[Federal Register Volume 65, Number 174 (Thursday, September 7, 2000)]
[Notices]
[Pages 54197-54205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22992]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-815 & A-580-816]


Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat 
Products From the Republic of Korea; Notice of Preliminary Results of 
Antidumping Duty Administrative Review and Intent Not To Revoke 
Antidumping Duty Order in Part

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review and intent not to revoke antidumping duty order 
in part.

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SUMMARY: In response to requests from three respondents and from the 
petitioners in the original investigation, the Department of Commerce 
(``the Department'') is conducting (the sixth) administrative reviews 
of the antidumping duty orders on certain

[[Page 54198]]

cold-rolled and corrosion-resistant carbon steel flat products from 
Korea. These reviews cover three manufacturers and exporters of the 
subject merchandise. The period of review (''POR'') is August 1, 1998, 
through July 31, 1999.
    We preliminarily determine that sales have been made below normal 
value (``NV''). If these preliminary results are adopted in our final 
results of administrative reviews, we will instruct U.S. Customs to 
assess antidumping duties equal to the difference between export price 
(``EP'') or constructed export price (``CEP'') and NV.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit argument in this proceeding are requested 
to submit with the argument: (1) A statement of the issue; and (2) a 
brief summary of the argument.

EFFECTIVE DATE: September 7, 2000.

FOR FURTHER INFORMATION CONTACT: Marlene Hewitt ((Dongbu Steel Co., 
Ltd. (Dongbu) and Union Steel Manufacturing Co., Ltd. (Union)), Michael 
Panfeld ((Pohang Iron and Steel Co., (POSCO), Pohang Coated Steel Co., 
Ltd. (POCOS), and Pohang Steel Industries Co., Ltd. (PSI)--(the POSCO 
Group)), or James Doyle, Enforcement Group III--Office 9, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Room 7866, 
Washington, D.C. 20230; telephone (202) 482-1385 (Hewitt), -0172 
(Panfeld), or -0159 (Doyle).

SUPPLEMENTARY INFORMATION:

Applicable Statute

    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's regulations are 
references to the provisions codified at 19 CFR Part 351 (April 1999).

Background

    The Department published antidumping duty orders on certain cold-
rolled and corrosion-resistant carbon steel flat products from Korea on 
August 19, 1993 (58 FR 44159). The Department published a notice of 
``Opportunity to Request an Administrative Review'' of the antidumping 
duty orders for the 1998/99 review period on August 11, 1999 (64 FR 
43649). On August 31, 1999, respondent POSCO and Dongbu requested that 
the Department conduct an administrative review of the antidumping duty 
orders on corrosion-resistant and cold-rolled carbon steel flat 
products from Korea. On August 31, 1999, petitioners in the original 
less-than-fair-value (LTFV) investigations (AK Steel Corporation; 
Bethlehem Steel Corporation; Inland Steel Industries, Inc.; LTV Steel 
Company; National Steel Corporation; and U.S. Steel Group A Unit of USX 
Corporation) requested that the Department conduct administrative 
reviews of the antidumping duty orders on cold-rolled and corrosion-
resistant carbon steel flat products from Korea with respect to all 
three of the aforementioned respondents. We initiated these reviews on 
September 24,1999 (64 FR 53318) October 1, 1999.
    Under section 751(a)(3) of the Act the Department may extend the 
deadline for completion of administrative reviews if it determines that 
it is not practicable to complete the review within the statutory time 
limit of 365 days. The Department extended the time limits for the 
preliminary results in these cases. See Certain Cold-Rolled Carbon 
Steel Flat Products and Certain Corrosion-Resistant Carbon Steel Flat 
Products from Korea: Antidumping Duty Administrative Reviews: Extension 
of Time Limit, 65 FR 20135 (April 14, 2000).
    The Department is conducting these administrative reviews in 
accordance with section 751 of the Act.

Scope of the Reviews

    The review of ``certain cold-rolled carbon steel flat products'' 
covers cold-rolled (cold-reduced) carbon steel flat-rolled products, of 
rectangular shape, neither clad, plated nor coated with metal, whether 
or not painted, varnished or coated with plastics or other nonmetallic 
substances, in coils (whether or not in successively superimposed 
layers) and of a width of 0.5 inch or greater, or in straight lengths 
which, if of a thickness less than 4.75 millimeters, are of a width of 
0.5 inch or greater and which measures at least 10 times the thickness 
or if of a thickness of 4.75 millimeters or more are of a width which 
exceeds 150 millimeters and measures at least twice the thickness, as 
currently classifiable in the Harmonized Tariff Schedule (``HTS'') 
under item numbers 7209.15.0000, 7209.16.0030, 7209.16.0060, 
7209.16.0090, 7209.17.0030, 7209.17.0060, 7209.17.0090, 7209.18.1530, 
7209.18.1560, 7209.18.2550, 7209.18.6000, 7209.25.0000, 7209.26.0000, 
7209.27.0000, 7209.28.0000, 7209.90.0000, 7210.70.3000, 7210.90.9000, 
7211.23.1500, 7211.23.2000, 7211.23.3000, 7211.23.4500, 7211.23.6030, 
7211.23.6060, 7211.23.6085, 7211.29.2030, 7211.29.2090, 7211.29.4500, 
7211.29.6030, 7211.29.6080, 7211.90.0000, 7212.40.1000, 7212.40.5000, 
7212.50.0000, 7215.50.0015, 7215.50.0060, 7215.50.0090, 7215.90.5000, 
7217.10.1000, 7217.10.2000, 7217.10.3000, 7217.10.7000, 7217.90.1000, 
7217.90.5030, 7217.90.5060, 7217.90.5090. Included in this review are 
flat-rolled products of non-rectangular cross-section where such cross-
section is achieved subsequent to the rolling process (i.e., products 
which have been ``worked after rolling'')--for example, products which 
have been beveled or rounded at the edges. Excluded from this review is 
certain shadow mask steel, i.e., aluminum-killed, cold-rolled steel 
coil that is open-coil annealed, has a carbon content of less than 
0.002 percent, is of 0.003 to 0.012 inch in thickness, 15 to 30 inches 
in width, and has an ultra flat, isotropic surface.
    The review of ``certain corrosion-resistant carbon steel flat 
products'' covers flat-rolled carbon steel products, of rectangular 
shape, either clad, plated, or coated with corrosion-resistant metals 
such as  zinc, aluminum, or zinc-, aluminum-, nickel-or iron-based 
alloys, whether or not corrugated or painted, varnished or coated with 
plastics or other nonmetallic substances in addition to the metallic 
coating, in coils (whether or not in successively superimposed layers) 
and of a width of 0.5 inch or greater, or in straight lengths which, if 
of a thickness less than 4.75 millimeters, are of a width of 0.5 inch 
or greater and which measures at least 10 times the thickness or if of 
a thickness of 4.75 millimeters or more are of a width which exceeds 
150 millimeters and measures at least twice the thickness, as currently 
classifiable in the HTS under item numbers 7210.30.0030, 7210.30.0060, 
7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000, 
7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000, 
7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 
7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 
7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 
7217.30.1560,

[[Page 54199]]

7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090. Included in 
this review are flat-rolled products of non-rectangular cross-section 
where such cross-section is achieved subsequent to the rolling process 
(i.e., products which have been ``worked after rolling'')--for example, 
products which have been beveled or rounded at the edges. Excluded from 
this review are: Flat-rolled steel products either plated or coated 
with tin, lead, chromium, chromium oxides, both tin and lead (``terne 
plate''), or both chromium and chromium oxides (``tin-free steel''), 
whether or not painted, varnished or coated with plastics or other 
nonmetallic substances in addition to the metallic coating; clad 
products in straight lengths of 0.1875 inch or more in composite 
thickness and of a width which exceeds 150 millimeters and measures at 
least twice the thickness; and certain clad stainless flat-rolled 
products, which are three-layered corrosion-resistant carbon steel 
flat-rolled products less than 4.75 millimeters in composite thickness 
that consist of a carbon steel flat-rolled product clad on both sides 
with stainless steel in a 20%-60%-20% ratio.
    These HTS item numbers are provided for convenience and Customs 
purposes. The written descriptions remain dispositive.
    The POR is August 1, 1998 through July 31, 1999. These reviews 
cover entries associated with sales of certain cold-rolled and 
corrosion-resistant carbon steel flat products by Dongbu, Union, and 
the POSCO Group (see ``Affiliated Parties'' section below).

Verification

    We verified information provided by the POSCO Group with respect to 
sales, including on-site inspection of facilities of the manufacturer, 
the examination of relevant accounting and financial records, and 
selection of original documentation containing relevant information. 
Our verification results are outlined in the sales, and cost 
verification reports. See the August 9, 2000, Sales Verification Report 
(``Sales Report'') from Michael Panfeld and Stephen Shin through Jim 
Doyle to Edward Yang to the File, and the August 14, 2000, Cost 
Verification Report (``Cost Report'') from Theresa L. Caherty to Neal 
M. Halper, respectively.

Facts Available

    Section 776(a) of the Act provides that, if an interested party 
withholds information that has been requested by the Department, fails 
to provide such information in a timely manner or in the form or manner 
requested, significantly impedes a proceeding under the antidumping 
statute, or provides information which cannot be verified, the 
Department shall use, subject to sections 782(d) and (e) of the Act, 
facts otherwise available in reaching the applicable determination. 
Pursuant to section 782(e), the Department shall not decline to 
consider submitted information if all of the following requirements are 
met: (1) The information is submitted by the established deadline; (2) 
the information can be verified; (3) the information is not so 
incomplete that it cannot serve as a reliable basis for reaching the 
applicable determination; (4) the interested party has demonstrated 
that it acted to the best of its ability; and (5) the information can 
be used without undue difficulties.

The POSCO Group

    We have applied partial adverse facts available with regard to two 
home market expense fields reported by the POSCO Group. First, POSCO 
did not report imputed credit expenses on a transaction-specific basis, 
despite having the ability to do so. Additionally, POSCO did not report 
certain rebate expenses on a transaction-specific basis, despite having 
the ability to do so. For both of these expenses, we asked POSCO to 
report the expense on a transaction-specific basis. See for example, 
the Department's October 4, 1999 questionnaire at B-25 and B-29. POSCO 
stated that it was not able to report transaction-specific imputed 
credit costs because it ``maintains an open account system.'' See 
POSCO's December 6, 1999 response at 43 and 68. With respect to 
rebates, POSCO stated that it ``has no means to tie a rebate to a 
specific sale because rebates can relate to numerous transactions.'' 
See ibid at 55. However, at verification, the Department determined 
that POSCO was able to tie specific rebates and could calculate 
transaction-specific imputed credit costs. For a further discussion of 
these issues, see the August 30, 2000, Preliminary Results Analysis 
Memorandum (''Prelim Memo'') from Michael Panfeld through James Doyle 
to the File and the Sales Report at p. 10, 12.
    Section 776(a)(2)(B) of the Act requires the Department to use 
facts available when a party does not provide the Department with 
information by the established deadline or in the form and manner 
requested by the Department. Additionally, Section 776(b) of the Act 
provides that adverse inferences may be used when a party has failed to 
cooperate by not acting to the best of its ability to comply with the 
Department's requests for information. See also Statement of 
Administrative Action accompanying the URAA, H.R. Rep. No. 316, Vol. 1, 
103d Cong., 2d Sess. 870 at 868-870 (1994) (SAA). For these two home 
market expense fields, we have applied an adverse assumption, because 
the POSCO Group did not act to the best of its ability in responding to 
the Department's questionnaire nor did the POSCO Group report the data 
in the manner requested. As a result, the POSCO Group's reported 
imputed credit and certain rebate expenses cannot serve as a reliable 
basis for reaching a preliminary determination (see section 782(e)(3) 
of the Act). We have instead relied on partial facts available for 
those figures for the purpose of calculating a dumping margin to the 
POSCO Group for this preliminary determination. For a detailed 
proprietary discussion of our treatment of these two fields, see 
Preliminary Analysis Memo at page 6 and at Appendix I.

Transactions Reviewed

    Consistent with prior reviews, we excluded reported overrun sales 
in the home market from our sales comparisons because such sales were 
outside the ordinary course of trade.

The POSCO Group

    According to section 351.403(d) of the Department's regulations, 
downstream sales to home market affiliates accounting for less than 
five (5) percent of total sales are normally excluded from the normal 
value calculation. Since the POSCO Group's sales to affiliated 
resellers exceeded the Department's 5 percent threshold, the Department 
has required the POSCO Group to report the home market downstream sales 
of the four affiliated service centers with the largest volume of sales 
of subject merchandise in each case. If the sales to the affiliated 
service centers did not pass the arm's length test, we used the resales 
made by these affiliated service centers. To test whether the POSCO 
Group's sales were made at arm's length, we compared the prices of 
sales to affiliated and unaffiliated customers net of all movement 
charges, direct selling expenses, discounts and packing. Where prices 
to the affiliated parties were on average 99.5 percent or more of the 
price to the unaffiliated party, we determined that sales made to the 
related party were at arm's length. Where no affiliated customer ratio 
could be calculated because identical merchandise was not sold to 
unaffiliated customers, we were unable to determine that these sales 
were made

[[Page 54200]]

at arm's length and, therefore, excluded them from our analysis. See 
Final Determination of Sales at Less Than Fair Value: Certain Cold-
Rolled Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 
(July 9, 1993). Where the exclusion of such sales eliminated all sales 
of the most appropriate comparison product, we made comparisons to the 
next most similar model.

Dongbu

    In determining NV, based on our review of the submissions by 
Dongbu, the Department determined that Dongbu need not report 
``downstream'' sales by affiliated resellers in the home market because 
such sales were less than the 5% threshold.

Affiliated Parties

    For purposes of these reviews, we are treating POSCO, POCOS, and 
PSI as affiliated parties and have ``collapsed'' them, i.e., treated 
them as a single producer of certain cold-rolled carbon steel flat 
products (POSCO and PSI) and certain corrosion-resistant carbon steel 
flat products (POSCO, POCOS, and PSI). We refer to the collapsed 
respondent as the POSCO Group. POSCO, POCOS, and PSI were treated as 
collapsed in a previous segment of these proceedings. See, e.g. 
Preliminary Determinations of Sales at Less Than Fair Value: Certain 
Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant 
Carbon Steel Flat Products from Korea, 61 FR 51882, 51884 (October 4, 
1996). The POSCO Group has submitted no new information which would 
cause us to reconsider that determination.
    As we have determined in past administrative reviews, we are 
treating Union and Dongkuk Industries Co., Ltd. (``DKI'') as a single 
producer of certain cold-rolled carbon steel flat products. See Certain 
Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From 
Korea: Preliminary Results of Antidumping Duty Administrative Reviews, 
60 FR 65284 (December 19, 1995). Additionally, we are treating Union 
and DKI as a single producer of certain corrosion-resistant carbon 
steel flat products. See the August 31, 1999 Collapsing Memorandum from 
Marlene Hewitt through James Doyle to Edward Yang. We have found no 
indication on the record that the underlining facts have substantively 
changed.

Dongbu and Union

    On March 24, 2000, Petitioners alleged that Dongbu and Union are 
affiliated with POSCO based on Dongbu and Union's dependence on POSCO 
as their primary supplier of hot-rolled coil (HRC), the primary input 
in the production of subject merchandise. Petitioners indicated that 
these purchases are substantial and the Department should determine 
whether, under its recently articulated ``greater-than-fifty-percent-
dependence-for-five-years'' test, Dongbu and Union are affiliated with 
POSCO. See Mitsubishi Heavy Industries v. United States, Slip Op. 99-46 
(Ct. Int'l Trade May 26, 1999). Petitioners propose that POSCO is in a 
position to exercise restraint or direction over the purchasers, Dongbu 
and Union, because Dongbu and Union are dependent upon POSCO to 
continue their production of hot-rolled coil.
    We preliminarily determine that the record evidence does not show a 
close supplier relationship between POSCO, Dongbu and Union. 
Specifically, the record evidence shows that both Union and Dongbu 
source a significant supply of hot-rolled coil from other companies. 
Thus, the Department finds no affiliation between Union, Dongbu and 
POSCO. This is consistent with a previous review in which petitioners 
also alleged affiliation based on a close supplier relationship. In 
that case we determined that there was no affiliation. See e.g. Certain 
Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from 
Korea: Final Results of Antidumping Duty Administrative Reviews, 62 FR 
18404, 18412 (April 15, 1997).

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
cold-rolled carbon steel flat products produced by the respondents, 
covered by the descriptions in the ``Scope of the Reviews'' section of 
this notice, supra, and sold in the home market during the POR, to be 
foreign like products for the purpose of determining appropriate 
product comparisons to U.S. sales of cold-rolled carbon steel flat 
products. Likewise, we considered all corrosion-resistant carbon steel 
flat products produced by the respondents and sold in the home market 
during the POR to be foreign like products for the purpose of 
determining appropriate product comparisons to corrosion-resistant 
carbon steel flat products sold in the United States.
    For certain product characteristics (i.e., quality and surface 
finish) Dongbu reported an additional sub-code. The Department has 
included the additional codes that Dongbu reported in the 
aforementioned category in the Department's product matching 
methodology. See the March 6, 2000 Final Results Analysis Memorandum 
from Juanita Chen through James Doyle to the File.
    Where there were no sales of identical merchandise in the home 
market to compare to U.S. sales, we compared U.S. sales to the next 
most similar foreign like product on the basis of the characteristics 
listed in Appendix V of the Department's antidumping questionnaire. In 
making the product comparisons, we matched foreign like products based 
on the physical characteristics reported by the respondent. Where sales 
were made in the home market on a different weight basis from the U.S. 
market (theoretical versus actual weight), we converted all quantities 
to the same weight basis, using the conversion factors supplied by the 
respondents, before making our fair-value comparisons.

Fair-Value Comparisons

    To determine whether sales of certain cold-rolled and corrosion-
resistant carbon steel flat products by the respondents to the United 
States were made at less than normal value, we compared the export 
price (``EP'') or constructed export price (``CEP'') to the normal 
value (``NV''), as described in the ``Export Price/Constructed Export 
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.

Particular Market Situation in the Home Market

    On November 12, 1999, the petitioners alleged that the Korean home 
market should not be used to determine NV because there were economic 
distortions constituting a ``particular market situation'' in Korea 
during the period of review. Petitioners allege that economic 
distortions make it impossible to obtain reliable measures of normal 
value in Korea, or to make proper comparisons of normal value with U.S. 
sales. This economic distortion, according to petitioners, is: The 
Government of Korea (``GOK'') controls home market prices of cold-
rolled and corrosion-resistant steel. Petitioners propose that the 
Department instead rely upon third country sales as the basis for 
normal value.
    We preliminarily determine that the information submitted by 
petitioners and the questionnaire responses by the respondents do not 
show that there is a particular market situation in Korea that warrants 
disregarding the home market in this case. Although updated, 
petitioners provided the same type of evidence we previously considered 
to

[[Page 54201]]

be insufficient for determining a particular market situation exists 
(e.g. price lists, market reports, and news articles). Furthermore, the 
direct analysis and narrative provided by the petitioners either 
address POSCO as a whole or cut-to-length carbon steel plate (which was 
the proceeding for which they filed the original direct analysis) and 
not cold-rolled or corrosion-resistant carbon steel flat products from 
Korea specifically. This is consistent with previous reviews in which 
petitioners also alleged a particular market situation in Korea's home 
market based on alleged government control of pricing. In those cases, 
we determined that the Korean home market was viable and appropriate as 
a basis for NV. See e.g., Certain Cold-Rolled and Corrosion-Resistant 
Carbon Steel Flat Products from Korea: Preliminary Results of 
Antidumping Duty Administrative Reviews, 62 FR 47422, 47425 (September 
9, 1997). This issue was not discussed in the final results of the 
review in question.

Request for Revocation

The POSCO Group

    On August 31, 1999, POSCO submitted a request, in accordance with 
19 CFR 351.222(e), that the Department revoke the order covering cold-
rolled carbon steel flat products from Korea with respect to its sales 
of this merchandise. In accordance with 19 CFR 351.222(e), these 
requests were accompanied by certifications from POSCO that it had not 
sold the subject merchandise at less than NV for a three-year period 
and in commercial quantities, including this review period, and would 
not do so in the future. POSCO also agreed to immediate reinstatement 
in the relevant antidumping order, as long as any firm is subject to 
the order, if the Department concludes under 19 CFR 351.216 that, 
subsequent to revocation, POSCO sold the subject merchandise at less 
than NV.
    The Department conducted verifications of POSCO's responses for 
this period of review. In the two prior reviews of this order we 
determined that POSCO sold cold-rolled carbon steel flat products from 
Korea at not less than NV or at de minimis margins. We have 
preliminarily determined that POSCO sold cold-rolled carbon steel flat 
products at not less than NV during the instant review period.
    However, in determining whether a requesting party is entitled to a 
revocation inquiry, the Department must be able to determine that the 
company has continued to participate meaningfully in the U.S. market 
during each of the three years at issue. See Pure Magnesium from 
Canada, 63 FR 26147 (May 12, 1998). This practice has been codified by 
Sec. 351.222(e) where a party requesting a revocation review is 
required to certify that they have sold the subject merchandise in 
commercial quantities. See also Sec. 351.222(d)(1) of the Department's 
regulations, which state that, ``before revoking an order or 
terminating a suspended investigation, the Secretary must be satisfied 
that, during each of the three (or five) years, there were exports to 
the United States in commercial quantities of the subject merchandise 
to which a revocation or termination will apply.'' (emphasis added); 
See also, the preamble of the Department's latest revision of the 
revocation regulation stating: ``The threshold requirement for 
revocation continues to be that respondent not sell at less than normal 
value for at least three consecutive years and that, during those 
years, respondent exported subject merchandise to the United States in 
commercial quantities'' (emphasis added) Amended Regulation Concerning 
the Revocation of Antidumping and Countervailing Duty Orders, 64 FR 
51236, 51237 (September 22, 1999).
    For purposes of revocation, the Department must be able to 
determine that past margins reflect a company's normal commercial 
activity. Sales during the POR which, in the aggregate, are an 
abnormally small quantity do not provide a reasonable basis for 
determining that the discipline of the order is no longer necessary to 
offset dumping. As the Department has previously stated, the commercial 
quantities requirement is a threshold matter. See e.g., Pure Magnesium 
from Canada, 64 FR 50489, 50490 (September 17, 1999). Thus, a party 
must have meaningfully participated in the marketplace in order to 
substantiate the need for further inquiry regarding whether continued 
imposition of the order is warranted.
    Based on the current record, we find that POSCO did not sell 
merchandise in the United States in commercial quantities during the 
fourth administrative review (one of the three consecutive reviews 
cited by POSCO to support its request for revocation). During the POR 
covered by that review (August 1996 though July 1997), POSCO appeared 
to have made only one sale in the United States. Moreover, the total 
tonnage of this sale was small. See Prelim Memo August 30, 2000 at 
Appendix II. By contrast, during the period covered by the antidumping 
investigation, which was only six months long (January 1992 through 
June 1992), POSCO made several thousand sales whose total quantity is 
400 times greater than the quantity for the fourth administrative. In 
other words, POSCO's sales for the entire year covered by the fourth 
review period were only 0.27% of its sales volume during the six-months 
covered by the investigation. Similarly, during the current POR, POSCO 
sold approximately 400 times more subject merchandise in the United 
States than during the fourth administrative review.
    Consequently, although POSCO received a de minimis margin during 
the fourth administrative review, this margin was not based on 
commercial quantities within the meaning of the revocation regulation. 
The number of sales and total sales volume is so small, both in 
absolute terms, and in comparison with the period of investigation and 
other review periods (see Analysis memo), that it does not provide any 
meaningful information of POSCO's normal commercial experience. 
Therefore, we find that POSCO did not meaningfully participate in the 
marketplace for purposes of qualifying for a revocation inquiry and 
thus, because it has not sold the subject merchandise for three years 
in commercial quantities within the meaning of 351.222(e) does not 
qualify for a revocation inquiry.

Date of Sale

    It is the Department's current practice normally to use the invoice 
date as the date of sale, although we may use a date other than the 
invoice date if we are satisfied that a different date better reflects 
the date on which the exporter or producer establishes the material 
terms of sale. See 19 CFR 351.401(i). We have preliminarily determined 
that there is no reason to depart from the Department's treatment of 
date of sale for these respondents. Consistent with prior reviews, for 
home market sales, we used the reported date of the invoice from the 
Korean manufacturer; for U.S. sales we have followed the Department's 
methodology from the prior reviews, and have based date of sale on 
invoice date from the U.S. affiliate, unless that date was subsequent 
to the date of shipment from Korea, in which case that shipment date is 
the date of sale. See Certain Cold-Rolled and Corrosion-Resistant 
Carbon Steel Flat Products from Korea: Final Results of Antidumping 
Duty Administrative Reviews, 65 FR 13359, 13362 (March 13, 2000) and 
accompanying Decision Memo at comment 6.

[[Page 54202]]

Export Price/Constructed Export Price

    We calculated the price of U.S. sales based on CEP, in accordance 
with section 772(b) of the Act, except for U.S. sales made by the POSCO 
Group to one customer, which we have classified as ``export price'' 
sales. The Act defines the term ``constructed export price'' as ``the 
price at which the subject merchandise is first sold (or agreed to be 
sold) in the United States before or after the date of importation by 
or for the account of the producer or exporter of such merchandise or 
by a seller affiliated with the producer or exporter, to a purchaser 
not affiliated with the producer or exporter, as adjusted under 
subsections (c) and (d).'' In contrast, ``export price'' is defined as 
``the price at which the subject merchandise is first sold (or agreed 
to be sold) before the date of importation by the producer or exporter 
of the subject merchandise outside of the United States.'' Sections 
772(a)-(b) of the Act (emphasis added).
    In determining whether to classify sales as either EP or CEP, the 
Department must examine the totality of the circumstances surrounding 
the U.S. sales process, and assess whether the reviewed sales were made 
``in the United States'' for purposes of section 772(b) of the Act. In 
the instant case, the record establishes that Dongbu, the POSCO Group, 
and Union's affiliates in the United States (1) took title to the 
subject merchandise; and (2) invoiced and received payment from the 
unaffiliated U.S. customers. Thus, as the record stands, because these 
functions are more than ancillary the Department has determined that 
these sales should be classified as CEP transactions.
    For Dongbu, Union, and the POSCO Group, we calculated CEP based on 
packed prices to unaffiliated customers in the United States. Where 
appropriate, we made deductions from the starting price for foreign 
inland freight, foreign inland insurance, foreign brokerage and 
handling, international freight, marine insurance, U.S. inland freight, 
U.S. brokerage and handling, U.S. Customs duties, commissions, credit 
expenses, warranty expenses, inventory carrying costs incurred in the 
United States, and other indirect selling expenses. Pursuant to section 
772(d)(3) we made an adjustment for CEP profit. Where appropriate, we 
added interest revenue to the gross unit price.
    Consistent with the Department's normal practice, we added the 
reported duty drawback to the gross unit price. We did so in accordance 
with the Department's long-standing test, which requires: (1) That the 
import duty and rebate be directly linked to, and dependent upon, one 
another; and (2) that the company claiming the adjustment demonstrate 
that there were sufficient imports of imported raw materials to account 
for the duty drawback received on the exports of the manufactured 
product.
    For POSCO, we calculated EP for one customer located outside the 
United States based on packed prices to unaffiliated purchasers in the 
United States. We made deductions for foreign inland freight, brokerage 
and handling, ocean freight, marine insurance, U.S. inland freight 
(where applicable), and U.S. Customs duties in accordance with section 
772(c)(2)(A) of the Act. Additionally, we added to the U.S. price an 
amount for duty drawback. Pursuant to section 772(c)(1)(B) of the Act.

Normal Value

    Based on a comparison of the aggregate quantity of home market and 
U.S. sales, we determined that the quantity of the foreign like product 
sold in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States, pursuant to section 773(a) of the Act. Therefore, in accordance 
with section 773(a)(1)(B)(i) of the Act, we based NV on the price at 
which the foreign like product was first sold for consumption in the 
home market, in the usual commercial quantities and in the ordinary 
course of trade.
    Where appropriate, we deducted rebates, discounts, inland freight 
(offset, where applicable, by freight revenue), inland insurance, and 
packing. We made adjustments to NV, where appropriate, for differences 
in credit expenses (offset, where applicable, by interest income), 
warranty expenses, post-sale warehousing, and differences in weight 
basis. We also made adjustments, where appropriate, for home market 
indirect selling expenses to offset U.S. commissions in CEP 
comparisons.
    We also increased NV by U.S. packing costs in accordance with 
section 773(a)(6)(A) of the Act. We made adjustments to NV for 
differences in cost attributable to differences in physical 
characteristics of the merchandise, pursuant to section 
773(a)(6)(C)(ii) of the Act. In accordance with the Department's 
practice, where all contemporaneous matches to a U.S sale observation 
resulted in difference-in-merchandise adjustments exceeding 20 percent 
of the cost of manufacturing (``COM'') of the U.S. product, we based NV 
on constructed value (``CV'').

Differences in Levels of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act and the 
Statement of Administrative Action (``SAA'') at 829-831, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade as the U.S. sales (either EP or CEP). When the 
Department is unable to find sales in the comparison market at the same 
level of trade as the U.S. sale(s), the Department may compare sales in 
the U.S. and foreign markets at different levels of trade, and adjust 
NV if appropriate. The NV level of trade is that of the starting-price 
sales in the home market. As the Department explained in Gray Portland 
Cement and Clinker From Mexico: Final Results of Antidumping Duty 
Administrative Review, 62 FR 17148, 17156, April 9, 1997, for both EP 
and CEP, the relevant transaction for the level-of-trade analysis is 
the sale from the exporter to the importer.
    To determine whether comparison market NV sales are at a different 
Level of Trade (LOT) than EP or CEP, we examine stages in the marketing 
process and selling functions along the chain of distribution between 
the producer and 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)(&)(A) of the Act.
    When NV is established at a level of trade which constitutes a more 
advanced stage of distribution than the level of trade of the CEP, 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, November 19, 1997, and Granular 
Polytetrafluoroethylene Resin From Italy; Preliminary Results of 
Antidumping Duty Administrative Review, 63 FR 25826, 25827, May 11, 
1998.

A. Dongbu

    In its questionnaire responses, Dongbu states that there were no 
significant differences in its selling activities by customer 
categories within or between each market. Therefore, Dongbu states that 
it is not distinguishing between LOT for these reviews and that it is 
not claiming a

[[Page 54203]]

level of trade adjustment nor claiming a CEP offset. Our analysis of 
the questionnaire responses detailing the selling functions provided by 
Dongbu in the United States and home market leads us to conclude that 
sales within or between each market are not made at different levels of 
trade. We also note that the selling functions described by Dongbu in 
these reviews are consistent with the selling functions described for 
the previous reviews of these orders, in which we determined no 
distinct levels of trade. See Notice of Preliminary Results: Certain 
Cold-Rolled Carbon Steel Flat Products and Certain Corrosion-Resistant 
Carbon Steel Flat Products from Korea, 64 FR 48767, 48772 (September 9, 
1999). Accordingly, we preliminarily find that all sales in the home 
market and the U.S. market were made at the same level of trade. 
Therefore, all price comparisons are at the same level of trade and any 
adjustment pursuant to section 773(a)(7) of the Act is unwarranted.

B. Union

    Union argues that, with the Department's classification of Union's 
U.S. sales as CEP sales, and its view of Dongkuk International Inc.'s 
(``DKA's'') role in the sales process as more than ancillary for the 
U.S. sales, it is incumbent on the Department to recognize that U.S. 
sales and home market sales are at different levels of trade. 
Furthermore, Union notes that because the difference in the level of 
trade cannot be quantified, Union is eligible for a CEP offset. Union 
states that home market sales are at a different level of trade from 
CEP sales, a level representing a more advanced stage of distribution. 
Union asserts that the Department's practice in a CEP situation is to 
compare the level of trade of the U.S. sale after the deduction of the 
selling expenses with the level of trade of the home market product 
with no deduction; therefore, the indirect selling expenses incurred 
for the selling functions associated with the U.S. sale, i.e., the 
contact, and other ancillary functions (in particular the arranging of 
credit terms) have been deducted from the U.S. sales price, but remain 
in the home market price.
    In identifying the level of trade for home market sales, we 
consider the selling functions reflected in the starting price of home 
market sales before any adjustments, pursuant to section 
773(a)(1)(B)(i) of the Act. Union's description of selling functions in 
the home market makes no distinction with regard to customer categories 
or channels of trade, and there is no evidence on the record indicating 
that such functions vary within the home market. Thus, we conclude that 
all of Union's home market sales are at a single level of trade. In 
identifying the level of trade for CEP sales, we considered only the 
selling activities reflected in the U.S. price after deduction of 
expenses and profit under section 772(d) of the Act. Based upon our 
review of the activities, we also conclude that all of the U.S. sales 
are at a single level of trade.
    We find that Union performed similar functions for its U.S. sales 
to DKA as it did for its sales to home market customers. Although the 
expenses related to DKA's activities have been deducted from CEP, the 
expenses incurred by Union in selling to DKA are still reflected in 
CEP. Because we find there are no substantive differences in selling 
functions provided by Union for its home market customers as compared 
to DKA, there is no difference in level of trade and, therefore, no 
basis for granting a level of trade adjustment or a CEP offset. This is 
consistent with our treatment of level of trade for Union in prior 
administrative reviews. See Notice of Preliminary Results: Certain 
Cold-Rolled Carbon Steel Flat Products and Certain Corrosion-Resistant 
Carbon Steel Flat Products from Korea, 64 FR 48767, 48772 (September 9, 
1999).

C. The POSCO Group

    In its questionnaire responses, the POSCO Group stated that its 
home-market sales by affiliated service centers were at a different 
level of trade than its other home-market sales and its U.S. sales 
(regardless of the customer category). The respondent indicated that 
the service centers provide certain selling functions to all of their 
customers, while POSCO, POCOS and PSI provide a different set of 
selling functions to all of their customers (including the service 
centers).
    In order to confirm the presence of separate levels of trade within 
or between the U.S. and home markets, we examined the respondent's 
questionnaire responses for indications of substantive differences in 
selling and marketing functions. See the preamble to section 351.412 of 
the Department's new regulations (62 FR 27296, at 27371 May 19, 1997).
    In its November 3, 1999 and its January 28, 2000 section A 
responses, the POSCO Group claimed that there are two channels of 
distribution in the home market: one channel of distribution consists 
of sales made by POSCO, POCOS, and PSI, while they claim that a second 
channel of distribution consists of the sales made by the affiliated 
service centers. Our analysis of the questionnaire responses and review 
of the sales functions at the service center leads us to conclude that 
the cumulative functions of the POSCO Group and the service centers for 
sales made by the service centers are essentially the same as the 
cumulative functions of the POSCO Group for sales made by the POSCO 
Group (e.g., the only substantive additional function that the 
affiliated service centers perform is the slitting and shearing of 
coils, which is not a sales function, but rather a manufacturing 
operation). Thus, we conclude that all sales in the home market are at 
a single level of trade. Similarly, although the POSCO group has both 
CEP and EP sales in the U.S. market, the selling functions performed on 
sales to affiliated and unaffiliated U.S. customers are the same. Thus, 
we conclude that all U.S. sales are at a single level of trade. 
Finally, the Department also finds that POSCO, POCOS, and PSI all 
provide comparable services to their customers in each market. Thus, 
our review of the record evidence leads us to conclude that sales 
within or between each market are not made at different levels of 
trade. Accordingly, we find that all sales in the home market and the 
U.S. market were made at the same level of trade. Therefore, all price 
comparisons are at the same level of trade and an adjustment pursuant 
to section 773(a)(7) is unwarranted.

Cost of Production/Constructed Value

    At the time the questionnaires were issued in these reviews, the 
fifth annual administrative reviews were the most recently completed 
segments of these proceedings in which each of the three respondents 
had participated. In accordance with section 773(b)(2)(A)(ii) of the 
Act, and consistent with the Department's practice, because we 
disregarded certain below-cost sales by each of the three respondents 
in the fifth reviews, we found reasonable grounds in these reviews to 
believe or suspect that those respondents made sales in the home market 
at prices below the cost of producing the merchandise. We therefore 
initiated cost investigations with regard to Dongbu, Union, and the 
POSCO Group, in order to determine whether the respondents made home 
market sales during the POR at prices below their cost of production 
(COP) within the meaning of section 773(b)(2)(A)(ii) of the Act.
    Before making concordance matches, we conducted the COP analysis 
described below.

[[Page 54204]]

A. Calculation of COP

    We calculated the COP for Dongbu, Union, and the POSCO Group based 
on the sum of each respondent's cost of materials and fabrication for 
the foreign like product, plus amounts for home-market selling 
expenses, general, and administrative expenses (``SG&A''), and packing 
costs in accordance with section 773(b)(3) of the Act.
    We relied on Dongbu, Union, and POSCO's information as submitted 
with the exception of POSCO, where we adjusted the cost of 
manufacturing to account for product-specific variances which POSCO 
calculated on an overall basis.

B. Test of Home-Market Prices

    We used the respondents' weighted-average COP, as adjusted (see 
above), for the period July 1998 to June 1999. We compared the 
weighted-average COP figures to home-market sales of the foreign like 
product as required under section 773(b) of the Act. In determining 
whether to disregard home-market sales made at prices below the COP, as 
required under section 773(b)(1)2(A)&(B)of the Act, we examined whether 
(1) within an extended period of time, such sales were made in 
substantial quantities, and (2) such sales were made at prices which 
permitted the recovery of all costs within a reasonable period of time. 
On a product-specific basis, we compared the COP to the home-market 
prices (not including VAT), less any applicable movement charges, 
discounts, and rebates.

C. Results of 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 POR were at prices less than the 
COP, we found that sales of that model were made in ``substantial 
quantities'' within a reasonable period of time, in accordance with 
sections 773(b)(2)(B) and (C) of the Act, and were not 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. In such cases, we 
disregarded the below-cost sales in accordance with section 773(b)(1) 
of the Act.

D. Calculation of CV

    In accordance with section 773(e) of the Act, we calculated 
constructed value (CV) for Dongbu, Union, and the POSCO Group based on 
the sum of respondents' cost of materials, fabrication, SG&A, including 
interest expenses, U.S. packing costs, and profit. In accordance with 
section 773(e)(2)(A) of the Act, we based SG&A and profit on the actual 
amounts incurred and 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 foreign country. For selling expenses, 
we used the weighted-average home-market selling expenses. As noted in 
the ``Calculation of COP'' section of this notice, we made adjustments 
to the reported COMs of the POSCO Group. We also made adjustments, 
where appropriate, for home-market indirect selling expenses to offset 
U.S. commissions in CEP comparisons.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions based on the exchange rates in effect on the dates of the 
U.S. sales as published by the Federal Reserve Bank of New York. 
Section 773A(a) of the Act directs the Department to use a daily 
exchange rate in effect on the date of sale of subject merchandise 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, e.g., Certain Stainless Steel Wire Rods from France: 
Preliminary Results of Antidumping Duty Administrative Review, 61 FR 
8915, 8918 (March 6, 1996) and Policy Bulletin 96-1: Currency 
Conversions, 61 FR 9434, (March 8, 1996). The benchmark is defined as 
the rolling average of rates for the past 40 business days. When we 
determined a fluctuation existed, we substituted the benchmark for the 
daily rate.

Preliminary Results of the Reviews

    As a result of these reviews, we preliminarily determine that the 
following weighted-average dumping margins exist:

------------------------------------------------------------------------
                                                               Weighted-
               Producer/Manufacturer/ Exporter                  average
                                                                 margin
------------------------------------------------------------------------
             Certain Cold-Rolled Carbon Steel Flat Products
------------------------------------------------------------------------
Dongbu.......................................................       1.84
the POSCO Group..............................................       0.05
Union........................................................       6.27
         Certain Corrosion-Resistant Carbon Steel Flat Products
========================================================================
Dongbu..................................................................
 
------------------------------------------------------------------------

Pursuant to 19 CFR 351.224(b), the Department will disclose to parties 
to the proceeding any calculations performed in connection with these 
preliminary results within five days after the publication of this 
notice. Pursuant to 19 CFR 351.309, interested parties may submit 
written comments in response to these preliminary results. Case briefs 
must be submitted within 30 days after the date of publication of this 
notice, and rebuttal briefs, limited to arguments raised in case 
briefs, must be submitted no later than five days after the time limit 
for filing case briefs. Parties who submit argument in this proceeding 
are requested to submit with the argument: (1) a statement of the 
issue, and (2) a brief summary of the argument. Case and rebuttal 
briefs must be served on interested parties in accordance with 19 CFR 
351.303(f). Also, pursuant to 19 CFR 351.310, within 30 days of the 
date of publication of this notice, interested parties may request a 
public hearing on arguments to be raised in the case and rebuttal 
briefs. Unless the Secretary specifies otherwise, the hearing, if 
requested, will be held two days after the date for submission of 
rebuttal briefs, that is, thirty-seven days after the date of 
publication of these preliminary results. The Department will publish 
the final results of this administrative review, including the results 
of its analysis of issues raised in any case or rebuttal brief or at a 
hearing not later than 120 days after the date of publication of these 
preliminary results.
    Upon issuance of the final results of this review, the Department 
shall determine, and the U.S. Customs Service shall assess, antidumping 
duties on all appropriate entries. Exporter/importer-specific 
assessment rates shall be calculated in accordance with 19 CFR 
351.212(b). This is done by dividing the total dumping margins for the 
reviewed sales by the total entered value of those reviewed sales for 
each importer. The U.S. Customs Service shall be directed, at the 
issuance of the final results of this review, to assess the resulting 
percentage margin against the entered customs values for the subject 
merchandise on each of that importer's

[[Page 54205]]

entries under the relevant order during the review period.

Cash Deposit

    The following cash deposit requirements will be effective upon 
publication of the final results of this administrative review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(1) of the Act: (1) the cash deposit rate 
for each respondent will be the rate established in the final results 
of these administrative reviews (except that no deposit will be 
required for firms with zero or de minimis margins, i.e., margins lower 
than 0.5 percent); (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 period; (3) if 
the exporter is not a firm covered in these reviews, a prior review, or 
the original LTFV investigations, but the manufacturer is, the cash 
deposit rate will be the rate established for the most recent period 
for the manufacturer of the merchandise; and (4) if neither the 
exporter nor the manufacturer is a firm covered in these or any prior 
reviews, the cash deposit rate will be 14.44 percent (for certain cold-
rolled carbon steel flat products) and 17.70 percent (for certain 
corrosion-resistant carbon steel flat products), the ``all others'' 
rate established in the LTFV investigations See Final Determination: 
Antidumping Duty Orders on Certain Cold-Rolled Carbon Steel Flat 
Products and Certain Corrosion-Resistant Carbon Steel Flat Products 
From Korea 58 FR 44159, August 19, 1993. These deposit requirements, 
when imposed, shall remain in effect until publication of the final 
results of the next administrative reviews.
    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.
    These administrative reviews and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: August 30, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-22992 Filed 9-6-00; 8:45 am]
BILLING CODE 3510-DS-P