[Federal Register Volume 66, Number 20 (Tuesday, January 30, 2001)]
[Notices]
[Pages 8348-8356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-2523]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-844]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Steel Concrete 
Reinforcing Bars From the Republic of Korea

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

EFFECTIVE DATE: January 30, 2001.

FOR FURTHER INFORMATION CONTACT: Mark Manning or Jeff Pedersen at (202) 
482-3936 and (202) 482-4195, respectively; AD/CVD Enforcement, Office 
4, Group II, Import Administration, Room 1870, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230.

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 Department of Commerce (the Department) 
regulations refer to the regulations codified at 19 CFR part 351 
(2000).

Preliminary Determination

    We preliminarily determine that steel concrete reinforcing bars 
(rebar) from the Republic of Korea (Korea) are being sold, or are 
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 of sales 
at LTFV are shown in the Suspension of Liquidation section of this 
notice.

Case History

    This investigation was initiated on July 18, 2000.\1\ See 
Initiation of Antidumping Duty Investigations: Steel Concrete 
Reinforcing Bars from Austria, Belarus, Indonesia, Japan, Latvia, 
Moldova, the People's Republic of China, Poland, the Republic of Korea, 
the Russian Federation, Ukraine, and Venezuela, 65 FR 45754 (July 25, 
2000) (Initiation Notice). Since the initiation of these 
investigations, the following events have occurred.
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    \1\ The petitioner in these investigations is the Rebar Trade 
Action Coalition (RTAC), and its individual members, AmeriSteel, 
Auburn Steel Co., Inc., Birmingham Steel Corp., Border Steel, Inc., 
Marion Steel Company, Riverview Steel, and Nucor Steel and CMC Steel 
Group. (Auburn Steel was not a petitioner in the Indonesia case).
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    On August 14, 2000, the United States International Trade 
Commission (ITC) preliminarily determined that there is a reasonable 
indication that imports of the products subject to this investigation 
are threatening material injury or materially injuring a regional 
industry in the United States producing the domestic like product. See 
Certain Steel Concrete Reinforcing Bars From Austria, Belarus, China, 
Indonesia, Japan, Korea, Latvia, Moldova, Poland, Russia, Ukraine, and 
Venezuela, 65 FR 51329 (August 23, 2000). With respect to subject 
imports from Austria, Russia, and Venezuela, the ITC determined that 
imports from these countries during the period of investigation (POI) 
were negligible and, therefore, these investigations were terminated. 
The ITC also determined that there is no reasonable indication that an 
industry in the United States is

[[Page 8349]]

materially injured or threatened with material injury, by reason of 
subject imports from Japan. Id.
    The Department issued antidumping questionnaires to the three 
mandatory respondents in Korea on August 18, 2000.\2\ We received 
responses from two companies, Dongkuk Steel Mill Co., Ltd. (DSM) and 
Korea Iron & Steel Co., Ltd. (KISCO). The third respondent, Hanbo Iron 
& Steel Co., Ltd. (Hanbo) did not respond to our questionnaire. We 
confirmed with Federal Express that Hanbo did receive our questionnaire 
(see Memorandum from Jeff Pedersen to the File, dated January 16, 
2001). On September 14, 2000, we notified Hanbo that we had not 
received its questionnaire response and that, as a result, the 
Department may have to rely on facts available in making our 
determinations in this proceeding. We issued supplemental 
questionnaires pertaining to sections A, B, C, and D of the antidumping 
questionnaire to DSM and KISCO in September, October, November, and 
December 2000. DSM and KISCO responded to these supplemental 
questionnaires in October, November, and December 2000.
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    \2\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under investigation that it sells, and the manner in 
which it sells that merchandise in all of its markets. Section B 
requests a complete listing of all home market sales, or, if the 
home market is not viable, of sales in the most appropriate third-
country market (this section is not applicable to respondents in 
non-market economy (NME) cases). Section C requests a complete 
listing of U.S. sales. Section D requests information on the cost of 
production (COP) of the foreign like product and the constructed 
value (CV) of the merchandise under investigation. Section E 
requests information on further manufacturing.
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    DSM and KISCO requested that they not be required to report certain 
information requested in the questionnaires. Specifically they 
requested that they be permitted to exclude three types of data. First, 
on September 20, 2000, DSM and KISCO reported that they each purchased 
a small quantity of rebar from each other, which was resold to 
unaffiliated home market customers. DSM and KISCO also reported that 
they purchased a small quantity of rebar from unaffiliated suppliers, 
which was resold to unaffiliated home market customers. Since their 
accounting systems do not identify which resales of purchased rebar 
related to purchases from affiliated suppliers and which related to 
purchases from unaffiliated suppliers, DSM and KISCO stated that their 
accounting systems prevent them from reporting the downstream sales of 
rebar purchased from affiliated suppliers (i.e., each other). 
Therefore, DSM and KISCO requested that they be allowed to report the 
upstream sale from DSM to KISCO, and vice versa, while being allowed to 
exclude the downstream sale to the unaffiliated customer.
    Second, DSM and KISCO stated in their section A responses that they 
have not reported their home market sales of rebar purchased from 
unaffiliated suppliers because such rebar does not fall within the 
definition of the ``foreign like product.'' DSM and KISCO contend that 
``foreign like product'' is defined as merchandise ``produced in the 
same country by the same person as the subject merchandise.'' Since 
they did not produce the rebar in question, DSM and KISCO did not 
include these home market sales in their reported sales listing.
    Lastly, in the September 20, 2000, submission, KISCO requested that 
it be allowed to exclude certain U.S. market sales of rebar that were 
cut to length and then repacked in Korea by its affiliate, Pusan Steel 
Mill Co., Ltd. (PSM), prior to export. According to KISCO, these sales 
account for a tiny portion of its U.S. market sales, are not typical of 
KISCO's normal course of business, and would complicate the 
Department's dumping analysis.
    On September 29, 2000, the Department issued to DSM and KISCO a 
supplemental questionnaire concerning these exclusion requests. We 
received their joint response on October 23, 2000. The information 
contained in this response, in addition to information contained in DSM 
and KISCO's responses to the antidumping questionnaire, indicated that 
the sales covered by these exclusion requests were not representative 
of normal selling behavior, were made in such small volumes that they 
would have an insignificant effect on the calculation, and, if not 
excluded, would unduly complicate the Department's analysis. Therefore, 
we granted the three exclusion requests discussed above. See Letter 
from Thomas F. Futtner, Acting Office Director, to DSM and KISCO, dated 
November 6, 2000.
    On November 9, 2000, the petitioner requested a postponement of the 
preliminary determination in this investigation. On November 21, 2000, 
the Department published a Federal Register notice postponing the 
deadline for the preliminary determination until January 16, 2001. See 
Notice of Postponement of Preliminary Antidumping Duty Determinations: 
Steel Concrete Reinforcing Bars from Belarus, Indonesia, Latvia, 
Moldova, the People's Republic of China, Poland, the Republic of Korea 
and Ukraine, 65 FR 69909 (November 21, 2000).

Postponement of the Final Determination

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for extension of provisional 
measures from a four-month period to not more than six months.
    On December 28, 2000, DSM and KISCO requested that, in the event of 
an affirmative preliminary determination in this investigation, the 
Department postpone its final determination until 135 days after the 
publication of the preliminary determination. DSM and KISCO also 
included a request to extend the provisional measures to not more than 
135 days after the publication of the preliminary determination. 
Accordingly, since we have made an affirmative preliminary 
determination, and the requesting parties account for a significant 
proportion of exports of the subject merchandise, we have postponed the 
final determination until not later than 135 days after the date of the 
publication of the preliminary determination.

Period of Investigation

    The POI for this investigation is April 1, 1999, through March 31, 
2000. This period corresponds to the four most recent fiscal quarters 
prior to the month of the filing of the petition (i.e., June 2000).

Scope of Investigations

    For purposes of these investigations, the product covered is all 
rebar sold in straight lengths, currently classifiable in the 
Harmonized Tariff Schedule of the United States (HTSUS) under item 
number 7214.20.00 or any other tariff item number. Specifically 
excluded are plain rounds (i.e., non-deformed or smooth bars) and rebar 
that has been further processed through bending or coating. HTSUS 
subheadings are provided for convenience and Customs purposes. The 
written description of the scope of this proceeding is dispositive.

[[Page 8350]]

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. Where it is not practicable to examine all known 
producers/exporters of subject merchandise, section 777A(c)(2) of the 
Act permits us 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. Using company-specific 
export data for all of 1999 and the first half of 2000, which we 
obtained from the American Embassy in Seoul, we found that four Korean 
exporters shipped rebar to the United States during that time period. 
Due to limited resources we determined that we could investigate only 
the three largest producers. See Memorandum from Valerie Ellis and 
Paige Rivas to Holly A. Kuga, Selection of Respondents, dated August 
25, 2000. Therefore, we designated DSM, KISCO, and Hanbo as mandatory 
respondents and sent them the antidumping questionnaire. On September 
18, 2000, we received section A questionnaire responses from DSM and 
KISCO. We did not, however, receive a response from Hanbo.

Facts Available (FA)

    Section 776(a) of the Act provides that ``if an interested party or 
any other person--(A) withholds information that has been requested by 
the administering authority, (B) fails to provide such information by 
the deadlines for the submission of the information or in the form and 
manner requested, subject to subsections (c)(1) and (e) of section 782, 
(C) significantly impedes a proceeding under this title, or (D) 
provides such information but the information cannot be verified as 
provided in section 782(i), the administering authority and the 
Commission shall, subject to section 782(d), use the facts otherwise 
available in reaching the applicable determination under this title.'' 
The statute requires that certain conditions be met before the 
Department may resort to the facts otherwise available. Where the 
Department determines that a response to a request for information does 
not comply with the request, section 782(d) of the Act provides that 
the Department will so inform the party submitting the response and 
will, to the extent practicable, provide that party the opportunity to 
remedy or explain the deficiency. If the party fails to remedy the 
deficiency within the applicable time limits, the Department may, 
subject to section 782(e), disregard all or part of the original and 
subsequent responses, as appropriate. Briefly, section 782(e) provides 
that the Department ``shall not decline to consider information that is 
submitted by an interested party and is necessary to the determination 
but does not meet all the applicable requirements established by the 
administering authority'' if the information is timely, can be 
verified, is not so incomplete that it cannot be used, and if the 
interested party acted to the best of its ability in providing the 
information. Where all of these conditions are met, and the Department 
can use the information without undue difficulties, the statute 
requires it to do so.
    In this proceeding, Hanbo declined to respond at all to the 
Department's antidumping questionnaire. Because Hanbo provided no 
information whatsoever, sections 782(d) and (e) of the Act are not 
relevant, and the Department must resort to the use of facts available 
for this respondent, in accordance with 776(a) of the Act. Moreover, we 
note that at no time did Hanbo contact the Department and state that it 
was having difficulty responding to the questionnaire or otherwise 
explain why it could not provide the requested information. Thus, we 
have also determined that this respondent has not cooperated to the 
best of its ability. Therefore, pursuant to 776(b) of the Act, we used 
an adverse inference in selecting a margin from the FA. As FA, the 
Department has applied a margin rate of 102.28 percent, the highest 
alleged margin for Korea in the petition. See Memorandum from Holly A. 
Kuga to Troy H. Cribb, Antidumping Investigation of Steel Concrete 
Reinforcing Bars From The Republic of Korea--The Use of Facts Available 
for Hanbo Iron & Steel Co. Ltd., and Corroboration of Secondary 
Information, dated January 16, 2001 (Facts Available Memorandum).
    Section 776(c) of the Act provides that where the Department 
selects from among the facts otherwise available and relies on 
``secondary information,'' such as the petition, the Department shall, 
to the extent practicable, corroborate that information from 
independent sources reasonably at the Department's disposal. The 
Statement of Administrative Action accompanying the URAA, H.R. Doc. 
No.316, 103d Cong., 2d Sess. (1994) (hereinafter, the SAA) states that 
``corroborate'' means to determine that the information used has 
probative value. See SAA at 870.
    In this proceeding, we considered the petition information the most 
appropriate record information to use to establish the dumping margins 
for this uncooperative respondent because, in the absence of verifiable 
data provided by Hanbo, the petition information is the best 
approximation available to the Department of Hanbo's pricing and 
selling behavior in the U.S. market. In accordance with section 776(c) 
of the Act, we sought to corroborate the data contained in the 
petition. We reviewed the adequacy and accuracy of the information in 
the petition during our pre-initiation analysis of the petition, to the 
extent appropriate information was available for this purpose (e.g., 
import statistics and foreign market research reports). See Initiation 
Notice.
    For purposes of this preliminary determination, we attempted to 
corroborate the information in the petition with information gathered 
since the initiation. We compared the export price (EP) and CV data 
which formed the basis for the highest margin in the petition to the 
price and expense data provided by DSM and KISCO during the 
investigation and, to the extent practicable, found that it had 
probative value (see Facts Available Memorandum).

Critical Circumstances

    In the petition filed on June 28, 2000, the petitioner alleged that 
there is a reasonable basis to believe or suspect that critical 
circumstances exist with respect to imports of rebar from Korea. On 
July 18, 2000, concurrent with the initiation of the LTFV 
investigations on imports of rebar from Korea and other countries, the 
Department announced its intention to investigate the petitioner's 
allegation that critical circumstances exist with respect to imports of 
rebar from Korea. On August 14, 2000, the ITC determined that there is 
a reasonable indication of material injury to a regional domestic 
industry from imports of rebar from Korea.
    Section 733(e)(1) of the Act provides that the Department will 
preliminarily determine that there is a reasonable basis to believe or 
suspect that critical circumstances exist, if: (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 its 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

[[Page 8351]]

merchandise over a relatively short period. Section 351.206(h)(1) of 
the Department's regulations provides that, in determining whether 
imports of the subject merchandise have been ``massive,'' the 
Department normally will examine: (i) The volume and value of the 
imports; (ii) seasonal trends; and (iii) the share of domestic 
consumption accounted for by the imports. In addition, section 
351.206(h)(2) of the Department's regulations provides that an increase 
in imports of 15 percent during the ``relatively short period'' of time 
may be considered ``massive.''
    Because we are not aware of any existing antidumping order in any 
country on rebar from Korea, we do not find a history of dumping from 
Korea, pursuant to section 733(e)(1)(A)(i) of the Act. Further, with 
respect to section 733(e)(1)(A)(i) of the Act, the magnitude of the 
dumping margins found in this preliminary determination with respect to 
DSM, Kisco, and the producers of subject merchandise in the ``all 
others'' category, are insufficient to conclude that the person by 
whom, or for whose account, the merchandise was imported knew or should 
have known that the exporter was selling subject merchandise at LTFV 
and that there was likely to be material injury by reason of such 
sales.
    With respect to DSM, KISCO and producers of subject merchandise in 
the ``all others'' category, we find (see below) that they do not 
satisfy the statutory criterion regarding massive imports necessary for 
an affirmative finding of critical circumstances, section 733(e)(1)(B) 
of the Act. Therefore, we did not address the issue of whether 
importers had knowledge that DSM, KISCO and the ``all others'' 
companies were selling the subject merchandise at less than its fair 
value.
    As mentioned above, Hanbo was selected as a mandatory respondent in 
this investigation and did not respond to our antidumping 
questionnaire, nor provide the requested shipment data necessary for 
our critical circumstances analysis. On September 14, 2000, we notified 
Hanbo that we had not received its questionnaire response and that, as 
a result, the Department may have to rely on facts available in making 
our determinations in this proceeding. With respect to imports of 
subject merchandise sold by Hanbo, we have determined the preliminary 
dumping margin to be 102.28 percent (based on adverse facts available). 
This margin exceeds the 25 percent threshold used by the Department to 
impute knowledge that the subject merchandise was causing injury. 
Therefore, pursuant to section 733(e)(1)(A)(ii) of the Act, we find 
that there is a reasonable basis to believe or suspect that importers 
knew or should have known that rebar imports from Hanbo were being sold 
at less than fair value and there was likely to be material injury by 
reason of such sales.
    In determining whether there are ``massive imports'' over a 
``relatively short period,'' pursuant to section 733(e)(1)(B) of the 
Act, the Department normally compares the import volume of the subject 
merchandise for three months immediately preceding the filing of the 
petition (i.e., the base period), and three months following the filing 
of the petition (i.e., the comparison period). However, as stated in 
section 351.206(i) of the Department's regulations, if the Secretary 
finds that importers, exporters, or producers had reason to believe, at 
some time prior to the beginning of the proceeding, that a proceeding 
was likely, then the Secretary may consider a time period of not less 
than three months from that earlier time. 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.
    In this case, the petitioner argues that importers, exporters, or 
producers of rebar from Korea had reason to believe that an antidumping 
proceeding was likely before the filing of the petition. Based upon 
information contained in the petition, we found that press reports and 
published statements were sufficient to establish that, by December 
1999, importers, exporters, and foreign producers knew or should have 
known that a proceeding was likely concerning rebar from Korea. As a 
result, the Department has considered whether there have been massive 
imports after that time, based on a comparison of periods immediately 
preceding and following the end of December 1999. See Memorandum from 
Tom Futtner to Holly A. Kuga, Antidumping Duty Investigation of Steel 
Concrete Reinforcing Bars from Korea--Preliminary Determination of 
Critical Circumstances (Critical Circumstances Preliminary 
Determination Memorandum), dated January 16, 2001.
    In order to determine whether imports from Korea have been massive, 
the Department requested that DSM, KISCO and Hanbo provide their 
shipment data for the last three years. We note that we have collapsed 
DSM and KISCO into a single entity for purposes of this antidumping 
investigation (see the Collapsing section below). Therefore, we 
conducted our analysis on the shipment volumes from the collapsed 
entity DSM/KISCO. See Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel 
Products From Brazil, 65 FR 5554, 5561 (February 4, 2000). Based on our 
analysis of the shipment data reported, because imports have decreased 
during the comparison period, we preliminarily find that the criterion 
under section 733(e)(1) of the Act has not been met, i.e., there have 
not been massive imports of rebar from DSM/KISCO over a relatively 
short time. See Critical Circumstances Preliminary Determination 
Memorandum. For this reason, we preliminarily determine that critical 
circumstances do not exist for imports of rebar produced by DSM/KISCO.
    With respect to imports of this merchandise from producers in the 
``all others'' category, it is the Department's normal practice to 
conduct its critical circumstances analysis of companies in this 
category based on the experience of the investigated companies. See 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Steel Concrete Reinforcing Bars from Turkey, (Rebar from Turkey) 62 FR 
9737, 9741 (Mar. 4, 1997). In Rebar from Turkey, the Department found 
critical circumstances for the ``all others'' category because it found 
critical circumstances for three of the four companies investigated. 
However, as we more recently determined in Notice of Final 
Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled 
Carbon-Quality Steel Products from Japan, 64 FR 24329 (May 6, 1999) 
(Hot-Rolled Steel from Japan), we are concerned that literally applying 
that approach could produce anomalous results in certain cases. Thus, 
in deciding whether critical circumstances apply to companies covered 
by the ``all others'' rate, the Department also considers the 
traditional critical circumstances criteria.
    In determining whether imports from the ``all others'' category 
have been massive, the Department followed its normal practice of 
conducting its critical circumstances analysis of companies in this 
category based on the experience of the investigated companies. In this 
case, we note that DSM/KISCO account for the majority of rebar exports 
from Korea. See Critical Circumstances Preliminary Determination 
Memorandum. For this reason, it is appropriate to extend the experience 
of DSM/KISCO to the ``all others'' category and determine that there 
have not been massive imports of rebar from the ``all others'' category 
over a relatively short time. Since the second

[[Page 8352]]

criterion under section 733(e)(1) of the Act has not been met, we find 
that critical circumstances do not exist for imports of rebar produced 
by the ``all others'' category.
    With regard to Hanbo, we note that since Hanbo refused to respond 
to the Department's antidumping questionnaire, there is no verifiable 
information on the record with respect to Hanbo's export volumes. For 
this reason, we must use the facts available in accordance with section 
776(a) of the Act in determination of whether there were massive 
imports of merchandise produced by Hanbo. With regard to aggregate 
import statistics, these data do not permit the Department to ascertain 
the import volumes for any individual company that failed to provide 
verifiable information. Nor do these data reasonably preclude an 
increase in shipments of 15 percent or more within a relatively short 
period for Hanbo. As a result, in accordance with section 776(b) of the 
Act, we have used an adverse inference in applying facts available, and 
determine that there were massive imports from Hanbo. Since we also 
find that, pursuant to section 733(e)(1)(A)(ii) of the Act, there is a 
reasonable basis to believe or suspect that importers knew or should 
have known that rebar imports from Hanbo were being dumped and there 
was likely to be material injury by reason of such sales, we 
preliminary determine that critical circumstances exist with respect to 
imports of rebar produced by Hanbo.

Product Comparisons

    In accordance with section 771(16) of the Act, all products 
produced by the respondents covered by the description in the Scope of 
Investigation section, above, and sold in Korea during the POI are 
considered to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We have relied on three 
criteria to match U.S. sales of subject merchandise to comparison-
market sales of the foreign like product or CV: Type of steel, yield 
strength, and size. 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 above.

Collapsing

    Section 771(33)(E) of the Act provides that ``affiliated persons'' 
include ``any person directly or indirectly owning, controlling, or 
holding with power to vote, 5 percent or more of the outstanding voting 
stock or shares of any organization and such organization.'' 
Furthermore, under section 351.401(f) of the Department's regulations, 
we will treat ``two or more affiliated producers as a single entity 
where those producers (1) have production facilities for similar or 
identical products that would not require substantial retooling of 
either facility in order to restructure manufacturing priorities and 
(2) the Secretary concludes that there is significant potential for the 
manipulation of price or production'' based on factors such as: (a) The 
level of common ownership; (b) the extent to which managerial employees 
or board members of one firm sit on the board of the other firm; and 
(c) whether operations are intertwined (e.g., through sharing of sales 
information, involvement in production and pricing decisions, sharing 
facilities/employees, and/or significant transactions between the two 
affiliated producers).
    In this case, it is undisputed that DSM owns over 5 percent of 
KISCO's outstanding equity. Thus, DSM and KISCO are affiliated as 
defined by section 771(33)(E) of the Act. Regarding the first 
collapsing criterion listed in section 351.401(f) of the Department's 
regulations, DSM and KISCO stated that both companies ``produce the 
same grades of rebar . . . {and} there were no grades that were 
produced by one company but not the other.'' In addition, both 
companies stated that ``there are no significant differences in the 
production processes used by DSM and KISCO to produce rebar.'' See DSM 
and KISCO's October 23, 2000, submission at 46 and 47. In addition, we 
note that DSM and KISCO's U.S. market sales of rebar (by quantity) are 
not large percentages of their total home market sales of rebar. For 
this reason, we conclude that both companies potentially have the 
capacity to absorb the other's export market sales, in the event they 
were to shift export sales to the company with a lower margin. In 
analyzing whether there exists the potential for manipulation of price 
or production, we note that in addition to DSM's direct ownership of 
KISCO, DSM has a significant level of indirect ownership of KISCO 
through the Chang family, which founded both DSM and KISCO. Concerning 
the extent to which DSM and KISCO have shared managerial employees and 
board members, we note that two of KISCO's current senior managers are 
former senior managers at DSM, and that one of DSM's current senior 
managers was a former director at KISCO. Lastly, we note that DSM and 
KISCO have intertwined operations because both companies sold a small 
amount of rebar to each other in the home market, which entailed the 
sharing of certain sales information, and used the same affiliated 
transportation company for certain home market sales.
    Based on these reasons, we find that DSM and KISCO are affiliated 
producers with similar or identical production facilities that would 
not require substantial retooling of either facility in order to 
restructure manufacturing priorities. We also find that there exists a 
significant potential for the manipulation of price or production. For 
further discussion, see Decision Memorandum: Whether to Collapse 
Dongkuk Steel Mill Co., Ltd. and Korea Iron and Steel Co., Ltd. Into a 
Single Entity, dated December 5, 2000. Therefore, we have collapsed DSM 
and KISCO, and are treating them as a single entity (hereafter referred 
to as DSM/KISCO) for purposes of the preliminary determination in this 
antidumping investigation.

Fair Value Comparisons

    To determine whether sales of rebar from Korea were made in the 
United States at LTFV, we compared the EP or the constructed export 
price (CEP) to the normal value (NV), as described in the EP and CEP 
and NV sections of this notice. In accordance with section 
777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs and 
CEPs. We compared these to weighted-average home market prices.

EP and CEP

    For the price to the United States, we used, as appropriate, EP or 
CEP as defined in sections 772(a) and 772(b) of the Act, respectively. 
Section 772(a) of the Act defines EP as the price at which the subject 
merchandise is first sold by the exporter or producer outside the 
United States to an unaffiliated purchaser for exportation to the 
United States, before the date of importation, or to an unaffiliated 
purchaser for exportation to the United States.
    Section 772(b) of the Act defines CEP as the price at which the 
subject merchandise is first sold inside the United States before or 
after the date of importation, by or for the account of the producer or 
exporter of the merchandise, or by a seller affiliated with the 
producer or exporter, to an unaffiliated purchaser, as adjusted under 
subsections 772(c) and (d) of the Act.
    For DSM/KISCO, we calculated EP and CEP, as appropriate, based on 
the packed prices charged to the first unaffiliated customer in the 
United States. During the POI, DSM/KISCO made both EP and CEP 
transactions. We

[[Page 8353]]

calculated an EP for sales where DSM/KISCO sold the merchandise 
directly to unaffiliated U.S. customers and where DSM/KISCO sold the 
merchandise to unaffiliated Korean companies, with knowledge that these 
companies in turn sold the merchandise to U.S. customers. We also 
calculated an EP for sales to PSM,\3\ an affiliated Korean company, who 
in turn sold the merchandise to U.S. customers. We calculated a CEP for 
sales where DSM/KISCO sold the merchandise to its U.S. affiliate, 
Dongkuk International Inc. (DKA), who then resold the merchandise to 
unaffiliated U.S. customers. We also calculated a CEP for sales made by 
DSM/KISCO to an affiliated home market company, Dongkuk Industries Co. 
Ltd. (DKI), who in turn sold the merchandise to DKA, who then sold the 
merchandise to unaffiliated U.S. customers.
---------------------------------------------------------------------------

    \3\ Although the Department granted DSM/KISCO its exclusion 
request concerning its U.S. sales through PSM, DSM/KISCO reported 
these sales in its U.S. sales database.
---------------------------------------------------------------------------

    We calculated EP in accordance with section 772(c)(1)(B) of the 
Act, by adding, where applicable, to the starting price an amount for 
duty drawback. We also deducted from the starting price, where 
applicable, amounts for discounts and rebates. We made deductions, 
where applicable, from the starting price for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These include, where 
appropriate, foreign inland freight, international freight, foreign and 
U.S. brokerage and handling charges, insurance, U.S. duties and U.S. 
inland freight. We adjusted the reported credit expense to reflect a 
more accurate shipping period. See Calculation Memorandum of the 
Preliminary Determination for the Investigation of Dongkuk Steel Mill 
Co., Ltd., and Korea Iron & Steel Co., Ltd., January 16, 2001 
(Preliminary Calculation Memorandum).
    We calculated CEP, in accordance with section 772(c)(2)(A) of the 
Act, by adding, where applicable, to the starting price an amount for 
duty drawback. We also deducted from the starting price, where 
applicable, amounts for discounts and rebates, and movement expenses 
from the starting price. Movement expenses include, where appropriate, 
foreign inland freight, international freight, foreign and U.S. 
brokerage and handling charges, insurance, U.S. duties, and U.S. inland 
freight. In accordance with section 772(d)(1) of the Act, we deducted 
from the starting price those selling expenses associated with economic 
activities occurring in the United States, including direct selling 
expenses (commissions and credit costs) and indirect selling expenses. 
We adjusted the reported credit expense to reflect a more accurate 
shipping period.
    See Preliminary Calculation Memorandum. Finally, in accordance with 
section 772(d)(3) of the Act, we made a deduction for CEP profit.

NV

A. Selection of Comparison Market
    Section 773(a)(1) of the Act directs that NV be based on the price 
at which the foreign like product is sold in the home market, provided 
that the merchandise is sold in sufficient quantities (or value, if 
quantity is inappropriate) and that there is no particular market 
situation that prevents a proper comparison with the EP or CEP. The 
statute contemplates that quantities (or value) will normally be 
considered insufficient if they are less than five percent of the 
aggregate quantity (or value) of sales of the subject merchandise to 
the United States.
    For this investigation, we found that DSM/KISCO has a viable home 
market of rebar. The respondents submitted home market sales data for 
purposes of the calculation of NV.
    In deriving NV, we made adjustments as detailed in the Calculation 
of NV Based on Home Market Prices and Calculation of NV Based on CV, 
sections below.
B. Affiliated-Party Transactions and Arm's-Length Test
    During the POI, DSM sold a small amount of rebar to KISCO, who then 
resold the merchandise to unaffiliated home market customers. 
Similarly, KISCO sold a small amount of rebar to DSM, who then resold 
the merchandise to unaffiliated home market customers. Since we have 
collapsed these two companies into a single entity, we requested that 
DSM and KISCO remove these sales, which we considered to be inter-
company sales, from their home market sales database.
    During the POI, DSM/KISCO also had home market sales to other 
affiliated companies. Both DSM and KISCO had home market sales to DKI, 
an affiliated Korean company that consumed rebar in its construction 
division, while KISCO had home market sales to PSM, an affiliated home 
market company that also consumed rebar during the POI. See DSM/KISCO's 
September 18, 2000, section A response at 3. We applied the arm's-
length test to sales from DSM/KISCO to these affiliated companies by 
comparing them to sales of identical merchandise from DSM/KISCO to 
unaffiliated home market customers. If these affiliated party sales 
satisfied the arm's-length test, we used them in our analysis. Sales to 
affiliated customers in the home market which were not made at arm's-
length prices were excluded from our analysis because we considered 
them to be outside the ordinary course of trade. See 19 CFR 351.102.
    To test whether these sales were made at arm's-length prices, we 
compared on a model-specific basis the starting prices of sales to 
affiliated and unaffiliated customers net of all discounts and rebates, 
movement charges, direct selling expenses, commissions, and home market 
packing. Where, for the tested models of subject merchandise, prices to 
the affiliated party were on average 99.5 percent or more of the price 
to the unaffiliated parties, we determined that sales made to the 
affiliated party were at arm's-length. See 19 CFR 351.403(c) and 62 FR 
at 27355, Preamble--Department's Final Antidumping Regulations (May 19, 
1997).
A. COP Analysis
    On June 28, 2000, the petitioner alleged that sales of rebar in the 
home market of Korea were made at prices below the fully absorbed COP, 
and accordingly, requested that the Department conduct a country-wide 
sales-below-COP investigation. Based upon the comparison of the 
adjusted prices from the petition for the foreign like product to its 
COP, and in accordance with section 773(b)(2)(A)(i) of the Act, we 
found reasonable grounds to believe or suspect that sales of rebar 
manufactured in Korea were made at prices below the COP. See Initiation 
Notice. As a result, the Department has conducted an investigation to 
determine whether DSM/KISCO made sales in the home market at prices 
below its COP 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 based on the sum of the cost 
of materials and fabrication for the foreign like product, plus amounts 
for the home market general and administrative (G&A) expenses and 
interest expenses.
    We relied on the COP data submitted by DSM and KISCO in their cost 
questionnaire responses, except, as noted below, in specific instances 
where the submitted costs were not appropriately quantified or valued. 
Since we collapsed DSM and KISCO, and are treating them as a single 
entity for the purposes of this antidumping investigation, we merged 
their

[[Page 8354]]

separately reported cost databases into a single, combined cost 
database by weight-averaging DSM and KISCO's individually reported 
costs. We used the combined costs in our dumping analysis. See 
Preliminary Calculation Memorandum.
    DSM. We adjusted DSM's G&A expense ratio to exclude gain on 
disposal of land, freight revenue, gain on equity method investments 
and gain on insurance settlement and to include donation expenses in 
the calculation of the G&A expense ratio.
    In addition, we adjusted DSM's financial expense ratio to exclude 
the long-term portion of exchange gains and losses generated by foreign 
currency denominated debt. See Memorandum from Robert Greger, dated 
January 16, 2001.

KISCO

    We adjusted KISCO's G&A expense ratio to: (1) Exclude the ``non-
operating income from the gain on equity method valuation,'' from the 
miscellaneous gains section of KISCO's financial statement; and (2) 
included donation expenses in the calculation of the G&A expense ratio.
    Further, we adjusted KISCO's financial expense ratio to exclude the 
long-term portion of exchange gains and losses generated by foreign 
currency denominated debt. See Memorandum from Michael Harrison, dated 
January 16, 2001.
    2. Test of Home Market Sales Prices. We compared the adjusted 
weighted-average COP to the home market sales of the foreign like 
product, as required under section 773(b) of the Act, in order 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 NV.
---------------------------------------------------------------------------

    On a model-specific basis, we compared the revised COP to the home 
market prices, less any applicable discounts and rebates, movement 
charges, selling expenses, commissions, and packing.
    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) or the Act. In such cases, 
because we compared prices to POI average costs, we also determined 
that such sales were not made at prices that would permit recovery of 
all costs within a reasonable period of time, in accordance with 
section 773(b)(2)(D) of the Act. Therefore, we disregarded the below-
cost sales.
    We found that, for certain models of rebar, more than 20 percent of 
the home market sales by DSM/KISCO 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 these below-cost sales and used the remaining 
sales as the basis for determining NV, in accordance with section 
773(b)(1) of the Act.
    1. Calculation of NV Based on Home Market Prices. We determined 
price-based NVs for DSM/KISCO as follows. We made adjustments for any 
differences in packing, and we deducted movement expenses pursuant to 
section 773(a)(6)(B)(ii) of the Act. In addition, where applicable, we 
made adjustments for differences in circumstances of sale (COS) 
pursuant to section 773(a)(6)(C)(iii) of the Act. We also made 
adjustments, pursuant to 19 CFR 351.410(e), for indirect selling 
expenses incurred on comparison-market or U.S. sales where commissions 
were granted on sales in one market but not in the other (the 
commission offset).
    We based home market prices on the packed prices to unaffiliated 
purchasers in Korea. We adjusted, where applicable, the starting price 
for discounts and rebates and movement expenses (foreign inland freight 
and warehousing). We also made COS adjustments, where applicable, by 
deducting direct selling expenses incurred for home market sales 
(credit expense and warranty). For comparisons made to EP sales, we 
made COS adjustments by adding U.S. direct selling expenses. For 
comparisons made to CEP sales, we did not add U.S. direct selling 
expenses. No other adjustments to NV were claimed or allowed.
    2. Calculation of NV Based on CV. Section 773(a)(4) of the Act 
provides that, where NV cannot be based on comparison-market sales, NV 
may be based on CV. Accordingly, for those models of rebar for which we 
could not determine the NV based on comparison-market sales, either 
because there were no sales of a comparable product or all sales of the 
comparison products failed the COP test, we based NV on CV. Since there 
were contemporaneous home market sales of identical merchandise for all 
U.S. market EP and CEP sales, we did not resort to CV in this 
investigation.
    3. Level of Trade (LOT)/CEP Offset. 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 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 sales, the U.S. LOT is 
also the level of the starting-price sale, which is usually from 
exporter to importer. For CEP transactions, 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 
transactions, 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. For CEP sales, if the NV level is more remote 
from the factory than the CEP level and there is no basis for 
determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP-offset provision). See Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel 
Plate from South Africa, 62 FR 61731 (November 19, 1997).
    In implementing these principles in this investigation, we obtained 
information from the respondents about the marketing stages involved in 
the reported U.S. and home market sales, including a description of the 
selling activities performed by the respondents for each channel of 
distribution. In identifying LOTs for EP and home market sales we 
considered the selling functions reflected in the starting price before 
any adjustments. For CEP sales, we considered only the selling 
activities reflected in the price after the deduction

[[Page 8355]]

of expenses pursuant to section 772(d) of the Act.
    In this investigation, DSM/KISCO reported that it sold subject 
merchandise to three types of customers (distributors, end-users, and 
government entities) in the home market. Further, it indicated that, 
for each of the two originally reported channels of distribution, it 
provided the same types of selling functions (market research, price 
negotiations, order processing, sales calls, interactions with 
customers, inventory maintenance, technical advice, warranty services, 
Korean inland freight, and advertising) at the same levels of intensity 
for each of the three types of customers. Since all three types of 
customers received the same selling functions, at the same levels of 
intensity, we determine that there is a single LOT in the home market. 
See Memorandum from Ronald Trentham to Thomas F. Futtner, Level of 
Trade Analysis: Dongkuk Steel Mill Co., Ltd. and Korea Iron & Steel 
Co., Ltd. (LOT Memorandum), dated January 16, 2001.
    DSM/KISCO also reported that it made EP and CEP sales of subject 
merchandise to three types of customers (Korean trading companies, U.S. 
distributors, and U.S. end-users) through four channels of distribution 
in the U.S. market. The four channels are as follows: (1) sales from 
DSM directly to unaffiliated U.S. distributors and end-users, (2) sales 
from DSM to unaffiliated Korean trading companies, who then resold the 
merchandise to U.S. customers,\5\ (3) sales from DSM to DKA, who then 
resold the merchandise to unaffiliated U.S. distributors and end-users, 
and (4) sales from DSM to DKI, who then resold the merchandise to DKA, 
who then resold the merchandise to unaffiliated U.S. distributors and 
end-users. Further, DSM/KISCO indicated that it provided certain types 
of selling functions (market research, price negotiations, order 
processing, sales calls, interactions with customers, inventory 
maintenance, technical advice, warranty services, Korean inland 
freight, and advertising) for each of the three types of customers. We 
examined the types of selling functions provided in each of the four 
U.S. market channels of distribution, and the level of intensity with 
which each function is provided, and determined, based upon the selling 
functions performed, that EP sales and CEP sales are sold at two 
different LOTs, specifically, LOT1 for EP sales, and at a more remote 
level of selling activity, LOT2, for CEP sales. See LOT Memorandum. We 
then compared LOT1 (the LOT for EP sales) to the home market LOT and 
found that EP sales are provided at a different LOT than the home 
market sales. We also compared LOT2 (the LOT for CEP sales) to the home 
market and found that CEP sales are provided at the same LOT as the 
home market transactions. Thus, no LOT adjustment is warranted for CEP 
comparisons.
---------------------------------------------------------------------------

    \5\ DSM did not report the types of U.S. customers to which the 
unaffiliated Korean trading companies resold the subject 
merchandise.
---------------------------------------------------------------------------

    Section 773(7)(A)(ii) of the Act states that the Department will 
grant a LOT adjustment only ``if the difference in the level of trade 
is demonstrated to affect price comparability, based on a pattern of 
consistent price differences between sales at different levels of trade 
in the country in which normal value is determined.'' Although we find 
that the U.S. market LOT1 (EP sales) is different from the home market 
LOT, we are unable to calculate ``a pattern of consistent price 
differences between sales at different levels of trade in the country 
in which normal value is determined'' because there is only one LOT in 
the home market. Thus, in this instance, we have also not granted DSM/
KISCO a LOT adjustment to NV for EP comparisons.
    Section 773(a)(7)(B) of the Act provides for a CEP offset to NV 
when NV is established at a more advanced LOT than the LOT of CEP. 
Since, in this instance, we have found that the U.S. market LOT2 (CEP 
sales) is the same as the home market LOT, we have not granted DSM/
KISCO a CEP offset to NV. For a further discussion, see LOT Memorandum.

Currency Conversions

    We made currency conversions into U.S. dollars in accordance with 
section 773A of the Act based on exchange rates in effect on the dates 
of the U.S. sales, as obtained from the Federal Reserve Bank (the 
Department's preferred source for exchange rates).

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
all information relied upon in making our final determinations.

Final Critical Circumstances Determination

    We will make a final determination concerning critical 
circumstances for Korea when we make our final determination regarding 
sales at LTFV in this investigation, which will be no later than 135 
days after the publication of this notice in the Federal Register.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
U.S. Customs Service to suspend liquidation of all entries of rebar 
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. In the case of rebar produced by Hanbo, because of 
our preliminary affirmative critical circumstances finding, and in 
accordance with section 733(e) of the Act, we are directing the U.S. 
Customs Service to suspend liquidation of all entries of rebar produced 
by Hanbo that are entered, or withdrawn from warehouse, for consumption 
on or after the date which is 90 days prior to the date of publication 
of this notice in the Federal Register. We will instruct the Customs 
Service to require a cash deposit or the posting of a bond equal to the 
weighted-average amount by which the NV exceeds the EP or CEP, as 
indicated in the chart below. These suspension-of-liquidation 
instructions will remain in effect until further notice. The weighted-
average dumping margins are as follows:

------------------------------------------------------------------------
                                                                Margin
                                                               (percent)
------------------------------------------------------------------------
Manufacturer/exporter:
  Dongkuk Steel Mill Co., Ltd/Korea Iron & Steel Co., Ltd...       21.70
  Hanbo Iron & Steel Co., Ltd...............................      102.28
  All Others................................................       21.70
------------------------------------------------------------------------

Disclosure

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of the 
proceedings in these investigations in accordance with 19 CFR 
351.224(b).

International Trade Commission Notification

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

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the verification reports. Rebuttal 
briefs must be filed

[[Page 8356]]

within five days after the deadline for submission of case briefs. 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. Further, we would appreciate it if parties submitting 
written comments would provide the Department with an additional copy 
of the public version of any such comments on diskette.
    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 or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs, 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW, Washington, DC 20230. In the event that the Department 
receives requests for hearings from parties to more than one rebar 
case, the Department may schedule a single hearing to encompass all 
those cases. Parties should confirm by telephone the time, date, and 
place of the hearing 48 hours before the scheduled time.
    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.
    As noted above, the final determination will be issued 135 days 
after the date of the publication of the preliminary determination.
    This determination is issued and published pursuant to sections 
733(f) and 777(i)(1) of the Act.

    Dated: January 16, 2001.
Troy H. Cribb,
Assistant Secretary for Import Administration.
[FR Doc. 01-2523 Filed 1-29-01; 8:45 am]
BILLING CODE 3510-DS-P