to explain 
current departmental practice.

Background

    The Department published antidumping duty orders on certain cold-
rolled and corrosion-resistant carbon steel flat products from Korea on 
August 19, 1993 (58 FR 44159). The Department published a notice of 
``Opportunity to Request an Administrative Review'' of the antidumping 
duty orders for the 1995/96 review period on August 12, 1996 (61 FR 
41768). On August 31, 1996, respondents Dongbu Steel Co., Ltd. 
(``Dongbu''), Union Steel Manufacturing Co., Ltd. (``Union''), and 
Pohang Iron and Steel Co., Ltd. (``POSCO''), requested that the 
Department conduct administrative reviews of the antidumping duty 
orders on cold-rolled and corrosion-resistant carbon steel flat 
products from Korea. On the same day, the petitioners in the original 
less-than-fair-value (``LTFV'') investigations (AK Steel Corporation; 
Bethlehem Steel Corporation; Inland Steel Industries, Inc.; LTV Steel 
Co., Inc.; National Steel Corporation; and U.S. Steel Group, a unit of 
USX Corporation) filed a similar request. We initiated these reviews on 
September 13, 1996 (61 FR 48882--September 17, 1996).
    On October 7, 1996, the petitioners requested, pursuant to section 
751(a)(4) of the Act, that the Department determine whether antidumping 
duties had been absorbed by the respondents during the POR. Section 
751(a)(4) provides for the Department, if requested, to determine, 
during an administrative review initiated two years or four years after 
publication of the order, whether antidumping duties have been absorbed 
by a foreign producer or exporter subject to the order if the subject 
merchandise is sold in the United States through an importer who is 
affiliated with such foreign producer or exporter. Section 751(a)(4) 
was added to the Act by the URAA.
    The regulations governing these reviews do not address this 
provision of the Act. However, for transition orders as defined in 
section 751(c)(6)(C) of the Act, i.e., orders in effect as of January 
1, 1995, section 351.213(j)(2) of the Department's new antidumping 
regulations provides that the Department will make a duty-absorption 
determination, if requested, in any administrative review initiated in 
1996 or 1998. See 19 CFR 351.213(j)(2), 62 FR at 27394. As noted above, 
while the new regulations do not govern the instant reviews, they 
nevertheless serve as a statement of departmental policy. Because the 
orders on certain cold-rolled and corrosion-resistant carbon steel flat 
products from Korea have been in effect since 1993, they are transition 
orders in accordance with section 751(c)(6)(C) of the Act. Since these 
reviews were initiated in 1996 and a request for a duty-absorption 
inquiry was made, the Department will undertake a duty-absorption 
inquiry as part of these administrative reviews.
    The Act provides for a determination on duty absorption if the 
subject merchandise is sold in the United States through an affiliated 
importer. In these cases, all reviewed firms sold through importers 
that are ``affiliated'' within the meaning of section 751(a)(4) of the 
Act. Furthermore, we have preliminarily determined that there are 
dumping margins for the following firms with respect to the percentages 
of their U.S. sales, by quantity, indicated below:

------------------------------------------------------------------------
                                                      Percentage of U.S.
                                  Class or kind of    affiliate's sales 
          Name of firm               merchandise         with dumping   
                                                           margins      
------------------------------------------------------------------------
Dongbu.........................  Cold-Rolled.......  0.00%.             
                                 Corrosion-          5.98%              
                                  Resistant.                            
POSCO..........................  Cold-Rolled.......  10.07%             
                                 Corrosion-          10.63%.            
                                  Resistant.                            
Union..........................  Cold-Rolled.......  No U.S. sales in   
                                                      POR.              
                                 Corrosion-          7.88%.             
                                  Resistant.                            
------------------------------------------------------------------------

    We presume that the duties will be absorbed for those sales which 
were dumped. This presumption can be rebutted with evidence that the 
unaffiliated purchasers in the United States will pay the ultimately 
assessed duty. However, there is no such evidence on the record. Under 
these circumstances, we preliminarily find that antidumping duties have 
been absorbed by the above-listed firms on the percentages of U.S. 
sales indicated. If interested parties wish to submit evidence that the 
unaffiliated purchasers in the United States will pay the ultimately 
assessed duty, they must do so no later than 15 days after publication 
of these preliminary results.
    Under the Act, the Department may extend the deadline for 
completion of administrative reviews if it determines that it is not 
practicable to complete the review within the statutory time limit of 
365 days. On February 18, 1997, and again on July 18, 1997, the 
Department extended the time limits for the preliminary results in 
these cases. See Certain Cold-Rolled and Corrosion-Resistant Carbon 
Steel Flat Products from Korea; Extension of Time Limits for 
Antidumping Duty Administrative Reviews, 62 FR 40333 (July 28, 1997).
    The Department is conducting these administrative reviews in 
accordance with section 751 of the Act.

Scope of the Reviews

    The review of ``certain cold-rolled carbon steel flat products'' 
covers cold-rolled (cold-reduced) carbon steel flat-rolled products, of 
rectangular shape, neither clad, plated nor coated with metal, whether 
or not painted, varnished or coated with plastics or other nonmetallic 
substances, 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

[[Page 47424]]

millimeters and measures at least twice the thickness, as currently 
classifiable in the Harmonized Tariff Schedule (``HTS'') under item 
numbers 7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0090, 
7209.17.0030, 7209.17.0060, 7209.17.0090, 7209.18.1530, 7209.18.1560, 
7209.18.2550, 7209.18.6000, 7209.25.0000, 7209.26.0000, 7209.27.0000, 
7209.28.0000, 7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.23.1500, 
7211.23.2000, 7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060, 
7211.23.6085, 7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030, 
7211.29.6080, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 
7215.50.0015, 7215.50.0060, 7215.50.0090, 7215.90.5000, 7217.10.1000, 
7217.10.2000, 7217.10.3000, 7217.10.7000, 7217.90.1000, 7217.90.5030, 
7217.90.5060, 7217.90.5090. Included in this review 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 
beveled or rounded at the edges. Excluded from this review is certain 
shadow mask steel, i.e., aluminum-killed, cold-rolled steel coil that 
is open-coil annealed, has a carbon content of less than 0.002 percent, 
is of 0.003 to 0.012 inch in thickness, 15 to 30 inches in width, and 
has an ultra flat, isotropic surface.
    The review of ``certain corrosion-resistant carbon steel flat 
products'' covers 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 7210.30.0030, 7210.30.0060, 
7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000, 
7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000, 
7210.90.9000, 7212.20.0000, 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, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 
7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090. 
Included in this review 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 beveled or rounded at 
the edges. Excluded from this review 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 from this review 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 from this review 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 descriptions remain dispositive.
    The POR is August 1, 1995 through July 31, 1996. These reviews 
cover sales of certain cold-rolled and corrosion-resistant carbon steel 
flat products by Dongbu, Union, and POSCO.

Verification

    As provided in section 782(i)(3) of the Act, we verified 
information provided by the respondents using standard verification 
procedures, including on-site inspection of the manufacturers' 
facilities, the examination of relevant sales and financial records, 
and selection of original documentation containing relevant 
information. Our verification results are outlined in the public 
versions of the verification reports.

Transactions Reviewed

    In accordance with section 751 of the Act, the Department is 
required to determine the EP (or CEP) and NV of each entry of subject 
merchandise.
    In determining NV, based on our review of the submissions by Dongbu 
and Union, the Department determined that Dongbu and Union need not 
report ``downstream'' sales by affiliated resellers in the home market 
because of their small quantity. With respect to POSCO, based on our 
review of the respondent's submissions, the Department determined that 
POSCO need not report the home market downstream sales of the service 
centers in which it owns a minority stake because it appears that they 
would have a minimal effect upon the calculation of NV, and such 
reporting would constitute an enormous burden. See Memorandum to 
Richard O. Weible from Steve Bezirganian (August 29, 1997).
    For purposes of these reviews, we are treating POSCO, Pohang Coated 
Steel Co., Ltd. (``POCOS''), and Pohang Steel Industries Co., Ltd. 
(``PSI'') as affiliated parties and have ``collapsed'' them as a single 
producer of certain cold-rolled carbon steel flat products (POSCO and 
PSI) and certain corrosion-resistant carbon steel flat products (POSCO, 
POCOS, and PSI). POSCO, POCOS, and PSI were already collapsed in 
previous segments of these proceedings. See, e.g., Final Determinations 
of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat 
Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain 
Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-
Length Carbon Steel Plate from Korea, 58 FR 37176 (July 9, 1993). The 
POSCO group has submitted no information which would cause us to change 
that treatment.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
cold-rolled carbon steel flat products produced by the respondents, 
covered by the descriptions in the ``Scope of the Reviews'' section of 
this notice, supra, and sold in the home market during the POR, to be 
foreign like products for the purpose of determining appropriate 
product comparisons to U.S. sales of cold-rolled carbon steel flat 
products. Likewise, we considered all corrosion-resistant carbon steel 
flat products produced by the respondents and sold in the home market 
during the POR to be foreign like products for the purpose of 
determining appropriate product comparisons to corrosion-resistant

[[Page 47425]]

carbon steel flat products sold in the United States. 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 Appendix V of the 
Department's September 19, 1996 antidumping questionnaire. In making 
the product comparisons, we matched foreign like products based on the 
physical characteristics reported by the respondent and verified by the 
Department. Where sales were made in the home market on a different 
weight basis from the U.S. market (theoretical versus actual weight), 
we converted all quantities to the same weight basis, using the 
conversion factors supplied by the respondents, before making our fair-
value comparisons.

Fair-Value Comparisons

    To determine whether sales of certain cold-rolled and corrosion-
resistant carbon steel flat products by the respondents to the United 
States were made at less than fair value, we compared EP (or CEP) to 
NV, as described in the ``Export Price (or Constructed Export Price)'' 
and ``Normal Value'' sections of this notice. In accordance with 
section 777A(d)(2) of the Act, we calculated monthly weighted-average 
prices for NV and compared these to individual U.S. transactions.

Use of Home-Market Sales

    Section 773(a)(1)(C)(iii) of the Act provides that the Department 
will use third-country sales as the basis for normal value if ``the 
particular market situation in the exporting country does not permit a 
proper comparison with the export price or the constructed export 
price.'' Section B.2.a(1) of the Statement of Administrative Action, 
which accompanied the passage of the URAA (H.R. Doc. No. 3106, 103rd 
Cong., 2nd Sess. 829-831 (1994)) (``SAA''), further states that 
``Commerce may determine that home market sales are inappropriate as a 
basis for determining normal value if the particular market situation 
would not permit a proper comparison.'' SAA at 822. The statute does 
not define ``particular market situation,'' but the SAA indicates that 
``such a situation might exist where a single sale in the home market 
constitutes five percent of sales to the United States or where there 
is government control over pricing to such an extent that home market 
prices cannot be considered to be competitively set.'' Id.
    On October 24 and November 22, 1996, and again on March 17, 1997, 
the petitioners alleged that the Government of Korea controls steel 
prices in Korea and that the home-market prices reported by respondents 
are therefore not true market prices. Claiming that the home market 
could not be used, the petitioners requested that the Department 
collect third-country sales information for each of the Korean 
respondents, and use the respondents' sales of subject merchandise to 
third countries for purposes of comparison with prices in the U.S. 
market.
    On April 15, 1997, the Department published in the Federal Register 
its notice of final results of administrative reviews in the previous 
segment of these proceedings. In that notice the Department found that 
``while there (was) some evidence of a substantial level of Korean 
government involvement in domestic steel pricing, there was not 
``convincing'' evidence that the Korean government controlled domestic 
steel prices ``to such an extent that home market prices cannot be 
considered to be competitively set.' '' In other words, petitioners 
failed to meet the burden of demonstrating that there is a ``reasonable 
basis for believing that a ``particular market situation'' exists.'' 
See ``Explanation to the Final Rules,'' section 351.404, in the new 
regulations at 62 FR 27357 (May 19, 1997). We determined, therefore, 
that the Korean home market was viable and appropriate as a basis for 
NV. No factual information has been submitted in the record of these 
proceedings that would lead us to modify this decision. We determine, 
therefore, that the Korean home market still provides an appropriate 
basis for calculating NV.

Date of Sale

    It is the Department's current practice normally to use the invoice 
date as the date of sale; we may, however, use a date other than the 
invoice date if we are satisfied that a different date better reflects 
the date on which the exporter or producer establishes the material 
terms of sale. See 19 CFR 351.401(i) (62 FR at 27411).
    The questionnaire we sent to the respondents on September 19, 1997 
instructed them to report the date of invoice as the date of sale; it 
also stated, however, that ``[t]he date of sale cannot occur after the 
date of shipment.'' Because in these reviews the date of shipment in 
many instances preceded the date of invoice, we cannot use the date of 
invoice as the new regulations prescribe. Accordingly, as allowed by 
the exception set forth in Sec. 351.401(i) of the new regulations, we 
used the dates of sale described below. These sale dates reflect the 
dates on which the exporter or producer established the material terms 
of sale.

A. Dongbu

    Rather than the date of invoice, we used the date of shipment as 
the date of sale for home-market sales by Dongbu, and the contract date 
as the date of sale for Dongbu's U.S. sales. We based the date of sale 
on those dates because the material terms of sale could, and did, 
change until those dates.

B. POSCO

    Rather than the date of invoice, we used the date of shipment as 
the date of sale for all sales by the POSCO group. We based the date of 
sale on this date because the material terms of sale could, and did, 
change until that date.

C. Union

    Rather than the date of invoice, we used the date of shipment as 
the date of sale for home-market sales by Union, and the contract date 
as the date of sale for Union's U.S. sales. We based the date of sale 
on those dates because the material terms of sale could, and did, 
change until those dates.

Export Price (or Constructed Export Price)

    We calculated the price of United States sales based on EP, in 
accordance with section 772(a) of the Act, when the subject merchandise 
was sold to unaffiliated purchasers in the United States prior to the 
date of importation. In certain instances, however, we determined that 
CEP, as defined in section 772(b) of the Act, was a more appropriate 
basis for comparison with NV.
    We determined that some of the sales Dongbu reported as EP sales 
were actually CEP sales because they were sold to the first 
unaffiliated customer in the U.S. after importation into U.S. customs 
territory. We also determined that some of those sales were made 
outside the period of review. We will review these sales in the review 
covering the period during which those sales were made. With regard to 
Union, we used CEP as the basis for comparison with NV in certain 
instances where sales were made prior to importation and Union's U.S. 
affiliate had substantial involvement in the U.S. sale. In these cases, 
our determination was based on the following facts: (a) Union America 
(``UA'') and later Dongkuk International (``DKA''), Union's sales 
office in the United States, was the importer of record and took title 
to the merchandise; (b) UA or DKA financed the relevant sales 
transactions; (c) UA

[[Page 47426]]

arranged to have the merchandise further processed by an outside 
contractor in the United States on a fee-for-service basis and paid for 
the further processing; and (d) UA or DKA assumed the seller's risk.
    Although these are the only sales we are reclassifying as CEP, for 
the final review results we will consider whether other sales claimed 
by respondents to be indirect EP sales should in fact be reclassified 
as CEP sales. We will reexamine the issues surrounding the affiliate's 
selling activities and sales operations in the United States in 
determining whether a particular sale should be considered indirect EP 
or CEP.
    For all three respondents, we calculated EP based on packed prices 
to unaffiliated customers in the United States. Where appropriate, we 
made deductions from the starting price for foreign inland freight, 
foreign brokerage and handling, international freight, marine 
insurance, U.S. inland freight, U.S. brokerage and handling, U.S. 
Customs duties, and that portion of markups by affiliated trading 
companies categorized as movement expenses; we also added duty drawback 
to the starting price.
    We calculated CEP based on packed prices to unaffiliated customers 
in the United States. Where appropriate, we made deductions from the 
starting price for foreign inland freight, foreign brokerage and 
handling, international freight, marine insurance, U.S. inland freight, 
U.S. brokerage and handling, U.S. Customs duties, commissions, credit 
expenses, warranty expenses, indirect selling expenses, and further 
processing in the United States; we also added duty drawback to the 
starting price. Finally, we made an adjustment for profit in accordance 
with section 772(d)(3) of the Act.

Normal Value

    Based on a comparison of the aggregate quantity of home-market and 
U.S. sales, we determined that the quantity of the foreign like product 
sold in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States, pursuant to section 773(a) of the Act. Therefore, in accordance 
with section 773(a)(1)(B)(i) of the Act, we based NV on the price at 
which the foreign like product was first sold for consumption in the 
home market, in the usual commercial quantities and in the ordinary 
course of trade. We excluded certain ``overrun'' sales in the home 
market from our sales comparisons because these sales were outside the 
ordinary course of trade.
    Where appropriate, we deducted rebates, discounts, inland freight 
(offset, where applicable, by freight revenue), inland insurance, and 
packing. We also deducted value-added tax (``VAT'') since the reported 
gross unit price included VAT. Based on our verification of home-market 
sales responses, we made adjustments to NV, where appropriate, for 
differences in credit expenses (offset, where applicable, by interest 
income), warranty expenses, post-sale warehousing, and for differences 
in weight basis. We also made adjustments, where appropriate, for home-
market indirect selling expenses to offset U.S. commissions in EP and 
CEP comparisons.
    In comparisons to EP and CEP sales, we also increased NV by U.S. 
packing costs in accordance with section 773(a)(6)(A) of the Act. We 
made adjustments to NV for differences in cost attributable to 
differences in physical characteristics of the merchandise, pursuant to 
section 773(a)(6)(C)(ii) of the Act.

Differences in Levels of Trade

    In accordance with section 773(a)(1)(A) of the Act and the SAA at 
829-831, to the extent practicable, the Department will calculate NV 
based on sales at the same level of trade (``LOT'') as the U.S. sale 
(either EP or CEP). When there are no sales in the comparison market at 
the same LOT as the U.S. sale(s), the Department may compare sales in 
the U.S. and foreign markets at a different LOT, and adjust NV if 
appropriate. The NV LOT is that of the starting price of sales in the 
home market. See, e.g., Certain Circular Welded Carbon Steel Pipes and 
Tubes from Taiwan; Preliminary Results of Antidumping Duty 
Administrative Review, 62 FR 31070 (June 6, 1997).
    As the Department explained in Gray Portland Cement and Clinker 
from Mexico: Final Results of Antidumping Duty Administrative Review, 
(``Cement from Mexico'') (62 FR 17148, 17156--April 9, 1997), for both 
EP and CEP, the relevant transaction for the LOT analysis is the sale 
from the exporter to the importer. While the starting price for CEP is 
that of a subsequent resale to an unaffiliated buyer, the construction 
of the CEP results in a price that would have been charged if the 
importer had not been affiliated. Because the expenses deducted under 
section 772(d) represent selling activities in the United States, the 
deduction of these expenses may yield a different LOT for the CEP than 
for the later resale (which we use for the starting price).
    To determine whether home-market sales were at a different LOT than 
U.S. sales, we examine whether the home-market sales were at different 
stages in the marketing process than the U.S. sales. The marketing 
process in both markets begins with goods being sold by the producer 
and extends to the sale to the final user. The chain of distribution 
between the producer and the final user may have many or few links, and 
each respondent's sales occur somewhere along this chain. In the United 
States, the respondent's sales are generally to an importer, whether 
independent or affiliated. We review and compare the distribution 
systems in the home market and the United States, including selling 
functions, class of customer, and the extent and level of selling 
expenses for each claimed LOT. Customer categories such as distributor, 
retailers or end-users are commonly used by respondents to describe 
levels of trade, but without substantiation, they are insufficient to 
establish that a claimed LOT is valid. An analysis of the chain of 
distribution and of the selling functions substantiates or invalidates 
the claimed levels of trade. If the claimed levels are different, the 
selling functions performed in selling to each level should also be 
different. Conversely, if levels of trade are nominally the same, the 
selling functions performed should also be the same. Different levels 
of trade necessarily involve differences in selling functions, but 
differences in selling functions, even substantial ones, are not alone 
sufficient to establish a difference in the levels of trade. 
Differences in levels of trade are characterized by purchasers at 
different stages of marketing or their equivalent, which may be 
different stages in the chain of distribution and sellers performing 
qualitatively or quantitatively different functions in selling to them.
    When we compare U.S. sales to home-market sales at a different LOT, 
we make a LOT adjustment if the difference in LOT affects price 
comparability. We determine any effect on price comparability by 
examining sales at different levels of trade in the home market (or the 
third-country market) used to calculate NV. Any price effect must be 
manifested in a pattern of consistent price differences between home-
market (or third-country) sales used for comparison and sales at the 
equivalent LOT of the export transaction. See, e.g. Granular 
Polytetrafluorethylene Resin from Italy; Preliminary Results of 
Antidumping Duty Administrative Review, 62 FR 26283, 26285 (May 13, 
1997); Cement from Mexico at 17148.) To quantify the

[[Page 47427]]

price differences, we calculate the difference in the weighted average 
of the net prices of the same models sold at different levels of trade 
in the home market. Net prices are used because any difference will be 
due to differences in LOT rather than other factors. We use the average 
percentage difference between these weighted averages to adjust NV when 
the LOT of NV is different from that of the export sale. If there is a 
pattern of no price differences, then the difference in LOT does not 
have a price effect and no adjustment is necessary.
    In the case of CEP sales, section 773 of the statute also provides 
for an adjustment to NV if it is compared to U.S. sales at a different 
LOT, provided the NV is more remote from the factory than the CEP sales 
and we are unable to determine whether the difference in levels of 
trade between CEP and NV affects the comparability of their prices. 
This latter situation might occur when there is no home-market (or 
third-country) LOT equivalent to the U.S. sales level, or where there 
is an equivalent home-market (or third-country) level, but the data are 
insufficient to support a conclusion on price effect. See, e.g., 
Certain Corrosion Resistant Carbon Steel Flat Products and Cut-to-
Length Carbon Steel Plate from Canada; Final Results of Antidumping 
Duty Administrative Reviews, 62 FR 18448, 18466 (April 15, 1997). This 
adjustment, the CEP offset, is identified in section 773(a)(7)(B) and 
is the lower of the (1) indirect selling expenses of the home-market 
(or third-country) sale; or (2) indirect selling expenses deducted from 
the starting price used to calculate CEP. The CEP offset is not 
automatic each time we use CEP. See Mechanical Transfer Presses from 
Japan, Final Results of Antidumping Administrative Review, 62 FR 17148, 
17156 (October 9, 1996). The CEP offset is made only when the LOT of 
the home-market (or third country) sale is more advanced than the LOT 
of the U.S. CEP sale and there is not an appropriate basis for 
determining whether there is an effect on price comparability. See, 
e.g., Cement from Mexico, at 17156.

A. Dongbu

    In its questionnaire responses, Dongbu stated that there were no 
differences in its selling activities by customer categories within 
each market. In order independently to confirm the absence of separate 
levels of trade within or between the U.S. and home-markets, we 
examined Dongbu's questionnaire responses for indications that Dongbu's 
functions as a seller differed qualitatively and quantitatively among 
customer categories. See commentary to Sec. 351.412 of the Department's 
new regulations (62 FR at 27371).
    Dongbu sold to local distributors and end-users in the U.S. market. 
In the home market, Dongbu also sold to local distributors and end-
users. At both stages of distribution, Dongbu performed the same 
selling and marketing functions for all its home-market and U.S. 
customers. In accordance with section 773(a)(1)(B)(i) of the Act, we 
consider the selling functions reflected in the starting price of home-
market sales before any adjustments. Our analysis of the questionnaire 
response leads us to conclude that sales within or between each market 
are not made at different levels of trade. Accordingly, we 
preliminarily find that all sales in the home market and the U.S. 
market were made at the same level of trade. Therefore, all price 
comparisons are at the same level of trade and any adjustment pursuant 
to section 773(a)(7) of the Act is unwarranted.

B. POSCO

    In its questionnaire responses, POSCO stated that its home-market 
sales by affiliated service centers were at a different level of trade 
than its other home-market sales and its U.S. sales (regardless of the 
customer category). The respondent indicated that the service centers 
provide certain selling functions to all of their customers, while 
POSCO and its selling arms (e.g., POCOS or PSI) provide a different set 
of selling functions to all of their customers (including the service 
centers).
    In order independently to confirm the presence of separate levels 
of trade within or between the U.S. and home markets, we examined 
POSCO's questionnaire responses for indications of substantive 
differences in selling and marketing functions, and reviewed this issue 
during the sales verification in Korea. See commentary to Sec. 351.412 
of the Department's new regulations (62 FR at 27371).
    The POSCO group did not provide evidence of differences in selling 
functions to support its characterization of its home-market service-
center sales as a different level of trade from its U.S. sales and its 
other home-market sales. The POSCO group indicated at verification that 
selling functions were unchanged from the second administrative review 
period, and for that segment of these proceedings the Department 
treated all POSCO group sales in both markets as having been at the 
same level of trade. Accordingly, we preliminarily find that all sales 
in the home market and the U.S. market were made at the same level of 
trade. Therefore, all price comparisons are at the same level of trade 
and any adjustment pursuant to section 773(a)(7) of the Act is 
unwarranted.

C. Union

    In its questionnaire responses, Union stated that there were no 
differences in its selling activities by customer categories within 
each market. In order independently to confirm the absence of separate 
levels of trade within or between the U.S. and home markets, we 
examined Union's questionnaire responses for indications that Union's 
functions as a seller differed, qualitatively and quantitatively, among 
customer categories. See commentary to Sec. 351.412 of the Department's 
new regulations (62 FR at 27371).
    Union sold to unrelated distributors and end-users in the U.S. 
market. In the home market, Union sold to unrelated distributors and 
end-users and to related distributors for sale to unrelated end-users. 
At both stages of distribution, Union performed the same selling and 
marketing functions for sales to all its home-market and U.S. sales. In 
identifying the level of trade for CEP sales, we considered only the 
selling activities reflected in the U.S. price after deduction of 
expenses and profit under section 772(d) of the Act. In accordance with 
section 773(a)(1)(B)(i) of the Act, we consider the selling functions 
reflected in the starting price of home-market sales before any 
adjustments. Our analysis of the questionnaire response leads us to 
conclude that sales within and between each market are not made at 
different levels of trade. Accordingly, we preliminarily find that all 
sales in the home market and the U.S. market were made at the same 
level of trade. Therefore, all price comparisons are at the same level 
of trade and any adjustment pursuant to section 773(a)(7) of the Act is 
unwarranted.

Cost-of-Production Analysis

    At the time the questionnaires were issued in these reviews, the 
LTFV investigations were the most recently completed segments of these 
proceedings in which POSCO had participated. Because we disregarded 
certain below-cost sales by POSCO in the investigations, we found 
reasonable grounds in these reviews, in accordance with section 
773(b)(2)(A)(ii) of the Act, to believe or suspect that POSCO made 
sales in the home market at prices below the cost of producing the 
merchandise.

[[Page 47428]]

Furthermore, based on the fact that we had disregarded certain sales by 
Dongbu and Union in the first administrative review of the antidumping 
duty order on certain corrosion-resistant flat products because they 
were made below the COP, we found reasonable grounds in these reviews, 
in accordance with section 773(b)(2)(A)(ii) of the Act, to believe or 
suspect that Dongbu and Union made sales of certain corrosion-resistant 
flat products in the home market at prices below the cost of producing 
the merchandise. Finally, petitioners alleged, on January 8, 1997, that 
Dongbu sold certain cold-rolled carbon steel flat products in the home 
market at prices below COP. Based on these allegations, the Department 
determined, on April 9, 1997, that it had reasonable grounds to believe 
or suspect that Dongbu had sold the subject merchandise in the home 
market at prices below the COP. We therefore initiated cost 
investigations with regard to Dongbu, POSCO, and Union in order to 
determine whether the respondents made home-market sales during the POR 
at prices below their COP 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 selling, general, and administrative expenses 
(``SG&A''), and packing costs in accordance with section 773(b)(3) of 
the Act.
    For certain POCOS and POSCO control numbers, we revised the cost of 
manufacturing (``COM'') to reflect differences in production costs 
associated with differences in quality, thickness, and coating weight.

B. Test of Home-Market Prices

    We used the respondents' weighted-average COP, as adjusted (see 
above), for the period July 1995 to June 1996. 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 determining 
whether to disregard home-market sales made at prices below the COP, we 
examined whether (1) within an extended period of time, such sales were 
made in substantial quantities, and (2) such sales were made at prices 
which permitted the recovery of all costs within a reasonable period of 
time. On a product-specific basis, we compared the COP to the home-
market prices (not including VAT), less any applicable movement 
charges, discounts, and rebates.

C. Results of COP Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of 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 POR were at prices less than the 
COP, we found that sales of that model were made in ``substantial 
quantities'' within an extended period of time, in accordance with 
sections 773(b)(2)(B) and (C) of the Act, and were not at prices which 
would permit recovery of all costs within an extended period of time, 
in accordance with section 773(b)(2)(D) of the Act. When we found that 
below-cost sales had been made in ``substantial quantities'' and were 
not at prices which would permit recovery of all costs within a 
reasonable period of time, we disregarded the below-cost sales in 
accordance with section 773(b)(1) of the Act. Where all contemporaneous 
sales of a specific comparison product were at prices below the COP, we 
calculated NV based on CV.

D. Calculation of CV

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of respondents' cost of materials, fabrication, SG&A, 
U.S. packing costs, interest expenses, and profit. In accordance with 
sections 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. For selling expenses, 
we used the weighted-average home-market selling expenses. Based on our 
verification of the cost responses submitted by POSCO, we adjusted that 
respondent's reported CV to reflect adjustments to COM and G&A, as 
detailed in the ``Calculation of COP'' section of this notice. We also 
made adjustments, where appropriate, for home-market indirect selling 
expenses to offset U.S. commissions in EP and CEP comparisons.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions based on the official exchange rates in effect on the dates 
of the U.S. sales as certified by the Federal Reserve Bank of New York. 
Section 773A(a) directs the Department to use a daily exchange rate in 
order to convert foreign currencies into U.S. dollars, unless the daily 
rate involves a ``fluctuation.'' In accordance with the Department's 
practice, we have determined that a fluctuation exists when the daily 
exchange rate differs from a benchmark by 2.25 percent. See, e.g., 
Certain Stainless Steel Wire Rods from France: Preliminary Results of 
Antidumping Duty Administrative Review (61 FR 8915, 8918--March 6, 
1996). The benchmark is defined as the rolling average of rates for the 
past 40 business days. When we determined a fluctuation existed, we 
substituted the benchmark for the daily rate.

Preliminary Results of the Reviews

    As a result of these reviews, we preliminarily determine that the 
following weighted-average dumping margins exist:

------------------------------------------------------------------------
                                                             Weighted-  
             Producer/manufacturer/exporter               average margin
                                                             (percent)  
------------------------------------------------------------------------
Certain Cold-Rolled Carbon Steel Flat Products:                         
  Dongbu................................................            0.00
  POSCO.................................................            3.40
Certain Corrosion-Resistant Carbon Steel Flat Products:                 
  Dongbu................................................            0.09
  POSCO0................................................            0.32
  Union.................................................            0.63
------------------------------------------------------------------------

    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 of this notice. The Department will publish a 
notice of the final results of the administrative review, including its 
analysis of issues raised in any written comments or at a hearing, not 
later than 120 days after the date of publication of this notice.

Cash Deposit

    The following cash deposit requirements will be effective upon 
publication of the final results of this administrative review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section

[[Page 47429]]

751(a)(1) of the Act: (1) The cash deposit rate for each respondent 
will be the rate established in the final results of these 
administrative reviews (except that no deposit will be required for 
firms with zero or de minimis margins, i.e., margins lower than 0.5 
percent); (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 these reviews, a prior review, or the original 
LTFV investigations, 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 these or any prior reviews, the 
cash deposit rate will be 14.44 percent (for certain cold-rolled carbon 
steel flat products) and 17.70 percent (for certain corrosion-resistant 
carbon steel flat products), the ``all others'' rate established in the 
LTFV investigations. These deposit requirements, when imposed, shall 
remain in effect until publication of the final results of the next 
administrative reviews.
    This notice also 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.
    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: September 2, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-23857 Filed 9-8-97; 8:45 am]
BILLING CODE 3510-DS-P