[Federal Register Volume 63, Number 44 (Friday, March 6, 1998)]
[Notices]
[Pages 11214-11217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5866]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-580-807]


Polyethylene Terephthalate Film From Korea: Preliminary Results 
of Antidumping Duty Administrative Review and Partial Rescission of 
Review

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

ACTION: Notice of preliminary results of antidumpting duty 
administrative review and partial rescission of review.

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SUMMARY: In response to a request from one respondent 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 one manufacturer/exporter of the subject 
merchandise to the United States and the period June 1, 1996 through 
May 31, 1997. We preliminarily determine that SKC Limited (SKC) sold 
subject merchandise below normal value (NV) 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 based on the difference between the United States 
Price and NV. STC Corporation (STC) made no sales or shipments during 
the POR. Accordingly, we are resinding the review with respect to STC.
    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 6, 1998.

FOR FURTHER INFORMATION CONTACT: Michael J. Heaney or Linda Ludwig, AD/
CVD Enforcement Group III, Office 8, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone 
(202) 482-4475/3833.

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 Round Agreements Act (URAA). 
In addition, unless otherwise indicated, all citations to the 
Department's regulations are to the regulations, codified at 19 CFR 
Part 353 (1997).

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). On June 23, 1997, 
the petitioners, E.I. DuPont Nemours & Co., Inc., Hoescht Celanese 
Corporation, and ICI Americas, Inc. requested reviews of SKC, and STC. 
On June 27, 1997, SKC requested an administrative review of its sales. 
We published a notice of initiation of the review on August 1, 1997 (62 
FR 41339).
    In its June 27, 1997 request for review, SKC requested revocation 
pursuant to 19 CFR 353.25(b). We are not considering SKC's request for 
revocation at this time because SKC has not sold the subject 
merchandise at not less than fair value for three consecutive years.
    In response to our request for information, STC reported that it 
had no sales or shipments during the period of review. On November 25, 
1997, the Department sent a no-shipment inquiry regarding STC to the 
U.S. Customs Service. Customs did not report any shipments by STC 
during the POR.

[[Page 11215]]

Accordingly, we are rescinding the review with respect to STC.

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, 1996 through May 31, 1997. The 
Department is conducting this review in accordance with section 751 of 
the Act, as amended.

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 777A(d)(2) of the Act, we calculated 
monthly weighted-average prices for NV and compared these to individual 
U.S. transactions.

United States Price (USP)

    In calculating USP, the Department treated SKC's 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 SKC's sales as constructed 
export price (CEP) sales, as defined in section 772(b) of the Act, when 
the merchandise was sold to unaffiliated U.S. purchasers after 
importation.
    EP was based on the delivered, or c.i.f. U.S. port, packed prices 
to unaffiliated purchasers in the United States. We made adjustments, 
where applicable, for Korean and U.S. brokerage charges, Korean and 
U.S. inland freight, ocean freight, U.S. duties, and rebates in 
accordance with section 772(c) of the Act. We made an addition to EP 
for duty drawback pursuant to section 772(c)(1)(B) of the Act.
    CEP was based on the delivered, packed prices to unaffiliated 
purchasers in the United States. We made adjustments, where applicable, 
for Korean and U.S. brokerage charges, Korean and U.S. inland freight, 
ocean freight, rebates, U.S. duties and rebates, in accordance with 
section 772(c) of the Act. We made an offset to interest expense and 
adjustments for post-sale cost and quantity adjustments that were not 
reflected in the gross price. Pursuant to section 772(c)(1)(B) of the 
Act, we made an addition to CEP for duty drawback. 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, 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.
    With respect to subject merchandise to which value was added in the 
United States by SKC prior to sale to unaffiliated customers, we 
deducted the cost of further manufacturing 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. SKC'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 
fourth administrative review because they were made below the cost of 
production (COP), the Department initiated a sales-below-cost of 
production (COP) investigation for SKC in accordance with section 
773(b) of the Act. (The fourth 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 cost of materials and fabrication 
for the foreign like product, plus amounts for home market general 
expenses and packing costs in accordance with section 773(b)(3) of the 
Act. We allocated yield losses equally between A-Grade and B-grade film 
because these grades have identical production costs. This is 
consistent with the methodology employed in past reviews of this case. 
(See e.g., Polyethylene Terephthalate Film, Sheet and Strip from the 
Republic of Korea; Final Results of Antidumping Duty Administrative 
Review, 62 FR 38064, (July 16, 1997).)
    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 permit recovery of all costs within a reasonable period of 
time.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given model were 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. 
We found that, for certain models of PET film, 20 percent or more of 
the home market sales were sold at below-cost prices. 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 used the remaining above-cost sales as the basis of 
determining NV if such sales existed, in accordance with section 
773(b)(1).
    On January 8, 1998 the U.S. Court of Appeals for the Federal 
Circuit issued a decision in Cemex v. United States, WL 3626 (Fed.Cir). 
In that case, based on the pre-URAA version of the Act, the Court 
discussed the appropriateness of using constructed value (CV) as the 
basis for foreign market value when the Department finds foreign market 
sales to be outside ``the ordinary course of trade.'' This issue was 
not raised by any party in this proceeding. However, the URAA amended 
the definition of sales outside the ``ordinary course of trade'' to 
include sales below cost. See Section 771(15) of the Act. consequently, 
the Department has reconsidered its practice in accordance with this 
court decision and has determined that it would be inappropriate to 
resort

[[Page 11216]]

directly to CV, in lieu of foreign market sales, as the basis for NV if 
the Department finds foreign market sales of merchandise identical or 
most similar to that sold in the United States to be outside the 
``ordinary course of trade.'' Instead, the Department will use sales of 
similar merchandise, if such sales exist. The Department will use CV as 
the basis for NV only when there are no above-cost sales that are 
otherwise suitable for comparison. Therefore, in this proceeding, when 
making comparisons in accordance with section 771(16) of the Act, we 
considered all products sold in the home market as described in the 
``Scope of Investigation'' section of this notice, above, that were in 
the ordinary course of trade for purposes of determining appropriate 
product comparisons to U.S. sales. Where there were no sales of 
identical merchandise in the home market made in the ordinary course of 
trade to compare to U.S. sales, we compared U.S. sales to sales of the 
most similar foreign like product made in the ordinary course of trade, 
based on the information provided by SKC in response to our antidumping 
questionnaire. We have implemented the Court's decision in this case to 
the extent that the data on the record permitted.
    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 general expenses. We allocated yield losses equally between A-grade 
and B-grade film. In accordance with section 773(e)(2)(A) of the Act, 
we based selling, general, and administrative (SG&A) expenses and 
profit on the amounts incurred and realized by SKC 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 for credit expenses. When NV was 
based upon home market sales, we made an adjustment for inland freight. 
For SKC's local export sales, we also made an addition to home market 
price for duty drawback. For comparisons to EP, we made an addition to 
NV for U.S. 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

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the comparison 
market at the same level of trade (``LOT'') as the EP or CEP 
transaction. The NV LOT is that of the starting price sales in the 
comparison market or, when NV is based on CV, that of the sales from 
which we derive SG&A expenses and profit. For EP, the US LOT is also 
the level of the starting price sale, which is usually from the 
exporter to the importer. For CEP, it is the level of the constructed 
sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or 
CEP, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the differences in the levels between NV and 
CEP affects price comparability, we adjust NV under section 
773(A)(7)(B) of the Act (the CEP offset provision). (See e.g., Certain 
Carbon Steel Plate from South Africa, Final Determination of Sales at 
Less Than Fair Value, 62 FR 61731 (November 19, 1997).)
    In implementing these principles in this review, we asked SKC to 
identify the specific differences and similarities in selling functions 
and/or support services between all phases of marketing in the home 
market and the United States. SKC identified two channels of 
distribution in the home market: (1) wholesalers/distributors and (2) 
end-users. For both channels, SKC performs similar selling functions 
such as market research and after-sales warranty services. Because 
channels of distribution do not 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 SKC's home market sales.
    For the U.S. market, SKC reported two LOTs: (1) EP sales made 
directly to its U.S. customers, and (2) CEP sales made through Sunkyong 
America Ltd., SKC's wholly owned U.S. subsidiary (CEP sales). The 
Department examined the selling functions performed by SKC for both EP 
and CEP sales. These selling functions included customer sales contacts 
(i.e., visiting current or potential customers receiving orders, 
promotion of new products, collection of unpaid invoices), technical 
services, inventory maintenance, and or business system development. We 
found that SKC provided a greater degree of these services on EP sales 
than it did on CEP sales, and that the selling functions were 
sufficiently different to warrant two separate LOTs in the United 
States.
    When we compared EP sales to home market sales, we determined that 
both sales were made at the same LOT. For both EP and home market 
transactions, SKC sold directly to the customer, and provided similar 
levels of customer sales contacts, technical services, inventory 
maintenance and business system development. For CEP sales, SKC 
performed fewer customer sales contacts, technical services, inventory 
maintenance, and computer legal, audit and business system development. 
In addition, the differences in selling functions performed for home 
market and CEP transactions indicates that home market sales involved a 
more advanced stage of distribution than CEP sales.
    Because we compared these 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 sold at one level of trade in the home 
market; therefore, there is no basis upon which SKC has demonstrated a 
pattern of consistent price differences between levels of trade. 
Further, we do not have the information which would allow us to examine 
pricing patterns of SKC's sales of other similar products, and there 
are no other respondent's or other record evidence on which such an 
analysis could be based.
    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, as claimed by SKC. We based the CEP offset 
amount on the amount of home market indirect selling expenses, and 
limited the deduction for HM indirect selling expenses to the amount of 
indirect selling expenses deducted from CEP in accordance with section 
772(d)(1)(D) of the Act. We applied the CEP offset to NV, whether based 
on home market prices or CV.

[[Page 11217]]

Preliminary Results of Review

    We preliminarily determine that a margin of 6.83 percent exists fro 
SKC for the period June 1, 1996 through May 31, 1997. 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 date of publication of these preliminary results.
    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. We have calculated 
importer-specific ad valorem duty assessment rates based on the total 
amount of dumping margins calculated for the examined sales during the 
POR to the total customs of the sales used to calculate these duties. 
These rates will be assessed uniformly on all entries made during the 
POR. (This is equivalent to dividing the total amount of antidumping 
duties, which are calculated by taking the difference between statutory 
NV and statutory EP or CEP, by the total statutory EP or CEP of the 
sales compared, and adjusting the average differences between EP or CEP 
and the entered value for all merchandise entered 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; (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 21.5%, 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 2, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-5866 Filed 3-5-98; 8:45 am]
BILLING CODE 3510-DS-M