[Federal Register Volume 68, Number 194 (Tuesday, October 7, 2003)]
[Notices]
[Pages 57883-57887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25382]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-844]


Steel Concrete Reinforcing Bar from The Republic of Korea: Notice 
of Preliminary Results of Antidumping Duty Administrative Review

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

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

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EFFECTIVE DATE: October 7, 2003.
SUMMARY: In response to a request from Dongkuk Steel Mill Corporation 
Ltd. (``DSM''), the Department of Commerce (``the Department'') is 
conducting an administrative review of the antidumping duty order on 
steel concrete reinforcing bar (``rebar'') from the Republic of Korea 
(Korea). The period of review (``POR'') is January 30, 2001 through 
August 31, 2002.
    As discussed below, the Department collapsed DSM and Korea Iron and 
Steel Co., Ltd. (``KISCO'') into a single entity for purposes of this 
administrative review. We preliminarily determine that DSM/KISCO made 
sales at less than normal value during the POR. If these preliminary 
results are adopted in our final results of review, we will instruct 
the U.S. Bureau of Customs and Border Protection (``BCBP'') to assess 
antidumping duties based on the difference between the United States 
Price (``USP'') and normal value (``NV''). Interested parties are 
invited to comment on these preliminary results.

FOR FURTHER INFORMATION CONTACT: Richard Johns or Mark Manning at (202) 
482-2305 or (202) 482-5253, respectively, Antidumping and 
Countervailing Duty Enforcement Group

[[Page 57884]]

II, Office 4, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On September 7, 2001, the Department issued an antidumping duty 
order on rebar from Korea. See Antidumping Duty Orders: Steel Concrete 
Reinforcing Bars From Belarus, Indonesia, Latvia, Moldova, People's 
Republic of China, Poland, Republic of Korea and Ukraine, 66 FR 46777 
(September 7, 2001). On September 3, 2002, the Department published a 
notice of opportunity to request the first administrative review of 
this order. See Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation; Opportunity to Request Administrative Review, 
67 FR 56267 (September 3, 2002). On September 30, 2002, in accordance 
with 19 CFR Sec.  351.213(b), DSM requested an administrative review. 
On October 24, 2002, the Department published the notice of initiation 
of this administrative review, covering the period January 30, 2001, 
through August 31, 2002. See Initiation of Antidumping and 
Countervailing Duty Administrative Reviews, 67 FR 65336 (October 24, 
2002).
    On October 18, 2002, the Department issued a questionnaire to DSM. 
On November 15, 2002, DSM notified the Department that its corporate 
structure had changed since the less-than-fair-value (``LTFV'') 
investigation and that it is no longer affiliated with KISCO. DSM 
stated that it should not be required to submit information regarding 
KISCO's sales or costs of production, and that it would respond to the 
Department's questionnaire with only its own data. We received timely 
responses to Sections A-D of the initial questionnaire in November and 
December 2002. The Department issued supplemental questionnaires for 
Sections A-D, in addition to questions regarding the relationship 
between DSM and KISCO, from January through April 2003. We received 
timely responses from DSM from February through May 2, 2003.
    Because it was not practicable to issue the preliminary results of 
this review within the normal time frame, on June 3, 2003, we published 
in the Federal Register our notice of the extension of time limits for 
these preliminary results. See Steel Concrete Reinforcing Bars from the 
Republic of Korea: Notice of Postponement of Preliminary Results of 
Antidumping Duty Administrative Review, 68 FR 33105 (June 3, 2003). 
This extension established the deadline for these preliminary results 
as September 30, 2003.
    On May 7, 2003, the Department released to DSM the results of a 
query of entry data obtained from the BCBP, and requested that DSM 
verify that all sales through an affiliated company were included in 
the sales data set submitted to the Department. In response, on May 14, 
2003, DSM submitted additional U.S. sales, some of which had been 
previously unreported. On May 27, 2003, the petitioner\1\ objected to 
the additional sales contained in DSM's May 14, 2003 letter, stating 
that such sales constitute untimely submitted new factual information 
and should be removed from the record. On June 2, 2003, DSM submitted 
comments objecting to the petitioner's request that the additional 
sales be stricken from the record. On June 23, 2003, the petitioner 
rebutted DSM's June 2, 2003 submission.
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    \1\ The petitioner in this administrative review is the Rebar 
Trade Action Coalition and its individual members (collectively, the 
``petitioner'').
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    On August 6, 2003, the Department instructed DSM to remove the 
additional sales from its May 14, 2003 submission and delete all 
references to those sales from its June 2, 2003 submission. On August 
11, 2003, DSM submitted a letter objecting to the removal of the 
additional sales it had reported. DSM argued that the rejected 
information was an appropriate and necessary response to questions 
posed in the Department's May 7, 2003 letter. On August 12, 2003, DSM 
submitted redacted versions of its May 14, 2003 and June 2, 2003 
letters, as well as a revised version of its May 14, 2003 letter. The 
revised version of DSM's May 14, 2003 letter contains a reconciliation 
worksheet which shows that DSM's previously reported sales and the 
additional sales reported on May 14, 2003, sum to the total quantity of 
entries identified by the BCBP data query.
    After reviewing the arguments contained in DSM's August 11 and 
August 12, 2003 submissions, the Department has decided to accept DSM's 
additional U.S. sales, as reported in its revised May 14, 2003 
submission, and include them in our margin calculation for purposes of 
the preliminary determination. See DSM's May 14, 2003 submission at 
Attachment III.On September 12, 2003, the Department collapsed DSM and 
KISCO into a single entity for the purposes of this administrative 
review. See Memorandum from Thomas F. Futtner, Acting Office Director 
to Holly A. Kuga, Acting Deputy Assistant Secretary Group II, 
``Decision Memorandum: Whether to Collapse Dongkuk Steel Mill Co., 
Ltd., and Korea Iron and Steel Co., Ltd., Into a Single Entity,'' dated 
September 12, 2003 (``Collapsing Memorandum''), on file in the Central 
Records Unit, Room B-099 of the Main Commerce Building (``CRU''). On 
September 15, 2003, we issued the antidumping questionnaire to KISCO. 
Since the questionnaire was released to KISCO approximately two weeks 
before the fully extended deadline for the preliminary results, KISCO's 
sales and costs of production data are not available for inclusion in 
these preliminary results. For this reason, the preliminary results are 
based only upon DSM's data. We will provide the petitioner an 
opportunity to comment on KISCO's questionnaire responses and will 
include KISCO's information in our final results of review.

Scope of the Review

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

Verification

    Pursuant to 19 CFR Sec.  351.307, the Department will conduct 
verification of the information and data submitted by DSM and KISCO 
prior to the final results of administrative review.

Fair Value Comparisons

    To determine whether sales of rebar in the United States were made 
at LTFV, we compared USP to NV, as described in the ``Constructed 
Export Price'' and ``Normal Value'' sections of this notice. In 
accordance with section 777A(d)(2) of the Tariff Act of 1930, as 
amended (``the Act''), we calculated monthly weighted-average NVs and 
compared these to individual U.S. transactions.

Constructed Export Price

    We calculated the constructed export price (``CEP'') in accordance 
with subsection 772(b) of the Act, because the subject merchandise was 
first sold in the United States by Dongkuk International Inc. 
(``DKA''), a U.S. seller affiliated with DSM, to a purchaser not 
affiliated with the producer, DSM. We

[[Page 57885]]

based CEP on the packed prices charged to the first unaffiliated 
customer in the United States. Pursuant to section 772(c)(1)(B) we 
increased the starting price by the amounts reported by DSM for duty 
drawback. We made deductions for movement expenses in accordance with 
section 772(c)(2)(A) of the Act; these included, where appropriate, 
foreign inland freight, foreign brokerage and handling, international 
freight, marine insurance, U.S. customs duties, and U.S. brokerage and 
handling. In accordance with section 772(d)(1) of the Act, we deducted 
those selling expenses associated with economic activities occurring in 
the United States, including direct selling expenses (credit costs and 
other direct selling expenses), and indirect selling expenses. We also 
made an adjustment for CEP profit in accordance with section 772(d)(3) 
of the Act. See Memorandum from Mark Manning, Senior Import Compliance 
Specialist, to Ronald Trentham, Acting Program Manager, ``Calculation 
Memorandum of the Preliminary Results of Administrative Review,'' dated 
September 30, 2003 (``Preliminary Calculation Memorandum''), on file in 
the CRU.

Home Market

    In order 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 was equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared the respondent's volume of home 
market sales of the foreign like product to the volume of U.S. sales of 
the subject merchandise, in accordance with section 773(a)(1) of the 
Act. As DSM's aggregate volume of home market sales of the foreign like 
product was greater than five percent of its aggregate volume of U.S. 
sales of the subject merchandise, we determined that the home market 
was viable. Therefore, we have based NV on home market sales in the 
usual commercial quantities and in the ordinary course of trade.
    It is the Department's practice to remove from our analysis sales 
to affiliated customers for consumption in the home market which are 
determined not to be at arm's-length. To test whether these sales were 
made at arm's-length, we compared the prices of sales of comparison 
products to affiliated and unaffiliated customers, net of all movement 
charges, direct selling expenses, discounts, and packing. Pursuant to 
19 CFR Sec.  351.403(c), and in accordance with our practice, when the 
prices to the affiliated party are, on average, less than 99.5 percent 
of the prices to unaffiliated parties, we determine that the sales made 
to the affiliated party are not at arm's-length. See 19 CFR Sec.  
351.403(c).\2\ In the instant review, we found that all sales to the 
single affiliated home market customer passed the arm's-length test 
and, for this reason, were included in our analysis. See Preliminary 
Calculation Memorandum.
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    \2\ 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 FR 69186, 69197 (November 15, 2002).
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Cost of Production Analysis

    The Department disregarded certain sales made by DSM in the 
investigation because these sales failed the cost test. See Notice of 
Final Determination of Sales at Less Than Fair Value: Steel Concrete 
Reinforcing Bar from the Republic of Korea, 66 FR 33526 (June 22, 
2001); see also Notice of Preliminary Determination of Sales at Less 
Than Fair Value and Postponement of Final Determination: Steel Concrete 
Reinforcing Bars from the Republic of Korea, 66 FR 8348, 8354 (January 
30, 2001). Thus, in accordance with section 773(b)(2)(A)(ii) of the 
Act, there are reasonable grounds to believe or suspect that sales of 
rebar in the home market were made at prices below their cost of 
production (``COP'') in the current review period. Accordingly, 
pursuant to section 773(b) of the Act, we initiated a cost 
investigation to determine whether sales made during the POR were at 
prices below their respective COP.
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus an amount for general and administrative 
expenses (``G&A'') and interest expenses. We relied on the COP data 
submitted by DSM. See Preliminary Calculation Memorandum.
    In accordance with section 773(b)(1) of the Act, in determining 
whether to disregard home market sales made at prices below COP, we 
examined whether such sales were made within an extended period of time 
in substantial quantities, and whether such sales were made at prices 
which would permit recovery of all costs within a reasonable period of 
time.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of DSM's sales of a given model were at prices less than COP, 
we did not disregard any below-cost sales of that model because these 
below-cost sales were not made in substantial quantities. Where 20 
percent or more of DSM's home market sales of a given model were at 
prices less than the COP, we disregarded the below-cost sales because 
such sales were made: (1) in substantial quantities within the POR 
(i.e., within an extended period of time) in accordance with section 
773(b)(2)(B) of the Act, and (2) at prices which would not permit 
recovery of all costs within a reasonable period of time, in accordance 
with section 773(b)(2)(D) of the Act (i.e., the sales were made at 
prices below the weighted-average per-unit COP for the POR). We used 
the remaining sales as the basis for determining NV in accordance with 
section 773(b)(1) of the Act. We did not use the constructed value 
(``CV''), as all U.S. sales were matched to home market merchandise.

Normal Value

    We calculated NV based on prices to unaffiliated customers or 
prices to affiliated customers that we determined to be at arm's 
length. We adjusted the starting price for the discount DSM provided to 
certain home market customers. We made deductions, where appropriate, 
for foreign inland freight and warehousing, pursuant to section 
773(a)(6)(B) of the Act. In addition, when comparing sales of similar 
merchandise, we made adjustments for differences in cost attributable 
to differences in physical characteristics of the merchandise pursuant 
to section 773(a)(6)(C)(ii) of the Act and 19 CFR Sec.  351.411. We 
also adjusted the starting price for differences in circumstances of 
sale (``COS'') in accordance with section 773(a)(6)(C)(iii) of the Act 
and 19 CFR Sec.  351.410. We made a COS adjustment for imputed credit 
expenses. See Preliminary Calculation Memorandum. We also made an 
adjustment for the CEP offset in accordance with section 773(a)(7)(B) 
of the Act. See ``Level of Trade and CEP Offset'' section below. 
Finally, we deducted home-market (``HM'') packing costs and added U.S. 
packing costs in accordance with sections 773(a)(6)(A) and (B) of the 
Act.

Level of Trade and CEP Offset

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the comparison 
market at the same level of trade (``LOT'') as the 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 selling, 
general and administrative (``SG&A'') expenses and profit. For CEP, it 
is the level of the constructed sale from the exporter to the importer. 
Moreover, for CEP sales, we consider

[[Page 57886]]

only the selling activities reflected in the price after the deduction 
of expenses and profit, pursuant to section 772(d) of the Act. See 
Micron Technology, Inc. v. United States, 243 F.3d 1301, 1314-1315 
(Fed. Cir. 2001).
    To determine whether the comparison-market sales are at a different 
LOT than CEP sales, we examine stages in the marketing process and 
selling functions along the chain of distribution between the producer 
and the unaffiliated customer. If the comparison-market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV LOT is more 
remote from the factory than the CEP level and there is no basis for 
determining whether the differences in the levels between NV and CEP 
affect price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (``the CEP offset provision''). See, e.g., Certain Carbon Steel 
Plate from South Africa, Final Determination of Sales at Less Than Fair 
Value, 62 FR 61731 (November 19, 1997).
    In implementing these principles in this review, we asked DSM to 
identify the specific differences and similarities in selling functions 
and support services between all phases of marketing in the home market 
and the United States. DSM identified two channels of
    distribution in the home market: (1) direct sales and (2) warehouse 
sales. For both channels DSM performs similar selling functions such as 
negotiating prices with customers, setting similar credit terms, 
arranging freight to the customer, and conducting market research and 
sales calls. The remaining selling activities did not differ 
significantly by channel of distribution. Because channels of 
distribution do not qualify as separate levels of trade when the 
selling functions performed for each customer class or channel are 
sufficiently similar, we determined that one level of trade exists for 
DSM's HM sales.
    For the U.S. market, DSM reported one channel of distribution sales 
to unaffiliated U.S. customers through DKA, DSM's affiliated U.S. sales 
company. All of DSM's U.S. sales were CEP transactions and DSM 
performed the same selling functions in each instance. Therefore, the 
U.S. market has one LOT.
    When we compared CEP sales (after deductions made pursuant to 
section 772(d) of the Act) to HM sales, we determined that for CEP 
sales, DSM did not have interaction with customers, did not perform 
market research, and did not provide inventory maintenance. However, 
these functions are performed for HM sales. The differences in selling 
functions performed for home market and CEP transactions indicate that 
HM sales involved a more advanced stage of distribution than CEP sales. 
In the home market, DSM provides services normally found further down 
the chain of distribution which are normally performed by the 
affiliated reseller in the U.S. market (e.g., interaction with 
customers, market research).
    Based on our analysis, we determined that CEP and the starting 
price of HM sales represent different stages in the marketing process, 
and are thus at different LOTs. Therefore, when we compared CEP sales 
to HM sales, we examined whether a LOT adjustment may be appropriate. 
In this case, DSM sold at one LOT in the home market; therefore, there 
is no basis upon which to determine whether there is a pattern of 
consistent price differences between levels of trade. Further, we do 
not have the information which would allow us to examine pricing 
patterns of DSM's sales of other similar products, and there is no 
other record evidence upon which such an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a LOT adjustment, but the LOT in Korea for DSM is at a more 
advanced stage than the LOT of the CEP sales, a CEP offset is 
appropriate in accordance with section 773(a)(7)(B) of the Act, as 
claimed by DSM. Therefore, we applied the CEP offset to NV.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the following 
weighted-average dumping margin exists for the period January 30, 2001 
through August 31, 2002:

------------------------------------------------------------------------
                                               Weighted Average Margin
          Manufacturer / Exporter                   (percentage)
------------------------------------------------------------------------
Dongkuk Steel Mill Co., Ltd./Korea Iron                            10.37
 and Steel Co., Ltd.......................
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    The Department will disclose the calculations performed within five 
days of the date of publication of this notice in accordance with 19 
CFR Sec.  351.224(b). An interested party may request a hearing within 
thirty days of publication. See CFR Sec.  351.310(c). The date of any 
hearing, if requested, will be announced to all interested parties by 
the Department pursuant to 19 CFR Sec.  351.310(d). The Department will 
establish a schedule for interested parties to submit case briefs 
regarding the preliminary results and verification findings. Rebuttal 
briefs, limited to issues raised in the case briefs, may be filed no 
later than 5 days after the submission of case briefs. Parties who 
submit argument in these proceedings 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, parties submitting 
written comments should provide the Department with an additional copy 
of the public version of any such comments on diskette. The Department 
will issue final results of these administrative reviews, including the 
results of our analysis of the issues raised in any such written 
comments, within 120 days of publication of these preliminary results.
    The Department shall determine, and BCBP shall assess, antidumping 
duties on all appropriate entries. In accordance with 19 CFR Sec.  
351.212(b)(1), we will calculate importer-specific ad valorem 
assessment rates for the merchandise subject to this review. These 
rates will be assessed uniformly on all entries the respective 
importers made during the POR if these preliminary results are adopted 
in the final results of review. The Department will issue appropriate 
appraisement instructions directly to BCBP within fifteen days of 
publication of the final results of review.
    Furthermore, the following cash deposit requirements will be 
effective upon completion of the final results of this administrative 
review for all shipments of rebar from Korea entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: 1) the cash deposit rate for DSM/KISCO will be 
the rate established in the final results of this review; 2) for 
previously reviewed or investigated companies not listed above, the 
cash deposit rate will

[[Page 57887]]

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, or the 
LTFV investigation, but the manufacturer is, the cash deposit rate will 
be the rate established for the most recent period for the manufacturer 
of the merchandise; and 4) the cash deposit rate for all other 
manufacturers or exporters will continue to be 22.89 percent, the ``all 
others'' rate made effective by the LTFV investigation. See Notice of 
Final Determination of Sales at Less Than Fair Value: Steel Concrete 
Reinforcing Bars From the Republic of Korea, 66 FR 33526 (June 22, 
2001). The required cash deposits shall remain in effect until 
publication of the final results of the next administrative review.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR Sec.  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.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: September 30, 2003.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 03-25382 Filed 10-6-03; 8:45 am]
BILLING CODE 3510-DS-S