[Federal Register Volume 64, Number 215 (Monday, November 8, 1999)]
[Notices]
[Pages 60776-60784]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29208]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-580-839]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of the Final Determination: Certain Polyester 
Staple Fiber From the Republic of Korea

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

EFFECTIVE DATE: November 8, 1999.

FOR FURTHER INFORMATION CONTACT: Vincent Kane, Craig Matney, or Suresh 
Maniam, Office 1, AD/CVD Enforcement, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-2815, (202) 482-1778, or (202) 482-0176, 
respectively.

The Applicable Statute and Regulations

    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 of Commerce's (the 
Department's) regulations refer to the regulations codified at 19 CFR 
Part 351 (April 1998).

Preliminary Determination

    We preliminarily determine that certain polyester staple fiber 
(PSF) from the Republic of Korea (Korea) is being sold, 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 are shown in 
the Suspension of Liquidation section of this notice.

Case History

    This investigation was initiated on April 22, 1999 (see Initiation 
of Antidumping Duty Investigations: Certain Polyester Staple Fiber from 
the Republic of Korea and Taiwan, 64 FR 23053 (April 29, 1999) 
(Initiation Notice)). Since the initiation of this investigation, the 
following events have occurred:
    On May 17, 1999, the United States International Trade Commission 
(ITC) preliminarily determined that there is a reasonable indication 
that imports of PSF are materially injuring the United States industry.
    On May 24, 1999, the Department requested comments from interested 
parties regarding the criteria to be used for model matching purposes. 
The parties submitted comments on our proposed model matching criteria 
on May 26, 1999.
    On June 4 and 8, 1999, the Department issued antidumping 
questionnaires to Samyang Corporation (Samyang), Sam Young Synthetics 
Co. (Sam Young), and Geum Poong Corporation (Geum Poong) (see 
memorandum dated June 17, 1999, to Deputy Assistant Secretary Richard 
W. Moreland (Respondent Selection Memorandum), which is on file in 
Import Administration's Central Records Unit). The respondents 
submitted their initial responses to the questionnaires between July 2 
and 30, 1999. Between July 14 and August 5, 1999, E.I. DuPont de 
Nemours, Inc.; Arteva Specialities S.a.r.l., d/b/a KoSa; Wellman, Inc.; 
and Intercontinental Polymers, Inc. (hereinafter collectively referred 
to as ``the petitioners'') filed comments on the questionnaire 
responses. After analyzing the initial responses and the petitioners' 
comments, we issued supplemental questionnaires to the respondents 
between August 9 and 11, 1999. We received responses to these 
supplemental questionnaires between August 31 and September 3, 1999.
    On July 28 and August 10, 1999, the petitioners requested that the 
Department initiate an investigation of sales below the cost of 
production (COP) for Samyang and Sam Young, respectively. On August 17 
and 18, 1999, based on our review of the petitioners' below cost 
allegation, we initiated a cost investigation for Samyang and Sam Young 
(see memoranda dated August 17, 1999 and August 18, 1999, to Senior 
Director Susan Kuhbach, which is on file in Import Administration's 
Central Records Unit). On August 19, 1999, we requested that these two 
companies respond to Section D of the antidumping questionnaires 
concerning COP and constructed value (CV). We received the responses on 
September 9, 1999.
    On August 16, 1999, the petitioners made a timely request for a 
postponement of the preliminary determination pursuant to section

[[Page 60777]]

733(c)(1)(A) of the Act. On August 25, 1999, the Department extended 
the preliminary determination until no later than September 29, 1999. 
See Notice of Postponement of Preliminary Antidumping Duty 
Determinations: Certain Polyester Staple Fiber from the Republic of 
Korea and Taiwan, 64 FR 47766 (September 1, 1999). On September 29, 
1999, the petitioners requested another extension. In response, the 
Department extended the preliminary determination until no later than 
October 4, 1999. See Notice of Postponement of Preliminary Antidumping 
Duty Determinations: Certain Polyester Staple Fiber from the Republic 
of Korea and Taiwan, 64 FR 55248 (October 12, 1999). On October 4, 
1999, based on petitioners' September 29, 1999 request for extension, 
the Department further extended the preliminary determination until no 
later than October, 29, 1999. See Notice of Postponement of Preliminary 
Antidumping Duty Determinations: Certain Polyester Staple Fiber from 
the Republic of Korea and Taiwan, 64 FR 55700 (October 14, 1999).
    Between September 16 and October 20, 1999, the petitioners 
requested that the Department use quarterly averaging periods in our 
analysis rather than annual averaging periods (see Fair Value 
Comparisons section below).
    On October 8 and October 15, 1999, we issued Section D supplemental 
questionnaires to Sam Young and Samyang, respectively. We received 
responses to these questionnaires between October 15 and October 22, 
1999.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on October 4, Samyang 
requested that, in the event of an affirmative preliminary 
determination, the Department postpone its final determination in this 
investigation. On October 6, Sam Young and Geum Poong also requested 
that, in the event of an affirmative preliminary determination, the 
Department postpone its final determination in this investigation. In 
accordance with 19 CFR 351.210(b), because (1) our preliminary 
determination is affirmative, (2) the requesting exporters account for 
a significant proportion of exports of the subject merchandise, and (3) 
no compelling reasons for denial exist, we are granting the 
respondents' request and are postponing the final determination until 
no later than 135 days after the publication of this notice in the 
Federal Register. The respondents have further requested that the 
Department extend provisional measures from a four-month period to not 
more than six months. Suspension of liquidation will be extended 
accordingly.

Period of Investigation

    The period of investigation (POI) is April 1, 1998, through March 
31, 1999.
    This period corresponds to each respondent's four most recent 
fiscal quarters prior to the filing of the petition.

Scope of Investigation

    For the purposes of this investigation, the product covered is 
certain polyester staple fiber. Certain polyester staple fiber is 
defined as synthetic staple fibers, not carded, combed or otherwise 
processed for spinning, of polyesters measuring 3.3 decitex (3 denier, 
inclusive) or more in diameter. This merchandise is cut to lengths 
varying from one inch (25 mm) to five inches (127 mm). The merchandise 
subject to this investigation may be coated, usually with a silicon or 
other finish, or not coated. Certain polyester staple fiber is 
generally used as stuffing in sleeping bags, mattresses, ski jackets, 
comforters, cushions, pillows, and furniture. Merchandise of less than 
3.3 decitex (less than 3 denier) classified under the Harmonized Tariff 
Schedule of the United States (HTSUS) at subheading 5503.20.00.20 is 
specifically excluded from this investigation. Also specifically 
excluded from this investigation are polyester staple fibers of 10 to 
18 denier that are cut to lengths of 6 to 8 inches (fibers used in the 
manufacture of carpeting).
    The merchandise subject to this investigation is classified in the 
HTSUS at subheadings 5503.20.00.40 and 5503.20.00.60. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the merchandise under investigation is 
dispositive.

Scope Comments

    As stated in the Initiation Notice, we set aside a period for 
parties to raise issues regarding product coverage. We received 
comments on the scope from various interested parties on May 12, 1999, 
and rebuttal comments on June 7, 1999.
    Stein Fibers, an importer of PSF from Korea, argued that under the 
criteria set forth in the Department's regulations at 19 CFR 
351.225(k)(2) to determine whether products are covered or excluded by 
the scope (also known as the ``Diversified Products'' criteria), 
regenerated fiber does not fall under the scope of this investigation. 
First, Stein Fibers asserted that regenerated fiber is a low-quality 
product that is not comparable to U.S.-produced high-quality virgin and 
recycled PSF. Second, Stein Fibers contended that the quality 
differences result in different expectations by the ultimate user and 
in the product's ultimate use. Third, Stein Fibers stated that 
regenerated PSF and U.S.-made virgin or recycled PSF do not compete 
with each other and, therefore, their channels of trade are dissimilar. 
Finally, Stein Fibers claimed that regenerated fiber is never 
advertised or displayed, while particular brands of U.S.-made virgin or 
recycled 1PSF are prominently displayed and advertised in the bedding 
departments of many department stores.
    Gates Formed-Fibre Products, Inc. (Gates), a PSF importer, stated 
that the black and colored fiber extruded from textile fiber waste that 
it imports for the manufacture of substrate for automobile trunk liners 
is a different class or kind of merchandise than the products covered 
by the petition. Therefore, Gates argued, black automotive substrate 
(BAS) should be excluded from the scope of the investigation because: 
(1) It cannot be used for the fill applications described in the 
petition; (2) it is distinct from other fiber products; (3) it should 
be excluded based on consideration of the ``Diversified Products'' 
criteria as set forth in the Department's regulations; (4) the 
petitioners are considering its exclusion; and (5) if excluded, there 
would be no risk of circumvention.
    With respect to the ``Diversified Products'' criteria, Gates 
submitted specific comments on each of the criteria. First, Gates 
claimed that BAS differs from fiber fill product in all possible model 
matching criteria. Second, Gates stated that the ultimate purchaser 
would not accept BAS for use in the manufacture of merchandise such as 
pillows and ski jackets which require fiber fill. Third, Gates asserted 
that fiber fill is distributed by importers to manufacturers of 
pillows, comforters, jackets, etc., which then resell their products to 
distributors and large retailers. BAS is used in the manufacture of 
trunk liners which are then sold to original equipment manufacturers or 
their suppliers. Fourth, BAS cannot be used for fill applications. 
Fifth, products using fiber fill are advertised directly to consumers 
while BAS for trunk liners is not advertised to consumers.
    Far Eastern Textile Ltd. (Far Eastern) and Nan Ya Plastics 
Corporation (Nan Ya), the respondents in the companion antidumping 
investigation of PSF from Taiwan, noted that low-melt PSF is used

[[Page 60778]]

exclusively for bonding and acts as an adhesive to hold other fibers 
together for non-woven batting in high-loft products. Since low-melt 
PSF itself is not used as filling and is not similar in appearance to 
cotton or wool, Far Eastern and Nan Ya stated that low-melt PSF is 
clearly outside the scope of investigation. Moreover, Far Eastern and 
Nan Ya asserted that low-melt PSF is outside the scope of investigation 
in consideration of the ``Diversified Products'' criteria set forth in 
section 351.225(k)(2) of the Department's regulations. First, according 
to Far Eastern and Nan Ya, with respect to product characteristics, 
low-melt PSF consists of an outer sheath and an inner core as opposed 
to single-component PSF. Second, with respect to the expectations of 
the ultimate user and the ultimate use, Far Eastern and Nan Ya pointed 
out that low-melt PSF is used as a bonding agent, not as a filler or 
loft material, which is the expectation of the ultimate purchaser for 
polyester staple fibers. Third, Far Eastern and Nan Ya stated that 
while the channels of trade may be similar, the Department has 
consistently recognized that no single criterion is dispositive. 
Finally, Far Eastern and Nan Ya noted that they supply the U.S. market 
with a particular specification of low-melt PSF suitable for furniture 
and bedding manufacturing that is not available domestically in the 
United States.
    Saehan Industries Inc. and Samyang Corporation (Saehan/Samyang), 
Korean producers and exporters of PSF, stated that conjugate polyester 
staple fiber (conjugate PSF) and low-melt polyester staple fiber (low-
melt PSF) do not fall under the scope of this investigation. Saehan/
Samyang argued that conjugate PSF should be excluded from the scope 
because there is no U.S. industry producing this product. 1Saehan/
Samyang stated that low-melt PSF is not ``fiber for fill'' and is, 
thus, not the product targeted by the petitioners. Moreover, Saehan/
Samyang claimed that under the ``Diversified Products'' criteria, 
conjugate PSF and low-melt PSF are outside the scope of this 
investigation. First, Saehan/Samyang noted that the manufacturing 
process for conjugate fiber creates a natural curl or spiral, resulting 
in greater ``fluff.'' ``Regular'' fibers, produced by the petitioners, 
are straight or mechanically crimped and lack the loft of conjugate 
fiber. Second, Saehan/Samyang cited testimony given before the ITC 
asserting that end-users expect greater loft and a down-like quality 
from conjugate fibers which is not characteristic of the mechanically-
crimped fibers produced by DuPont, one of the petitioners. Third, 
Saehan/Samyang stated that ``regular'' PSF and conjugate PSF are both 
used in the production of furniture and home furnishings and, 
therefore, they are not sold in different channels of trade. However, 
Saehan/Samyang argued that channels of trade is less significant as a 
criterion in this case because there are no different channels of trade 
for any products used in this industry. Fourth, the ultimate use of 
conjugate PSF is to create a certain level of loft. In the United 
States, it is either used to provide high-loft characteristics, or it 
is mixed with ``regular'' fiber to achieve different levels of loft, 
and these two fibers are not interchangeable. Fifth, Saehan/Samyang 
stated that although these products are not advertised or displayed in 
the same way as products sold directly in the retail market, 
manufacturers and customers treat the two products very differently.
    The petitioners objected to the interested parties' requests that 
regenerated, low-melt, BAS, and conjugate PSF be excluded from the 
scope of the investigation. According to the petitioners, these 
products are all PSF, meet the definition of the scope, and are 
captured within the scope intended by the petitioners. Furthermore, the 
petitioners claimed that all of these imported products are 
domestically available. The petitioners added that there is no basis 
for creating a separate class or kind of merchandise relating to the 
PSF under consideration.
    For purposes of this preliminary determination and in consideration 
of comments by interested parties, the Department has not modified the 
scope of this investigation because the current language reflects the 
product coverage requested by the petitioners, and we have determined 
that regenerated, low-melt, BAS, and conjugate PSF fall within that 
scope. On the issue of whether BAS is a separate class or kind of 
merchandise under the ``Diversified Products'' criteria, we will make a 
determination in the final determination of this investigation.

Selection of Respondents

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual dumping margins for each known exporter and producer of the 
subject merchandise. However, section 777A(c)(2) of the Act gives the 
Department discretion, when faced with a large number of exporters/
producers, to limit its examination to a reasonable number of such 
companies if it is not practicable to examine all companies. Where it 
is not practicable to examine all known producers/exporters of the 
subject merchandise, this provision permits the Department to 
investigate either: (1) a sample of exporters, producers, or types of 
products that is statistically valid based on the information available 
at the time of selection; or (2) exporters and producers accounting for 
the largest volume of the subject merchandise that can reasonably be 
examined.
    On June 7, 1999, we received a request from Sung Lim Company Ltd. 
to participate as a voluntary respondent in this investigation. On June 
17, 1999, we received a similar request from Estal Industrial Company. 
However, we determined that it was not practicable in this 
investigation to examine all known producers/exporters of the subject 
merchandise. Instead we found that, given our resources, we would be 
able to investigate the three producers/exporters with the greatest 
export volume (see Case History section above). For a more detailed 
discussion of respondent selection in this investigation, see our 
Respondent Selection Memorandum.

Critical Circumstances

    On July 30, 1999, the petitioners alleged that there is a 
reasonable basis to believe or suspect that critical circumstances 
exist with respect to the subject merchandise. In accordance with 19 
CFR 351.206(c)(2)(i), because this allegation was filed at least 20 
days prior to our 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 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.
    With respect to the first criterion, i.e., a history of dumping and 
material injury in the United States or elsewhere, the European Union 
(EU) imposed antidumping duties on synthetic polyester fibers from 
Korea on January 8, 1993. The merchandise subject to the EU antidumping 
duty order was classified under Common Nomenclature

[[Page 60779]]

(CN) 5503.20.00, which is the equivalent of HTSUS subheading 5503.20.00 
and, thus, covers the subject merchandise in the instant investigation. 
On July 29, 1999, the EU terminated the antidumping duty order.
    Based on the recent existence of this order, there is sufficient 
evidence to determine that there is a history of dumping of the subject 
merchandise and a history of material injury as a result thereof. 
Because there is a history of dumping and material injury by reason of 
dumped imports in the EU of the subject merchandise, the first 
statutory criterion of the test for finding critical circumstances is 
met. Therefore, we must consider the second statutory criterion: 
whether or not the imports of the subject merchandise have been massive 
over a relatively short period.
    In determining whether there are ``massive imports'' over a 
``relatively short time period,'' the Department ordinarily bases its 
analysis on import data for at least the three months preceding (the 
``base period'') and following (the ``comparison period'') the filing 
of the petition. Imports normally will be considered massive when 
imports during the comparison period have increased by 15 percent or 
more compared to imports during the base period (see 19 CFR 
351.206(h)). The Department examines respondent-specific shipment 
information or aggregate import statistics when respondent-specific 
shipment information is not available.
    To determine whether imports of the subject merchandise have been 
massive over a relatively short period, we compared each respondent's 
export volume for the three months prior to the filing of the petition 
(i.e., January through March 1999) to that during the three months 
subsequent to the filing of the petition (i.e., April through June 
1999). For the ``all other'' exporters, although we found massive 
imports for the mandatory respondents, in this case we also had usable 
aggregate import data. Therefore, we performed the analysis using total 
imports from Korea, less those imports accounted for by the respondents 
(see Notice of Final Determination of Sales at Less Than Fair Value: 
Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Japan, 64 FR 
24329, 24338 (Comment 2) (May 6, 1999)).
    Based on our analysis, we preliminarily determine that the increase 
in imports was greater than 15 percent for each of the respondents. 
Therefore, because (1) there is a history of dumping and material 
injury, and (2) each of the respondents had more than a 15 percent 
increase in import volume, we preliminarily determine that critical 
circumstances exist for each of the companies under investigation. 
Also, based on our analysis of the import data as described above, we 
preliminarily determine that critical circumstances do not exist for 
the ``all other'' exporters.
    We note that Sam Young and Geum Poong have argued that the increase 
in imports was a direct result of an anticipated, publicized freight 
rate increase and submitted documentation in support of their argument. 
In making a determination of whether there have been massive imports 
for purposes of a critical circumstances determination under 19 CFR 
351.206(h), the Department normally examines the volume and value of 
imports, seasonal trends, and the share of domestic consumption 
accounted for by the imports. Anticipated increases in freight rates 
are not among the factors that the Department normally takes into 
consideration when making such a determination. After reviewing the 
information submitted by the respondents, we believe that the 
respondents have failed to demonstrate that increased freight rates are 
a seasonal trend. Therefore, we preliminarily determine that an 
increase in freight rates is not relevant for our determination of 
whether there have been massive imports of the subject merchandise.
    We will make a final determination concerning critical 
circumstances when we make our final determination in this 
investigation.

Product Comparisons

    Pursuant to section 771(16) of the Act, all products produced and 
sold by the respondents in the comparison market that fit the 
definition contained in the Scope of the Investigation section of this 
notice and were sold during the POI comprise the foreign like product. 
For purposes of this preliminary determination, we have relied on the 
following criteria, in order of significance, to match U.S. sales of 
PSF to comparison market sales of the foreign like product: (1) Fiber 
composition (conjugate, single component, crimped, low melt, etc.); (2) 
fiber type (virgin, recycled, blended, regenerated); (3) cross section; 
(4) finish; and (5) denier. Also, because Samyang specified grade of 
product in both the comparison market and the U.S. market, we attempted 
to make comparisons of the same grade for Samyang (see memorandum to 
file on Preliminary Determination Calculations for Samyang, dated 
October 29, 1999, (Samyang Calculations Memo) which is on file in 
Import Administration's Central Records Unit).
    In making our comparisons, we performed the cost test and 
disregarded all sales that failed this test (see the Results of the COP 
Test section below). We then attempted to compare products sold in the 
U.S. and the comparison market that were identical with respect to the 
product matching criteria above. Where we did not find any comparison 
market sales of merchandise that was identical in these respects to the 
merchandise sold in the United States, we compared U.S. products with 
the most similar merchandise sold in the comparison market. Where there 
were no appropriate comparison market sales of comparable merchandise, 
we compared the merchandise sold in the United States to CV, in 
accordance with section 773(a)(4) of the Act.

Fair Value Comparisons

    To determine whether sales of PSF from Korea to the United States 
were made at less than fair value, we compared the export price (EP) to 
comparison market prices or CV, as described in the Export Price and 
Normal Value sections below.
    The petitioners allege that due to a significant change in the 
value of the won and declining prices during the POI, the Department 
should use quarterly averaging periods rather than a POI average 
period. The petitioners cite the Department's determination that there 
was a ``sustained movement'' in the exchange rate during the POI. 
Furthermore, the petitioners state that the exchange rate appreciated 
by 20 to 30 percent over the POI. The petitioners argue that the 
Department has in the past used different averaging periods to avoid 
the distortive effects on the dumping analysis when there is a 
significant change in the exchange rate (see, Notice of Final 
Determination of Sales at Less Than Fair Value: Stainless Steel Sheet 
and Strip in Coils From the Republic of Korea (``Sheet and Strip from 
Korea''), 64 FR 30664, 30676 (June 8, 1999)).
    With regard to declining prices, the petitioners contend that, for 
the largest volume control numbers, sales prices in both the U.S. and 
home market dropped significantly during the POI. The petitioners argue 
that in past cases, when there was a ``significant and consistent'' 
price decline in the market, the Department used different averaging 
periods (see, Notice of Final Determination of Sales at Less Than Fair 
Value: Static Random Access Memory Semiconductors From the Republic of 
Korea (``SRAMS''), 63 FR 8934, 8935 (February 23, 1998). The

[[Page 60780]]

petitioners claim that in the SRAMS case, unit prices of SRAMS fell by 
32 percent during the POI.1 In this case, since some 
products had a price decline as high as 40 percent, the petitioners 
request the Department to use quarterly averaging periods to avoid the 
combined distortive effects that exchange rate and price changes would 
have on the dumping analysis if POI averaging was used.
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    \1\ See petitioners' submission dated October 20, 1999, at 3. 
The percentage change in price was derived by calculating unit 
prices on the basis of import statistics.
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    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. 
However, when a currency has undergone a sustained movement, section 
773A(b) of the Act directs the Department to allow a 60-day adjustment 
period. A sustained movement has occurred when the weekly average of 
the actual daily rates exceeds the weekly average of the benchmark 
rates by more than five percent for eight consecutive weeks. The 
benchmark is defined as the moving average of exchange rates for the 
past 40 business days (see Policy Bulletin 96-1: Currency Conversions, 
61 FR 9434, March 8, 1996). This adjustment is only required when the 
foreign currency is appreciating against the U.S. dollar. In this case, 
the Department found a sustained exchange rate movement in the won 
during March and April of 1998. We therefore used a fixed exchange rate 
for a period of 60 days after the ``sustained movement'' (i.e., from 
May 5 to July 5, 1998).
    As noted, the ``sustained movement'' of the won occurred in March 
and April of 1998. Our POI is April 1998 to March 1999. Therefore, half 
of the ``sustained movement'' occurred outside the POI. In looking only 
at the month of April 1998, the won appreciated roughly 8.5 
percent.2 The resulting effect on normal value is minimal in 
comparison to the effect on normal value caused by the exchange rate 
decline during November and December of 1997. That decline was the 
change in currency value that prompted the Department to use different 
averaging periods in Sheet and Strip from Korea. Furthermore, we found 
that, while the actual exchange rate varied over the POI and at one 
point appreciated by over 20 percent compared to the beginning of the 
POI, on average, the actual exchange rate did not appreciate out of the 
ordinary. For example, the average exchange rate for the last month of 
the POI was only 13 percent higher than the average exchange rate for 
the first month. Also, this movement did not occur abruptly.
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    \2\ Calculated by subtracting the dollar/won rate on April 1, 
1998 from the dollar/won rate on April 30, 1998 and dividing the 
result by the dollar/won rate on April 1, 1998.
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    Because the gradual movement of the exchange rate during our POI 
differs from the situation which occurred in Sheet and Strip from 
Korea, and because the magnitude of the exchange rate change is not 
large, we find that the change in the value of the won relative to the 
dollar is not a basis for adopting a different averaging period.
    With regard to the petitioners' claim concerning declining prices 
during the POI, section 777A(d)(1)(A)(i) of the Act allows the 
Department to use a weighted average-to-average comparison when 
comparing export prices to home market prices. Section 351.414(d)(3) of 
the Department's regulations, which discusses the length of averaging 
periods, states that the Department normally will use weighted averages 
for the entire POI, but that when prices differ significantly over the 
course of the POI, the Department may calculate weighted averages for 
shorter periods.
    In this case, for Samyang, we examined changes in the average 
monthly gross unit price for the subject merchandise sold in the United 
States and the average monthly gross unit price for the subject 
merchandise sold in the home market. For Sam Young, we performed the 
same analysis, except we examined the average monthly U.S. sales prices 
and the average monthly gross unit prices for the subject merchandise 
sold in the Canadian market.3 In analyzing the data, we did 
not find a significant and consistent price decline during the POI. 
While monthly average prices were higher at the beginning of the POI 
than at the end, several months during the POI showed either price 
increases or virtually no change at all, while other months showed 
price decreases. Further, we did not find a significant divergence 
between the two markets.
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    \3\ Geum Poong did not have a viable home or third country 
market and, therefore, we analyzed price movements only for its U.S. 
sales..
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    In addition to our market-to-market analysis, we also examined, for 
Samyang, the data on an individual control number basis. We first 
examined changes in the average monthly prices of the three largest 
U.S. control numbers (representing a significant percentage of total 
U.S. sales) and their respective matching home market control numbers. 
Second, we examined the price trends for the four largest home market 
control numbers (representing a significant percentage of total home 
market sales). A similar analysis was performed for Sam Young, using 
the Canadian price in lieu of home market prices. Because Geum Poong 
did not have a viable home or third country market, we looked at only 
the movement of prices in the U.S. market. In analyzing the individual 
control number data for Samyang, Sam Young, and Geum Poong, we found 
that there was not a significant and consistent decrease in prices. 
Prices fluctuated both upward and downward throughout the POI.
    Based on our analysis, we find that there was not a significant and 
consistent decline in prices over the POI (see Samyang Calculations 
Memo, and memoranda to file on Preliminary Determination Calculations 
for Sam Young, dated October 29, 1999 (Sam Young Calculations Memo), 
and Preliminary Determination Calculations for Guem Poong, dated 
October 29, 1999 (Geum Poong Calculations Memo), which are on file in 
Import Administration's Central Records Unit). Therefore, in accordance 
with section 777A(d)(1)(A)(i) of the Act, we calculated POI weighted-
average EPs for comparison to POI weighted-average NVs.

Date of Sale

    Samyang and Sam Young reported that the date on which the material 
terms of sale were set was the invoice date for sales in both the 
comparison market and the U.S. market. For its sales in the U.S. 
market, Geum Poong reported the invoice date as the date on which the 
material terms of sale were set. As noted above, Geum Poong did not 
have a viable comparison market. The basis for the companies' reporting 
invoice date as the date of sale is described below.
    Samyang reported that it negotiated price and quantity with its 
U.S. customers, and that a purchase order or other initial sales 
agreement document was generated confirming the order. However, 
according to Samyang, changes in price and quantity occurred after the 
initial sales document was issued and the terms of sale were not fixed 
until the invoice was issued. Therefore, Samyang reported its U.S. 
sales prices based on invoice date. Regarding home market sales, 
Samyang reported that purchase orders were seldom issued. Consequently, 
Samyang also reported its home market sales based on invoice date.
    Sam Young reported that it negotiated price and quantity with its 
U.S. and Canadian customers. Once agreement was reached, Sam Young 
faxed a confirmation to its customer and the customer then issued a 
purchase order to Sam Young. Sam Young claimed,

[[Page 60781]]

however, that changes in price and quantity occurred after the purchase 
order had been issued and, therefore, price and quantity were not fixed 
until the date on which the invoice was issued. For this reason, Sam 
Young initially reported invoice date as the date of sale. For certain 
comparison market sales, Sam Young used the tax invoice date as the 
date of sale.
    Geum Poong reported that it negotiated price and quantity with its 
U.S. customers by telephone or by fax. For sales negotiated by fax, 
once an agreement was reached, a purchase order or order acceptance 
sheet was issued. However, according to Geum Poong, changes in price 
and quantity occurred after the order was accepted and the purchase 
order was issued and that the terms of sale were not fixed until the 
invoice was issued. Therefore, Geum Poong reported its U.S. sales based 
on invoice date.
    The petitioners questioned all three respondents' use of invoice 
date as the date of sale. Based on our review of the information 
submitted, we determined that neither Samyang, Sam Young, nor Geum 
Poong provided sufficient evidence of significant changes in price and 
quantity between the issuance of the order confirmation and invoice 
date. Therefore, on September 14, 1999, we requested that Samyang 
report its U.S. sales based on initial purchase order date. On 
September 16, 1999, we requested that Sam Young report U.S. and 
Canadian sales and that Geum Poong report U.S. sales based on initial 
order confirmation date. For purposes of this preliminary 
determination, we used initial order confirmation date as the date of 
sale for all three respondents' U.S. sales and for Sam Young's Canadian 
sales. For Samyang's home market sales, since no purchase order was 
issued, we used the sales reported on the basis of invoice date. We 
will consider this issue further for purposes of the final 
determination.

Export Price

    In accordance with section 772 of the Act, we based U.S. price on 
EP. Section 772(a) of the Act defines EP as the price at which the 
subject merchandise is first sold before the date of importation by the 
exporter or producer outside the United States to an unaffiliated 
purchaser in the United States, or to an unaffiliated purchaser for 
exportation to the United States. Consistent with these definitions, we 
found that all of the respondents' sales during the POI were EP sales. 
For all respondents, we calculated EP based on prices charged to the 
first unaffiliated customer in the United States.
    As the starting U.S. price, we relied on the gross unit price shown 
on sales invoices. These prices were delivered and FOB prices to 
unaffiliated customers in the United States. In accordance with section 
772(c)(2) of the Act, we reduced the EP, where appropriate, by movement 
expenses, including foreign inland freight, international freight, 
brokerage, export taxes, U.S. customs duties, and other miscellaneous 
charges. We increased EP, where appropriate, for duty drawback in 
accordance with section 772(c)(1)(B) of the Act.

Normal Value

A. Selection of Comparison Markets
    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 each respondent's volume of home market sales of the 
foreign like product to the volume of their U.S. sales of the subject 
merchandise.
    Samyang had a viable home market for PSF and reported home market 
sale for purposes of calculating normal value. Sam Young did not have a 
viable home market. However, it had a viable third country market and 
reported third country sales for purposes of calculating normal value. 
For Geum Poong, which had no viable home or third country market, we 
compared EPs to CV in accordance with section 773(a)(4) of the Act. See 
the section on Calculation of Normal Value Based on Constructed Value 
below.
    Adjustments made in deriving the normal values for each company are 
described in detail in the sections on Calculation of Normal Value 
Based on Comparison Market Prices and Calculation of Normal Value Based 
on Constructed Value, below.

B. Cost of Production Analysis

    Based on the timely cost allegations filed on July 28 and August 
10, 1999, and in accordance with section 773(b)(2)(A)(i) of the Act, we 
found reasonable grounds to believe or suspect that Samyang's PSF sales 
made in Korea and Sam Young's PSF sales made to Canada were made at 
prices below COP. As a result, the Department has conducted 
investigations to determine whether these respondents made sales in 
their respective comparison markets at prices below their respective 
COPs during the POI within the meaning of section 773(b) of the Act. We 
conducted the COP analysis described below.
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP for PSF, based on the sum of the cost of materials 
and fabrication for the foreign like product, plus amounts for general 
and administrative (G&A) expenses and packing costs. For Samyang, we 
adjusted reported direct material costs to reflect the market price of 
inputs purchased from unaffiliated sellers, because cost of production 
data was not provided by the affiliated suppliers (see Samyang 
Calculations Memo). For Sam Young, we revised the reported per unit 
total materials costs because we noted an apparent discrepancy in the 
total production quantity used by Sam Young to calculate its per-unit 
costs (see Sam Young Calculations Memo). For Geum Poong, we revised the 
reported per unit total materials costs to correct for an apparent 
discrepancy in its duty drawback adjustment (see Geum Poong 
Calculations Memo). In addition, for all three companies, we revised 
general and administrative expenses and interest expenses based on our 
corrections to their reported cost of manufacturing.
2. Test of Home Market Sales Prices
    We compared the adjusted, weighted-average, COP for Samyang and Sam 
Young to its home market or Canadian market sales of the foreign like 
product. The prices were net of movement charges, taxes, rebates, 
commissions, and other direct and indirect selling expenses. This is 
accordance with 773(b) of the Act, and was done to determine whether 
these sales had been made at prices below the COP within an extended 
period of time (i.e., a period of one year) in substantial quantities 
4 and whether such prices were sufficient to permit the 
recovery of all costs within a reasonable period of time.
---------------------------------------------------------------------------

    \4\ In accordance with section 773(b)(2)(C)(i) of the Act, we 
determined that sales made below the COP were made in substantial 
quantities if the volume of such sales represented 20 percent or 
more of the volume of sales under consideration for the 
determination of normal value.
---------------------------------------------------------------------------

3. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a 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 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. Because we compared prices to

[[Page 60782]]

the POI average COP, 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.
    We found that, for certain models of PSF, more than 20 percent of 
Samyang's and Sam Young's respective comparison market sales were made 
within an extended period of time at prices less than the 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 sales as the basis for determining normal 
value, in accordance with section 773(b)(1) of the Act.
    For those U.S. sales of PSF for which there were no comparable 
comparison market sales in the ordinary course of trade, we compared 
EPs to CV in accordance with section 773(a)(4) of the Act. See the 
section on Calculation of Normal Value Based on Constructed Value 
below.
C. Calculation of Normal Value Based on Comparison Market Prices
    We performed price-to-price comparisons where there were sales of 
comparable merchandise in the comparison market that did not fail the 
cost test. We calculated NV based on FOB or delivered prices to 
comparison market customers. We made deductions from the starting 
price, where appropriate, for movement expenses and discounts. In 
accordance with sections 773(a)(6) (A) and (B) of the Act, we deducted 
comparison market packing costs and added U.S. packing costs. In 
addition, we made circumstances of sale (COS) adjustments for direct 
expenses in accordance with section 773(a)(6)(C)(iii) of the Act.
    When comparing U.S. sales with comparison market sales of similar, 
but not identical, merchandise, we also made adjustments to NV for 
physical differences in the merchandise pursuant to 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, using POI-average costs.
    We also made adjustments, in accordance with 19 CFR 351.410(e), for 
indirect selling expenses incurred in the comparison market or U.S. 
sales where commissions were granted on sales in one market but not in 
the other (the ``commission offset''). Specifically, where commissions 
were granted in the comparison market but not in the U.S. market, we 
made an upward adjustment to NV for the lesser of (1) the amount of the 
commission paid in the comparison market, or (2) the amount of indirect 
selling expenses incurred in the U.S. market. Company-specific 
adjustments of NV are described below.
Samyang
    We calculated normal value based on FOB or delivered prices to 
unaffiliated purchasers in the home market and made deductions for the 
following movement expenses: foreign inland freight and loading fees. 
We made COS adjustments by deducting direct selling expenses incurred 
for home market sales (credit expenses, technical services charges, and 
bank negotiation fees) and adding U.S. direct selling expenses (credit 
expenses, letter of credit fees, bank charges, and postage charges) in 
accordance with section 773(a)(6)(C)(iii) of the Act.
Sam Young
    We calculated normal value based on FOB prices to unaffiliated 
purchasers in the Canadian market and made deductions for the following 
movement expenses: foreign inland freight, wharfage, container taxes, 
terminal handling fees, and brokerage and handling. We made COS 
adjustments by deducting direct selling expenses incurred for third-
country market sales (credit expenses, bill of lading charges, letter 
of credit fees, wire transfer fees, and document handling fees) and 
adding U.S. direct selling expenses (credit expenses, bill of lading 
charges, letter of credit fees, wire transfer fees, and document 
handling fees) in accordance with section 773(a)(6)(C)(iii) of the Act. 
We offset commission expenses in accordance with section 351.410(e) of 
the Department's regulations in the manner described above.
D. Calculation of Normal Value Based on Constructed Value
    Section 773(a)(4) of the Act provides that where normal value 
cannot be based on comparison market sales, normal value may be based 
on the constructed value. Accordingly, for Samyang and Sam Young, for 
those models of PSF for which we could not determine the NV based on 
comparison market sales, either because (1) there were no sales of a 
comparable product, or (2) all sales of comparison products failed the 
COP test, we based NV on the CV. In addition, for Geum Poong, which did 
not have a viable comparison market, we based NV on CV.
    Sections 773 (e)(1) and (e)(2)(A) of the Act provide that the CV 
shall be based on the sum of the cost of materials and fabrication for 
the foreign like product, plus amounts for selling, general, and 
administrative expenses (SG&A), profit, and U.S. packing costs. For 
Samyang and Sam Young, we calculated the cost of materials and 
fabrication based on the methodology described in the Calculation of 
COP section above. We based SG&A and profit for Samyang and Sam Young 
on the actual amounts reported as 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 comparison market, 
in accordance with section 773(e)(2)(A) of the Act. Because there is no 
viable comparison market for Geum Poong and, hence, no company-specific 
profit or non-U.S. selling expenses, we calculated Geum Poong's profit 
and selling expenses in accordance with section 773(e)(2)(B)(iii) of 
the Act. Specifically, we calculated weighted average amounts for 
selling expenses and profit based on the selling expenses incurred and 
profit earned by Samyang and Sam Young in their respective comparison 
markets on sales in the ordinary course of trade. Consistent with 
section 351.405(b)(2) of the Department's regulations and section 
773(e)(2)(B)(iii) of the Act, this profit amount does not exceed the 
amount normally realized by exporters or producers in connection with 
the sale for consumption in the home market of merchandise that is in 
the same general category of products as the subject merchandise, 
represented by Samyang's home market profit.
    In addition, for each respondent we added U.S. packing costs as 
described in the Export Price section of this notice.
    We made adjustments to CV for differences in COS in accordance with 
section 773(e)(8) of the Act and 19 CFR 351.410. We made COS 
adjustments by deducting direct selling expenses incurred on comparison 
market sales and adding U.S. direct selling expenses.

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 constructed export price (CEP) 
transaction. The normal value 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 
constructed sale from the exporter to the importer.

[[Page 60783]]

    In this case, the respondents made only EP sales in the United 
States during the POI. To determine whether normal value sales are at a 
different level of trade than EP, 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 normal value 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. 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).
    In implementing these principles in this investigation, we obtained 
information from Samyang and Sam Young about the channels of 
distribution involved in the reported U.S. and comparison market sales, 
including a description of the selling activities performed by the 
respondents for each channel of distribution. In identifying levels of 
trade for EP and comparison market sales, we considered the selling 
functions reflected in the starting price before any adjustments.
Samyang
    In this investigation, we found that Samyang has three channels of 
distribution in the home market and two channels for U.S. sales. In 
both the U.S. and home markets, Samyang sells to end users and 
distributors. In the home market, Samyang also sells to distributors 
which not only distribute PSF, but also use it for their own 
production. For each of the channels of distribution in the U.S. and 
home markets, Samyang provides the same selling functions, though it 
provides the functions to varying degrees. We found that these selling 
functions were minimal in both the U.S. and home markets.
    Because the same selling functions are performed in each channel in 
each market, despite variations in degree for certain functions, we 
found a single level of trade in the United States, and a single, 
identical level of trade in the home market. Thus, it was unnecessary 
to make any level-of-trade adjustment for comparison of EP and home 
market prices.
Sam Young
    In this investigation, we found that Sam Young has one channel of 
distribution in the comparison market and one channel in the U.S. 
market. In both the U.S. and comparison markets, Sam Young sells to 
distributors. For each of these channels of distribution, Sam Young 
provides the same selling functions and to the same degree. In both the 
comparison market and the U.S. market, Sam Young generally makes the 
same freight and delivery arrangements. Packing is also the same in 
both markets.
    Because the single channel of distribution in the Canadian market 
is the same as the single channel of distribution in the U.S. market, 
we found a single level of trade in the United States, and a single, 
identical level of trade in the comparison market. It was, thus, 
unnecessary to make any level-of-trade adjustment for comparison of EP 
and comparison market prices.
Geum Poong
    In this investigation, we found that Geum Poong has one channel of 
distribution in the U.S. market. Geum Poong had no viable home or third 
country markets. When normal value is based on constructed value, the 
normal value level of trade is that of the sales from which we derive 
SG&A expenses and profit (see Notice of Preliminary Determination of 
Sales at Less Than Fair Value and Postponement of Final Determination: 
Fresh Atlantic Salmon from Chile, 63 FR 2664 (January 16, 1998)). For 
Geum Poong, we based selling expenses and profit on a weighted average 
of selling expenses incurred and profits earned by Samyang and Sam 
Young. Because Sam Young's and Samyang's comparison market selling 
functions do not vary significantly from Geum Poong's U.S. selling 
functions, we made no level-of-trade adjustment for Geum Poong.

Currency Conversions

    We made currency conversions in accordance with section 773A of the 
Act. From early March to early May 1998, there was a sustained movement 
(appreciation) in the value of the Korean won (see Policy Bulletin 96-
1, Notice: Change in Policy Regarding Currency Conversions, 61 FR 9434 
(March 8, 1996)). In accordance with the policy described in the Policy 
Bulletin, we applied a fixed exchange rate for the 60-calendar day 
period following the sustained movement. That exchange rate was taken 
from the last day of the sustained movement period, i.e., the last day 
of the so-called ``recognition period.''
    For the remainder of the POI, we followed the Department's practice 
of using daily exchange rates from the Federal Reserve Bank to convert 
foreign currencies into U.S. dollars, except where the daily rate 
involves a fluctuation. A fluctuation occurs where the actual daily 
rate differs from the benchmark rate by 2.25 percent. The benchmark is 
defined as the moving average of daily rates for the past 40 business 
days. When we determine that a fluctuation exists, we substitute the 
benchmark rate for the daily rate.

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
information to be used 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 entries of PSF from Korea 
produced or exported by the companies listed below that are entered, or 
withdrawn from warehouse, for consumption on or after 90 days prior to 
the date of publication of this notice in the Federal Register. For 
companies not listed below (i.e., ``all others''), we are directing the 
Customs Service to suspend liquidation of all entries of PSF from Korea 
that are entered, or withdrawn from warehouse, for consumption on or 
after the date of publication of this notice in the Federal Register. 
We are also instructing the Customs Service to require a cash deposit 
or the posting of a bond equal to the weighted-average amount by which 
the normal value exceeds the EP, as indicated in the chart below. These 
instructions suspending liquidation will remain in effect until further 
notice.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                             Weighted-
                                                              average
                    Exporter/producer                         margin
                                                             (percent)
------------------------------------------------------------------------
Samyang Corporation.....................................            3.51
Sam Young Synthetics Co.................................            6.33
Geum Poong Corporation..................................           26.39
All Others..............................................            7.99
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our preliminary determination. If our final antidumping 
determination is affirmative, the ITC will determine whether these 
imports are materially injuring, or threaten material injury to, the 
U.S. industry. The deadline for that

[[Page 60784]]

ITC determination would be the later of 120 days after the date of this 
preliminary determination or 45 days after the date of our final 
determination.

Disclosure

    We will disclose the calculations used in our analysis to parties 
in this proceeding within five days of the publication of this notice. 
See 19 CFR 351.224(b).

Public Comment

    For this investigation, case briefs must be submitted no later than 
February 15, 2000. Rebuttal briefs must be filed no later than February 
22, 2000. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case of rebuttal briefs, provided that such a 
hearing is requested by any interested party. Interested parties who 
wish to request a hearing, or to participate if one is requested, must 
submit a written request within 30 days of the publication of this 
notice. Requests should specify the number of participants and provide 
a list of the issues to be discussed. Oral presentations will be 
limited to issues raised in the briefs. If a hearing is requested, it 
will be held on February 25, 2000, at the U.S. Department of Commerce, 
14th Street and Constitution Avenue, N.W., Washington, D.C. 20230. 
Parties should confirm by telephone the time, date, and place of the 
hearing 48 hours before the scheduled time.
    If this investigation proceeds normally, we will make our final 
determination no later than 135 days after the publication of this 
notice in the Federal Register.
    This determination is published pursuant to sections 733(d) and 
777(i)(1) of the Act.

    Dated: October 28, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-29208 Filed 11-5-99; 8:45 am]
BILLING CODE 3510-DS-P