[Federal Register Volume 69, Number 172 (Tuesday, September 7, 2004)]
[Notices]
[Pages 54101-54108]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2085]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-816]


Certain Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Notice of Preliminary Results of Antidumping Duty 
Administrative Review and Antidumping Duty New Shipper Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests from petitioners, the Department of 
Commerce (the Department) is conducting the tenth administrative review 
of the antidumping order on corrosion-resistant carbon steel flat 
products (CORE) from Korea.\1\ This review covers three manufacturers 
and exporters of the subject merchandise: Union Steel Manufacturing 
Co., Ltd. (Union), Pohang Iron & Steel Company, Ltd. (POSCO), Pohang 
Coated Steel Co., Ltd. (POCOS), and Pohang Steel Industries Co., Ltd. 
(PSI) (collectively, the POSCO Group), and Dongbu Steel Corporation, 
Ltd. (Dongbu). The period of review (POR) is August 1, 2002, through 
July 31, 2003. In response to a request from Hyundai Hysco (HYSCO), the 
Department is also conducting a new-shipper review. The POR for the 
new-shipper review is August 1, 2002, through July 31, 2003.
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    \1\ Petitioners are the International Steel Group.
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    We preliminarily determine that during the POR, Union, the POSCO 
Group, Dongbu, and HYSCO did not make sales of the subject merchandise 
at less than normal value (NV) (i.e., sales were made at ``zero'' or de 
minimis dumping margins). If these preliminary results are adopted in 
the final results of this administrative review, we will instruct 
Customs and Border Protection (CBP) to liquidate appropriate entries 
without regard to antidumping duties. Furthermore, we rescinded the 
request for review of the antidumping order for SeAH Steel Corporation 
(SeAH) because neither SeAH nor its affiliates had exports or sales of 
subject merchandise to the United States during the POR. For more 
information, see Corrosion-Resistant Carbon Steel Flat Products from 
Korea: Partial Rescission of Antidumping Duty Administrative Review, 69 
FR 25059 (May 5, 2004) (Partial Rescission of CORE).
    Interested parties are invited to comment on these preliminary 
results. Parties who submit comments in this segment of the proceeding 
should also submit with them: (1) a statement of the

[[Page 54102]]

issues and (2) a brief summary of the comments.

EFFECTIVE DATE: September 7, 2004.

FOR FURTHER INFORMATION CONTACT: Mark Young (Union), Carrie Farley 
(Dongbu), Lyman Armstrong (the POSCO Group), and Joy Zhang (HYSCO), AD/
CVD Enforcement, Office III, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
6397, (202) 482-0395, (202) 482-3601, and (202) 482-1168, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On August 19, 1993, the Department published the antidumping order 
on CORE from Korea. See Antidumping Duty Orders on Certain Cold-Rolled 
Caron Steel Flat Products and Certain Corrosion-Resistant Carbon Steel 
Flat Products from Korea, 58 FR 44159 (August 19, 1993) (Orders on 
Certain Steel from Korea). On August 1, 2003, we published in the 
Federal Register the notice of Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 68 FR 45218. On August 29, 2003, petitioners 
requested reviews of the POSCO Group, SeAH, Dongbu, Dongshin Special 
Steel Co., Ltd. (Dongshin), and Union. The Department initiated these 
reviews on September 30, 2003. See, Notice of Initiation of Antidumping 
and Countervailing Duty Administrative Reviews, Request for Revocation 
in Part and Deferral of Administrative Review, 68 FR 56262.
    On August 29, 2003, HYSCO requested a new shipper review. On 
October 3, 2003, the Department initiated this review. See Corrosion-
Resistant Carbon Steel Flat Products from Korea: Initiation of New 
Shipper Antidumping Duty Review, 68 FR 57423.
    During the most recently completed segments of the proceeding in 
which SeAH, Dongbu, Union, and the POSCO Group participated, the 
Department found and disregarded sales that failed the cost test.\2\ 
Pursuant to section 773(b)(2)(A)(ii) of the Tariff Act of 1930, as 
amended (the Act), we had reasonable grounds to believe or suspect that 
sales by these companies of the foreign like product under 
consideration for the determination of NV in this review were made at 
prices below the cost of production (COP). Therefore, we instructed 
SeAH, Dongbu, Union, and the POSCO Group to fill out sections A-D of 
the initial questionnaire, which we issued on October 3, 2003.\3\
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    \2\ See Notice of Final Results of Antidumping Duty 
Administrative Reviews: Certain Corld-Rolled and Corrosion-Resistant 
Steel Flat Products from Korea, 67 FR 11976 (March 18, 2002) (7th 
Review of CORE from Korea).
    \3\ Section A: Organization, Accounting Practices, Markets and 
Merchandise Section B: Comparison Market Sales
    Section C: Sales to the United States
    Section D: Cost of Production and Constructed Value
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    On January 2, 2004, petitioners alleged that HYSCO made sales of 
the foreign like product under consideration for the determination of 
NV in this review at prices below COP. On January 20, 2004, the 
Department rejected petitioners' COP allegation. See the Department's 
January 20, 2004, letter from the Department to petitioners, a public 
document on file in the Central Records Unit (CRU) room B099 in the 
main Commerce building. On January 22, 2004, petitioners submitted 
revised COP allegations. On February 3, 2004, HYSCO rebutted 
petitioners' COP allegation. On March 29, 2004, the Department 
initiated a COP investigation of HYSCO. See the Department's March 29, 
2004, memorandum, the public version of which is available in the CRU. 
Therefore, we issued a section D questionnaire to HYSCO on April 5, 
2004.
    On March 4, 2004, the Department published an extension of 
preliminary results of the administrative review, extending the 
preliminary results until August 30, 2004.\4\ See Corrosion-Resistant 
Carbon Steel Flat Products from Korea: Extension of Time Limit for the 
Preliminary Results of the Antidumping Duty Administrative Review, 69 
FR 10203.
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    \4\ As a result of a typographical error, the Department 
published the extended preliminary signature date as September 1, 
2004. The actual signature date is August 30, 2004.
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    On March 24, 2004, the Department published an extension of 
preliminary results of the new shipper review, extending the 
preliminary results until July 22, 2004. See Corrosion-Resistant Carbon 
Steel Flat Products from Korea: Extension of Time Limit for the 
Preliminary Results of Antidumping Duty New Shipper Review, 69 FR 
13812. On April 15, 2004, the Department aligned the new shipper review 
with the current administrative review, further extending the 
preliminary results of the new shipper review until August 30, 2004. 
See Memorandum to the File from Paul Walker, re: Request for Alignment 
of Annual and New Shipper Reviews, a public document on file in the 
CRU.\5\
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    \5\ The memorandum states that September 1, 2004, is the new 
date for the preliminary results; however, the correct date for the 
preliminary results of the administrative and new shipper reviews is 
August 30, 2004.
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SeAH

    On May 5, 2004, the Department rescinded the review of SeAH because 
neither SeAH nor its affiliates had exports or sales of the subject 
merchandise to the United States during the POR. See Partial Rescission 
of CORE.
    On June 22, 2004, the Department published a correction regarding 
its rescission of the review of SeAH. See Corrosion-Resistant Carbon 
Steel Flat Products from Korea: Partial Rescission of Antidumping Duty 
Administrative Review, 69 FR 34646, in which the Department addressed a 
comment from petitioners that it inadvertently failed to address in the 
March 4, 2004, rescission notice. Upon review of petitioners' 
additional comment, the Department determined to continue to rescind 
the review of SeAH. Id. at 34647.

Dongshin

    On October 24, 2003, the Department confirmed that Dongshin 
received the initial questionnaire. See the October 24, 2003, 
memorandum to the file containing the shipping receipt indicating that 
Dongshin had received the initial questionnaire, a public document on 
file in the CRU. On November 7, 2003, the Department sent a letter to 
Dongshin inquiring whether it intended to respond to the Department's 
initial questionnaire. Dongshin failed to respond to the Department's 
attempts to contact it and failed to respond to the initial 
questionnaire.

Dongbu

    On November 10, 2003, Dongbu submitted its section A response. On 
December 5, 2003, Dongbu submitted its sections B through D response. 
On May 3, 2004, Dongbu submitted its supplemental questionnaire 
response for sections A through D. On August 6, 2004, Dongbu submitted 
an additional supplemental questionnaire response.

Union

    On November 10, 2003, Union submitted its section A response. On 
December 5, 2003, Union submitted its sections B through D response. On 
April 2, 2004, Union submitted its supplemental questionnaire response. 
On July 23 and July 30, 2004, Union submitted its second and third 
supplemental questionnaire responses, respectively.

[[Page 54103]]

The POSCO Group

    On November 19, 2003, the POSCO Group submitted its section A 
response. On December 12, 2003, the POSCO Group submitted its sections 
B through D response. On April 14, 2004, the POSCO Group submitted its 
supplemental questionnaire response for sections A through C. On May 
17, 2004, the POSCO Group submitted its supplemental questionnaire 
response for section D.

HYSCO

    On November 21, 2003, HYSCO submitted its section A response and 
its importer questionnaire response. On December 12, 2003, HYSCO 
submitted its section B through D response. On January 16, 2004, HYSCO 
submitted its supplemental section A responses. On February 13, 2004, 
HYSCO submitted its supplemental questionnaire response for sections B 
and C. On April 23, 2004, HYSCO submitted questionnaire responses to 
sections A through D of the Department's questionnaire. On July 1, 
2004, HYSCO submitted its 2003 consolidated and unconsolidated 
financial statements of Hyundai Pipe of America (HPA), HYSCO's U.S. 
affiliated company. On July 20, 2004, HYSCO submitted a supplemental 
questionnaire response to section D.

Petitioners' Request for Revision to the Model Match Criteria

    In their May 28, 2004, submission, petitioners requested that the 
Department refine its model match criteria to reflect the actual sales 
and pricing practices undertaken by Dongbu, Union, and POSCO during the 
POR. Petitioners claim that the Department's model match criteria 
currently is based on a design from the underlying investigation that 
no longer reflects the sales and pricing practices of the Korean 
respondents. Thus, petitioners request that the Department obtain the 
Korean respondents' actual product specifications--actual thickness, 
width, etc.--so that real product comparisons can be made rather than 
comparisons based on classifications provided by the companies.
    In their June 7, 2004, submission, Dongbu and Union object to 
petitioners' request for revisions to the model match criteria. Dongbu 
and Union assert that their current internal pricing guidelines are the 
same as those used by the Department in the underlying investigation to 
establish the original matching criteria. They further argue that the 
Department's established policy dictates that it refrain from revising 
model match criteria absent evidence of a change in the norms of the 
industry under review. The Korean respondents contend that the internal 
pricing guidelines on which petitioners' argument relies fail to 
constitute sufficient evidence of a change in industry norms.
    The Department has determined not to alter the model match criteria 
in this segment of the proceeding. For further discussion of the this 
issue, see the August 27, 2004, memorandum from Eric B. Greynolds, 
Program Manager, Office of AD/CVD Enforcement III, to Melissa G. 
Skinner, Office Director, Office of AD/CVD Enforcement III, of which 
the public version is available in the CRU.

Period of Review

    The POR for these reviews is August 1, 2002, through July 31, 2003. 
These reviews cover entries from Dongshin, Dongbu, Union, the POSCO 
Group, and HYSCO.

Scope of the Reviews

    These reviews cover flat-rolled carbon steel products, of 
rectangular shape, either clad, plated, or coated with corrosion-
resistant metals such as zinc, aluminum, or zinc-, aluminum-, nickel- 
or iron-based alloys, whether or not corrugated or painted, varnished 
or coated with plastics or other nonmetallic substances in addition to 
the metallic coating, in coils (whether or not in successively 
superimposed layers) and of a width of 0.5 inch or greater, or in 
straight lengths which, if of a thickness less than 4.75 millimeters, 
are of a width of 0.5 inch or greater and which measures at least 10 
times the thickness or if of a thickness of 4.75 millimeters or more 
are of a width which exceeds 150 millimeters and measures at least 
twice the thickness, as currently classifiable in the Harmonized Tariff 
Schedule of the United States (HTS) under item numbers 7210.30.0030, 
7210.30.0060, 7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 
7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 
7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 
7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 
7212.60.0000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 
7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 
7217.90.5090. Included in these reviews are flat-rolled products of 
non-rectangular cross-section where such cross-section is achieved 
subsequent to the rolling process (i.e., products which have been 
``worked after rolling'') for example, products which have been beveled 
or rounded at the edges. Excluded from these reviews are flat-rolled 
steel products either plated or coated with tin, lead, chromium, 
chromium oxides, both tin and lead (``terne plate''), or both chromium 
and chromium oxides (``tin-free steel''), whether or not painted, 
varnished or coated with plastics or other nonmetallic substances in 
addition to the metallic coating. Also excluded from these reviews are 
clad products in straight lengths of 0.1875 inch or more in composite 
thickness and of a width which exceeds 150 millimeters and measures at 
least twice the thickness. Also excluded from these reviews are certain 
clad stainless flat-rolled products, which are three-layered corrosion-
resistant carbon steel flat-rolled products less than 4.75 millimeters 
in composite thickness that consist of a carbon steel flat-rolled 
product clad on both sides with stainless steel in a 20%-60%-20% ratio.
    These HTS item numbers are provided for convenience and customs 
purposes. The written descriptions remain dispositive.

Verification

    The Department is determining which of the three Korean respondents 
(Union, Dongbu, and the POSCO Group) involved in the administrative 
review it will verify. Further, in keeping with its current practice 
regarding new shipper reviews, the Department intends to verify the 
questionnaire responses submitted by HYSCO. All verifications 
undertaken in the administrative reviews and new shipper review will be 
conducted after the publication of the preliminary results. Parties 
will be given the opportunity to comment on the Department's 
verification findings in their case and rebuttal briefs.

Use of Partial Facts Available

    The Department has determined preliminarily that the use of partial 
facts available is appropriate for purposes of determining the 
preliminary dumping margin for subject merchandise sold by Union. 
Specifically, the Department has applied partial facts available for 
various expenses and adjustments with respect to the comparison margin 
program for Union. See Union's August 31, 2004, Preliminary Calculation 
Memorandum (Union's Preliminary Calculation Memorandum).
    Section 776(a)(2) of the Act provides that ``if an interested party 
or any other person (A) withholds information that

[[Page 54104]]

has been requested by the administering authority; (B) fails to provide 
such information by the deadlines for the submission of the information 
or in the form and manner requested, subject to subsections (c)(1) and 
(e) of section 782; (C) significantly impedes a proceeding under this 
title; or (D) provides such information but the information cannot be 
verified as provided in section 782(i), the administering authority 
shall, subject to section 782(d), use the facts otherwise available in 
reaching the applicable determination under this title.''
    In its section B-D response at section B, page 14, Union reported 
its inland freight charge for certain home market sales as ``freight 
equalized'' (i.e., Union splits the freight charge with the customer 
based on a freight schedule). However, upon closer examination of the 
home market database and sample documentation submitted by Union, it 
appears that Union reported the entire freight amount, including the 
amount paid by the customer.
    As long recognized by the Court of International Trade (CIT), the 
burden is on the respondent, not the Department, to create a complete 
and accurate record. See Pistachio Group of Association Food Industries 
v. United States, 641 F. Supp. 31, 39-40 (CIT 1987). In its narrative 
questionnaire response, Union indicated that the total inland freight 
amount, for certain home market sales, is allocated to the customer and 
Union based on a fee schedule that it provided. However, as noted 
above, it appears that in the home market database Union incurred the 
total cost of the inland freight. Therefore, in accordance with section 
776(a)(2)(B) of the Act, we are applying partial facts otherwise 
available in calculating Union's dumping margin. As facts available, 
the Department used the sample documentation that illustrates the 
freight split as provided in Exhibit 21 of Union's April 2, 2004, 
submission as a basis for determining the freight paid by Union. See 
Union's Preliminary Calculation Memorandum.

Use of Adverse Facts Available

    In accordance with section 776(a)(2) of the Act, the Department has 
determined that the use of facts available is appropriate for purposes 
of determining the preliminary antidumping duty margins for the subject 
merchandise sold by Dongshin. Section 776(a)(2) of the Act provides:
If an interested party (A) withholds information that has been 
requested by the administrating authority; (B) fails to provide such 
information by the deadlines for the submission of the information or 
in the form and the manner requested, subject to subsections (c)(1) and 
(e) of section 782; (C) significantly impedes a proceeding under this 
title; or (D) provides such information but the information cannot be 
verified as provided in section 782(i), the administering authority 
shall, subject to section 782(d), use the facts otherwise available in 
reaching the applicable determination under this title.
    Moreover, section 776(b) of the Act provides that:
If the administering authority finds that an interested party has 
failed to cooperate by not acting to the best of its ability to comply 
with a request for information from the administering authority, the 
administering authority, in reaching the applicable determination under 
this subtitle, may use an inference that is adverse to the interests of 
the party in selecting from among the facts otherwise available.
As explained above in the ``Background'' section of these preliminary 
results, Dongshin, despite the Department's repeated inquires, failed 
to provide a response to the Department's initial questionnaire. 
Therefore, we have determined that Dongshin's failure to respond to the 
Department's questionnaire warrants the use of facts otherwise 
available pursuant to sections 776(a)(2)(A) and (C) of the Act. 
Moreover, the Department finds that Dongshin failed to cooperate by not 
acting to the best of its ability by not submitting a questionnaire 
response; accordingly, the Department is using an inference that is 
adverse to Dongshin in the preliminary results pursuant to section 
776(b) of the Act.
    Section 776(c) of the Act provides that when the Department selects 
from among the facts otherwise available and relies on ``secondary 
information,'' the Department shall, to the extent practicable, 
corroborate that information from independent sources reasonably at the 
Department's disposal. The Statement of Administrative Action (SAA) 
provides that ``corroborate'' means simply that the Department will 
satisfy itself that the secondary information to be used has probative 
value. See Statement of Administrative Action accompanying the Uruguay 
Round Agreements Act, H.R. Doc. No. 103-316 at 870 (1994) and 19 CFR 
351.308(d). However, unlike other types of information, such as input 
costs or selling expenses, there are no independent sources for 
calculated dumping margins. The only source for margins is 
administrative determinations. Thus, in an administrative review, if 
the Department chooses as total adverse facts available a calculated 
dumping margin from a prior segment of the proceeding, it does not 
question the reliability of the margin for that time period. See Grain-
Oriented Electrical Steel from Italy: Preliminary Results of 
Antidumping Duty Administrative Review, 61 FR 36551, 36552 (July 11, 
1996). With respect to the relevance aspect of corroboration, however, 
the Department will consider information reasonably at its disposal to 
determine whether a margin continues to have relevance. Where 
circumstances indicate that the selected margin is not appropriate as 
adverse facts available, the Department will disregard the margin and 
determine an appropriate margin.
    For example, in Fresh Cut Flowers from Mexico: Final Results of 
Antidumping Administrative Review, 61 FR 6812 (February 22, 1996), the 
Department disregarded the highest margin in that case as adverse best 
information available (the predecessor to facts available) because the 
margin was based on another company's rate that was uncharacteristic of 
the industry, resulting in an unusually high margin. Similarly, the 
Department does not apply a margin that has been discredited. See D & L 
Supply Co. v. United States, 113 F.3d 1220, 1221 (Fed. Cir. 1997) (the 
Department will not use a margin that has been judicially invalidated); 
see also F. Lii De Cecco di Filippo v. U.S., 216 F.3d 1027 (Fed. Cir. 
2000). Accordingly, for Dongshin we have resorted to adverse facts 
available and have used the all others rate in effect for this order 
(17.70 percent) \6\, which is the highest margin upheld in

[[Page 54105]]

this proceeding, as the margin for these preliminary results because 
there is no evidence on the record indicating that such a margin is not 
appropriate as adverse facts available. See Orders on Certain Steel 
from Korea.
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    \6\ The all others rate was a calculated rate based on the 
weighted-average margin for Pohang Iron and Steel, the sole 
respondent in the investigation of corrosion-resistant steel from 
Korea. See Final Determinations of Sales at Less Than Fair Value: 
Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-Rolled 
Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel 
Flat Products, and Certain Cut-to-Length Carbon Steel Plate From 
Korea, 58 FR 37176 (July 9, 1993); see also Amendment of Final 
Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled 
Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat 
Products, Certain Corrosion-Resistant Carbon Steel Flat Products, 
and Certain Cut-to-Length Carbon Steel Plate From Korea, 58 FR 41083 
(August 2, 1993). The Department considered using the higher rate we 
calculated for Dongbu in the fifth administrative review of this 
proceeding; however, we found that rate to be inappropriate because 
it was based upon duty absorption. See Notice of Amended Final 
Results of Antidumping Duty Administrative Reviews: Certain Cold-
Rolled and Corrosion-Resistant Carbon Steel Flat Products From 
Korea, 65 FR 24180 (April 25, 2000).
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Transactions Reviewed for the POSCO Group

    For these preliminary results, we have accepted the POSCO Group's 
reporting methodology for overruns and have excluded reported overrun 
sales in the home market from our sales comparisons because such sales 
were outside the ordinary course of trade.\7\ This is consistent with 
the methodology we accepted in prior reviews. See, e.g., Certain Cold-
Rolled and Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Notice Preliminary Results of Antidumping Duty 
Administrative Review, 66 FR 47163, 47166 (September 11, 2001) 
(Preliminary Results of the 7th Review of CORE from Korea). Based on 
its questionnaire response, we have adopted the same approach with 
respect to overrun sales made by Union.
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    \7\ For purposes of this proceeding, overrun sales are those 
products which have not been sold within 90 days of production or 
those products which were produced for export but were, in fact, 
sold to the domestic market.
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Affiliated Parties

    For purposes of these reviews, we are treating POSCO, POCOS, and 
PSI as affiliated parties and have ``collapsed'' them, i.e., treated 
them as a single producer of CORE, within the meaning of 19 CFR 
351.401(f)(1). We refer to the collapsed respondent as the POSCO Group. 
We note that the POSCO Group was treated as collapsed in the most 
recently completed segment of this proceeding. See Preliminary Results 
of the 7th Review of CORE from Korea, 66 FR at 47166-47167. The POSCO 
Group has submitted no information to warrant reconsideration of that 
determination.
    In past reviews, we have taken the same approach with respect to 
Union and Dongkuk Industries Co., Ltd. (DKI). Id. However, based on 
information submitted by Union, we have preliminarily determined not to 
collapse Union and DKI. For further information, see the August 27, 
2004, memorandum from Mark Young, Senior Analyst, Office of AD/CVD 
Enforcement III, and Eric B. Greynolds, Program Manager, Office of AD/
CVD Enforcement III, to Melissa G. Skinner, Director, Office of AD/CVD 
Enforcement III re: Collapsing.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
CORE products produced by the respondents and sold in the home market 
during the POR to be foreign like products for the purpose of 
determining appropriate product comparisons to CORE sold in the United 
States.
    Where there were no sales in the ordinary course of trade 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 listed in Appendix V of the 
Department's antidumping questionnaire. In making the product 
comparisons, we matched foreign like products based on the physical 
characteristics reported by the respondent. Where sales were made in 
the home market on a different weight basis from the U.S. market 
(theoretical versus actual weight), we converted all quantities to the 
same weight basis, using the conversion factors supplied by the 
respondents, before making our fair-value comparisons.

Normal Value Comparisons

    To determine whether sales of CORE by the respondents to the United 
States were made at less than NV, we compared the EP or CEP to the NV, 
as described in the ``Export Price/Constructed Export Price'' and 
``Normal Value'' sections of this notice. In accordance with section 
777A(d)(2) of the Act, we calculated monthly weighted-average prices 
for NV and compared these to individual U.S. transactions.

Date of Sale

    It is the Department's practice normally to use the invoice date as 
the date of sale, although we may use a date other than the invoice 
date if we are satisfied that a different date better reflects the date 
on which the exporter or producer establishes the material terms of 
sale. See 19 CFR 351.401(i). We have preliminarily determined that 
there is no reason to depart from the Department's treatment of invoice 
date as the date of sale for Dongbu, the POSCO Group, and Union. 
Consistent with prior reviews, for home market sales, we used the 
reported date of the invoice from the Korean manufacturer; for U.S. 
sales we have followed the Department's methodology from prior reviews, 
and have based date of sale on invoice date from the U.S. affiliate, 
unless that date was subsequent to the date of shipment to the 
unaffiliated customer from Korea, in which case that shipment date is 
the date of sale. See Certain Cold-Rolled and Corrosion-Resistant 
Carbon Steel Flat Products from Korea: Preliminary Results, 65 FR 
54197, 54201 (September 7, 2000) (Preliminary Results of the 8th Review 
of CORE from Korea), and Certain Cold-Rolled and Corrosion-Resistant 
Carbon Steel Flat Products from Korea: Final Results of Antidumping 
Duty Administrative Reviews, 66 FR 3540 (January 16, 2001) (8th Review 
of CORE from Korea). Consistent with the Department's practice, we have 
used shipment date as date of sale for HYSCO because shipment date 
occurred prior to invoice date. See Honey from Argentina: Preliminary 
Results of Antidumping Duty Administrative Review, 69 FR 621, (January 
6, 2004). See also Notice of Final Determinations of Sales at Less than 
Fair Value: Certain Durum Wheat and Hard Red Spring Wheat from Canada, 
68 FR 52741 (September 5, 2003) and accompanying Decision Memorandum at 
Comment 3.

Export Price/Constructed Export Price

    We calculated the price of U.S. sales based on CEP, in accordance 
with section 772(b) of the Act. The Act defines the term ``constructed 
export price'' 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).'' In contrast, ``export 
price'' is defined 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 the subject merchandise outside of the United 
States.'' Sections 772(a) and (b) of the Act.
    In determining whether to classify U.S. sales as either EP or CEP 
sales, the Department must examine the totality of the circumstances 
surrounding the U.S. sales process, and assess whether the reviewed 
sales were made ``in the United States'' for purposes of section 772(b) 
of the Act. In the instant case, the record establishes that Dongbu's, 
the POSCO Group's, Union's, and HYSCO's affiliates in the United States 
(1) took title to the subject merchandise and (2) invoiced and received 
payment from the unaffiliated U.S. customers. Thus, the Department has 
determined that these U.S. sales should be classified as CEP 
transactions.
    For Dongbu, the POSCO Group, Union, and HYSCO we calculated CEP 
based on packed prices to unaffiliated customers in the United States. 
Where appropriate, we made deductions from the starting price for 
foreign inland freight, foreign inland insurance, foreign

[[Page 54106]]

brokerage and handling, international freight, marine insurance, U.S. 
warehousing expenses, U.S. wharfage, U.S. inland freight, U.S. 
brokerage and handling, loading expenses, other U.S. transportation 
expenses, U.S. customs duties, commissions, credit expenses, letter of 
credit expenses, warranty expenses, other direct selling expenses, 
inventory carrying costs incurred in the United States, and other 
indirect selling expenses in the country of manufacture and the United 
States associated with economic activity in the United States. Pursuant 
to section 772(d)(3) of the Act, we made an adjustment for CEP profit. 
Where appropriate, we added interest revenue to the gross unit price.
    In order to ensure that we have accounted for all appropriate U.S. 
interest expenses (i.e. both imputed and actual) without double-
counting, we have utilized the following interest expense methodology. 
As in the prior review, in the U.S. indirect selling expenses, we have 
included net financial expenses incurred by the respondent's U.S. 
affiliates; however, we added U.S. interest expenses only after 
deducting U.S. imputed credit expenses and U.S. inventory carrying 
costs, so as to eliminate the possibility of double-counting U.S. 
interest expenses.\8\
---------------------------------------------------------------------------

    \8\ See Issues and Decision Memorandum for the Final Results of 
Antidumping Administrative Review of Cold-Rolled (``CR'') and 
Corrosion- Resistant (``CORE'') Carbon Steel Flat Products from 
Korea, from Joseph A. Spetrini to Faryar Shirzad, Comment 1, (March 
11, 2002), on file in the CRU.
---------------------------------------------------------------------------

    Consistent with the Department's normal practice, we added the 
reported duty drawback to the gross unit price. We did so in accordance 
with the Department's long-standing test, which requires: (1) that the 
import duty and rebate be directly linked to, and dependent upon, one 
another; and (2) that the company claiming the adjustment demonstrate 
that there were sufficient imports of imported raw materials to account 
for the duty drawback received on the exports of the manufactured 
product. See Preliminary Results of the 8th Review of CORE from Korea, 
65 FR at 54202.

Normal Value

    Based on a comparison of the aggregate quantity of home market and 
U.S. sales, we determined that the quantity of the foreign like product 
sold in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States, pursuant to section 773(a) of the Act. Therefore, in accordance 
with section 773(a)(1)(B)(i) of the Act, we based NV on the price at 
which the foreign like product was first sold for consumption in the 
home market, in the usual commercial quantities and in the ordinary 
course of trade.
    Where appropriate, we deducted rebates, discounts, inland freight 
(offsets, where applicable, by freight revenue), inland insurance, and 
packing. Additionally, we made adjustments to NV, where appropriate, 
for credit expenses (offset, where applicable, by interest income), 
warranty expenses, post-sale warehousing, and differences in weight 
basis. We also made adjustments, where appropriate, for home market 
indirect selling expenses and inventory carrying costs to offset U.S. 
commissions.
    We also increased NV by U.S. packing costs in accordance with 
section 773(a)(6)(A) of the Act. We made adjustments to NV for 
differences in cost attributable to differences in physical 
characteristics of the merchandise, pursuant to section 
773(a)(6)(C)(ii) of the Act. In accordance with the Department's 
practice, where all contemporaneous matches to a U.S. sale observation 
resulted in difference-in-merchandise adjustments exceeding 20 percent 
of the cost of manufacturing (COM) of the U.S. product, we based NV on 
constructed value (CV). See 19 CFR 351.411.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, we determined 
NV based on sales in the comparison market at the same level of trade 
(LOT) as the CEP sales, to the extent practicable. When there were no 
sales at the same LOT, we compared U.S. sales to comparison market 
sales at a different LOT. When NV is based on CV, the NV LOT is that of 
the sales from which we derive selling expenses, general, and 
administrative expenses (SG&A), and profit.
    Pursuant to section 351.412 of the Department's regulations, to 
determine whether comparison market sales were at a different LOT, we 
examined stages in the marketing process and selling functions along 
the chain of distribution between the producer and the unaffiliated (or 
arm's-length) customers. If the comparison-market sales were at a 
different LOT and the differences affect 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 will make an LOT adjustment under section 
773(a)(7)(A) of the Act.
    Finally, if the NV LOT is more remote from the factory than the CEP 
LOT and there is no basis for determining whether the differences in 
LOT between NV and CEP affected price comparability, we will grant a 
CEP offset, as provided in section 773(a)(7)(B) of the Act. See Notice 
of Final Determination of Sales at Less Than Fair Value: Certain Cut-
to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61732-33 
(November 19, 1997). Specifically in this review, we did not make an 
LOT adjustment for any respondent. We are preliminarily granting a CEP 
offset for the POSCO Group and Dongbu. However, we did not grant a CEP 
offset for Union or HYSCO because we determined that NV LOT was not 
more advanced than the CEP LOT.
    For a detailed description of our LOT methodology and a summary of 
company-specific LOT findings for these preliminary results, see the 
company-specific calculation memoranda, all on file in the CRU.

Cost of Production/Constructed Value

    As explained above, at the time the questionnaires were issued in 
the administrative review, the seventh administrative review was the 
most recently completed segment of this proceeding. In accordance with 
section 773(b)(2)(A)(ii) of the Act, and consistent with the 
Department's practice, because we disregarded certain below-cost sales 
by Dongbu, the POSCO Group, and Union in the seventh review, we found 
reasonable grounds to believe or suspect that these respondents made 
sales in the home market at prices below the cost of producing the 
merchandise. See the 7th Review of CORE from Korea and the Preliminary 
Results of the 7th Review of CORE from Korea, 66 FR at 47168. We, 
therefore, initiated cost investigations with regard to Dongbu, the 
POSCO Group, and Union in order to determine whether these respondents 
made home market sales during the POR at prices below their COP within 
the meaning of section 773(b)(2)(A)(ii) of the Act. As stated above, we 
have also initiated a COP investigation of HYSCO.
    Before making concordance matches, we conducted the COP analysis 
described below.
A. Calculation of COP
    We calculated a company-specific COP for Dongbu, the POSCO Group, 
Union, and HYSCO based on the sum of each respondent's cost of 
materials and fabrication for the foreign like product, plus amounts 
for home-market selling expenses, SG&A, and packing costs in accordance 
with section 773(b)(3) of the Act. We relied on Dongbu's, the POSCO

[[Page 54107]]

Group's, and Union's information as submitted.
B. Test of Home-Market Prices
    For Union, we used each respondents' weighted-average COP, as 
adjusted (see ``Calculation of COP'' above), for the period July 1, 
2002, to June 30, 2003, as reported. The COP and CV figures for the 
POSCO Group and Dongbu were calculated based on costs incurred by the 
companies during the period July 1, 2002, through June 30, 2003, as 
reported, for CORE products. We calculated HYSCO's COP and CV based on 
HYSCO's actual costs of manufacturing the subject merchandise for the 
POR, August 2002 through July 2003.
    We compared the weighted-average COP figures to home-market sales 
of the foreign like product as required under section 773(b) of the 
Act. In determining whether to disregard home-market sales made at 
prices below the COP, as required under sections 773(b)(1)(A) and (B) 
of the Act, we examined whether (1) within an extended period of time, 
such sales were made in substantial quantities, and (2) such sales were 
made at prices which permitted the recovery of all costs within a 
reasonable period of time. On a product-specific basis, we compared the 
COP to the home-market prices (not including VAT), less any applicable 
movement charges, discounts, and rebates.
C. Results of COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given product were 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 a respondent's 
sales of a given product during the POR were at prices less than the 
COP, we determined that sales of that model were made in ``substantial 
quantities'' for an extended period of time, in accordance with 
sections 773(b)(2)(B) and (C) of the Act, and were not 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. In such cases, we 
disregarded the below-cost sales in accordance with section 773(b)(1) 
of the Act.
    Therefore, for Dongbu, Union, the POSCO Group, and HYSCO, for 
purposes of these preliminary results, we disregarded below-cost sales 
of a given product of 20 percent or more and used the remaining sales 
as the basis for determining NV, in accordance with section 773(b)(1) 
of the Act. See the company-specific calculation memoranda, the public 
versions of which are on file in the CRU.
D. Calculation of CV
    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of each respondent's cost of materials, fabrication, 
SG&A, including interest expenses, U.S. packing costs, and profit. In 
accordance with section 773(e)(2)(A) of the Act, we based SG&A and 
profit on the actual 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 the foreign country. 
For selling expenses, we used the weighted-average home-market selling 
expenses. We also made adjustments, where appropriate, for home-market 
indirect selling expenses to offset U.S. commissions in CEP 
comparisons.

Arm's Length Sales

    The POSCO Group reported sales of the foreign like product to an 
affiliated reseller/service center. Dongbu and HYSCO also reported that 
they made sales in the home market to affiliated parties. The 
Department calculates NV based on a sale to an affiliated party only if 
it is satisfied that the price to the affiliated party is comparable to 
the price at which sales are made to parties not affiliated with the 
producer or exporter, i.e., sales at arm's length. See 19 CFR 
351.403(c).
    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 movement charges, direct selling expenses, discounts and 
packing. In accordance with the Department's current practice, if the 
prices charged to an affiliated party were, on average, between 98 and 
102 percent of the prices charged to unaffiliated parties for 
merchandise identical or most similar to that sold to the affiliated 
party, we consider the sales to be at arm's-length prices. See 19 CFR 
351.403(c). Conversely, where sales to the affiliated party did not 
pass the arm's-length test, all sales to that affiliated party have 
been excluded from the NV calculation. Id.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions based on the exchange rates in effect on the dates of the 
U.S. sales as published by the Federal Reserve Bank of New York. 
Section 773A(a) of the Act directs the Department to use a daily 
exchange rate in effect on the date of sale of subject merchandise in 
order to convert foreign currencies into U.S. dollars, unless the daily 
rate involves a ``fluctuation.'' In accordance with the Department's 
practice, we have determined, as a general matter, that a fluctuation 
exists when the daily exchange rate differs from a benchmark by 2.25 
percent. See, e.g., Certain Stainless Steel Wire Rods from France: 
Preliminary Results of Antidumping Duty Administrative Review, 61 FR 
8915, 8918 (March 6, 1996) and Policy Bulletin 96-1: Currency 
Conversions, 61 FR 9434, (March 8, 1996). The benchmark is defined as 
the rolling average of rates for the past 40 business days.

Preliminary Results of the Review

    As a result of these reviews, we preliminarily determine that the 
following weighted-average dumping margins exist:

------------------------------------------------------------------------
                                                       Weighted-Average
                Producer/Manufacturer                       Margin
------------------------------------------------------------------------
Dongbu..............................................   0.27 (De Minimis)
Union...............................................   0.27 (De Minimis)
The POSCO Group.....................................   0.41 (De Minimis)
HYSCO...............................................   0.00 (De Minimis)
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of this 
proceeding in accordance with 19 CFR 351.224(b). Interested parties may 
submit case and rebuttal briefs. The Department will announce the due 
date of the case briefs at a later date. Rebuttal briefs must be 
limited to issues raised in the case briefs. Parties who submit 
arguments are requested to submit with the argument (1) a statement of 
the issue, and (2) a brief summary of the argument. Further, parties 
submitting written comments are requested to provide the Department 
with an additional copy of the public version of any such comments on 
diskette. An interested party may request a hearing within 30 days of 
publication of these preliminary results. See 19 CFR 351.310(c). Any 
hearing, if requested, ordinarily will be held two days after the due 
date of the rebuttal briefs. 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 comments, or at a hearing, 
if requested, within 120 days of publication of these preliminary 
results.

Assessment Rate

    Pursuant to 19 CFR 351.212(b), the Department calculated an 
assessment

[[Page 54108]]

rate for each importer of the subject merchandise. Upon issuance of the 
final results of this administrative review, if any importer-specific 
assessment rates calculated in the final results are above de minimis 
(i.e., at or above 0.5 percent), the Department will issue appraisement 
instructions directly to CBP to assess antidumping duties on 
appropriate entries by applying the assessment rate to the entered 
value of the merchandise. For assessment purposes, we calculated 
importer-specific assessment rates for the subject merchandise by 
aggregating the dumping margins for all U.S. sales to each importer and 
dividing the amount by the total entered value of the sales to that 
importer. Where appropriate, to calculate the entered value, we 
subtracted international movement expenses (e.g., international 
freight) from the gross sales value.

Cash Deposit Requirements

    To calculate the cash deposit rate for each producer and/or 
exporter included in this administrative review, we divided the total 
dumping margins for each company by the total net value for that 
company's sales during the review period.
    The following deposit rates will be effective upon publication of 
the final results of this administrative review for all shipments of 
certain pasta from Italy entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided by section 
751(a)(2)(C) of the Act: (1) The cash deposit rates for the companies 
listed above will be the rates established in the final results of 
these reviews, except if the rate is less than 0.5 percent and, 
therefore, de minimis, the cash deposit will be zero; (2) for 
previously reviewed or investigated companies not listed above, the 
cash deposit rate will continue to be the company-specific rate 
published for the most recent final results in which that manufacturer 
or exporter participated; (3) if the exporter is not a firm covered in 
these reviews, a prior review, or the original less than fair value 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent final results for the 
manufacturer of the merchandise; and (4) if neither the exporter nor 
the manufacturer is a firm covered in these or any previous review 
conducted by the Department, the cash deposit rate will be 17.70 
percent, the ``All Others'' rate established in the underlying 
investigation. See Orders on Certain Steel from Korea.
    These cash deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.

Notification to Importers

    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 administrative review is issued and published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: August 30, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. E4-2085 Filed 9-3-04; 8:45 am]
BILLING CODE 3510-DS-S