[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