[Federal Register Volume 65, Number 89 (Monday, May 8, 2000)]
[Notices]
[Pages 26574-26577]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11460]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-807]


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

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

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

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SUMMARY: In response to a request from two respondents and two U.S. 
producers, the Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on polyethylene 
terephthalate film, sheet, and strip (PET film) from the Republic of 
Korea. The review covers three manufacturers/exporters of the subject 
merchandise to the United States and

[[Page 26575]]

the period June 1, 1998 through May 31, 1999.
    We preliminarily determine that there is a dumping margin for SKC 
Limited (SKC), and no margin for H.S. Industries (HSI) and Hyosung 
Corporation (Hyosung) during the period June 1, 1998 through May 31, 
1999.
    If these preliminary results are adopted in our final results of 
review, we will instruct the U.S. Customs Service to assess antidumping 
duties based on the difference between the United States Price (USP) 
and normal value (NV).
    Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with the arguments: (1) A statement of the issues and (2) a 
brief summary of the arguments (no longer than five pages, including 
footnotes).

EFFECTIVE DATE: May 8, 2000.

FOR FURTHER INFORMATION CONTACT: Michael J. Heaney or Robert James, AD/
CVD Enforcement Group III , Office 8, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone 
(202) 482-4475 and (202) 482-0649, respectively.

Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act) are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the regulations codified at 19 CFR Part 351 (1999).

SUPPLEMENTARY INFORMATION:

Background

    The Department published an antidumping duty order on PET film from 
the Republic of Korea on June 5, 1991 (56 FR 25660). On June 16, 1999, 
two domestic producers, E.I. DuPont Nemours & Co., Inc. and Mitsubishi 
Polyester Film L.L.C. requested reviews of HSI, Hyosung, and SKC for 
the period June 1, 1998 through May 31, 1999. On June 28, and June 30, 
1999, SKC and HSI, respectively, requested administrative reviews of 
their sales for the same time period. We published a notice of 
initiation of the review on July 29, 1999 (64 FR 41075).
    On February 9, 2000, the Department published a notice extending 
the time limits for publication of its preliminary results by 62 days 
(65 FR 6360).

Scope of the Review

    Imports covered by this review are shipments of all gauges of raw, 
pretreated, or primed polyethylene terephthalate film, sheet, and 
strip, whether extruded or coextruded. The films excluded from this 
review are metallized films and other finished films that have had at 
least one of their surfaces modified by the application of a 
performance-enhancing resinous or inorganic layer of more than 0.00001 
inches (0.254 micrometers) thick. Roller transport cleaning film which 
has at least one of its surfaces modified by the application of 0.5 
micrometers of SBR latex has also been ruled as not within the scope of 
the order.
    PET film is currently classifiable under Harmonized Tariff Schedule 
(HTS) subheading 3920.62.00.00. The HTS subheading is provided for 
convenience and for U.S. Customs purposes. The written description 
remains dispositive as to the scope of the product coverage. The review 
covers the period June 1, 1998 through May 31, 1999. The Department is 
conducting this review in accordance with section 751 of the Act, as 
amended.

Fair Value Comparisons

    To determine whether sales of PET film in the United States were 
made at less than fair value, we compared USP to the NV, as described 
in the ``United States Price'' and ``Normal Value'' sections of this 
notice. In accordance with section 777A(d)(2) of the Act, we calculated 
monthly weighted-average prices for NV and compared these to individual 
U.S. transactions.

United States Price (USP)

    In calculating USP, the Department treated respondent's sales as 
export price (EP) sales, as defined in section 772(a) of the Act, when 
the merchandise was sold to unaffiliated U.S. purchasers prior to the 
date of importation, and use of the constructed export price (CEP) 
methodology was not otherwise indicated. The Department treated SKC's 
sales as CEP sales, as defined in section 772(b) of the Act, when the 
merchandise was sold to unaffiliated U.S. purchasers after importation.
    CEP was based on the delivered or c.i.f. U.S. port, packed prices 
to unaffiliated purchasers in the United States. We made adjustments, 
where applicable, for Korean and U.S. brokerage charges, Korean and 
U.S. inland freight, ocean freight, bank charges, U.S. duties, and 
discounts, in accordance with section 772(c) of the Act. We made 
additions to EP for duty drawback pursuant to section 772(c)(1)(B) of 
the Act.
    CEP was based on the delivered, packed prices to unaffiliated 
purchasers in the United States. We made adjustments, where applicable, 
for Korean and U.S. brokerage charges, Korean and U.S. inland freight, 
ocean freight, and U.S. duties, in accordance with section 772(c) of 
the Act. Pursuant to section 772(c)(1)(B) of the Act, we made an 
addition to CEP for duty drawback. We also made an addition to CEP for 
interest revenue. In accordance with section 772(d)(1) of the Act, we 
made deductions for selling expenses associated with economic 
activities in the United States, including warranties, credit expenses, 
bank charges, and indirect selling expenses.
    With respect to subject merchandise to which value was added in the 
United States by SKC prior to sale to unaffiliated customers, we 
deducted the cost of further manufacturing in accordance with section 
772(d)(2) of the Act.
    Pursuant to section 772(d)(3) of the Act, the price was further 
reduced by an amount for profit to arrive at the CEP.

Normal Value

    In order to determine whether there were sufficient sales of PET 
film in the home market (HM) to serve as a viable basis for calculating 
NV, for each respondent we compared the volume of HM sales of PET film 
to the volume of PET film sold in the United States, in accordance with 
section 773(a)(1)(C) of the Act. Each respondent's aggregate volume of 
HM sales of the foreign like product was greater than five percent of 
its aggregate volume of U.S. sales of the subject merchandise. 
Therefore, we have based NV on the price at which the foreign like 
product was sold for consumption in the home market in the usual 
commercial quantities, in the ordinary course of trade, and, to the 
extent practicable, at the same level of trade.
    Because the Department had disregarded SKC's sales of the foreign 
like product in the June 1996-May 1997 administrative review because 
they failed the cost test (see Polyethylene Terephthalate Film, Sheet 
and Strip from the Republic of Korea; Final Results of Antidumping Duty 
Administrative Review (1996-1997 Administrative Review), 63 FR 37334, 
37335 (July 10, 1998) in accordance with section 773(b)(2)(A)(ii) of 
the Act, the Department had reasonable grounds to believe or suspect 
that SKC made sales below cost of production (COP) during this POR. 
Accordingly, we initiated a sales-below-cost of production 
investigation for SKC in accordance with section 773(b) of the

[[Page 26576]]

Act. (The June 1996-May 1997 administrative review was the most 
recently completed review at the time that we issued our antidumping 
questionnaire.)
    We performed a model-specific COP test in which we examined whether 
each HM sale was priced below the merchandise's COP. We calculated the 
COP of the merchandise using SKC's cost of materials and fabrication 
for the foreign like product, plus amounts for home market general and 
administrative (G&A) expenses and packing costs, in accordance with 
section 773(b)(3) of the Act. We allocated yield losses equally between 
A-grade and B-grade film because these grades have identical production 
costs. This is consistent with the methodology employed in past reviews 
of this case. (See e.g., 1996-1997 Administrative Review, 37335).
    In accordance with section 773(b)(1) of the Act, in determining 
whether to disregard home market sales made at prices below COP, we 
examined whether such sales were made within an extended period of time 
in substantial quantities, and whether such sales were made at prices 
which would permit recovery of all costs within a reasonable period of 
time.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of SKC's sales of a given model were at prices less than COP, 
we did not disregard any below-cost sales of that model because these 
below-cost sales were not made in substantial quantities. Where 20 
percent or more of SKC's home market sales of a given model were at 
prices less than the COP, we disregarded the below-cost sales because 
such sales were found to be made: (1) in substantial quantities within 
the POR (i.e., within an extended period of time) in accordance with 
section 773(b)(2)(B) of the Act, and (2) at prices which would not 
permit recovery of all costs within a reasonable period of time, in 
accordance with section 773(b)(2)(D) of the Act (i.e., the sales were 
made at prices below the weighted-average per-unit COP for the POR). We 
used the remaining sales as the basis for determining NV, if such sales 
existed, in accordance with section 773(b)(1) of the Act.
    In determining NV, we considered comparison market sales of 
identical or similar merchandise, or constructed value (CV).
    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of SKC's cost of materials, fabrication, G&A expenses, 
and profit. We allocated yield losses equally between A-grade and B-
grade film. In accordance with section 773(e)(2)(A) of the Act, we 
based G&A expenses and profit on the amounts incurred and realized by 
SKC in connection with the production and sale of the foreign like 
product in the ordinary course of trade for consumption in the foreign 
country. For selling expenses, we used the weighted-average HM selling 
expenses. Pursuant to section 773(e)(3) of the Act, we included U.S. 
packing expenses.
    In accordance with section 773(a)(6) of the Act, we adjusted NV, 
where appropriate, by deducting home market packing expenses and adding 
U.S. packing expenses. We also adjusted NV for credit expenses. When NV 
was based upon home market sales, we made an adjustment for inland 
freight. For SKC's local export sales, we also made an addition to home 
market price for duty drawback. For comparisons to EP, we made an 
addition to NV for U.S.credit expenses, and bank charges as 
circumstance-of-sale adjustments pursuant to section 773(a)(6)(C) of 
the Act.

Level of Trade and CEP Offset

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the comparison 
market at the same level of trade (LOT) as the EP or CEP transaction. 
The NV LOT is that of the starting price sales in the comparison market 
or, when NV is based on CV, that of the sales from which we derive SG&A 
expenses and profit. For EP, the U.S. LOT is also the level of the 
starting price sale, which is usually from the exporter to the 
importer. For CEP, it is the level of the constructed sale from the 
exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or 
CEP, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the differences in the levels between NV and 
CEP affect price comparability, we adjust NV under section 773(A)(7)(B) 
of the Act (the CEP offset provision). See, e.g., Certain Carbon Steel 
Plate from South Africa, Final Determination of Sales at Less Than Fair 
Value, 62 FR 61731 (November 19, 1997).
    In implementing these principles in this review, we asked each 
respondent to identify the specific differences and similarities in 
selling functions and/or support services between all phases of 
marketing in the home market and the United States. SKC identified two 
channels of distribution in the home market: (1) wholesalers/
distributors and (2) end-users. HSI also identified two channels of 
distribution: sales to end-users and sales to distributors. Hyosung 
identified one channel of distribution in the home market: sales to 
end-users. For both channels SKC and HSI perform similar selling 
functions such as order processing, market research and after-sales 
warranty services. Because channels of distribution do not qualify per 
se as separate LOTs, when the selling functions performed for each 
customer class are sufficiently similar, as in the instant review, we 
determined that there exists one LOT for SKC's and HSI's home market 
sales.
    For the U.S. market SKC reported two LOTs: (1) EP sales made 
directly to its U.S. customers, and (2) CEP sales made through SKC 
America, Inc., SKC's wholly-owned U.S. subsidiary. HSI and Hyosung 
identified one LOT: EP sales made directly to U.S. customers. The 
Department examined the selling functions performed by SKC for both EP 
and CEP sales. These selling functions included customer sales contacts 
(i.e., visiting current or potential customers, receiving orders, 
promotion of new products, collection of unpaid invoices), technical 
services, inventory maintenance, and/or business system development. We 
found that SKC provided a greater degree of these services on EP sales 
than it did on CEP sales, and that the selling functions were 
sufficiently different to warrant two separate LOTs in the United 
States.
    When we compared EP sales to home market sales, we determined that 
for each respondent both sales were made at the same LOT. For both EP 
and home market transactions, each respondent sold directly to the 
customer and provided similar levels of customer sales contacts, 
technical services, inventory maintenance and business system 
development. Therefore, no LOT adjustment was warranted.
    For CEP sales, SKC performed fewer customer sales contacts, 
technical services, inventory maintenance, and computer legal, audit 
and business system development. In addition, the differences in 
selling functions performed for home market and CEP transactions 
indicate that home market

[[Page 26577]]

sales involved a more advanced stage of distribution than CEP sales.
    Because we compared these CEP sales to HM sales at a different LOT, 
we examined whether a LOT adjustment may be appropriate. In this case 
SKC sold at one LOT in the home market; therefore, there is no 
demonstrated pattern of consistent price differences between LOTs. 
Further, we do not have the information which would allow us to examine 
pricing patterns of SKC's sales of other similar products, and there is 
no other record evidence on which such an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a LOT adjustment but the LOT in Korea for SKC is at a more 
advanced stage than the LOT of its CEP sales, a CEP offset is 
appropriate in accordance with section 773(a)(7)(B) of the Act, as 
claimed by SKC. We based the CEP offset amount on the amount of home 
market indirect selling expenses, and limited the deduction for home 
market indirect selling expenses to the amount of indirect selling 
expenses deducted from CEP in accordance with section 772(d)(1)(D) of 
the Act. We applied the CEP offset to NV, whether based on home market 
prices or CV.

Preliminary Results of Review

    We preliminarily determine that the following margins exist for the 
period June 1, 1998 through May 31, 1999:

------------------------------------------------------------------------
                                                                Margin
                           Company                             (percent)
------------------------------------------------------------------------
HSI.........................................................      0
Hyosung.....................................................      0
SKC.........................................................      1.35
------------------------------------------------------------------------

    We will disclose calculations performed in connection with these 
preliminary results of review within 5 days of the day of publication 
of this notice. Interested parties may request a hearing not later than 
30 days after publication of this notice. Interested parties may also 
submit written arguments in case briefs on these preliminary results 
within 30 days of the date of publication of this notice. Rebuttal 
briefs, limited to issues raised in case briefs, may be filed no later 
than five days after the time limit for filing case briefs. Parties who 
submit arguments are requested to submit with each argument a statement 
of the issue and a brief summary of the argument. All memoranda to 
which we refer in this notice can be found in the public reading room, 
located in the Central Records Unit, room B-009 of the main Commerce 
building. Any hearing, if requested, will be held two days after the 
scheduled date for submission of rebuttal briefs.
    The Department will publish the final results of this 
administrative review, including a discussion of its analysis of issues 
raised in any case or rebuttal brief or at a hearing. The Department 
will issue final results of this review within 120 days of publication 
of these preliminary results.
    Upon completion of the final results in this review, the Department 
shall determine, and the Customs Service shall assess, antidumping 
duties on all appropriate entries. In accordance with 19 CFR 351.212 
(b), we have calculated an importer/customer-specific assessment rate 
based on the ratio of the total amount of antidumping duties calculated 
for the examined sales to the entered value of those same sales. This 
Department will issue appraisement instructions on each exporter 
directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of PET film from the Republic of Korea entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date of the final results of this administrative review, as provided by 
section 751(a)(1) of the Act: (1) the cash deposit rate for the 
reviewed firm will be the rate established in the final results of 
administrative review; (2) for merchandise exported by manufacturers or 
exporters not covered in this review but covered in the original less-
than-fair-value (LTFV) investigation or a previous review, the cash 
deposit will continue to be the most recent rate published in the final 
determination or final results for which the manufacturer or exporter 
received a company-specific rate; (3) if the exporter is not a firm 
covered in this review or the original investigation, but the 
manufacturer is, the cash deposit rate will be that established for the 
manufacturer of the merchandise in the final results of this review or 
the LTFV investigation; and (4) if neither the exporter nor the 
manufacturer is a firm covered in this or any previous reviews, the 
cash deposit rate will be 21.5%, the ``all others'' rate established in 
the LTFV investigation.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) 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 administrative review and 
notice are in accordance with sections 751(a)(1) and 777(i)(1) of the 
Act.

    Dated: May 1, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-11460 Filed 5-5-00; 8:45 am]
BILLING CODE 3510-DS-P