[Federal Register Volume 67, Number 90 (Thursday, May 9, 2002)]
[Notices]
[Pages 31225-31231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11190]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-848]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Certain Cold-Rolled Carbon Steel Flat Products From Korea

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

ACTION: Notice of preliminary determination of sales at less than fair 
value.

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SUMMARY: We preliminarily determine that certain cold-rolled carbon 
steel flat products (``cold-rolled steel'') from Korea are being, or 
are likely to be, sold in the United States at less than fair value 
(``LTFV''), as provided in section 733(b) of the Tariff Act of 1930, as 
amended.
    Interested parties are invited to comment on this preliminary 
determination.

EFFECTIVE DATE: May 9, 2002.

FOR FURTHER INFORMATION CONTACT: Brian Ledgerwood or Mark Young, AD/CVD 
Enforcement Office VI, Group II, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
3836 or (202) 482-6397, respectively.

SUPPLEMENTARY INFORMATION:

The 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. In addition, unless 
otherwise indicated, all citations to the Department of Commerce 
(``Department's'') regulations are to 19 CFR part 351 (April 2001).

Case History

    On October 18, 2001, the Department initiated antidumping duty 
investigations on cold-rolled steel (See Notice of Initiation of 
Antidumping Duty Investigations: Certain Cold-Rolled Carbon Steel Flat 
Products From Argentina, Australia, Belgium, Brazil, France, Germany, 
India, Japan, Korea, the Netherlands, New Zealand, the People's 
Republic of China, the Russian Federation, South Africa, Spain, Sweden, 
Taiwan, Thailand, Turkey, and Venezuela, 66 FR 54198 (October 26, 
2001)) (Initiation Notice).

[[Page 31226]]

    On October 18, 2001, based on information provided in the petition, 
we found ``reasonable grounds to believe or suspect'' that sales of the 
foreign like products in Korea were made at prices below the cost of 
production (``COP'') within the meaning of section 773(b)(2)(A)(i) of 
the Act. Accordingly, the Department initiated a country-wide cost 
investigation on sales of the foreign like products in this market. 
Since the initiation of this investigation the following events have 
occurred.
    On October 31, 2001, we solicited comments from interested parties 
regarding the criteria to be used for model-matching purposes, and we 
received comments on our proposed matching criteria on November 8, 2001 
from the petitioners and respondents. On November 26, 2001, we informed 
respondents of our revised model match criteria.
    On November 13, 2001, the United States International Trade 
Commission (``ITC'') preliminarily determined that there is a 
reasonable indication that an industry in the United States is 
materially injured or threatened with material injury by reason of 
imports from Argentina, Australia, Belgium, Brazil, China, France, 
Germany, India, Japan, Korea, the Netherlands, New Zealand, Russia, 
South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela of 
cold-rolled steel products. See Certain Cold-Rolled Steel Products From 
Argentina, Australia, Belgium, Brazil, China, France, Germany, India, 
Japan, Korea, Netherlands, New Zealand, Russia, South Africa, Spain, 
Sweden, Taiwan, Thailand, Turkey, and Venezuela, 66 FR 57985 (November 
19, 2001).
    On November 16, 2001, the Department issued an antidumping 
questionnaire to Pohang Iron & Steel CO. Ltd. (``POSCO'') and Dongbu 
Steel Co., Ltd., (``Dongbu'').\1\ The petitioners made an allegation of 
sales below COP in the petition. Based on the factual information 
contained in the petition, we found ``reasonable grounds to believe or 
suspect'' that sales below cost occurred. See Initiation Notice 66 FR 
at 54212-13. Accordingly, the Department initiated the requested 
country-wide cost investigation.
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    \1\ 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 the cost of production and 
constructed value for the subject merchandise that the company sold 
and/or produced during the POI. The costs reported in a section D 
response are reported on a product specific basis (i.e., CONNUM 
specific basis).
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    On November 29, 2001, we made a final determination and 
consequently selected POSCO and Dongbu, the largest two producers/
exporters of cold-rolled steel from Korea, as the mandatory respondents 
in this proceeding. For further discussion, see the memorandum to 
Melissa Skinner, Director, Office 6, from Mark Young: Selection of 
Respondents, dated November 29, 2001 (``Selection of Respondents 
Memo'').
    On December 7, 2001, and January 14, 2002, Nucor Corporation, Steel 
Dynamics, Inc., WCI Steel, Inc., and Weirton Steel Company \2\ made 
submissions requesting that the Department make an expedited finding 
that critical circumstances exist with respect to imports from Korea. 
See Critical Circumstances section below for further discussion.
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    \2\ The complete list of petitioners in this investigation are: 
Bethlehem Steel Corporation, LTV Steel Company Inc., National Steel 
Corporation, Nucor Corporation, Steel Dynamics, Inc., United States 
Steel Corporation, WCI Steel, Inc., and Weirton Steel Corporation, 
(collectively ``the petitioners'').
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    During the period December 2001 through April 2002, the Department 
received responses from POSCO and Dongbu regarding the Department's 
original and supplemental questionnaires.
    On February 5, 2002, the respondents submitted comments regarding 
petitioners' December 7, 2001 and January 14, 2002 letters alleging 
that critical circumstances exist with respect to imports of subject 
merchandise from Korea. Respondents' comments regarding POSCO were 
inadvertently omitted from the Departments' preliminary determination 
of critical circumstances (see Critical Circumstances section, infra). 
Accordingly, we addressed respondents' comments through a memo to the 
file. See Memorandum to File, from Mark Manning: Respondents' Arguments 
Concerning the Preliminary Determination of Affirmative Critical 
Circumstances, dated April 26, 2002. Moreover, on April 12, 2002 the 
petitioners' submitted a letter with additional comments in support of 
their request for an expedited finding that critical circumstances 
exist. However, the petitioners' letter arrived after our preliminary 
critical circumstance finding had been signed, therefore we will 
address petitioners' comments in our final determination.
    On February 7, 2002, pursuant to 19 CFR 351.205(e), Bethlehem Steel 
Corporation, National Steel Corp., and United States Steel Corporation 
made a timely request to postpone the preliminary determination. We 
granted this request on February 22, 2002, and postponed the 
preliminary determination until no later than April 26, 2001. (See 
Postponement of Preliminary Determinations of Antidumping Duty 
Investigations: Certain Cold-Rolled Carbon Steel Flat Products from 
Argentina (A-357-816), Australia (A-602-804), Belgium (A-423-811), 
Brazil (A-351-834), the People's Republic of China (A-570-872), France 
(A-427-822), Germany (A-428-834), India (A-533-826), Japan (A-588-859), 
Korea (A-580-848), the Netherlands (A-421-810), New Zealand (A-614-
803), Russia (A-821-815), South Africa (A-791-814), Spain (A-469-812), 
Sweden (A-401-807), Taiwan (A-583-839), Thailand (A-549-819), Turkey 
(A-489-810) and Venezuela (A-307-822), 67 FR 8227 (February 22, 2002).)
    On April 3, 16, and 18, 2002, petitioners submitted comments 
regarding POSCO's U.S. selling practices through a Korean trading 
company and both companies' U.S. affiliates (i.e., ``U.S. Channel 3'' 
sales). On April 11, 2002, POSCO submitted comments in rebuttal to 
petitioners' April 3, 2002 comments. See ``POSCO's U.S. Channel 3 
Sales'' in the Export Price section below for further discussion.
    On April 9, 2002, petitioners submitted comments on POSCO and its 
affiliates. On April 12 and 15, 2002, petitioners submitted comments on 
Dongbu and its affiliates.
    On April 15, 2002, respondents submitted rebuttal comments to the 
petitioners' April 9, 2002 submission regarding POSCO. On April 18, 
2002, respondents submitted rebuttal comments to the petitioners' April 
12 and 15, 2002 submission regarding Dongbu.
    On April 17, 2002, respondents submitted comments on the 
Department's preliminary determination of critical circumstances (see 
Critical Circumstances section, infra).
    On April 18, 2002, petitioners submitted comments on POSCO's April 
11, 2002 rebuttal comments.

Critical Circumstances

    On April 10, 2002, the Department preliminarily determined that 
critical circumstances exist with respect to all imports of cold-rolled 
steel from Korea except for those from Dongbu, (i.e., POSCO and all 
others). See Memorandum From Bernard Carreau to

[[Page 31227]]

Faryar Shirzad Re: Preliminary Affirmative Determinations of Critical 
Circumstances; see also Notice of Preliminary Determination of Critical 
Circumstances: Certain Cold-Rolled Carbon Steel Flat Products From 
Australia, the People's Republic of China, India, the Republic of 
Korea, the Netherlands, and the Russian Federation, 67 FR 19157 (April 
18, 2002) (Critical Circumstances Notice).

Scope of Investigation

    For purposes of this investigation, the products covered are 
certain cold-rolled (cold-reduced) flat-rolled carbon-quality steel 
products. For a full description of the scope of this investigation, as 
well as a complete discussion of all scope exclusion requests submitted 
in the context of the on-going cold-rolled steel investigations, please 
see the ``Scope Appendix'' attached to the Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina, published concurrently with 
this preliminary determination.

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 the Department 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 reasonable be examined. Using company-
specific export data for the period of investigation (``POI''), which 
we obtained from a variety of sources under the Harmonized Tariff 
Schedules of the United States number that corresponds to the subject 
merchandise, we found that thirty producers/exporters from Korea may 
have exported cold-rolled steel to the Untied States during the POI. 
According to the data on the record, POSCO and Dongbu represented more 
than 80 percent of the imports during the POI. Due to limited 
resources, we determined that we could only investigate the two largest 
producers/exporters. See, Selection of Respondents Memo. Therefore, we 
designated POSCO and Dongbu as the mandatory respondents and sent both 
companies the Department's antidumping questionnaire.

Period of Investigation

    The POI is July 1, 2000, through June 30, 2001.

Fair Value Comparisons

    To determine whether sales of cold-rolled steel from Korea to the 
United States were made at LTFV, we compared the export price (``EP'') 
or constructed export price (``CEP'') to the normal value (``NV''), as 
described in the ``Export Price,'' ``Constructed Export Price,'' and 
``Normal Value'' sections of this notice below. In accordance with 
section 777A(d)(1)(A)(i) of the Act, we compared POI weighted-average 
EPs and CEPs to weighted-average NVs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the respondents in the home market during 
the POI that fit the description in the ``Scope of Investigation'' 
section of this notice to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. We compared 
U.S. sales to sales made in the home market, where appropriate. Where 
there were no sales of identical merchandise in the home market made in 
the ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade. In making the product comparisons, we matched 
foreign like products based on the physical characteristics reported by 
the respondents in the following order of importance: hardening and 
tempering, paint, carbon level, quality, yield strength, minimum 
thickness, thickness tolerance, width, edge finish, form, temper 
rolling, leveling, annealing, surface finish, specification, and grade 
or type.

Export Price

    We calculated EP for POSCO and Dongbu, in accordance with section 
772(a) of the Act, for those sales where the merchandise was sold to 
the first unaffiliated purchaser in the United States prior to 
importation by the exporter or producer outside the United States, or 
to an unaffiliated purchaser for exportation to the United States, 
based on the facts of record. We based EP on the packed delivered price 
to unaffiliated purchasers in the United States. Where appropriate, we 
made adjustments for price-billing errors and freight revenue. We also 
made deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these included, where appropriate, ocean 
freight, marine insurance, U.S. brokerage and handling (including bank 
and wharfage charges for POSCO), and U.S. customs duties (including 
harbor maintenance fees and merchandise processing fees).

POSCO's ``U.S. Channel 3'' EP Sales

    On April 3, 16, and 18, 2002, petitioners submitted comments 
regarding POSCO's U.S. selling practices through a Korean trading 
company and both companies' U.S. affiliates, expressing concern that 
POSCO may have dumped subject merchandise through a particular channel 
by way of a middleman or other questionable means (i.e., ``U.S. Channel 
3'' sales). On April 11, 2002, POSCO submitted comments in rebuttal to 
petitioners' April 3, 2002 comments.
    The petitioners state that the Department needs to collect 
additional data to evaluate POSCO's ``U.S. Channel 3'' transactions in 
greater detail. Moreover, petitioners claim the data and analysis POSCO 
submitted in its April 11, 2002 submission indicate that POSCO has the 
ability to provide the Department with the information and data it 
needs to adequately address the issues raised about these sales. On 
April 17, 2002, the Department issued a supplemental questionnaire to 
POSCO which specifically addresses the Department's concerns about 
these sales. POSCO's reply to this request for information was not 
available in time for purposes of making our preliminary determination, 
but we will continue to collect information as necessary and parties 
are encouraged to comment on this topic for the final determination.

Constructed Export Price

    For POSCO and Dongbu, in accordance with section 772(b) of the Act, 
we calculated CEP for those sales where the merchandise was sold (or 
agreed to be sold) in the United States before or after the date of 
importation by or for the account of the producer or exporter, or by a 
seller affiliated with the producer or exporter, to a purchaser not 
affiliated with the producer or exporter.
    We based CEP on the packed delivered prices to unaffiliated 
purchasers in the United States. Where appropriate, we made adjustments 
for price-billing errors. We also made deductions for movement 
expenses, in accordance with section 772(c)(2)(A) of the Act; these 
included, where appropriate, foreign inland freight, ocean freight, 
marine insurance, U.S. brokerage and handling, and U.S. customs duties 
(including harbor maintenance fees and merchandise processing fees). 
For further discussion,

[[Page 31228]]

see the Sales Calculation Memorandum, dated April 26, 2002 
(``Calculation Memorandum''). In accordance with section 772(d)(1) of 
the Act and 19 CFR 351.402(b), we deducted those selling expenses 
associated with economic activities occurring in the United States, 
including direct selling expenses (commissions and imputed credit 
costs), and indirect selling expenses (including inventory carrying 
costs).
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by POSCO and Dongbu, respectively, and their 
affiliates on their sales of the subject merchandise in the United 
States and the foreign like product in the home market and the profit 
associated with those sales.

Normal Value

A. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV, we 
compared each respondent's volume of home market sales of the foreign 
like product to the volume of U.S. sales of the subject merchandise, in 
accordance with section 773(a)(1)(B) of the Act. Because each 
respondent's aggregate volume of home market sales of the foreign like 
product was greater than five percent of its aggregate volume of U.S. 
sales for the subject merchandise, we determined that the home market 
was viable for the respondent.

B. Arm's Length Test

    For POSCO sales to affiliated customers for consumption in the home 
market which were determined not to be at arm's length were excluded 
from our analysis. To test whether these sales were made at arm's 
length, for both Dongbu and POSCO we compared the prices of sales of 
comparison products to affiliated and unaffiliated customers, net of 
all movement charges, direct selling expenses, discounts, and packing. 
Pursuant to 19 CFR 351.403(c) and in accordance with our practice, 
where the prices to the affiliated party were on average less than 99.5 
percent of the prices to unaffiliated parties, we determined that the 
sales made to the affiliated party were not at arm's length. See e.g., 
Notice of Final Results and Partial Rescission of Antidumping Duty 
Administrative Review: Roller Chain, Other Than Bicycle, From Japan, 62 
FR at 60472, 60478 (November 10, 1997), and Antidumping Duties; 
Countervailing Duties: Final Rule (``Antidumping Duties''), 62 FR at 
27295, 27355-56 (May 19, 1997). We included in our NV calculations 
those sales to affiliated customers that passed the arm's length test 
in our analysis. See 19 CFR 351.403; Antidumping Duties, 62 FR at 
27355-56.

C. Cost of Production Analysis

    Based on our analysis of an allegation contained in the petition, 
we found that there were reasonable grounds to believe or suspect that 
POSCO and Dongbu were selling cold-rolled steel in the home market at 
prices below their respective COPs. Accordingly, pursuant to section 
773(b) of the Act, we initiated a country-wide sales-below-cost 
investigation to determine whether sales were made at prices below 
their respective COPs (see Initiation Notice at 66 FR 54198, 54206).
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus an amount for general and administrative 
expenses (``G&A''), including interest expenses, and home market 
packing costs (see ``Test of Home Market Sales Prices'' section below 
for treatment of home market selling expenses). We relied on the COP 
data submitted by each respondent except for the following adjustments:

Dongbu

    1. We adjusted Dongbu's reported G&A expense to exclude gain on 
sale of land from the calculation of the G&A expense rate.
    2. We adjusted Dongbu's reported interest expense rate. We used 
Dongbu's consolidated audited financial statements figures in the 
calculation of the interest expense rate.

POSCO

    1. We revised POSCO's reported G&A expenses to exclude the gains on 
disposition of marketable securities, the gains on valuation of 
marketable securities, and the reversal of the allowance for bad debt. 
We also included foreign currency exchange gains on accounts payable 
and other foreign currency exchange losses in the reported G&A expense 
to calculate the G&A expense rate.
    2. We revised POSCO's reported consolidated financial expense to 
include foreign currency exchange losses from loans payable and foreign 
currency exchange gains from cash to calculate the financial expense 
rate.

See Memorandum from Ji Young Oh and Ernest Gziryan to Neal Halper, 
Director, Office of Accounting, dated April 26, 2002, Re: Cost of 
Production and Constructed Value Calculation Adjustments for the 
Preliminary Determination (``Cost Calculation Memorandum'').
2. Test of Home Market Sales Prices
    On a product-specific basis, 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 
the sales prices were below the COP. The prices were exclusive of any 
applicable movement charges, rebates, discounts, and direct and 
indirect selling expenses. In determining whether to disregard home 
market sales made at prices less than their COP, we examined, in 
accordance with sections 773(b)(1)(A) and (B) of the Act, whether such 
sales were made (1) within an extended period of time in substantial 
quantities, and (2) at prices which permitted the recovery of all costs 
within a reasonable period of time.
3. Results of the COP Test
    Pursuant to section 773(b)(2)(C), where less than 20 percent of the 
respondent's sales of a given product are at prices less than the COP, 
we do not disregard any below-cost sales of that product, because we 
determine that in such instances 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 are at prices less than the 
COP, we determine that in such instances the below-cost sales represent 
``substantial quantities'' within an extended period of time, in 
accordance with section 773(b)(1)(A) of the Act. In such cases, we also 
determine whether such sales were made at prices which would not permit 
recovery of all costs within a reasonable period of time, in accordance 
with section 773(b)(1)(B) of the Act.
    We found that, for certain specific products, more than 20 percent 
of POSCO's and Dongbu's home market sales were at prices less than the 
COP and, in addition, such sales did not provide for the recovery of 
costs within a reasonable period of time. We therefore excluded these 
sales and used the remaining sales, if any, as the basis for 
determining NV, in accordance with section 773(b)(1) of the Act.

D. Calculation of Normal Value Based on Comparison Market Prices

    We calculated NV based on delivered prices to unaffiliated 
customers. We

[[Page 31229]]

made deductions, where appropriate, from the starting price for early 
payment discounts. We also made deductions for movement expenses, 
including inland freight (plant to distribution warehouse, plant/
warehouse to customer, and affiliated reseller to customer) and 
warehousing under section 773(a)(6)(B)(ii) of the Act. In addition, we 
made adjustments under section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410 for differences in circumstances of sale for imputed credit 
expenses and commissions.
    Furthermore, we made adjustments for differences in costs 
attributable to differences in the physical characteristics of the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 
19 CFR 351.411. We also deducted home market packing costs and added 
U.S. packing costs in accordance with section 773(a)(6)(A) and (B) of 
the Act. Finally, for comparisons to POSCO's CEP sales, we made a CEP 
offset pursuant to section 773(a)(7)(B) of the Act and 19 CFR 
351.412(f). We calculated the CEP offset as the lesser of the indirect 
selling expenses on the comparison-market sales or the indirect selling 
expenses deducted from the starting price in calculating CEP.

E. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (``LOT'') as the EP or CEP transaction. Sales are 
made at different LOTs if they are made at different marketing stages 
(or their equivalent). See 19 CFR 412(c)(2). Substantial differences in 
selling activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. Id.; 
See also Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 
FR 61731, 61732 (November 19, 1997). In order to determine whether the 
comparison sales were at different stages in the marketing process than 
the U.S. sales, we reviewed the distribution system, for each 
respondent, in each market (i.e., the ``chain of distribution''), \3\ 
including selling functions, class of customer (``customer category''), 
and the level of selling expenses for each type of sale.
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    \3\ The marketing process in the United States and comparison 
markets begins with the producer and extends to the sale to the 
final user or consumer. The chain of distribution between the two 
may have many or few links, and the respondent's sales occur 
somewhere along this chain. In performing this evaluation, we 
considered the narrative responses of the respondent to properly 
determine where in the chain of distribution the sale appears to 
occur.
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    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for EP and comparison market sales (i.e., NV based on 
either home market or third country prices \4\), we consider the 
starting prices before any adjustments. For CEP sales, we consider only 
the selling activities reflected in the price after the deduction of 
expenses and profit under section 772(d) of the Act. See Micron 
Technology, Inc. v. United States, Court Nos. 00-1058, 00-1060 (Fed. 
Cir. 2001).
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    \4\ Where NV is based on constructed value (``CV''), we 
determine the NV LOT based on the LOT of the sales from which we 
derive selling expenses, G&A and profit for CV, where possible.
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    When the Department is unable to find sales of the foreign like 
product in the comparison market at the same LOT as the EP or CEP, the 
Department may compare the U.S. sale to sales at a different LOT in the 
comparison market. In comparing EP or CEP sales to sales at a different 
LOT in the comparison market, where available data make it practicable, 
we make a LOT adjustment under section 773(a)(7)(A) of the Act if the 
difference in level of trade is demonstrated to affect price 
comparability. For CEP sales only, if a NV LOT is more remote from the 
factory than the CEP LOT, and there is no basis for determining whether 
the difference in LOTs between NV and CEP affected price comparability 
(i.e., no LOT adjustment was practicable), the Department will grant a 
CEP offset, as provided in section 773(a)(7)(B) of the Act. 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).
    We obtained information from each respondent regarding the 
marketing stages involved in making the reported home market and U.S. 
sales, including a description of the selling activities performed by 
each respondent for each channel of distribution. Company-specific LOT 
analyses containing business proprietary information are incorporated 
into the company-specific calculation memoranda. Company-specific LOT 
findings are summarized below.
1. POSCO
    POSCO reported home market sales through three channels of 
distribution and to three customer categories. We examined the chain of 
distribution and the selling activities associated with sales reported 
by POSCO to each of its customer categories in the home market. We 
found that these three categories (service centers, trading companies, 
and end-users) did not differ significantly from each other with 
respect to selling activities, \5\ although there were slight 
differences between them for meeting with customers and inventory 
management. See Appendix A-6 of POSCO's response to the Department's 
questionnaire, dated December 14, 2001. Based on our overall analysis, 
we found that POSCO performs virtually the same selling functions with 
the same intensity for all its home market customers regardless of 
their channel of distribution in the home market. Therefore, we 
preliminarily determine that POSCO made home market sales at one LOT 
during the POI.
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    \5\ POSCO performs the following selling functions in the home 
market: Negotiates sales price, invoices customers, meets with 
customers, freight and delivery arrangement, inventory maintenance, 
technical advice, arranging customer credit, market research, 
warranty services, engineering services, research and development, 
technical programs, advertising, and packing services.
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    In the U.S. market, POSCO made EP and CEP sales through three 
channels of distribution and one customer category (trading companies). 
We examined the chain of distribution and the selling activities 
associated with sales reported by POSCO to trading companies in the 
U.S. market. The information on the record demonstrates that the 
selling activities that POSCO reported for its sales through U.S. 
channels 1 and 2 (i.e., POSCO's CEP sales) differed significantly from 
its sales through U.S. channel 3 (i.e., POSCO's EP sales). In 
particular, for POSCO's EP sales, POSCO performs all categories of 
selling functions. However, for POSCO's CEP sales, there are several 
selling functions that POSCO's U.S. affiliate, Pohang Steel America 
Corp. (``POSAM'') is heavily involved in and performs exclusively: 
POSAM negotiates the sales terms, meets with customers, invoices 
unaffiliated customers, performs market research, handles importation 
documents, serves as importer of record, pays U.S. customs duties and 
wharfage, and extends credit for CEP sales.
    Based on our overall analysis, we found that the three U.S. market 
sales channels constituted two different levels of trade (U.S. LOT 1 
for U.S. channels 1 and 2, and U.S. LOT 2 for channel 3). We then 
compared the U.S. LOTs to the home market LOT. We preliminarily 
determine that U.S. channel 3 and home market channels 1, 2, and 3 are 
at the same LOT because the selling functions that POSCO provides are 
virtually the same in both markets and do not vary according to whether 
subject merchandise is

[[Page 31230]]

ultimately destined for the U.S. market or the home market. Thus, we 
matched U.S. LOT 2 sales with sales in the home market and made no LOT 
adjustment.
    U.S. LOT 1 (i.e., POSCO's CEP sales) differed considerably from the 
home market LOT with respect to selling activities. As noted above, 
approximately half of the U.S. selling functions, otherwise performed 
by POSCO, were performed by POSAM. The information on the record 
demonstrates that the selling activities that POSCO reported for its 
sales through U.S. channels 1 and 2 (i.e., POSCO's CEP sales) differed 
significantly from its sales through U.S. channel 3 (i.e., POSCO's EP 
sales). In particular, for POSCO's EP sales, POSCO performs all 
categories of selling functions. However, for POSCO's CEP sales, of the 
selling functions noted above, POSAM is heavily involved and performs 
exclusively the following: POSAM negotiates the sales terms, meets with 
customers, invoices unaffiliated customers, performs market research, 
handles importation documents, serves as importer of record, pays U.S. 
customs duties and wharfage, and extends credit for CEP sales. Thus, we 
found POSCO's U.S. LOT 1 (i.e., CEP sales) to be different from the 
home market LOT and to be at a less advanced LOT than that of the home 
market LOT. Furthermore, we have no other information on the record 
that provides an appropriate basis for quantifying the difference in 
selling functions performed in either market in order to determine an 
LOT adjustment.
    Thus, in accordance with section 773(a)(7)(B) of the Act and as set 
forth in 19 CFR 351.412(f), a CEP offset will be granted where (1) 
normal value is compared to CEP sales, (2) normal value is determined 
at a more advanced LOT than the LOT of the CEP, and (3) despite the 
fact that the party has cooperated to the best of its ability, the data 
available do not provide an appropriate basis to determine whether the 
difference in LOT affects price comparability. Since we have found that 
to be the case here with respect to POSCO, in accordance with 19 CFR 
351.412(f), we are granting POSCO a CEP offset.
2. Dongbu
    Dongbu reported home market sales through two channels of 
distribution and to two customer categories. We examined the chain of 
distribution and the selling activities associated with sales reported 
by Dongbu to each of its customer categories in the home market. The 
information on the record demonstrates that Dongbu performs virtually 
the same selling functions across all home market channels of 
distribution and customer categories. \6\ See page A-12 of Dongbu's 
section A response to the Department's questionnaire, dated December 
14, 2001, as well as Dongbu's March 22, 2002 supplemental response at 
Exhibit A-22. Based on our overall analysis, we found that Dongbu 
performs virtually the same selling functions with the same intensity 
for all its customers regardless of the channel of distribution, 
although there were slight differences between them in terms of the 
sale process (i.e., sales price is determined through: (1) Typical 
customer/seller negotiation; or (2) via internet auction bidding 
process). Therefore, we preliminarily determine that Dongbu made home 
market sales at one LOT during the POI.
---------------------------------------------------------------------------

    \6\ Dongbu performs the following selling functions in the home 
market: Inventory maintenance, after sales service, warranties, 
inland freight, sales price negotiation, invoicing, and arranging 
customer credit.
---------------------------------------------------------------------------

    In the U.S. market, Dongbu and Dongbu U.S.A. made EP and CEP sales 
through four channels of distribution and to three customer categories 
(i.e., distributors, service centers, or end users). We examined the 
chain of distribution and the selling activities associated with sales 
reported by Dongbu and Dongbu U.S.A. to distributors, service centers, 
and end users in the U.S. market. The information on the record 
demonstrates that the selling activities reported by Dongbu through 
U.S. channels 1 and 2 differed only slightly from U.S. channels 3 and 
4. Basically, Dongbu's U.S. channels 1 and 2 involved its U.S. sales 
affiliate, Dongbu U.S.A. (i.e., they are CEP sales), while Dongbu's 
U.S. channels 3 and 4 did not involve its U.S. sales affiliate, (i.e., 
EP sales). In particular, for Dongbu's EP sales, Dongbu performs all 
categories of selling functions. However, for Dongbu's CEP sales, of 
the selling functions performed for U.S. sales, the majority are 
performed by Dongbu. \7\ Thus, based on our overall analysis of the 
facts currently on the record, we found that Dongbu's four U.S. sales 
channels constituted a single LOT (i.e., U.S. LOT 1 for U.S. channels 
1, 2, 3, and 4).
---------------------------------------------------------------------------

    \7\ The selling functions Dongbu performs for its U.S. CEP sales 
are: Inventory maintenance, after sales service, warranty services, 
inland freight in Korea, Korean customs clearance, and international 
freight.
---------------------------------------------------------------------------

    Moreover, we have preliminarily determined that Dongbu's home 
market and U.S. LOTs are the same because the selling functions that 
Dongbu provides are nearly the same in each market and do not vary 
significantly between markets. See Dongbu's March 22, 2002 supplemental 
response at Exhibit A-22 for further discussion. Thus no LOT adjustment 
or CEP offset is warranted.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act based on the exchange rates in effect on the 
dates of the U.S. sales as certified by the Federal Reserve Bank.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information relied upon in making our final determination.

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 75 
days (unless postponed) after this preliminary determination.

Suspension of Liquidation

    Based on our preliminary affirmative critical circumstances finding 
with respect to all imports of subject merchandise, except those 
produced or exported by Dongbu, we are directing the Customs Service to 
suspend liquidation of all entries of cold-rolled steel entered, or 
withdrawn from warehouse, for consumption on or after the date which is 
90 days prior to the date on which this notice is published in the 
Federal Register (see Critical Circumstances Notice). Furthermore, in 
accordance with section 733(d)(2) of the Act, we are directing the U.S. 
Customs Service to suspend liquidation of all imports of subject 
merchandise by Dongbu that are entered, or withdrawn from warehouse, 
for consumption on or after 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 appropriate, as indicated in the chart 
below. These suspension-of-liquidation instructions will remain in 
effect until further notice.
    The weighted-average dumping margin are as follows:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/manufacturer                        margin
                                                              percentage
------------------------------------------------------------------------
POSCO......................................................         5.25
Dongbu.....................................................        19.03
All Others.................................................        13.84
------------------------------------------------------------------------


[[Page 31231]]

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Disclosure

    We will disclose the calculations used in our analysis to parties 
in this proceeding in accordance with 19 CFR 351.224(b).

Public Comment

    Case briefs for this investigation must be submitted to the 
Department no later than seven days after the date of the final 
verification report issued in this proceeding. Rebuttal briefs must be 
filed five days from the deadline date for 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. Public versions of all comments and rebuttals should be 
provided to the Department and made available on diskette. Section 774 
of the Act provides that the Department will hold a public 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 an interested party. If a request for a hearing is made in this 
investigation, the hearing will tentatively be held two days after the 
rebuttal brief deadline date at the U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230. 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 to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs.
    We will make our final determination no later than 75 days (unless 
postponed) after this preliminary determination. This determination is 
issued and published pursuant to sections 733(f) and 777(i) of the Act.

    Dated: April 26, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-11190 Filed 5-8-02; 8:45 am]
BILLING CODE 3510-DS-P