[Federal Register Volume 66, Number 6 (Tuesday, January 9, 2001)]
[Notices]
[Pages 1642-1644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-603]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-839]


Notice of Initiation and Preliminary Results of Changed 
Circumstances Antidumping Duty Review: Certain Polyester Staple Fiber 
From the Republic of Korea

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: Based on the submissions of the petitioners, E.I. Dupont de 
Nemours and Co., Arteva Specialities S.a.r.l, d/b/a KoSa, Wellman Inc. 
and Intercontinental Polymers, Inc., and Samyang Corporation and the 
Huvis Corporation, Korean polyester staple fiber producers, we are 
initiating a changed circumstances review to examine the recent 
formation of the Huvis Corporation through a joint venture merger of 
Samyang Corporation and SK Chemicals Co., Ltd. Pursuant to this review, 
the Department of Commerce preliminarily determines that the Huvis 
Corporation is not the successor-in-interest to either of the pre-
merger companies, and is covered by the antidumping duty order on 
certain polyester staple fiber from Korea. The Department of Commerce 
is directing that liquidation of the Huvis Corporation's entries of 
subject merchandise be suspended retroactive to November 1, 2000, the 
date of the joint venture merger of Samyang Corporation and SK 
Chemicals Co. Ltd.

EFFECTIVE DATE: January 9, 2001.

FOR FURTHER INFORMATION CONTACT: Sally Hastings or Craig Matney, at 
(202) 482-3464 or (202) 482-1778 respectively; AD/CVD Enforcement Group 
I, Office 1, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street & Constitution Avenue, NW, 
Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

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

Background

    On May 25, 2000, the Department of Commerce (the Department) issued 
an antidumping duty order on certain polyester staple fiber (PSF) from 
Republic of Korea. See Notice of Amended Final Determination of Sales 
at Less Than Fair Value and Antidumping Duty Order: Certain Polyester 
Staple Fiber from Republic of Korea, 65 FR 33807 (May 25, 2000). The 
order excluded merchandise produced by Samyang Corporation (Samyang) 
which had been found to be dumping at a de minimis level in the less-
than-fair-value (LTFV) investigation. SK Chemicals Co., Ltd. (SK 
Chemicals) was not examined in the LTFV investigation and its entries 
of subject merchandise are currently being suspended at the ``all 
others'' cash deposit rate, 11.35 percent.
    On September 25 and November 1, 2000, E.I. Dupont de Nemours and 
Co., Arteva Specialities S.a.r.l, d/b/a KoSa, Wellman Inc. and 
Intercontinental Polymers, Inc., (the petitioners), requested that the 
Department forward new antidumping duty deposit instructions to Customs 
informing that agency that Samyang and SK Chemicals no longer produce 
subject merchandise and directing that entries of subject merchandise 
produced or exported by the Huvis Corporation (Huvis) be subject to the 
``all others'' rate. In addition, the petitioners argued that the 
Department may not conduct a changed circumstances review, claiming 
that Huvis is a new company and not a ``successor'' to either SK 
Chemicals or Samyang, and that ``good cause'' does not exist to conduct 
a changed circumstances review.
    On November 20, 2000, Samyang and Huvis informed the Department 
that Samyang and SK Chemicals established Huvis as a 50-50 joint 
venture, effective November 1, 2000, and requested that the Department 
conduct a changed circumstances review. Samyang and Huvis argued that 
Huvis is the successor-in-interest to Samyang and, therefore, entitled 
to exclusion from the antidumping order. In the alternative, they asked 
that the Department find Huvis a joint successor to Samyang and SK 
Chemicals and to calculate a weighted-average cash deposit rate for 
Huvis.

[[Page 1643]]

Scope of the Review

    The product covered by this order 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 these orders 
may be coated, usually with a silicon or other finish, or not coated. 
PSF 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 these orders. Also 
specifically excluded from these orders 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). In addition, low-melt PSF is excluded 
from these orders. Low-melt PSF is defined as a bi-component fiber with 
an outer sheath that melts at a significantly lower temperature than 
its inner core.
    The merchandise subject to this order 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 this order is dispositive.

Initiation of Changed Circumstances Antidumping Review

    It is undisputed that Samyang and SK Chemicals have merged their 
operations for the production of the subject merchandise. Accordingly, 
pursuant to section 351.216(c) of the Department's regulations, we have 
determined that good cause exists to initiate this changed 
circumstances review for purposes of determining whether the merged 
entity, Huvis, is the successor-in-interest to either of the previous 
entities, neither, or both. Thus, in accordance with section 751(b)(1) 
of the Act and section 351.216 of the Department's regulations, the 
Department is initiating a changed circumstances review to determine 
whether Huvis is the successor-in-interest to Samyang or SK Chemicals, 
and, based on that determination, whether PSF produced by the entity 
known as Huvis, is covered by the antidumping duty order on PSF from 
Korea.

Preliminary Results of Changed Circumstances Antidumping Review

    Section 351.221(c)(3)(ii) of the Department's regulations provides 
that the preliminary results of a changed circumstances review may be 
issued concurrently with the initiation of the review if the Department 
determines that expedited action is warranted. In this instance, 
because Samyang is excluded from the order, an expedited action is 
warranted to determine whether merchandise produced by the joint 
venture company Huvis should be included in the order. As explained 
below, the Department preliminarily finds that Huvis, formed by a 50-50 
joint venture of Samyang and SK Chemicals, is not a successor-in-
interest to either Samyang or SK Chemicals, or to Samyang and SK 
Chemicals jointly. As such, the Department is directing the suspension 
of liquidation of Huvis' entries of the subject merchandise at the 
``all others'' rate.
    In determining successor-in-interest questions in past cases, the 
Department typically has examined several factors including, but not 
limited to, changes in: (1) Management; (2) production facilities; (3) 
supplier relationships; and (4) customer base. See, e.g., Brass Sheet 
and Strip from Canada: Final Results of Antidumping Duty Administrative 
Review, 57 FR 20460 (May 13, 1992). Such determinations are made based 
on consideration of the totality of the circumstances. If the evidence 
demonstrates that, with respect to the production and sale of the 
subject merchandise, the new company operates as the same business 
entity as the former company, the Department will accord the new 
company the same antidumping and countervailing duty treatment as its 
predecessor.
    In this case, the evidence on the record indicates that Huvis is 
substantially different from the pre-merger Samyang and SK Chemicals. 
While Huvis claims that there have been no significant changes in the 
operations of the production facilities and there has not been a 
significant crossover of personnel at the production facilities since 
the merger, the overall Huvis management and organizational structure 
reflects the new, 50-50, equal nature of the joint venture between 
Samyang and SK Chemicals. The president of Huvis is a former employee 
of SK Chemicals, while a former Samyang official is Huvis' vice-
president. The heads of Huvis' eight managerial departments are equally 
divided among SK Chemicals and Samyang personnel. Concerning Huvis' 
statements that the Chunju factory continues to produce merchandise 
under the Samyang brand name while the Ulsan factory continues to 
produce merchandise under the SK Chemicals brand name, the Department 
does not conduct its dumping analyses with respect to brands, but 
rather on a company-specific basis.
    With respect to supplier relationships and customer bases, Huvis 
claims that the production operations of the pre-merger entities have 
not been integrated and that each of the production facilities has 
maintained its supplier relationships and customer bases. Despite 
Huvis' claim, however, Samyang and SK Chemical's PSF production 
facilities are now integrated by virtue of their operations as part of 
the Huvis Corporation. While the post-merger operations of the PSF 
production facilities may resemble the pre-merger Samyang and SK 
Chemical factories respectively, the management of each of the 
production facilities is now answerable to the management of Huvis.
    The evidence on the record thus far indicates that Samyang and SK 
Chemicals entered into a joint venture as equal partners to form a new 
company, Huvis. By its nature, this joint venture is sufficiently 
distinct from each of the pre-merger entities such that it is not a 
successor-in-interest to either Samyang or SK Chemicals. Concerning 
Huvis' assertion that the Department must determine whether Huvis is a 
successor-in-interest to Samyang and SK Chemicals jointly, even if it 
were possible to conclude that an entity could be a successor to two 
entities jointly, given the recent occurrence of the merger, there is 
insufficient evidence concerning the post-merger operations of Huvis to 
make such a determination. Therefore, the Department preliminarily 
finds that the entity currently doing business as Huvis is covered by 
the antidumping order on polyester staple fiber from the Republic of 
Korea. We will request additional information from Huvis in the context 
of this changed circumstances review before making a final 
determination.
    Accordingly, the Department will instruct the Customs Service to 
suspend liquidation of all entries of PSF from the Republic of Korea 
produced and exported by Huvis that are entered, or withdrawn from 
warehouse, for consumption, effective retroactive to November 1, 2000, 
the effective date of the joint venture merger between Samyang and SK 
Chemicals.
    In determining the appropriate cash deposit rate to assign to Huvis 
for this purpose, based on our preliminary finding that Huvis is not a 
successor-in-interest to the pre-merger entities, we

[[Page 1644]]

will instruct the Customs Service to require a cash deposit based on 
the ``all others'' rate from the LTFV investigation, 11.35 percent. 
This requirement for a cash deposit of estimated antidumping duties on 
imports of subject merchandise produced by Huvis will continue unless 
and until it is modified pursuant to the final results of this changed 
circumstances review.

Public Comment

    Interested parties may submit case briefs and/or written comments 
no later than 30 days after the date of publication of these 
preliminary results. Rebuttal briefs or comments, limited to issues 
raised in the briefs or comments, may be filed no later than five days 
after the deadline for case briefs. Parties who submit arguments are 
requested to submit with the argument (1) a statement of the issue, (2) 
a brief summary of the argument and (3) a table of authorities. 
Consistent with section 351.216(e) of the Department's regulations, we 
will issue the final results of this changed circumstances review no 
later than 270 days after the date on which this review was initiated, 
or within 45 days if all parties agree to our preliminary finding.
    This notice is in accordance with section 751(b) of the Act.

    Dated: January 3, 2001.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 01-603 Filed 1-8-01; 8:45 am]
BILLING CODE 3510-DS-P