[Federal Register Volume 68, Number 174 (Tuesday, September 9, 2003)]
[Notices]
[Pages 53129-53136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-22941]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-841]
Preliminary Results of Antidumping Duty Administrative Review:
Structural Steel Beams From the Republic of Korea
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of the preliminary results of antidumping duty
administrative review.
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SUMMARY: In response to a request from the Committee for Fair Beam
Imports, Nucor Corp., Nucor-Yamato Steel Co., TXI-Chaparral Steel Co.,
(``Petitioners''), INI Steel Company (``INI''), and Dongkuk Steel Mill
Co., Ltd. (``DSM''), the Department of Commerce (``Department'') is
conducting an administrative review of the antidumping duty order on
structural steel beams (``SSB'') from the Republic of Korea. This
review covers INI and DSM, manufacturers and exporters of the subject
merchandise. The period of review (``POR'') is August 1, 2001 through
July 31, 2002.
We preliminarily determined that INI has sold subject merchandise
at less than normal value (``NV'') during the POR. However, we
preliminarily determine that DSM has not sold subject merchandise at
less than NV. If these preliminary results are adopted in our final
results of administrative review, we will instruct the U.S. Bureau of
Customs and Border Protection (``Customs'') to assess antidumping
duties on entries of INI's merchandise during the POR for which the
importer-specific assessment rates are above de minimis, in accordance
with the Department's regulations (19 CFR 351.106 and 351.212(b)). The
preliminary results are listed below in the section titled
``Preliminary Results of Review.''
We invite interested parties to comment on these preliminary
results. Parties who submit arguments in this segment of the proceeding
are requested to submit with the argument: (1) A statement of the
issue, and (2) a brief summary of the argument.
EFFECTIVE DATE: September 9, 2003.
FOR FURTHER INFORMATION CONTACT: Aishe Allen (DSM) or Michael Holton
(INI), Enforcement Group III--Office 9, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW., Washington, DC 20230; telephone
(202) 482-0172 and (202) 482-1324, respectively.
SUPPLEMENTARY INFORMATION:
Background
On August 18, 2000, the Department published in the Federal
Register the antidumping duty order on structural steel beams from the
Republic of Korea. See Notice Amended Final Determination of Sales at
Less Than Fair Value: Structural Steel Beams from South Korea, 65 FR
50501 (August 18, 2000). On August 6, 2002, we published in the Federal
Register a notice for antidumping or countervailing duty order,
finding, or suspended investigation; opportunity to request
administrative review on structural steel beams from the Republic of
Korea covering the period August 1, 2001 through July 31, 2002. See
Antidumping or Countervailing Duty Order, Finding, or Suspended
Investigation; Opportunity to Request Administrative Review, 67 FR
50856 (August 6, 2002).
On August 30, 2002, respondent DSM, a Korean producer of subject
merchandise, requested a review of its sales of subject merchandise
during the POR in accordance with 19 CFR 351.213(b)(1). On August 30,
2002, petitioners and INI, in separate requests, requested that the
Department conduct an administrative review of INI for the period of
August 1, 2001 to July 31, 2002. On September 25, 2002, the Department
published a notice of initiation of this antidumping duty
administrative review for the period of August 1, 2001 through July 31,
2002. See Initiation of Antidumping and Countervailing Duty
Administrative Reviews, Requests for Revocation in Part and Deferral of
Administrative Reviews 67 FR 60210 (September 25, 2002).
DSM
On September 30, 2002, the Department issued a questionnaire to
DSM. DSM submitted its Section A questionnaire response on November 4,
2002. On November 13, 2002, DSM submitted its Sections B and C
questionnaire responses.
On November 14, 2002, Petitioners submitted comments regarding
sales below cost of production for DSM and requested that DSM respond
to section D of the Department's September 30, 2002 questionnaire. On
November 18, 2002, the Department informed petitioners that it would
need to file a sales below cost allegation for the Department to
consider whether DSM sold below its cost of production during the POR.
On December 6, 2002, petitioners submitted an allegation that the home
market sales submitted by DSM in its November 13, 2002, section B
response were below its cost of production.
On December 20, 2002, the Department issued a supplemental
questionnaire covering DSM's November 4, 2002 section A response. On
January 13, 2003, DSM submitted its section A supplemental response to
the Department's December 20, 2002 supplemental questionnaire.
On January 21, 2003, the Department initiated a sales below cost of
production inquiry, and on January 22, 2003, requested DSM to respond
to section D of the questionnaire.
[[Page 53130]]
On February 4, 2003, DSM requested that the Department allow it to
report cost of production and constructed value information based on
DSM's fiscal accounting period, which is based upon the calendar year
(January 1 to December 31). On February 7, 2003, the Department issued
a questionnaire to DSM requesting why it should not report its cost of
production and constructed value data based on a fiscal year basis
instead of the POR. On February 13, 2003, DSM submitted additional
information regarding its cost reporting period. See DSM's February 13,
2003 submission at 2. Based on DSM's submission, the Department granted
DSM's request that it be allowed to report its cost based on a twelve-
month period that includes the second half of its 2001 fiscal year
(July 1 to December 31, 2001) and the first half of its 2002 fiscal
year (January 1 to June 30, 2002). See Memorandum to the File dated
February 17, 2003.
On February 19, 2003, DSM submitted its Section D questionnaire
response. On February 26, 2003, the Department issued a supplemental
questionnaire covering DSM's section B response. On March 7, 2003, the
Department issued a supplemental questionnaire covering DSM's November
4, 2002 Section C response. On March 24, 2003, the Department issued a
supplemental questionnaire covering DSM's February 19, 2003 section D
response. Also, on March 24, 2002, DSM submitted its section B response
to the Department's February 26, 2002 supplemental questionnaire. On
April 4, 2003, DSM submitted its section C response to the Department's
March 7, 2003 supplemental questionnaire. On April 11, 2003, the
Department issued a second supplemental questionnaire covering DSM's
January 13, 2003 Section A response.
On April 21, 2003, DSM submitted its section D response to the
Department's March 24, 2003 supplemental questionnaire. On May 6, 2003,
DSM submitted its section A response to the Department's April 11, 2003
second supplemental questionnaire. On May 20, 2003, the Department
issued a second supplemental questionnaire covering DSM's Section B
response. On June 5, 2003, the Department issued a second supplemental
questionnaire covering DSM's Section C response. On June 11, 2003, DSM
submitted its section B response to the Department's May 20, 2003
second supplemental questionnaire. On June 24, 2003, DSM submitted its
section C response to the Department's June 5, 2003 second supplemental
questionnaire.
On June 26, 2003, the Department issued a second supplemental
questionnaire covering DSM's Section D response. On July 8, 2003, DSM
submitted its section D response to the Department's June 26, 2003
second supplemental questionnaire. On August 11, 2003, the Department
determined that DSM and the Korean trading company it used were
actually affiliated companies during the POR. See Analysis of the
Affiliation Dongkuk Steel Company section below and Antidumping Duty
Administrative Review on Structural Steel Beams from South Korea for
the Review Period of August 1, 2001 through July 31, 2002; Analysis of
the Affiliation for Dongkuk Steel Mill Company, Ltd., from Aishe Allen
through Robert Bolling to Edward Yang, dated August 11, 2003
(``Affiliation Memorandum'').
INI
On September 25, 2002, the Department issued its antidumping
questionnaire to INI. On November 4, 2002, INI reported that it made
sales of subject merchandise to the United States during the POR in its
response to Section A of the Department's questionnaire. On November
26, 2002, INI submitted its response to Sections B, C, and D of the
Department's questionnaire. On March 14 and 19, 2003, the Department
issued supplemental Sections A through C and Section D questionnaires,
respectively. INI submitted its response to the Sections A through D
supplemental questionnaires on April 11, 2003. On May 28, 2003, the
Department issued its second supplemental questionnaires for Sections A
through C. On May 30, 2003, the Department issued a third supplemental
questionnaire for Section B. On June 9, 2003, INI submitted its
response to the Sections A through D second supplemental
questionnaires. On June 6, 2003, the Department issued a second
supplemental Section D questionnaire. On June 13, 2003, INI submitted
its response to the Department's second Section D supplemental
questionnaire. On June 13, 2003, the Department issued a third
supplemental questionnaire for Sections B through D to INI. On June 18,
2003, INI submitted its response to the third supplemental
questionnaire for Sections B through D.
On April 17, 2003, due to the reasons set forth in the Structural
Steel Beams From Korea: Extension of Time Limit for Preliminary results
of Antidumping Duty Administration Review, 68 FR 18947 (April 17,
2003), the Department extended the due date for the preliminary
results. In accordance with section 751(a)(3)(A) of the Act, the
Department extended the due date for the notice of preliminary results
120 days, from the original due date of May 3, 2003, to August 31,
2002. See Structural Steel Beams From Korea: Extension of Time Limit
for Preliminary results of Antidumping Duty Administration Review, 68
FR 18947 (April 17, 2003).
The Department is conducting this administrative review in
accordance with section 751 of the Act.
Verification
As provided in section 782(i) of the Act, the Department verified
sales information of INI on June 23 through 27, 2003, sales information
of DSM from July 21 through July 25, 2003, and sales information of
DSM's United States affiliate Dongkuk International, Inc. (``DKA''),
July 29 through July 31, 2003, using standard verification procedures,
including an examination of relevant sales, financial and production
records, and selection of original documentation containing relevant
information. Our verification results are outlined in the public
versions of the verification reports and are on file in the Central
Records Unit (``CRU'') located in room 1870 of the main Department of
Commerce Building, 14th Street and Constitution Avenue, NW.,
Washington, DC.
Scope of the Review
The products covered by this investigation are doubly-symmetric
shapes, whether hot- or cold-rolled, drawn, extruded, formed or
finished, having at least one dimension of at least 80 mm (3.2 inches
or more), whether of carbon or alloy (other than stainless) steel, and
whether or not drilled, punched, notched, painted, coated or clad.
These products include, but are not limited to, wide-flange beams
(``W'' shapes), bearing piles (``HP'' shapes), standard beams (``S'' or
``I'' shapes), and M-shapes.
All products that meet the physical and metallurgical descriptions
provided above are within the scope of this investigation unless
otherwise excluded. The following products, are outside and/or
specifically excluded from the scope of this investigation: structural
steel beams greater than 400 pounds per linear foot or with a web or
section height (also known as depth) over 40 inches.
The merchandise subject to this investigation is classified in the
Harmonized Tariff Schedule of the United States (``HTSUS'') at
subheadings: 7216.32.0000, 7216.33.0030, 7216.33.0060,
[[Page 53131]]
7216.33.0090, 7216.50.0000, 7216.61.0000, 7216.69.0000, 7216.91.0000,
7216.99.0000, 7228.70.3040, 7228.70.6000. Although the HTSUS
subheadings are provided for convenience and Customs (as of March 1,
2003, renamed the U.S. Bureau of Customs and Border Protection)
purposes, the written description of the merchandise under
investigation is dispositive.
Product Comparison
In accordance with section 771(16) of the Act, we considered all
SSB produced by DSM and INI covered by the description in the ``Scope
of Review'' section of this notice, supra, which were sold in the home
market during the POR, to be the foreign like product for the purpose
of determining appropriate product comparisons to SSB products sold in
the United States. In making the product comparisons, we matched
products based on the physical characteristics reported by DSM and INI
as follows (listed in order of preference): hot formed or cold formed,
shape/size (section depth), strength/grade, whether or not coated.
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 and
reporting instructions listed in the antidumping duty questionnaire and
instructions, or to constructed value (``CV''), as appropriate.
Affiliation
In order to complete the dumping calculation, the Department must
determine whether the Korean trading company that DSM sold subject
merchandise through is affiliated. DSM reported that it sold subject
merchandise during the POR to an unaffiliated Korean trading company
and reseller of the subject merchandise, which, in turn, resold the
subject merchandise to DKA, an affiliated U.S. importer. As discussed
below, the Department preliminarily determines that the Korean trading
company is affiliated with DSM.
Information submitted on the record by DSM in its original Section
A response indicates that DSM was not affiliated with the Korean
trading company during the POR. In the Section A response, DSM reported
that in January of 2001, it sold all of its ownership interest in the
Korean trading company and was, therefore, no longer affiliated. See
DSM's November 4, 2002, Section A questionnaire response. On April 7,
2003, petitioners requested that the Department investigate DSM's
continuing relationship with the Korean trading company, based on
familial ownership in both companies. In response to the Department's
April 11, 2003 second supplemental Section A questionnaire, DSM
submitted information which demonstrated that there was a familial
relationship between itself and the Korean trading company during the
POR. See DSM's May 5, 2003 second supplemental Section A response. The
information submitted on May 5, 2003, suggested that there was the
requisite amount of control for affiliation between DSM and the Korean
trading company. Based on record evidence, the Department has
determined that DSM and the Korean trading company were affiliated
during the POR, according to section 771(33)(A) and (F) of the Act. Due
to the proprietary nature of this information and for a complete
discussion of this issue, please see the Affiliation Memorandum.
Sales Outside the Ordinary Course of Trade
On February 12, 2003, Petitioners alleged that INI made sales
outside the ordinary course of trade (``OCT'') during the POR.
Petitioners alleged that all of INI's home market sales of non-Korean
specification (``non-KS'') SSBs are outside the OCT based on total
volume sold, the customer base, price per shipment and profitability of
sales, and should be excluded from the home market database in the
margin calculation. Additionally, Petitioners claim that all non-KS
sales are overruns. Further, Petitioners stated that if the Department
decided not to exclude all of INI's non-KS merchandise, then
Petitioners have alleged that certain non-KS home market sales are
aberrational and outside the OCT, and should be excluded from the home
market database in the calculation of the margin. The Department has
determined, based on record evidence, that certain INI home market
sales are outside the OCT, and thus have made changes to INI's home
market sales database. However, due to the proprietary nature of this
information and for a complete discussion of this issue, please see the
memorandum of Analysis of Sales Outside the Ordinary Course of Trade
for INI Steel Company from Stephen Bailey and Michael Holton to Edward
Yang dated September 2, 2003 (``OCT Memorandum''); and Analysis
Memorandum for INI Steel Company for the Preliminary Results of the
Administrative Review on Structural Steel Beams (``SSB'') from Korea
for the period August 1, 2001 through July 31, 2002, September 2, 2003
(``INI Analysis Memorandum'').
Fair Value Comparisons
To determine whether sales of subject merchandise made by DSM and
INI to the United States were made at prices below NV, we compared the
export price (``EP''), or the constructed export price (``CEP''), to
the NV, as described below. Pursuant to section 777A(d)(2) of the Act,
we compared the EPs and CEPs of individual U.S. transactions to the
monthly weight-averaged NV of the foreign like product where there were
sales at prices above the cost of production (``COP''), as discussed in
the ``Cost of Production Analysis'' section below.
Export Price and Constructed Export Price
Section 772(a) of the Act defines EP as ``the price at which the
subject merchandise is first sold (or agreed to be sold) before the
date of importation by the producer or exporter of subject merchandise
outside of the United States to an unaffiliated purchaser in the United
States or to an unaffiliated purchaser for exportation to the United
States. . . .,'' as adjusted under subsection (c). Section 772(b) of
the Act defines CEP as ``the price at which the subject merchandise is
first sold (or agreed to be sold) in the United States before or after
the date of importation by or for the account of the producer or
exporter of such merchandise or by a seller affiliated with the
producer or exporter, to a purchaser not affiliated with the producer
or exporter. . . .,'' as adjusted under subsections (c) and (d). For
the purpose of this administrative review DSM classified all of its
U.S. sales as CEP, and INI has classified its U.S. sales as either EP
or CEP.
DSM
DSM identified one channel of distribution for its U.S. sales. For
U.S. sales, DSM sold all subject merchandise to an affiliated trading
company in Korea (see affiliation section above), the subject
merchandise was then resold by the affiliated trading company in Korea
to DSM's U.S. affiliate, DKA, and DKA then resold the subject
merchandise to unaffiliated U.S. customers. DSM has reported these
sales as CEP sales because the first sale to an unaffiliated party
occurred in the United States. Therefore, we based our calculation on
CEP, in accordance with subsections 772(b), (c), and (d) of the Act.
We calculated CEP based on packed prices to unaffiliated purchasers
in the United States. We made deductions for movement expenses in
accordance with
[[Page 53132]]
section 772(c)(2)(A) of the Act; these included, where appropriate,
foreign inland freight from the plant to the port of export, foreign
brokerage and handling expenses (i.e., loading and unloading charges,
wharfage and lashing expenses, brokerage fees, and port renovation
expenses), international freight, marine insurance, other U.S.
transportation expenses (i.e., U.S. wharfage, brokerage, and handling
charges), and U.S. customs duty. Also, we made deductions for
commissions for selling the subject merchandise in the United States in
accordance with section 772(d)(1)(A) of the Act. Additionally, we made
deductions for expenses that bear a direct relationship to the sale in
the United States (i.e., credit, and other direct selling expenses)
pursuant to section 772(d)(1)(B). We added an amount for duty drawback
pursuant to section 772(c)(1)(B) of the Act. Further, in accordance
with section 772(c)(1)(A) of the Act, we added packing expenses.
For CEP sales, we also made an adjustment for profit in accordance
with section 772 (d)(3) of the Act. We deducted the profit allocated to
expenses deducted under sections 772(d)(1) and 772(d)(2) in accordance
with sections 772(d)(3) and 772(f) of the Act. In accordance with
section 772(f) of the Act, we computed profit based on total revenue
realized on sales in both the U.S. and home markets, less all expenses
associated with those sales. We then allocated profit expenses incurred
with respect to U.S. economic activity, based on the ratio of total
U.S. expenses to total, expenses for both the U.S. and home markets.
We changed the U.S. indirect selling expense ratio to correspond to
the information contained in the finalized version of DKA's audited
financial statements. See Analysis Memorandum for Dongkuk Steel Mill
Company (``DSM'') for the Preliminary Results of the Administrative
Review on Structural Steel Beams (``SSB'') from Korea for the period
August 1, 2001 through July 31, 2002, September 2, 2003 (``DSM Analysis
Memorandum''); Sales Verification of Dongkuk International (``DKA'') in
the Antidumping Administrative Review of Structural Steel Beams
(``SSB'') from Korea, August 28, 2003 (``DKA Verification Report'').
Furthermore, we have included the selling and general
administrative (``SG&A'') expenses of the affiliated trading company in
Korea (see section on affiliation above) in the calculation of U.S. net
price because all of DSM's U.S. sales pass through the Korean trading
company. To account for these SG&A expenses, the Department used
financial statements of the affiliated trading company in Korea.
Additionally, DSM failed to account for bad debt, interest, currency
difference, and loss of sale assets when calculating its indirect
selling expense ratio for DKA. For a detailed explanation, see DSM
Analysis Memorandum.
INI
For this administrative review, INI reported that it sold both EP
and CEP sales. EP sales were sold by the producer, INI, to an
unaffiliated customer in the United States. The Department has
determined that the sales made between INI's U.S. affiliate, Hyundai
USA Corporation (``Hyundai USA''), and the first unaffiliated customer
in the United States are CEP sales.
Having determined certain sales as EP, we calculated the packed,
delivered, tax and duty paid price to unaffiliated purchasers in the
United States. We made deductions for movement expenses in accordance
with section 772(c)(2)(A) of the Act; these included, where
appropriate, foreign inland freight from the plant to the warehouse,
foreign warehousing expenses, foreign inland freight from the warehouse
to the port of export, foreign wharfage and lashing expenses,
international freight, other U.S. transportation expenses (i.e., U.S.
brokerage charges), commissions, and U.S. customs duty. Additionally,
we added to the U.S. price an amount for duty drawback pursuant to
section 772(c)(1)(B) of the Act. Where applicable, we made adjustments
to gross unit price for billing adjustments.
We calculated the price of INI's sales based on CEP in accordance
with section 772(b) of the Act. We calculated CEP based on packed
prices to unaffiliated purchasers in the United States. We made
deductions for movement expenses in accordance with section
772(c)(2)(A) of the Act; these included where appropriate, foreign
inland freight from the plant to the warehouse, foreign warehousing
expenses, foreign inland freight from the warehouse to the port of
export, foreign wharfage and lashing expenses, international freight,
other U.S. transportation expenses (i.e., U.S. brokerage charges), and
U.S. customs duty. Additionally, we added to the U.S. price an amount
for duty drawback pursuant to section 772(c)(1)(B) of the Act. Where
applicable, we made a deduction to gross unit price for other
discounts. Also, in accordance with section 772(c)(2)(A) of the act, we
deducted packing expenses. In accordance with section 772(d)(1) of the
Act, we deducted certain selling expenses (i.e., imputed credit
expenses and bank expenses) and indirect selling expenses.
For CEP sales, we also made an adjustment for profit in accordance
with section 772 (d)(3) of the Act. We deducted the profit allocated to
expenses deducted under sections 772(d)(1) and 772(d)(2) in accordance
with sections 772(d)(3) and 772(f) of the Act. In accordance with
section 772(f) of the Act, we computed profit based on total revenue
realized on sales in both the U.S. and home markets, less all expenses
associated with those sales. We then allocated profit expenses incurred
with respect to U.S. economic activity, based on the ratio of total
U.S. expenses to total expenses for both the U.S. and home markets.
For both EP and CEP sales, we made certain changes to INI's packing
expenses based on pre-verification corrections. See INI Steel Company
Home Market Sales and United States Sales Verification Report;
Antidumping Duty Administrative Review on Structural Steel Beams from
Korea, dated August 20, 2003 (``INI Verification Report'').
Normal Value
After testing home market viability, we calculated NV as noted in
the ``Price-to-CV Comparisons'' and ``Price-to-Price Comparisons''
sections of this notice.
1. Home Market Viability
In accordance with section 773(a)(1)(C) of the Act, to determine
whether there was a sufficient volume of sales in the home market to
serve as a viable basis for calculating NV (i.e., the aggregate volume
of home market sales of the foreign like product is greater than or
equal to five percent of the aggregate volume of U.S. sales), we
compared DSM and INI's volume of home market sales of the foreign like
product to the volume of each of their U.S. sales of subject
merchandise. Pursuant to sections 773(a)(1)(B) and (C) of the Act,
because both DSM and INI's aggregate volume of home market sales of the
foreign like product were greater than five percent of their aggregate
volume of U.S. sales for the subject merchandise, we determined that
sales in the home market provide a viable basis for calculating NV. We
therefore based NV on home market sales to unaffiliated purchasers made
in the usual commercial quantities and in the ordinary course of trade.
For NV, we used the prices at which the foreign like product was
first sold for consumption in Korea, in the usual commercial
quantities, in the ordinary
[[Page 53133]]
course of trade, and, to the extent possible, at the same level of
trade (``LOT'') as the EP or CEP as appropriate. After testing home
market viability and whether home market sales were at below-cost
prices, we calculated NV as noted in the ``Price-to-Price Comparisons''
and ``Price-to-Constructed Value Price Comparisons'' sections of this
notice.
2. Arm's-Length Test
INI reported that it made sales in the home market to affiliated
and unaffiliated end users and unaffiliated distributors. Sales to
affiliated customers in the home market not made at arm's length were
excluded from our analysis. To test whether these sales were made at
arm's length, we compared the starting prices of sales to affiliated
and unaffiliated customers net of all billing adjustments, movement
charges, direct selling expenses, discounts and packing. Where prices
to the affiliated party were on average 99.5 percent or more of the
price to the unaffiliated party, we determined that sales made to the
affiliated party were made at arm's length. See 19 CFR 351.403(c).\1\
Where no affiliated customer ratio could be calculated because
identical merchandise was not sold to unaffiliated customers, we were
unable to determine that these sales were made at arm's length and,
therefore, excluded them from our analysis. See e.g., Final
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled
Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9,
1993). Where the exclusion of such sales eliminated all sales of the
most appropriate comparison product, we made comparisons to the next
most similar model. Certain of INI's affiliated home market customer(s)
did not pass the arm's length test. We did not consider the downstream
sales from these customers to the first unaffiliated customer because
INI's affiliated home market customers further manufactured the subject
merchandise into merchandise outside of the scope of the order.
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\1\ Because this review was initiated before November 23, 2002,
the 99.5 percent test applies to this review. See Antidumping
Proceedings: Affiliated Party Sales in the Ordinary Course of Trade,
67 69186, 69197 (November 15, 2002).
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3. Cost of Production Analysis
DSM
Based on the information contained in a timely filed cost
allegation by the petitioners on December 6, 2002, the Department found
reasonable grounds to believe or suspect that DSM's sales of the
foreign like product in their respective comparison market were made at
prices below the cost of production, pursuant to section 773(b)(1) of
the Act based on allegations made by petitioners in this case. See
Petitioners' Allegation of Sales Below Cost of December 6, 2002. As a
result, the Department initiated a sales below-cost investigation. See
Letter of Initiation of Sales Below Cost Investigation dated January
22, 2003.
INI
Because the Department disregarded certain INI sales made in the
home market at prices below the cost of producing the subject
merchandise in the most recently completed segment of this proceeding
and excluded such sales from normal value, the Department determined
that there are reasonable grounds to believe or suspect that INI made
sales in the home market at prices below the cost of producing the
merchandise in this review. See Structural Steel Beams From the
Republic of Korea; Final Results of Antidumping Duty Administrative
Review, 68 FR 2499 (January 17, 2003); and section 773(b)(2)(A)(ii) of
the Act. As a result, the Department initiated a cost of production
inquiry in this case on September 30, 2002, to determine whether INI
made home market sales during the POR at prices below their respective
COPs within the meaning of section 773(b) of the Act.
A. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated COP
based on the sum of DSM and INI's respective costs of materials and
fabrication for the foreign like product, plus amounts for home market
SG&A, including interest expenses, and packing costs. The Department
relied on the COP data submitted by DSM and INI in their original and
supplemental cost questionnaire responses.
For the purpose of these preliminary results, we did not revise the
COP information submitted by DSM or INI.
B. Test of Home Market Prices
We compared the weighted-average COP for DSM's and INI's 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. In determining whether to disregard home
market sales made at prices less than the COP, we examined whether such
sales were made: (1) in substantial quantities within an extended
period of time; and (2) at prices which permitted the recovery of all
costs within a reasonable period of time, in accordance with sections
773(b)(1)(A) and (B) of the Act. We compared the COP to home market
prices, less any applicable billing adjustments, movement charges,
discounts, and indirect selling expenses.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of DSM or INI's sales of a given product were, within an
extended period of time, 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 DSM or INI's sales of a given product 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 sections 773(b)(2)(B) of the Act and 19 CFR 351.406(b).
In such cases, because we used POR average costs, we also determined
that such sales were not made at prices which would permit recovery of
all costs within a reasonable period of time, in accordance with
section 773(b)(2)(D) of the Act. We compared the COP for subject
merchandise to the reported home market prices less any applicable
movement charges. Based on this test, we disregarded below-cost sales.
Where all sales of a specific product were at prices below the cost of
production, we disregarded all sales of that product.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated
DSM's and INI's CV based on the sum of their cost of materials,
fabrication, SG&A, including interest expenses, and profit. We
calculated the COPs included in the calculation of CV as noted above in
the ``Calculation of COP'' section of this notice. In accordance with
section 773(e)(2)(A) of the Act, we based SG&A and profit on the
amounts incurred and realized by DSM and INI 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 actual weighted-average home market direct and indirect
selling expenses.
Price-to-Price Comparisons
DSM
For those product comparisons for which there were sales at prices
above the COP, we based NV on the home
[[Page 53134]]
market prices to unaffiliated purchasers. We made adjustments, where
appropriate, for physical differences in the merchandise in accordance
with section 773(a)(6)(C)(ii) of the Act.
We made adjustments, where applicable, for movement expenses (i.e.,
inland freight from plant to customer) in accordance with section
773(a)(6)(B) of the Act. We made circumstance-of-sale adjustments for
credit and other discounts, where appropriate in accordance with
section 773(a)(6)(C) of the Act. In accordance with section 773(a)(6)
of the Act, we deducted home market packing costs and added U.S.
packing costs. We also made adjustments, where applicable, for other
discounts, indirect selling expenses and inventory carrying costs in
accordance with section 773(a)(6)(C) of the Act. Finally, in accordance
with section 773(a)(4) of the Act, where the Department was unable to
determine NV on the basis of contemporaneous matches in accordance with
773(a)(1)(B)(i), we based NV on CV.
We made changes to the reported variable cost of manufacturing,
total cost of manufacturing and home market inventory carrying costs to
account for a change in grade that was reported as a minor correction
to the home market database at the start of verification. See DSM
Analysis Memorandum and DSM Verification Report at page 2.
INI
For those product comparisons for which there were sales at prices
above the COP, we based NV on the home market prices to unaffiliated
purchasers and those affiliated customer sales which passed the arm's
length test. We made adjustments, where appropriate, for physical
differences in the merchandise in accordance with section
773(a)(6)(C)(ii) of the Act.
We made adjustments, where applicable, for movement expenses (i.e.,
inland freight from plant to distribution warehouse, and inland freight
from plant/distribution warehouse to customer) in accordance with
section 773(a)(6)(B) of the Act. We made circumstance-of-sale
adjustments for credit, warranty expense and interest revenue, where
appropriate in accordance with section 773(a)(6)(C). In accordance with
section 773(a)(6), we deducted home market packing costs and added U.S.
packing costs. Where applicable, we modified the gross unit price based
on billing adjustments. Finally, in accordance with section 773(a)(4)
of the Act, where the Department was unable to determine NV on the
basis of contemporaneous matches in accordance with 773(a)(1)(B)(i), we
based NV on CV.
For these preliminary results, we excluded certain home market
sales from INI's reported home market sales data in the calculation of
NV based on these sales being outside the ordinary course of trade. See
OCT Memorandum and INI Analysis Memorandum. We also made certain
changes to INI's packing expenses based on pre-verification
corrections. See (``INI Verification Report'')
Price-to-CV Comparisons
In accordance with section 773(a)(4) of the Act, we based NV on CV
if we were unable to find a home market match of identical or similar
merchandise. We calculated CV based on DSM's and INI's costs of
materials and fabrication employed in producing the subject
merchandise, SG&A including interest, and profit. In accordance with
section 773(e)(2)(A) of the Act, we based SG&A expense and profit on
the amounts incurred and realized by the respondent in connection with
the production and sale of the foreign like product in the ordinary
course of trade for consumption in Korea. For selling expenses, we used
the actual weighted-average home market selling expenses. Where
appropriate, we made adjustments to CV in accordance with section
773(a)(8) of the Act. We deducted from CV the weighted-average home
market direct selling expenses.
Level of Trade
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 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 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.
To determine whether NV sales are at a different LOT than EP or CEP
sales, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the 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
an 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 sales 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 Carbon Steel Plate from South Africa, 62 FR 61731
(November 19, 1997).
In implementing these principles in this administrative review, we
obtained information from INI about the marketing stages involved in
its reported U.S. and home market sales, including a description of the
selling activities performed for each channel of distribution. In
identifying levels of trade for CEP, we considered 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, 243 F.3d 1301, 1314-1315 (Fed. Cir. 2001). Generally, if
the reported levels of trade are the same in the home and U.S. markets,
the functions and activities of the seller should be similar.
Conversely, if a party reports levels of trade that are different for
different categories of sales, the functions and activities should be
dissimilar.
DSM
In accordance with the principles discussed above, we examined
information regarding DSM's distribution systems in both the United
States and Korean markets, including selling functions, classes of
customers, and selling expenses for DSM.
DSM claimed only one level of trade in the home market. See DSM's
November 13, 2002 submission at page B-20. Additionally, DSM reported
that it sold through two channels of distribution in the home market:
directly to unaffiliated customers (distributors and end-users); and
government entities. See DSM's November 13, 2002 submission at page B-
9. DSM reported that it performs the following selling functions in the
home market: market research, price negotiations, order processing,
sales calls and demonstrations, customer interaction, inventory
maintenance, warranty services, and freight and delivery arrangement.
See DSM's November 4, 2002 submission at Exhibit 6. Because DSM
performs the same selling functions for its two channels of
distribution in the home market and identical selling functions are
performed for all home market sales, we
[[Page 53135]]
preliminarily determine that there is one LOT in the home market.
DSM claimed one level of trade in the U.S. market because all of
its U.S. sales are CEP sales made through its U.S. affiliate, DKA. See
DSM's November 4, 2002 submission at page 12. DSM reported that it sold
through one channel of distribution in the U.S. market, directly from
its production facility to the unaffiliated U.S. customer. However, on
paper, the sales process is as follows: DSM sold the merchandise to an
affiliated Korean trading company, which then resold the merchandise to
its U.S. affiliate, DKA, which resold the merchandise to the
unaffiliated U.S. customer. See DSM's November 13, 2002 submission at
page C-9. We determined the LOT of DSM's CEP sales based on the CEP
starting price, and adjusted for selling expenses identified in section
772(d) of the Act. We found that the selling functions (i.e., price
negotiations, order processing, sales calls and demonstrations, inland
freight arrangement in Korea, and international freight arrangement)
DSM performs after the section 772(d) adjustments are the same for all
of its U.S. sales. See DSM's November 4, 2002 submission at Exhibit 6.
Therefore, we preliminarily determine that DSM has one LOT in the U.S.
market based on its selling functions to the United States.
In order to determine whether NV was established at a different LOT
than CEP sales, we examined stages in the marketing process and selling
functions along the chains of distribution between (1) DSM and its home
market customers and (2) DSM and its affiliated U.S. reseller, DKA,
after deductions for expenses and profits. Specifically, we compared
the selling functions performed for home market sales with those
performed with respect to the CEP transaction, after deductions for
economic activities which occurred in the United States, pursuant to
section 772(d) of the Act, to determine if the home market level of
trade constituted a different level of trade than the CEP level of
trade. DSM did not request a CEP offset. Nonetheless, in accordance
with the principles discussed above, we examined information regarding
the distribution systems in both the United States and Korean markets,
including the selling functions, classes of customer, and selling
expenses to determine whether a CEP offset was necessary. For CEP
sales, we found that DSM provided many of the same selling functions
and expenses for its sale to its affiliated U.S. reseller, DKA, as it
provided for its home market sales, including: Price negotiation; order
processing; sales calls and demonstrations; warranty services; and
freight arrangement. Based on our analysis of the channels of
distribution and selling functions performed for sales in the home
market and CEP sales in the U.S. market, we preliminarily find that
there is not a significant difference in the selling functions
performed in the home market and the U.S. market for CEP sales. Thus,
we find that DSM's NV and CEP sales were made at the same LOT, and no
LOT adjustment or CEP offset need be granted.
INI
To determine whether an LOT adjustment was necessary, in accordance
with the principles discussed above, we examined information regarding
the distribution systems in both the United States and home markets,
including the selling functions, classes of customer, and selling
expenses.
In both the U.S. and home markets, INI reported one level of trade.
See INI's November 26, 2002, Sections B-D response, at B-16 and C-16.
INI sold through two channels of distribution in the home market: (1)
Unaffiliated distributors; and (2) affiliated and unaffiliated end-
users. INI claims to have sold through two channels of distribution in
the U.S. market: (1) INI sales to unaffiliated U.S. customers; and (2)
INI sales through Hyundai U.S.A., a wholly owned U.S. subsidiary of
Hyundai Corporation (Hyundai Corporation is INI's affiliated trading
company in South Korea), to unaffiliated customers.
For sales in home market channels one and two, INI performed all
sales-related activities, including: Inventory maintenance; after sales
services/warranty; freight and delivery arrangement; and credit. INI's
home market sales in channels one and two were made from inventory.
Because these selling functions are similar for both sales channels, we
preliminarily determine that there is one LOT in the home market.
For sales in U.S. channels one and two, INI performed all sales-
related activities, including: After sales services/warranty; freight
and delivery arrangement; credit and import documents arrangement.
Because these selling functions are similar for both sales channels, we
preliminarily determine that there is one LOT in the U.S. market.
In order to determine whether NV was established at a different LOT
than CEP sales, we examined stages in the marketing process and selling
functions along the chains of distribution between INI and its home
market customers. We compared the selling functions performed for home
market sales with those performed with respect to the CEP transaction,
after deductions for economic activities occurring in the United
States, pursuant to section 772(d) of the Act, to determine if the home
market levels of trade constituted more advanced stages of distribution
than the CEP level of trade. In the present review, INI did not request
a LOT adjustment or a CEP offset. To determine whether a CEP offset was
necessary, in accordance with the principles discussed above, we
examined information regarding the distribution systems in both the
United States and Korean markets, including the selling functions,
classes of customer, and selling expenses.
Based on our analysis of the channels of distribution and selling
functions performed for sales in the home market and CEP sales in the
U.S. market, we preliminarily find that INI offered many of the same
selling functions in both markets, including: After sales services/
warranties; freight and delivery arrangement; and credit. Accordingly,
we determine that there is not a significant difference in the selling
functions performed in the home market and U.S. market and that these
sales are made at the same LOT. Consequently, we preliminarily
determine that a LOT adjustment or CEP offset is not warranted in this
case. Furthermore, we find INI's NV and EP sales were made at the same
LOT, and thus, no LOT adjustment need be granted.
Currency Conversion
We made currency conversions into U.S. dollars based on the
exchange rates in effect on the dates of the U.S. sales, as certified
by the Federal Reserve Bank, in accordance with Section 773A(a) of the
Act.
Preliminary Results of the Review
As a result of this review, we preliminarily determine that the
following weight-averaged dumping margin exists for the period August
1, 2001 through July 31, 2002:
Structural Steel Beams From Korea
------------------------------------------------------------------------
Weighted-
Producer/Manufacturer/Exporter average margin
%
------------------------------------------------------------------------
DSM..................................................... 0.04
INI..................................................... 4.15
------------------------------------------------------------------------
The Department will disclose calculations performed, within five
days of publication of this notice, to the
[[Page 53136]]
parties to this proceeding in accordance with 19 CFR 351.224(b) of the
Department's regulations. Any interested party may request a hearing
within 30 days of publication. See 19 CFR 351.310(c) of the
Department's regulations. Any hearing, if requested, will be held 37
days after the date of publication, or the first working day
thereafter. Interested parties may submit case briefs and/or written
comments no later than 30 days after the date of publication of these
preliminary results of review. See 19 CFR 351.309(c)(ii) of the
Department's regulations. Rebuttal briefs and rebuttals to written
comments, limited to issues raised in such briefs or comments, may be
filed no later than 35 days after the date of publication. See 19 CFR
351.309(d) of the Department's regulations. Parties who submit
arguments are requested to submit with the argument: (1) A statement of
the issue, (2) a brief summary of the argument and (3) a table of
authorities. Further, the Department requests that parties submitting
written comments provide the Department with an additional copy of the
public version of any such comments on diskette. The Department will
issue the final results of this administrative review, which will
include the results of its analysis of issues raised in any such
written comments or at a hearing, within 120 days after the publication
of this notice, pursuant to 751(a)(3)(A) of the Act.
Assessment
Upon completion of this administrative review, the Department will
determine, and Customs shall assess, antidumping duties on all
appropriate entries. In accordance with section 351.212(b)(1) of the
Department's regulations, we will calculate exporter/importer specific
assessment rates for merchandise subject to this review. The Department
will issue appropriate assessment instructions directly to Customs
within 15 days of publication of the final results of review. If these
preliminary results are adopted in the final results of review, we will
direct Customs to assess the resulting assessment rates against the
entered customs values for the subject merchandise on each of the
importers' entries during the review period.
Cash Deposit
The following deposit requirements will be effective upon
completion of the final results of this administrative review for all
shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication of the final
results of this administrative review, as provided in section 751(a)(1)
of the Act: (1) The cash deposit rate for DSM and INI will be that
established in the final results of this review; (2) for previously
reviewed or investigated companies not covered in this review, the cash
deposit rate will continue to be the company-specific rate published
for the most recent period; (3) if the exporter is not a firm covered
in this review, a prior review, or the original less than fair value
(``LTFV'') investigation, but the manufacturer is, the cash deposit
rate will be the rate established in the most recent period for the
manufacturer of the merchandise; and (4) if neither the exporter nor
the manufacturer is a firm covered in this or any previous review
conducted by the Department, the cash deposit rate will continue to be
the ``all other'' rate established in the LTFV investigation, which was
37.21 percent.
Notification to Interested Parties
This notice 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 notice also serves as a reminder to parties subject to
administrative protective orders (``APOs'') of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 351.305, that continues to govern
business proprietary information in this segment of the proceeding.
Timely written notification of the return/destruction of APO materials
or conversion to judicial protective order is hereby requested. Failure
to comply with the regulations and the terms of an APO is a
sanctionable violation.
This administrative review and notice are published in accordance
with sections 751(a)(1) and 777(i)(1) of the Act.
Dated: September 2, 2003.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 03-22941 Filed 9-8-03; 8:45 am]
BILLING CODE 3510-DS-P