[Federal Register Volume 64, Number 130 (Thursday, July 8, 1999)]
[Notices]
[Pages 36841-36844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17395]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-421-805]


Preliminary Results of Antidumping Duty Administrative Review; 
Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide From the 
Netherlands

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

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

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EFFECTIVE DATE: July 8, 1999.

SUMMARY: The Department of Commerce (``the Department'') is conducting 
an administrative review of the antidumping duty order on aramid fiber 
formed of poly para-phenylene terephthalamide (``PPD-T aramid'') from 
the Netherlands in response to requests by respondent, Akzo Nobel 
Aramid Products, Inc. and Aramid Products V.o.F. (``Akzo'') and 
petitioner, E.I. DuPont de Nemours and Company. This review covers 
sales of this merchandise to the United States during the period June 
1, 1997, through May 31, 1998, by Akzo. The results of the review 
indicate the existence of dumping margins for the above period.
    We invite interested parties to comment on these preliminary 
results. Parties who submit arguments are requested to submit with the 
argument (1) a statement of the issue and (2) a brief summary of the 
argument.

FOR FURTHER INFORMATION CONTACT: Russell Morris, Office of AD/CVD 
Enforcement VI, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; Telephone: (202) 482-
1775.

The Applicable Statute and Regulations

    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 at 19 CFR Part 351 (April 1998).

SUPPLEMENTARY INFORMATION:

Background

    The Department published in the Federal Register the antidumping 
duty order on PPD-T aramid from the Netherlands on June 24, 1994 (59 FR 
32678). On June 10, 1998, we published in the Federal Register (63 FR 
31717) a notice of ``Opportunity to Request an Administrative Review'' 
of this order covering the period June 1, 1997, through May 31, 1998.
    In accordance with 19 CFR 351.213(b), Akzo and petitioner requested 
that we conduct an administrative review for the aforementioned period. 
On July 28, 1998, the Department published a notice of ``Initiation of 
Antidumping Review'' (63 FR 40258). The Department is now conducting 
this administrative review pursuant to section 751 of the Act.

Scope of Review

    The products covered by this review are all forms of PPD-T aramid 
from the Netherlands. These consist of PPD-T aramid in the form of 
filament yarn (including single and corded), staple fiber, pulp (wet or 
dry), spun-laced and spun-bonded nonwovens, chopped fiber, and floc. 
Tire cord is excluded from the class or kind of merchandise under 
review. This merchandise is currently classifiable under the Harmonized 
Tariff Schedule of the United States (``HTSUS'') item numbers 
5402.10.3020, 5402.10.3040, 5402.10.6000, 5503.10.1000, 5503.10.9000, 
5601.30.0000, and 5603.00.9000. The HTSUS item numbers are provided for 
convenience and Customs purposes. The written description of the scope 
remains dispositive.

Transactions Reviewed

    In accordance with section 751 of the Act, the Department is 
required to determine the normal value (``NV'') and export price 
(``EP'') or constructed export price (``CEP'') of each entry of subject 
merchandise. See Section 751(a)(2)(A). Because there can be a 
significant lag between entry date and sale date for CEP sales, it has 
been the Department's practice to examine U.S. CEP sales during the 
period of review (``POR''). See Gray Portland Cement and Clinker From 
Japan; Final Results of Antidumping Duty Administrative Review, 58 FR 
48826 (1993) (the Department did not consider ESP (now CEP) entries 
which were sold after the

[[Page 36842]]

POR). The Court of International Trade (``CIT'') has upheld the 
Department's practice in this regard. See The AD Hoc Committee of 
Southern California Producers of Gray Portland Cement v. United States, 
914 F. Supp. 535, 544-45 (CIT 1995).

Comparisons to NV

    In accordance with section 771(16) of the Act, we considered all 
products covered by the Scope of the Review which were sold by the 
respondent in the home market during the POR to be foreign like 
products for purposes of product comparisons to U.S. sales. Where there 
were no sales of identical or similar merchandise in the home market to 
compare to U.S. sales, we compared U.S. sales to the constructed value 
(``CV'') of the product sold in the home market during the comparison 
period.
    Furthermore, pursuant to section 777A(d)(2) of the Act, where there 
were home market sales that passed the cost of production (``COP'') 
test, as discussed below, we compared the CEPs of individual U.S. 
transactions to the monthly weighted-average NV of the foreign like 
product.

Constructed Export Price

    The Department based its margin calculation on CEP, as defined in 
sections 772(b), (c), and (d) of the Act, because all sales to the 
first unaffiliated purchaser in the United States took place after 
importation.
    We calculated CEP based on delivered prices to unaffiliated 
purchasers in the United States. Where appropriate, we reduced these 
prices to reflect rebates. In accordance with section 772(d)(1) of the 
Act, we deducted direct selling expenses, e.g., credit expenses, and 
indirect selling expenses, including inventory carrying costs, which 
related to commercial activity in the United States. We also made 
deductions for movement expenses (international freight, brokerage and 
handling, U.S. duties, domestic inland freight, and insurance) in 
accordance with section 772(c)(2) of the Act. Finally, we also deducted 
from CEP an amount for profit in accordance with sections 772(d)(3) and 
(f) of the Act.

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared the respondent's volume of home market sales of the foreign 
like product to the volume of its U.S. sales of the subject 
merchandise. Pursuant to sections 773(a)(1)(B) and (C) of the Act, 
because Akzo's aggregate volume of the home market sales of the foreign 
like product was greater than five percent of its aggregate volume of 
U.S. sales for the subject merchandise, we determined that the home 
market provides a viable basis for calculating NV on home market sales.
    We calculated NV based on packed, ex-factory or delivered prices to 
unaffiliated purchasers in the home market. We made adjustments for 
discounts and rebates. Where applicable we deducted home market packing 
costs and added U.S. packing costs. In accordance with section 
773(a)(6) of the Act, where applicable, we made deductions from the 
starting price for inland freight and inland insurance. In addition, we 
made a circumstances of sale adjustment for imputed credit expenses, in 
accordance with section 773(a)(6)(C)(iii) of the Act. Prices were 
reported net of value added taxes (``VAT'') and, therefore, no 
deduction for VAT was necessary. We made adjustments, where 
appropriate, for physical differences in merchandise in accordance with 
section 773(a)(6)(C)(ii) of the Act. We based this adjustment on the 
difference in the variable costs of manufacturing for the foreign like 
product and the subject merchandise.
    We derived the CEP offset amount from the amount of the indirect 
selling expenses on sales in the home market. We limited the home 
market indirect selling expense deduction by the amount of the indirect 
selling expenses deducted from CEP under section 772(d) of the Act.

Cost of Production Analysis

    In the most recently completed administrative review of Akzo, we 
disregarded sales found to be below the COP. Therefore, in accordance 
with section 773(b)(2)(A)(ii) of the Act, the Department has reasonable 
grounds to believe or suspect that sales below the COP may have 
occurred during this review period. Thus, pursuant to section 773(b) of 
the Act, we initiated a COP investigation of Akzo in the instant 
review.
    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted average COP, by model, based on the sum of the cost of 
materials and fabrication employed in producing the foreign like 
product, plus amounts for home market selling, general and 
administrative expenses and packing costs in accordance with section 
773(b)(3) of the Act. We used the home market sales data and COP 
information provided by Akzo in its questionnaire responses.
    After calculating a weighted-average COP, we tested whether home 
market sales of PPD-T aramid were made at prices below COP within an 
extended period of time in substantial quantities, and whether such 
prices permitted recovery of all costs within a reasonable period of 
time. We compared model-specific COP to the reported home market prices 
less any applicable movement charges, discounts, rebates, and indirect 
selling expenses.
    Pursuant to section 773(b)(2)(C), where less than 20 percent of 
Akzo's sales of a given model were at prices less than 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.'' 
In accordance with section 773(b)(2)(B) and (D) where 20 percent or 
more of home market sales of a given product during the POR were at 
prices less than the COP, we found that such sales were made in 
substantial quantities within an extended period of time. Because the 
sales prices would not permit recovery of all costs within a reasonable 
period of time, we disregarded those below-cost sales and used the 
remaining above-cost sales to determine NV in accordance with section 
773(b)(1). For those models of PPD-T aramid for which there were no 
home market sales available for matching purposes, we compared CEP to 
CV.

Constructed Value

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of Akzo's cost of materials and fabrication employed 
in producing the subject merchandise, selling, general and 
administrative expenses (``SG&A''), and profit incurred and realized in 
connection with production and sale of the foreign like product, and 
U.S. packing costs. In accordance with section 773(e)(2)(A), we based 
SG&A and profit on the amounts incurred and realized by Akzo in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade, for consumption in the foreign country.
    We used the costs of materials, fabrication, and SG&A as reported 
in the CV portion of Akzo's questionnaire response. We used the U.S. 
packing costs as reported in the U.S. sales portion of Akzo's 
questionnaire response. We based selling expenses and profit on the 
information reported in the home market sales portion of Akzo's 
questionnaire response. See Certain Pasta from Italy; Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination, 61 FR 1344,

[[Page 36843]]

1349 (January 19, 1996). For selling expenses, we used the average of 
the home market selling expenses weighted by the respective quantities 
sold. For actual profit, we first calculated the difference between the 
home market sales value and home market COP for all home market sales 
in the ordinary course of trade, and divided the sum of these 
differences by the total home market COP for these sales. We then 
multiplied this percentage by the COP for each U.S. model to derive an 
actual profit.
    We derived the CEP offset amount from the amount of the indirect 
selling expenses on sales in the home market. We limited the home 
market indirect selling expense deduction by the amount of the indirect 
selling expenses deducted from CEP under section 772(d) of the Act.

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 as the EP or CEP. The NV level of trade 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 U.S. level of trade is also the level of the 
starting-price sale, which is usually from exporter to importer. For 
CEP, it is the level of the transaction between the exporter to the 
importer for which we construct the import price.
    To determine whether NV sales are at a different level of trade 
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 level of trade, 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 level of trade of the export transaction, we make a 
level of trade 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, 61732-33 (November 19, 1997) (``South Africa 
Final'').
    In the present case, we were not able to compare U.S. CEP sales to 
HM sales at the same level of trade. First we compared the CEP to the 
HM sales to determine whether a level-of-trade adjustment was 
appropriate, in accordance with the principles discussed above. For 
purposes of our analysis, we examined information regarding the 
distribution systems in both the United States and the Netherlands 
markets, including the selling functions, classes of customer, and 
selling expenses. Upon consideration of the above mentioned factors, 
the Department determined that there is one level of trade and one 
channel of distribution in the home market (direct to end users) and a 
different level of trade in the U.S. market (sales to an affiliated 
distributor). However, the data available do not provide an appropriate 
basis to determine a level of trade adjustment. Further, we determined 
that Akzo's NV sales to end-users/converters in the home market, as 
well as CV, are at a more advanced stage of distribution than CEP 
sales. As a result, the Department has preliminarily determined to 
grant Akzo an adjustment to NV in the form of a CEP Offset.
    For a detailed description of our level-of-trade analysis for these 
preliminary results, see the June 30, 1999, Analysis Memorandum to The 
File, on file in the Import Administration's Central Records Unit (Room 
B-099) of the main Commerce building.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions in accordance with section 773A of the Act, based on the 
exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank of New York. See Change in Policy Regarding 
Currency Conversions, 61 FR 9434 (March 8, 1996). Section 773A(a) of 
the Act directs the Department to use a daily exchange rate in order to 
convert foreign currencies into U.S. dollars, unless the daily rate 
involves a ``fluctuation.'' In accordance with the Department's 
practice, we have determined as a general matter that a fluctuation 
exists when the daily exchange rate differs from a benchmark by 2.25 
percent. See South Africa Final. The benchmark is defined as the 
rolling average of rates for the past 40 business days. When we 
determine that a fluctuation exists, we substitute the benchmark for 
the daily rate, in accordance with established practice. Therefore, for 
purposes of the current review, we have made currency conversions based 
on the official exchange rates in effect on the dates of the U.S. sales 
based on the methodology discussed above.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following weighted-average dumping margin exists:

------------------------------------------------------------------------
                                                              Weighted-
                                                               Average
                   Exporter/manufacturer                        Margin
                                                              (percent)
------------------------------------------------------------------------
Akzo.......................................................         3.00
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of the date of publication of this notice. See 
19 CFR 351.310(c). Any hearing, if requested, will be held 44 days 
after the date of publication, or the first workday thereafter. 
Interested parties may submit case briefs within 30 days of the date of 
publication of this notice. Parties who submit case briefs in this 
proceeding should provide a summary of the arguments not to exceed five 
pages and a table of statutes, regulations, and cases cited. Rebuttal 
briefs, limited to issues raised in the case briefs, may be filed not 
later than 37 days after the date of publication. The Department will 
publish a notice of 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 the hearing, within 120 days from the 
publication of these preliminary results.

Assessment Rate

    Pursuant to 19 CFR 351.212(b), the Department calculated an 
assessment rate for Akzo's entries of the subject merchandise. Upon 
completion of this review, the Department will instruct the U.S. 
Customs Service to assess antidumping duties on appropriate entries by 
applying the assessment rate to the entered value of the merchandise. 
If these preliminary results are adopted in our final results, we will 
instruct the Customs Service to assess antidumping duties on Akzo's 
entries of the merchandise subject to the review.

Cash Deposit Requirements

    To calculate the cash-deposit rate for Akzo in this administrative 
review, we divided the total dumping margins for Akzo by the total net 
value of Akzo's sales during the review period. Furthermore, the 
following deposit rates will be effective upon publication of the

[[Page 36844]]

final results of this administrative review for all shipments of aramid 
fiber from the Netherlands entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided by section 
751(a)(2)(C) of the Act: (1) The cash deposit rate for Akzo will be the 
rate established in the final results of this review, except if the 
rate is less than 0.5 percent and, therefore, de minimis, the cash 
deposit will be zero; (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 final results 
in which that manufacturer or exporter participated; (3) if the 
exporter is not a firm covered in this review, a prior review, or the 
original less-than-fair-value (``LTFV'') investigation, but the 
manufacturer is, the cash deposit rate will be the rate established for 
the most recent final results for the manufacturer of the merchandise; 
and (4) if neither the exporter nor the manufacturer is a firm covered 
in this or any previous review conducted by the Department, the cash 
deposit rate will be 66.26 percent, the ``All Others'' rate established 
in the LTFV investigation. See Notice of Antidumping Duty Order and 
Amended Final Determination of Sales at Less Than Fair Value: Aramid 
Fiber Formed of Poly-Phenylene Terephthalamide From The Netherlands, 59 
FR 32678-01 (June 24, 1996).
    These cash deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402 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.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    June 30, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-17395 Filed 7-7-99; 8:45 am]
BILLING CODE 3510-DS-P