[Federal Register Volume 63, Number 213 (Wednesday, November 4, 1998)]
[Notices]
[Pages 59514-59519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29552]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-580-833]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Emulsion Styrene-
Butadiene Rubber From the Republic of Korea

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

EFFECTIVE DATE: November 4, 1998.

FOR FURTHER INFORMATION CONTACT: Sunkyu Kim or James Nunno, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone: (202) 482-2613 or (202) 482-0783, respectively.

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department of Commerce's (the 
Department's) regulations are references to 19 CFR part 351 (April 1, 
1998).

Preliminary Determination

    We preliminarily determine that emulsion styrene-butadiene rubber 
(ESBR) from the Republic of Korea is being, or is likely to be, sold in 
the United States at less than fair value (LTFV), as provided in 
section 733 of the Act. The estimated margins of sales at LTFV are 
shown in the ``Suspension of Liquidation'' section of this notice, 
below.

Case History

    Since the initiation of this investigation (see Notice of 
Initiation of Antidumping Investigations: Emulsion Styrene-Butadiene 
Rubber from Brazil, the Republic of Korea, and Mexico (63 FR 20575, 
April 27, 1998), ``Notice of Initiation''), the following events have 
occurred:
    On May 8, 1998, the Department obtained a request from Hyundai 
Petrochemical Co., Ltd. (``Hyundai'') to be excluded from participation 
as a mandatory respondent in this investigation. On May 12, 1998, the 
petitioner submitted a letter to the Department opposing Hyundai's 
exclusion from this proceeding. On May 13, 1998, the Department 
notified Hyundai that it was selected as a mandatory respondent. In 
August 1998, Hyundai submitted a letter stating that it is unable to 
participate in this investigation, and is not responding to our 
questionnaires.
    On May 18, 1998, the United States International Trade Commission 
(ITC) issued an affirmative preliminary injury determination in this 
case (see ITC Investigation Nos. 731-TA-794-796).
    On May 21, 1998, the Department of Commerce (the Department) issued 
the antidumping duty questionnaire to Kumho and Hyundai, the only two 
producers, and/or exporters of the subject merchandise to the United 
States identified in the petition. In June of 1998 the Department 
received Kumho's response to Section A of the questionnaire. Kumho 
submitted its response to Sections B and C of the questionnaire in July 
of 1998.
    On July 21, 1998, pursuant to section 733(c)(1)(A) of the Act, the 
petitioners made a timely request to postpone the preliminary 
determination. The petitioners filed an explanatory amendment to that 
request on July 23, 1998. We granted this request and, on July 28, 
1998, postponed the

[[Page 59515]]

preliminary determination until no later than October 28, 1998 (see 
Notice of Postponement of Preliminary Determinations of Sales at Less 
Than Fair Value: Emulsion Styrene-Butadiene Rubber From Brazil, the 
Republic of Korea, and Mexico (63 FR 41544, August 4, 1998)).
    On July 27, 1998, pursuant to section 773(b) of the Act, the 
petitioners submitted a timely allegation, that Kumho had made sales in 
the home market below the cost of production (COP). Our analysis of 
that allegation indicated that there were reasonable grounds to believe 
or suspect that Kumho sold ESBR in the home market at prices at less 
than the COP. Accordingly, on August 21, 1998, we initiated a COP 
investigation with respect to Kumho pursuant to section 773(b) of the 
Act (see Memorandum from Team to Louis Apple, Director, Office 5, dated 
August 21, 1998).
    We issued supplemental questionnaires for Sections A, B, and C to 
Kumho in August 1998 and received responses to these supplemental 
questionnaires, along with revised U.S. and home market sales listings, 
in September 1998.
    We received Kumho's response to Section D of the questionnaire in 
September 1998. We issued a supplemental questionnaire for Section D on 
October 13, 1998, but the response to the supplemental questionnaire 
was not received in time to be considered for purposes of the 
preliminary determination. We will consider it, however, for the final 
determination.
    On September 24, 1998, the petitioners alleged that there is a 
reasonable basis to believe or suspect that critical circumstances 
exist with respect to imports of ESBR from Korea. We requested shipment 
data from Kumho on September 28, 1998, and received this information on 
October 13, 1998. The critical circumstances analysis for the 
preliminary determination is discussed below under ``Critical 
Circumstances.''

Postponement of Final Determination and Extension of Provisional 
Measures

    On October 21, 1998, Kumho requested that, in the event of an 
affirmative preliminary determination in this investigation, the 
Department postpone its final determination until no later than 135 
days after the publication of this notice in the Federal Register, 
pursuant to section 735(a)(2)(A) of the Act. In addition, Kumho 
requested that the Department extend provisional measures pursuant to 
section 733(d) of the Act from four months to not more than six months. 
In accordance with 19 CFR 351.210(e), because: (1) Our preliminary 
determination is affirmative; (2) Kumho accounts for a significant 
proportion of exports of the subject merchandise; (3) no compelling 
reasons for denial exist; and (4) Kumho has requested an extension of 
provisional measures, we are granting this request and are postponing 
the final determination until no later than 135 days after the 
publication of this notice in the Federal Register. Suspension of 
liquidation will be extended accordingly.

Scope of Investigation

    For purposes of this investigation, the product covered is ESBR. 
ESBR is a synthetic polymer made via free radical cold emulsion 
copolymerization of styrene and butadiene monomers in reactors. The 
reaction process involves combining styrene and butadiene monomers in 
water, with an initiator system, an emulsifier system, and molecular 
weight modifiers. ESBR consists of cold non-pigmented rubbers and cold 
oil extended non-pigmented rubbers that contain at least one percent of 
organic acids from the emulsion polymerization process.
    ESBR is produced and sold, both inside the United States and 
internationally, in accordance with a generally accepted set of product 
specifications issued by the International Institute of Synthetic 
Rubber Producers (IISRP). The universe of products subject to this 
investigation are grades of ESBR included in the IISRP 1500 series and 
IISRP 1700 series of synthetic rubbers. The 1500 grades are light in 
color and are often described as ``Clear'' or ``White Rubber.'' The 
1700 grades are oil-extended and thus darker in color, and are often 
called ``Brown Rubber.'' ESBR is used primarily in the production of 
tires. It is also used in a variety of other products, including 
conveyor belts, shoe soles, some kinds of hoses, roller coverings, and 
flooring.
    Products manufactured by blending ESBR with other polymers, high 
styrene resin master batch, carbon black master batch (i.e., IISRP 1600 
series and 1800 series) and latex (an intermediate product) are not 
included within the scope of this investigation.
    The products under investigation are currently classifiable under 
subheading 4002.19.0010 of the Harmonized Tariff Schedule of the United 
States (HTSUS). Although the HTSUS subheading is provided for 
convenience and customs purposes, the written description of the scope 
of this investigation is dispositive.

Period of Investigation

    The period of investigation (POI) is April 1, 1997, through March 
31, 1998.

Facts Available

    Section 776(a)(2) of the Act provides that, if an interested party: 
(A) Withholds information that has been requested by the Department; 
(B) fails to provide such information in a timely manner or in the form 
or manner requested; (C) significantly impedes a proceeding under the 
antidumping statute; or (D) provides such information but the 
information cannot be verified, the Department shall, subject to 
subsections 782(c)(1) and (e), use facts otherwise available in 
reaching the applicable determination. Because Hyundai failed to 
respond to the Department's questionnaire and because that failure is 
not overcome by the application of subsections (c)(1) and (e) of 
section 782, we must use facts otherwise available to calculate the 
dumping margins for this company.
    Section 776(b) of the Act provides that adverse inferences may be 
used against a party that has failed to cooperate by not acting to the 
best of its ability to comply with the Department's requests for 
information. See also Statement of Administrative Action accompanying 
the URAA, H.R. Rep. No. 316, 103d Cong., 2d Sess. 870 (1994) (SAA). 
Hyundai's decision not to reply to the Department's antidumping 
questionnaire demonstrates that it has failed to act to the best of its 
ability to comply with a request for information under section 776 of 
the Act. Thus, the Department has determined that, in selecting among 
the facts otherwise available, an adverse inference is warranted.
    Consistent with Department practice, as adverse facts available, 
the Department is assigning to Hyundai the higher of: (1) The highest 
margin stated in the petition; or (2) the highest margin calculated for 
any respondent in this investigation. In this case, this margin is 
118.88 percent, which is the highest margin alleged in the petition for 
any Korean producer (see Initiation Checklist and the Notice of 
Initiation for a discussion of the margin calculations in the 
petition).
    Section 776(b) states that an adverse inference may include 
reliance on information derived from the petition or any other 
information placed on the record. See also SAA at 829-831. Section 
776(c) provides that, when the Department relies on secondary 
information (e.g., the petition) as the facts otherwise available, it 
must, to the extent practicable, corroborate that

[[Page 59516]]

information from independent sources that are reasonably at its 
disposal. We reviewed the adequacy and accuracy of the information in 
the petition during our pre-initiation analysis of the petition, to the 
extent appropriate information was available for this purpose (e.g., 
import statistics, call reports, and data from business contacts). See 
Notice of Initiation and April 21, 1998, ``Office of Antidumping 
Investigations Initiation Checklist'' (``Initiation Checklist'').
    For purposes of the preliminary determination, we were only able to 
reexamine part of the information in the petition. We reexamined the 
export price data provided in the petition in light of information 
obtained during the investigation and, to the extent that it could be 
corroborated, found that it continues to be of probative value. 
However, the Department was provided no other useful information by the 
respondents or other interested parties, and is aware of no other 
independent sources of information, that would enable it to further 
corroborate the remaining components of the margin calculation in the 
petition. See the October 27, 1998, Memorandum to Louis Apple on The 
Facts Available Rate and Corroboration of Secondary Information: 
Preliminary Determination of Emulsion Styrene-Butadiene Rubber from the 
Republic of Korea. We note that the SAA at 870 specifically states 
that, where ``corroboration may not be practicable in a given 
circumstance,'' the Department may nevertheless apply an adverse 
inference.

Fair Value Comparisons

    To determine whether sales of ESBR from Korea to the United States 
were made at less than fair value, we compared the export price (EP) to 
the Normal Value (NV), as described in the ``Export Price'' and 
``Normal Value'' sections of this notice, below. In accordance with 
section 777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs 
for comparison to weighted-average NVs.
    On January 8, 1998, the Court of Appeals for the Federal Circuit 
issued a decision in CEMEX v. United States, 1998 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 home 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 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 characteristics listed in 
Sections B and C of our antidumping questionnaire.

Level of Trade

    In accordance with section 773(a)(1)(B) 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 constructed export price 
(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 selling, general and administrative (SG&A) 
expenses and profit. For EP, the LOT is also the level of the starting-
price sale, usually the price of the exporter to the importer. For CEP 
transactions, it is the level of the constructed sale from the exporter 
to the importer.
    To determine whether NV sales are at a different level of trade 
than EP or CEP, we examined stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer. If the home market sales are at a different LOT 
than sales made to the United States, and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales at different levels of trade in the home 
market, 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 
difference 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 Notice of Final Determination of Sales at 
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from 
South Africa, 62 FR 61731 (November 19, 1997).
    With respect to home market sales, Kumho reported two customer 
categories (i.e., end users and distributors) and two channels of 
distribution corresponding to each customer category. For its sales to 
the United States, it also reported two customer categories (i.e., end 
users and distributors) and two channels of distribution corresponding 
to each customer category. Kumho reported only EP sales in the U.S. 
market, and claimed that the selling functions that it performs in 
connection with its home market and U.S. sales do not vary by customer 
category or by distribution channel. In addition, Kumho considers all 
home market and U.S. sales to be at the same level of trade.
    Based on our analysis of the selling functions in the home market, 
we found the selling functions to end users to be similar to the 
selling functions to distributors. In addition, we noted that the two 
U.S. channels of distribution did not differ with respect to selling 
activities. Similar services, such as sales administration, billing, 
warranties, and freight & delivery arrangement, where applicable, were 
offered to all or some portion of customers in each channel. 
Furthermore, we noted that EP sales involved basically the same selling 
functions associated with the home market sales. Therefore, based upon 
this information, we determined that the level of trade for all EP 
sales is the same as that of the home market sales and to consider them 
as constituting the same LOT in the two markets. Accordingly, all 
comparisons are at the same LOT and an adjustment pursuant to section 
773(a)(7)(A) of the Act is not warranted.

Export Price

    In accordance with sections 772(a) and (c) of the Act, we 
calculated EP for all of Kumho's sales, since the merchandise was sold 
to the first unaffiliated purchaser in the United States prior to 
importation, and CEP was not otherwise warranted based on the facts of 
record.
    We calculated EP based on the packed delivered price to 
unaffiliated

[[Page 59517]]

purchasers in the United States. In accordance with section 
772(c)(1)(B) of the Act, we added an amount for uncollected import 
duties in Korea. We made deductions from the starting price for 
movement expenses in accordance with section 772(c)(2)(A) of the Act; 
these included, where appropriate, foreign domestic inland freight, 
foreign brokerage and handling, international freight, and marine 
insurance.

Affiliated-Party Transactions and Arm's-Length Test

    Kumho reported that it made sales in the home market to affiliated 
end users. Sales to affiliated customers in the home market not made at 
arm's-length prices (if any) were excluded from our analysis because we 
considered them to be outside the ordinary course of trade. See 19 CFR 
351.102 (1998). To test whether these sales were made at arm's-length 
prices, we compared on a model-specific basis the starting prices of 
sales to affiliated and unaffiliated customers net of all movement 
charges, direct selling expenses, and packing. Where, for the tested 
models of subject merchandise, prices to the affiliated party were on 
average 99.5 percent or more of the price to the unaffiliated parties, 
we determined that sales made to the affiliated party were at arm's 
length. See 19 CFR 351.403(c) (1998). In instances where no price ratio 
could be constructed for an affiliated customer because identical 
merchandise was not sold to unaffiliated customers, we were unable to 
determine that these sales were made at arm's-length prices and, 
therefore, excluded them from our LTFV analysis. See Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina (58 FR 37062, 37077 (July 9, 
1993)). Where the exclusion of such sales eliminated all sales of the 
most appropriate comparison product, we made a comparison to the next 
most similar model.

Normal Value

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV, we 
compared Kumho's volume of home market sales of the foreign like 
product to the volume of its U.S. sales of the subject merchandise, in 
accordance with section 773(a)(1)(C) of the Act. Because Kumho's 
aggregate volume of home market sales of the foreign like product was 
greater than five percent of its aggregate volume of U.S. sales of the 
subject merchandise, we determined that the home market was viable for 
Kumho.
    Based on the information contained in the cost allegation submitted 
by the petitioners, the Department found reasonable grounds to believe 
or suspect that Kumho made sales in the home market at prices below 
their COPs, in accordance with section 773(b)(1) of the Act. As a 
result, the Department initiated an investigation to determine whether 
Kumho made home market sales at prices below their COPs during the POI, 
within the meaning of section 773(b) of the Act. See Memorandum from 
the Team to Louis Apple, Director, Office 5, dated August 21, 1998. 
Before making any fair value comparisons, we conducted the COP analysis 
described below.
    We calculated the COP based on the sum of Kumho's cost of materials 
and fabrication for the foreign like product, plus amounts for home 
market SG&A expenses, financial expenses, and packing costs, in 
accordance with section 773(b)(3) of the Act. In addition, we made the 
following adjustments to Kumho's reported COP as follows: (1) we 
recalculated Kumho's interest expense factor on a consolidated basis, 
and (2) we adjusted the direct labor costs reported in the COP and CV 
databases to reflect Kumho's weighted-average direct labor costs (see 
Memorandum to the File from Stan Bowen, dated October 28, 1998).
    We compared Kumho's weighted-average COP figures to home market 
sales of the foreign like product, as required under section 773(b) of 
the Act, in order to determine whether sales had been made at prices 
below their COPs. On a product-specific basis, we compared the COP to 
home market price, less any applicable movement charges, direct and 
indirect selling expenses, and packing expenses.
    In determining whether to disregard home market sales made at 
prices below the COP, we examined whether such sales were made: (1) In 
substantial quantities within an extended period of time; and (2) at 
prices which permitted the recovery of all costs within a reasonable 
period of time in the normal course of trade, pursuant to section 
773(b)(1) of the Act.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of Kumho'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 Kumho's sales 
of a given product during the POI were at prices less than the COP, we 
determined such sales to have been made in ``substantial quantities'' 
within an extended period of time, in accordance with section 
773(b)(2)(B) of the Act. In such cases, we also determined that such 
sales were not made at prices which would permit recovery of all costs 
within a reasonable period of time, in accordance with section 
773(b)(2)(D) of the Act. Therefore, we disregarded the below-cost 
sales. Where all sales of a specific product were at prices below the 
COP, we disregarded all sales of that product.
    We found that, for certain models of ESBR, more than 20 percent of 
Kumho's home market sales within an extended period of time were at 
prices less than COP. Further, the prices did not provide for the 
recovery of costs within a reasonable period of time. We, therefore, 
disregarded the below-cost sales and used the remaining above-cost 
sales as the basis for determining NV, in accordance with section 
773(b)(1) of the Act. For those U.S. sales of ESBR for which there were 
no comparable home market sales in the ordinary course of trade, we 
compared the EP to CV, in accordance with section 773(a)(4) of the Act.
    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of Kumho's cost of materials, fabrication, SG&A 
expenses, profit, and U.S. packing costs. 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 Kumho in connection with the 
production and sale of the foreign like product in the ordinary course 
of trade, for consumption in Korea. As noted above, we recalculated 
Kumho's interest expense factor on a consolidated basis, and we 
adjusted the direct labor costs reported in the COP and CV databases to 
reconcile with amounts reported in the Section D response.
    We calculated NV for Kumho as noted in the ``Price to Price 
Comparisons'' and ``Price to CV Comparisons'' sections of this notice, 
below.

Price-to-Price Comparisons

    We calculated NV based on packed, FOB or delivered prices to home 
market unaffiliated customers and prices to affiliated customers that 
we determined to be at arm's length. We made deductions, where 
appropriate, for movement expenses consistent with section 773(a)(6)(B) 
of the Act; these included inland freight and warehousing expenses. In 
addition, we made adjustments for differences in cost attributable to 
differences in physical characteristics of the merchandise pursuant to 
section 773(a)(6)(C)(ii) of the Act, as well as for differences in 
circumstances of sale (COS) in

[[Page 59518]]

accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410. We made COS adjustments for imputed credit expenses, bank 
charges and commissions. We made no adjustment for imputed credit 
expenses related to the pre-payment of value-added taxes (VAT), in 
accordance with our long-standing practice. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: Sulfur Dyes, Including 
Sulfur Vat Dyes, from the United Kingdom, 58 FR 3253 (Jan. 8, 1993), 
Notice of Final Determination of Sales at Not Less Than Fair Value: 
Stainless Steel Bar from Italy, 59 FR 66921 (Dec. 28, 1994), 
Ferrosilicon from Brazil; Final Results of Antidumping Duty 
Administrative Review, 61 FR 59407 (Nov. 22, 1996), and Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Stainless Steel Wire Rod From 
Italy, 63 FR 10831 (March 5, 1998). In those instances where Kumho had 
not reported payment dates, we recalculated reported credit expenses 
using the date of the preliminary determination as the payment date. 
Because Kumho paid commissions to an unaffiliated agent on sales to the 
United States, in calculating NV, we offset these commissions using the 
weighted-average amount of indirect selling expenses, including 
inventory carrying costs, incurred on the home market sales for the 
comparison product, up to the amount of the U.S. commissions, in 
accordance with 19 CFR 351.410(e). Finally, we deducted home market 
packing costs and added U.S. packing costs, in accordance with section 
773(a)(6)(A) and (B) of the Act.

Price-to-CV Comparisons

    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act. Where we compared CV to 
EP, we deducted from CV the weighted-average home market direct selling 
expenses and added the weighted-average U.S. product-specific direct 
selling expenses (i.e., credit expenses, bank charges, and commissions) 
in accordance with section 773(a)(6)(C)(iii) of the Act. We offset U.S. 
commissions using the weighted-average amount of indirect selling 
expenses and inventory carrying costs incurred on the home market sales 
for the comparison product, up to the amount of the U.S. commissions, 
in accordance with 19 CFR 351.410(e).

Currency Conversion

    Our preliminary analysis of Federal Reserve dollar-won exchange 
rate data shows that the won declined rapidly at the end of 1997, 
losing over 40% of its value between the beginning of November and the 
end of December. The decline was, in both speed and magnitude, many 
times more severe than any change in the dollar-won exchange rate 
during the previous eight years. Had the won rebounded quickly enough 
to recover all or almost all of the initial loss, the Department might 
have been inclined to view the won's decline at the end of 1997 as 
nothing more than a sudden, but only momentary drop, despite the 
magnitude of that drop. As it was, however, there was no significant 
rebound. Therefore, we have preliminarily determined that the decline 
in the won at the end of 1997 was so precipitous and large that the 
dollar-won exchange rate cannot reasonably be viewed as having simply 
fluctuated during this time, i.e., as having experienced only a 
momentary drop in value. Therefore, in making this preliminary 
determination, the Department used daily rates exclusively for currency 
conversion purposes for home market sales matched to U.S. sales 
occurring between November 1 and December 31, 1997.
    In the recently completed preliminary determination of Mushrooms 
from Indonesia, an issue was raised regarding the use of two averaging 
periods in the margin calculations to account for the effect of the 
devaluation of the Indonesian rupiah. See, Notice of Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination: Certain Preserved Mushrooms from Indonesia 
(Mushrooms from Indonesia) 63 FR 41783 (August 5, 1998). The 
petitioners in Mushrooms from Indonesia argued that the Department 
should calculate the weighted-average export price for two averaging 
periods--January through June 1997 and July through December 1997--in 
order to avoid a distortion of the dumping margins caused by the rapid 
devaluation of the rupiah. The Department did not calculate two 
averaging periods in the preliminary determination in Mushrooms from 
Indonesia, but we are continuing to evaluate this issue. Although the 
issue of using two different averaging periods has not been raised in 
the instant investigation, the Korean won experienced a precipitous 
drop in value during the POI. Therefore, in both this investigation and 
Mushrooms from Indonesia, we will continue to examine this issue for 
the final determinations. We invite the interested parties to comment 
on this issue.

Critical Circumstances

    On September 24, 1998, the petitioners alleged that there is a 
reasonable basis to believe or suspect that critical circumstances 
exist with respect to imports of ESBR from Korea. In accordance with 19 
CFR 351.206(c)(2)(i), since this allegation was filed 20 days prior to 
the Department's preliminary determination, we must issue our 
preliminary critical circumstances determination not later than the 
preliminary determination.
    Section 733(e)(1) of the Act provides that if a petitioner alleges 
critical circumstances, the Department will determine whether there is 
a reasonable basis to believe or suspect that:
    (A)(i) There is a history of dumping and material injury by reason 
of dumped imports in the United States or elsewhere of the subject 
merchandise, or
    (ii) The person by whom, or for whose account, the merchandise was 
imported knew or should have known that the exporter was selling the 
subject merchandise at less than its fair value and that there was 
likely to be material injury by reason of such sales, and
    (B) There have been massive imports of the subject merchandise over 
a relatively short period.
    To determine that there is a history of dumping of the subject 
merchandise, the Department normally considers evidence of an existing 
antidumping duty order on ESBR in the United States or elsewhere to be 
sufficient. The petitioner did not provide any information indicating a 
``history of dumping'' of ESBR from Korea. Furthermore, we investigated 
the existence of antidumping duty orders on ESBR from Korea in the 
United States or elsewhere, and did not find any. We were also unable 
to find other information that would have indicated a ``history of 
dumping'' of ESBR.
    In determining whether an importer knew or should have known that 
the exporter was selling subject merchandise at less than fair value 
and thereby causing material injury, the Department normally considers 
margins over 15 percent for CEP sales and 25 percent for EP sales to 
impute knowledge of dumping and of resultant material injury. In this 
investigation, Kumho does not have a margin over 25 percent for EP 
sales, and there are no CEP sales. Based on these facts, we determine 
that the first criterion for ascertaining whether critical 
circumstances exist is not satisfied. Therefore, we have not analyzed 
the shipment data for this company to examine whether imports of ESBR 
have been massive over a relatively short period. Thus, we 
preliminarily determine that there is no reasonable basis to believe or 
suspect that critical

[[Page 59519]]

circumstances exist with respect to exports of ESBR from Korea by Kumho 
(see, e.g., Notice of Preliminary Determination of Sales at Less Than 
Fair Value and Postponement of Final Determination: Collated Roofing 
Nails From Korea, 62 FR 25895, 25898 (May 12, 1997)). Regarding all 
other exporters, because we do not find that critical circumstances 
exist for Kumho, we determine that critical circumstances do not exist 
for Hyundai, or for companies covered by the ``All Others'' rate. We 
will make a final determination concerning critical circumstances when 
we make our final determination in this investigation, if that final 
determination is affirmative.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information determined to be acceptable for use in making our final 
determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all imports of subject 
merchandise that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct the Customs Service to require a 
cash deposit or the posting of a bond equal to the weighted-average 
amount by which the NV exceeds the export price, as indicated in the 
chart below. These suspension-of-liquidation instructions will remain 
in effect until further notice. The weighted-average dumping margins 
are as follows:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/manufacturer                        margin
                                                              percentage
------------------------------------------------------------------------
Korea Kumho Petrochemical Co., Ltd.........................        13.91
Hyundai Petrochemical Co., Ltd.............................       118.88
All Others.................................................        13.91
------------------------------------------------------------------------

Pursuant to section 735(c)(5)(A) of the Act, the Department has 
excluded any zero and de minimis margins, and any margins determined 
entirely under section 776 of the Act, from the calculation of the 
``All Others Rate.''

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Public Comment

    Case briefs or other written comments in at least ten copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than February 5, 1999, and rebuttal briefs no later than February 
12, 1999. A list of authorities used and an executive summary of issues 
should accompany any briefs submitted to the Department. Such summary 
should be limited to five pages total, including footnotes. In 
accordance with section 774 of the Act, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. Tentatively, the hearing 
will be held on February 15, 1999, time and room to be determined, at 
the U.S. Department of Commerce, 14th Street and Constitution Avenue, 
NW, Washington, DC 20230. Parties should confirm by telephone the time, 
date, and place of the hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs. If 
this investigation proceeds normally, we will make our final 
determination by no later than 135 days after the publication of this 
notice in the Federal Register.
    This determination is issued and published pursuant to sections 
773(d) and 777(i) of the Act.

    Dated: October 28, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-29552 Filed 11-3-98; 8:45 am]
BILLING CODE 3510-DS-P