[Federal Register Volume 66, Number 132 (Tuesday, July 10, 2001)]
[Notices]
[Pages 35933-35937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-17231]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-807]


Polyethylene Terephthalate Film From Korea: Preliminary Results 
of Antidumping Duty Administrative Review and Intent To Revoke in Part

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review and intent to revoke in part.

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SUMMARY: In response to a request from two respondents and two U.S. 
producers, the Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on polyethylene 
terephthalate film, sheet, and strip (PET film) from the Republic of 
Korea. The review covers three manufacturers/exporters of the subject 
merchandise to the United States and the period June 1, 1999 through 
May 31, 2000.
    We preliminarily determine that there are sales at less than normal 
value for SKC Limited (SKC), and no or de minimis sales at less than 
normal value for H.S. Industries (HSI) and Hyosung Corporation 
(Hyosung) during the period June 1, 1999 through May 31, 2000. Based on 
three years of sales at not less than normal value (NV), we intend to 
revoke the order with respect to HSI if the preliminary results of this 
review are affirmed in our final results. If these preliminary results 
are adopted in our final results of review, we will instruct the U.S. 
Customs Service to assess antidumping duties based on the difference 
between the United States Price (U.S.P.) and normal value (NV).

[[Page 35934]]

    Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with the arguments: (1) A statement of the issues and (2) a 
brief summary of the arguments (no longer than five pages, including 
footnotes).

EFFECTIVE DATE: July 10, 2001.

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

Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act) are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the regulations codified at 19 CFR Part 351 (2000).

SUPPLEMENTARY INFORMATION:

Background

    The Department published an antidumping duty order on PET film from 
the Republic of Korea on June 5, 1991. See Antidumping Duty Order and 
Amendment to Final Determination of Less Than Fair Value: Polyethylene 
Terephthalate Film, Sheet and Strip from the Republic of Korea, 56 FR 
25660 (June 5, 1991). On June 30, 2000, two domestic producers, E.I. 
DuPont Nemours & Co., Inc. and Mitsubishi Polyester Film L.L.C. 
requested reviews of HSI, Hyosung, and SKC for the period June 1, 1999 
through May 31, 2000. On June 30, 1999, SKC and HSI requested 
administrative reviews of their sales for the same time period. We 
published a notice of initiation of the review on July 31, 2000. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Requests for Revocation in Part, 65 FR 46687 (July 31, 
2000).
    On February 21 2001, the Department published a notice extending 
the time limits for publication of its preliminary results by 120 days 
to June 29, 2001. See Polyethylene Terephthalate Film, Sheet, and Strip 
from Korea: Postponement of Preliminary Results of Antidumping Duty 
Administrative Review, 66 FR 10988 (February 21, 2001).

Verification

    As provided for in section 782(i)(2) of the Act, we verified the 
information submitted by HSI. We used standard verification procedures, 
including on-site inspection of the manufacturer's facilities and 
examination of relevant sales and financial records. Our verification 
findings are outlined in the verification report which is on file in 
Room B-099 of the main Department of Commerce Building. See 
Verification of HSI Sales Questionnaire and Supplemental Questionnaire 
Responses dated June 22, 2001.

Intent To Revoke

    In its submission of June 30, 2000, HSI requested, pursuant to 19 
CFR Sec. 351.222(e)(1), partial revocation of the order with respect to 
its sales of PET film. HSI certified that (1) it sold the subject 
merchandise in commercial quantities at not less than NV for a period 
of at least three consecutive years, (2) in the future it will not sell 
the subject merchandise at less than NV; and (3) it agreed to its 
immediate reinstatement of the order if the Department determines that, 
subsequent to revocation, it sold the subject merchandise at less than 
NV.
    Based upon the preliminary results in this review and the final 
results of the two proceeding reviews (see Polyethylene Terephthalate, 
Film, Sheet and Strip from the Republic of Korea; Final Results of 
Antidumping Duty Administrative Review, 65 FR 55003 (September 12, 
2000), and Polyethylene Terephthalate, Film, Sheet, and Strip from the 
Republic of Korea; Final Results of Antidumping Duty New Shipper 
Review, 64 FR 42670 (August 5, 1999)), HSI has preliminarily 
demonstrated three consecutive years of sales at not less than normal 
value. Furthermore, we have determined that HSI's aggregate sales to 
the United States have been made in commercial quantities during these 
three segments of this proceeding. The company also agreed in writing 
to immediate reinstatement of the antidumping order, as long as any 
exporter or producer is subject to the order, if the Department 
concludes that subsequent to the partial revocation, HSI sold the 
subject merchandise at less than normal value. Based on the above 
facts, and absent a determination that the continued application of the 
antidumping order is otherwise necessary to offset dumping, the 
Department preliminarily determines that partial revocation with 
respect to HSI is warranted. Therefore, if these preliminary results 
are affirmed in our final results, we intend to revoke the order in 
part with respect to merchandise produced and exported by HSI. In 
accordance with 19 CFR 351.222(b), we will terminate the suspension of 
liquidation for any such merchandise entered, or withdrawn from 
warehouse, for consumption after May 31, 2000. The Department is 
conducting this review in accordance with section 751 of the Act, as 
amended.

Scope of the Review

    Imports covered by this review are shipments of all gauges of raw, 
pretreated, or primed polyethylene terephthalate film, sheet, and 
strip, whether extruded or coextruded. The films excluded from this 
review are metallized films and other finished films that have had at 
least one of their surfaces modified by the application of a 
performance-enhancing resinous or inorganic layer of more than 0.00001 
inches (0.254 micrometers) thick. Roller transport cleaning film which 
has at least one of its surfaces modified by the application of 0.5 
micrometers of SBR latex has also been ruled as not within the scope of 
the order.
    PET film is currently classifiable under Harmonized Tariff Schedule 
(HTS) subheading 3920.62.00.00. The HTS subheading is provided for 
convenience and for U.S. Customs purposes. The written description 
remains dispositive as to the scope of the product coverage. The review 
covers the period June 1, 1999 through May 31, 2000.

Fair Value Comparisons

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

United States Price (USP)

    In calculating USP, the Department treated HSI's, Hyosung's and 
SKC's sales as export price (EP) sales, as defined in section 772(a) of 
the Act, when the merchandise was first sold to unaffiliated U.S. 
purchasers prior to the date of importation, and use of the constructed 
export price (CEP) methodology was not otherwise indicated. The 
Department treated SKC's sales as CEP sales, as defined in section 
772(b) of the Act, when the merchandise was first sold to unaffiliated 
U.S. purchasers after importation.

[[Page 35935]]

    EP was based on the delivered or c.i.f. U.S. port, packed prices to 
unaffiliated purchasers in the United States. We made adjustments, 
where applicable, for Korean and U.S. brokerage charges, Korean and 
U.S. inland freight, ocean freight, bank charges, U.S. duties, and 
discounts, in accordance with section 772(c) of the Act. We made 
additions to EP for duty drawback pursuant to section 772(c)(1)(B) of 
the Act.
    CEP was based on the delivered, packed prices to unaffiliated 
purchasers in the United States. We made adjustments, where applicable, 
for Korean and U.S. brokerage charges, Korean and U.S. inland freight, 
ocean freight, and U.S. duties, in accordance with section 772(c) of 
the Act. Pursuant to section 772(c)(1)(B) of the Act, we made an 
addition to CEP for duty drawback. We also made an addition to CEP for 
interest revenue. In accordance with section 772(d)(1) of the Act, we 
made deductions for selling expenses associated with economic 
activities in the United States, including warranties, credit expenses, 
bank charges, and indirect selling expenses.
    With respect to subject merchandise to which value was added in the 
United States by SKC prior to sale to unaffiliated customers, we 
deducted the cost of further manufacturing in accordance with section 
772(d)(2) of the Act.
    Pursuant to section 772(d)(3) of the Act, for SKC the price was 
further reduced by an amount for profit to arrive at the CEP.

Normal Value

    In order to determine whether there were sufficient sales of PET 
film in the home market (HM) to serve as a viable basis for calculating 
NV, for each respondent we compared the volume of HM sales of PET film 
to the volume of PET film sold in the United States, in accordance with 
section 773(a)(1)(C) of the Act. Each respondent's aggregate volume of 
HM sales of the foreign like product was greater than five percent of 
its aggregate volume of U.S. sales of the subject merchandise. 
Therefore, we have based NV on the price at which the foreign like 
product was sold for consumption in the home market in the usual 
commercial quantities, in the ordinary course of trade and, to the 
extent practicable, at the same level of trade.
    The Department disregarded sales by SKC of the foreign like product 
in the June 1998--May 1999 administrative review because they failed 
the cost test (see Polyethylene Terephthalate Film, Sheet and Strip 
from the Republic of Korea; Final Results of Antidumping Duty 
Administrative Review, 64 FR 62648 (November 17, 1999) (1998-1999 
Administrative Review)). Therefore, in accordance with section 
773(b)(2)(A)(ii) of the Act, the Department had reasonable grounds to 
believe or suspect that SKC made sales below cost of production (COP) 
during this POR. Accordingly, we initiated a sales-below-cost of 
production investigation for SKC in accordance with section 773(b) of 
the Act. The June 1998--May 1999 administrative review was the most 
recently completed review at the time that we issued our antidumping 
questionnaire.
    We performed a model-specific COP test in which we examined whether 
each HM sale was priced below the merchandise's COP. We calculated the 
COP of the merchandise using SKC's cost of materials and fabrication 
for the foreign like product, plus amounts for home market general and 
administrative (G&A) expenses and packing costs, in accordance with 
section 773(b)(3) of the Act. We allocated yield losses equally between 
A-grade and B-grade film because these grades have identical production 
costs. This is consistent with the methodology employed in past reviews 
of this case. See e.g., 1998-1999 Administrative Review, 64 FR at 
62649.
    In calculating SKC's G&A expenses, we excluded non-operating income 
related to SKC's sale of certain production facilities in its Converted 
Film Division. We excluded this income because it is unrelated to the 
general operations of the company. We based our calculation of SKC's 
G&A expenses upon the remaining information reported in Appendix D-14 
of SKC's October 27, 2000 questionnaire response.
    In accordance with section 773(b)(1) of the Act, in determining 
whether to disregard home market sales made at prices below COP, we 
examined whether such sales were made within an extended period of time 
in substantial quantities, and whether such sales were made at prices 
which would permit recovery of all costs within a reasonable period of 
time.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of SKC's sales of a given model were at prices less than COP, 
we did not disregard any below-cost sales of that model because these 
below-cost sales were not made in substantial quantities. Where 20 
percent or more of SKC's home market sales of a given model were at 
prices less than the COP, we disregarded the below-cost sales because 
such sales were found to be made: (1) In substantial quantities within 
the POR (i.e., within an extended period of time) in accordance with 
section 773(b)(2)(B) of the Act, and (2) at prices which would not 
permit recovery of all costs within a reasonable period of time, in 
accordance with section 773(b)(2)(D) of the Act (i.e., the sales were 
made at prices below the weighted-average per-unit COP for the POR). We 
used the remaining sales as the basis for determining NV, if such sales 
existed, in accordance with section 773(b)(1) of the Act.
    In determining NV, we considered comparison market sales of 
identical or similar merchandise, or constructed value (CV).
    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of SKC's cost of materials, fabrication, G&A expenses, 
and profit. We allocated yield losses equally between A-grade and B-
grade film, and recalculated G&A expenses as described above. In 
accordance with section 773(e)(2)(A) of the Act, we based G&A expenses 
and profit on the amounts incurred and realized by SKC in connection 
with the production and sale of the foreign like product in the 
ordinary course of trade for consumption in the foreign country. For 
selling expenses, we used the weighted-average HM selling expenses. 
Pursuant to section 773(e)(3) of the Act, we included U.S. packing 
expenses.
    In accordance with section 773(a)(6) of the Act, we adjusted NV, 
where appropriate, by deducting home market packing expenses and adding 
U.S. packing expenses. We also adjusted NV for credit expenses. When NV 
was based upon home market sales, we made an adjustment for inland 
freight. For SKC's local export sales, we also made an addition to home 
market price for duty drawback. For comparisons to EP, we made an 
addition to NV for U.S. credit expenses, and bank charges as 
circumstance-of-sale adjustments pursuant to section 773(a)(6)(C) of 
the Act.

Level of Trade and CEP Offset

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the comparison 
market at the same level of trade (LOT) as the EP or CEP transaction. 
The NV LOT is that of the starting price sales in the comparison market 
or, when NV is based on CV, that of the sales from which we derive SG&A 
expenses and profit. For EP, the U.S. LOT is also the level of the 
starting price sale, which is usually from the exporter to the 
importer. For CEP, it is the level of the constructed sale from the 
exporter to the importer.

[[Page 35936]]

    To determine whether NV sales are at a different LOT than EP or 
CEP, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the differences in the levels between NV and 
CEP affect price comparability, we adjust NV under section 773(A)(7)(B) 
of the Act (the CEP offset provision). See, e.g., Certain Carbon Steel 
Plate from South Africa, Final Determination of Sales at Less Than Fair 
Value, 62 FR 61731 (November 19, 1997).
    In implementing these principles in this review, we asked each 
respondent to identify the specific differences and similarities in 
selling functions and/or support services between all phases of 
marketing in the home market and the United States. SKC identified two 
channels of distribution in the home market: (1) Wholesalers/
distributors and (2) end-users. HSI also identified two channels of 
distribution: sales to end-users and sales to distributors. Hyosung 
identified one channel of distribution in the home market: sales to 
end-users, and we found that Hyosung performed the same type and level 
of selling functions for all of its sales to end-users. For both 
channels, SKC and HSI perform similar selling functions such as order 
processing, market research and after-sales warranty services. Because 
channels of distribution do not qualify per se as separate LOTs, when 
the selling functions performed for each customer class are 
sufficiently similar, as in the instant review, we determined that 
there exists one LOT for SKC's, HSI's, and Hyosung's home market sales.
    For the U.S. market, SKC reported two LOTs: (1) EP sales made 
directly to its U.S. customers, and (2) CEP sales made through SKC 
America, Inc., SKC's wholly-owned U.S. subsidiary. HSI and Hyosung each 
identified one LOT: EP sales made directly to U.S. customers. The 
Department examined the selling functions performed by SKC for both EP 
and CEP sales. These selling functions included customer sales contacts 
(i.e., visiting current or potential customers, receiving orders, 
promotion of new products, collection of unpaid invoices), technical 
services, inventory maintenance, and/or business system development. 
The Department also examined the selling functions performed by HSI and 
Hyosung on their home market and U.S. sales, and determined that 
Hyosung and HSI both performed substantially the same level of sales 
contact, inventory maintenance, and/or business system development on 
both their home market and U.S. sales.
    For EP sales, SKC provided its US customers with the selling 
functions noted above. For CEP sales, SKC performed fewer customer 
sales contacts, technical services, inventory maintenance, and computer 
legal, audit and business system development. On CEP sales, these 
selling fuctions were generally performed by SKC America, Inc. We found 
that SKC performed significantly greater selling functions on its EP 
sales, and that the selling functions performed by SKC on its EP and 
CEP sales were sufficiently different to warrant two separate LOTs in 
the United States.
    When we compared EP sales to home market sales, we determined that 
for each respondent both sales were made at the same LOT. For both EP 
and home market transactions, each respondent sold directly to the 
customer and provided similar levels of customer sales contacts, 
technical services, inventory maintenance and business system 
development. Because each respondent performed essentially equivalent 
services on its EP and home market sales, no LOT adjustment was 
warranted.
    For CEP sales, SKC performed fewer customer sales contacts, 
technical services, inventory maintenance, and computer legal, audit 
and business system development then it did in the home market. As 
previously noted, SKC America, Inc. generally provided these selling 
functions to SKC's CEP customers. The differences in selling functions 
performed for home market and CEP transactions indicate that home 
market sales involved a more advanced stage of distribution than CEP 
sales since SKC provided a greater degree of services on its home 
market sales then it did on its CEP sales.
    Because we compared these CEP sales to HM sales at a different LOT, 
we examined whether a LOT adjustment may be appropriate. In this case 
SKC sold at one LOT in the home market; therefore, there is no 
demonstrated pattern of consistent price differences between LOTs. 
Further, we do not have the information which would allow us to examine 
pricing patterns of SKC's sales of other similar products, and there is 
no other record evidence on which such an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a LOT adjustment but the LOT in Korea for SKC is at a more 
advanced stage than the LOT of its CEP sales, a CEP offset is 
appropriate in accordance with section 773(a)(7)(B) of the Act, as 
claimed by SKC. We based the CEP offset amount on the amount of home 
market indirect selling expenses, and limited the deduction for home 
market indirect selling expenses to the amount of indirect selling 
expenses deducted from CEP in accordance with section 772(d)(1)(D) of 
the Act. We applied the CEP offset to NV, whether based on home market 
prices or CV.

Preliminary Results of Review

    We preliminarily determine that the following margins exist for the 
period June 1, 1999 through May 31, 2000:

------------------------------------------------------------------------
                                                               Margin
                          Company                             (percent)
------------------------------------------------------------------------
HSI.......................................................          0
Hyosung...................................................          0
SKC.......................................................          5.13
------------------------------------------------------------------------

    We will disclose calculations performed in connection with these 
preliminary results of review within 5 days of the day of publication 
of this notice. Interested parties may request a hearing not later than 
30 days after publication of this notice. Interested parties may also 
submit written arguments in case briefs on these preliminary results 
within 30 days of the date of publication of this notice. Rebuttal 
briefs, limited to issues raised in case briefs, may be filed no later 
than five days after the time limit for filing case briefs. Parties who 
submit arguments are requested to submit with each argument a statement 
of the issue and a brief summary of the argument. All memoranda to 
which we refer in this notice can be found in the public reading room, 
located in the Central Records Unit, room B-099 of the main Commerce 
building. Any hearing, if requested, will be held two days after the 
scheduled date for submission of rebuttal briefs.
    The Department will publish the final results of this 
administrative review, including a discussion of its analysis of issues 
raised in any case or rebuttal brief or at a hearing. The Department 
will issue final results of this review within 120 days of publication 
of these preliminary results.
    Upon completion of the final results in this review, the Department 
shall determine, and the Customs Service shall assess, antidumping 
duties on all

[[Page 35937]]

appropriate entries. In accordance with 19 CFR 351.212(b), we have 
calculated an importer/customer-specific assessment rate based on the 
ratio of the total amount of antidumping duties calculated for the 
examined sales to the entered value of those same sales. The Department 
will issue appraisement instructions on each exporter directly to the 
Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of PET film from the Republic of Korea entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date of the final results of this administrative review, as provided by 
section 751(a)(1) of the Act: (1) The cash deposit rate for the 
reviewed firm will be the rate established in the final results of 
administrative review; (2) for merchandise exported by manufacturers or 
exporters not covered in this review but covered in the original less-
than-fair-value (LTFV) investigation or a previous review, the cash 
deposit will continue to be the most recent rate published in the final 
determination or final results for which the manufacturer or exporter 
received a company-specific rate; (3) if the exporter is not a firm 
covered in this review or the original investigation, but the 
manufacturer is, the cash deposit rate will be that established for the 
manufacturer of the merchandise in the final results of this review or 
the LTFV investigation; and (4) if neither the exporter nor the 
manufacturer is a firm covered in this or any previous reviews, the 
cash deposit rate will be 21.5%, the ``all others'' rate established in 
the LTFV investigation.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: June 29, 2001.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration
[FR Doc. 01-17231 Filed 7-9-01; 8:45 am]
BILLING CODE 3510-DS-P