[Federal Register Volume 71, Number 195 (Tuesday, October 10, 2006)]
[Notices]
[Pages 59440-59447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-16678]


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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 and Preliminary Rescission, in Part, of 
Antidumping Duty Administrative Review

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

SUMMARY: In response to requests by Dongkuk Steel Mill Co. Ltd. (DSM), 
a producer/exporter of the subject merchandise, and petitioners,\1\ 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). This review covers seven 
producers/exporters of the subject merchandise. The period of review 
(POR) is September 1, 2004, through August 31, 2005.
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    \1\ The petitioners are the Rebar Trade Action Coalition and its 
individual members-Gerdau Ameristeel, CMC Steel Group, Nucor 
Corporation, and TAMCO.
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    As discussed below, the Department has preliminarily determined to 
collapse DSM, Korea Iron and Steel Co., Ltd. (KISCO), and Hwanyoung 
Steel Industries Co. (HSI), into a single entity for purposes of this 
administrative review. We preliminarily determine that DSM/KISCO/HSI 
made sales at less than normal value (NV) during the POR. Further, as a 
result of our review, we preliminarily determine that three respondents 
had no sales or shipments of subject merchandise to the United States 
during the POR. Therefore, we are preliminarily rescinding the review 
with respect to these respondents. One remaining respondent, Dongil 
Industries Co. Ltd. (Dongil), failed to respond to our questionnaire. 
As a result, we are basing our preliminary results for Dongil on total 
adverse facts available (AFA). If these preliminary results are adopted 
in our final results of administrative review, we will instruct U.S. 
Customs and Border Protection (CBP) to assess antidumping duties on all 
appropriate entries. Interested parties are invited to comment on these 
preliminary results of review. Unless we extend the deadline, we will 
issue the final results of review no later than 120 days from the date 
of publication of this notice.

DATES: Effective Date: October 10, 2006.

FOR FURTHER INFORMATION CONTACT: Mark Manning or Drew Jackson, AD/CVD 
Operations, Office 4, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
5253, or (202) 482-4406, respectively.

Background

    On September 7, 2001, the Department published 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 1, 2005, the Department published in 
the Federal Register a notice of ``Opportunity to Request 
Administrative Review'' of the antidumping duty order on rebar from 
Korea. See Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation; Opportunity to Request Administrative Review, 
70 FR 52072 (September 1, 2005). On September 21, 2005, in accordance 
with 19 CFR 351.213(b)(2), DSM requested that the Department conduct an 
administrative review of its sales and entries of subject merchandise 
into the United States during the POR. Additionally, in accordance with 
19 CFR 351.213(b)(1), on September 30, 2005, petitioners requested that 
the Department conduct a review of DSM, Dongil, Hanbo Iron & Steel Co., 
Ltd. (Hanbo), INI Steel (INI), Kosteel Co., Ltd (Kosteel), and KISCO. 
On October 25, 2005, the Department initiated an

[[Page 59441]]

administrative review of Dongil, DSM, Hanbo, INI, Kosteel Co., and 
KISCO. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews, 70 FR 61601 (October 25, 2005).
    On October 19, 2005, the Department issued its antidumping 
questionnaire to Dongil, DSM, Hanbo, INI, Kosteel, and KISCO. In 
December 2005, DSM and KISCO responded to the Department's antidumping 
questionnaire.\2\ Additionally, KISCO's affiliate, HSI, responded to 
the Department's antidumping questionnaire in December 2005. 
Thereafter, the Department issued supplemental questionnaires to DSM, 
KISCO, and HSI, and received timely responses. The petitioners 
submitted comments regarding the respondents' supplemental 
questionnaire responses on May 26, 2006, and September 13, 2006.
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    \2\ KISCO and its affiliate, HSI, reported that they had no 
sales or shipments of subject merchandise to the United States 
during the POR. However, because DSM and KISCO were found to be 
affiliated and were collapsed in a prior review, the Department 
reviewed KISCO and HSI's submissions regarding, inter alia, their 
corporate structure and affiliations, home market sales, and cost of 
production.26, 2006, and September 13, 2006.
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    On October 21, 2005, Hanbo and INI notified the Department that 
neither they nor any of their affiliates had any sales or exports of 
subject merchandise during the POR. On August 2, 2006, the Department 
sent a letter to Kosteel and Dongil informing these companies that we 
did not receive a response from them to the antidumping questionnaire. 
In the letter, the Department stated that, if they did not respond to 
the antidumping questionnaire because they had no shipments of subject 
merchandise to the United States during the POR, they should inform the 
Department of this fact; otherwise, the Department may conclude that 
these companies decided not to cooperate with the Department's review. 
In response, on August 8, 2006, Kosteel reported that it had no sales 
or shipments of subject merchandise to the United States during the 
POR. Dongil did not respond to the Department's August 2, 2006, letter.
    Because it was not practicable to issue the preliminary results of 
this review within the normal time frame, on May 30, 2006, the 
Department published in the Federal Register a notice of the extension 
of time limits for these preliminary results. See Steel Concrete 
Reinforcing Bars from the Republic of Korea: Extension of the Time 
Limit for the Preliminary Results of Antidumping Duty Administrative 
Review, 71 FR 30658 (May 30, 2006). This extension established the 
deadline for these preliminary results as September 30, 2006. The first 
business day after this deadline is October 2, 2006.

Period of Review

    The POR is September 1, 2004, through August 31, 2005.

Scope of the Order

    The product covered by this order 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 subheading is provided for 
convenience and customs purposes. The written description of the scope 
of this proceeding is dispositive.

Partial Rescission of Review

    As noted above, Hanbo, INI, and Kosteel informed the Department 
that they had no shipments of subject merchandise to the United States 
during the POR. We obtained entry data from CBP and found that these 
data support the statements made by these respondents, that they had no 
shipments of subject merchandise during the POR. Therefore, in 
accordance with 19 CFR 351.213(d)(3) and consistent with the 
Department's practice, we are preliminarily rescinding our review with 
respect to Hanbo, INI, and Kosteel. (See, e.g., Certain Welded Carbon 
Steel Pipe and Tube from Turkey; Final Results and Partial Rescission 
of Antidumping Administrative Review, 63 FR 35190, 35191 (June 29, 
1998); and Certain Fresh Cut Flowers from Colombia; Final Results and 
Partial Rescission of Antidumping Duty Administrative Review, 62 FR 
53287, 53288 (October 14, 1997)).

Facts Available

    Section 776(a)(2) of the Tariff Act of 1930, as amended (the Act), 
provides that if any interested party: (A) Withholds information that 
has been requested by the Department; (B) fails to provide such 
information by the deadlines for submission of the information or in 
the form or manner requested; (C) significantly impedes a proceeding; 
or (D) provides such information but the information cannot be 
verified, the Department shall, subject to section 782(d) of the Act, 
use facts otherwise available in making its determination.
    If the Department determines that a response to a request for 
information does not comply with the request, section 782(d) of the Act 
provides that the Department will inform the person submitting the 
response of the nature of the deficiency and shall, to the extent 
practicable, provide that person the opportunity to remedy or explain 
the deficiency. If that person submits further information that 
continues to be unsatisfactory, or this information is not submitted 
within the applicable time limits, the Department may, subject to 
section 782(e), disregard all or part of the original and subsequent 
responses, as appropriate.
    Section 782(e) of the Act states that the Department shall not 
decline to consider information submitted by an interested party and is 
necessary to the determination, but does not meet all of the 
Department's applicable requirements, if: (1) The information is 
submitted by the established deadline; (2) the information can be 
verified; (3) the information is not so incomplete that it cannot serve 
as a reliable basis for reaching the applicable determination; (4) the 
interested party has demonstrated that it acted to the best of its 
ability; and (5) the information can be used without undue 
difficulties.
    Furthermore, section 776(b) of the Act states that if the 
Department ``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,'' the Department, in reaching the applicable determination 
under this title, ``may use an inference that is adverse to the 
interests of that party in selecting from among the facts otherwise 
available.'' See also Statement of Administrative Action (SAA) 
accompanying the URAA, H.R. Rep. No. 103-316 at 870 (1994).

Application of Facts Available

    The evidence on the record of this review establishes that, 
pursuant to section 776(a)(2)(A) of the Act, the use of total facts 
available (FA) is warranted in determining the dumping margin for U.S. 
sales of rebar made by Dongil because it failed to provide any 
requested information to the Department. As stated above, on October 
19, 2005, the Department issued the antidumping questionnaire to six 
manufacturers/exporters of the subject merchandise. Five companies 
responded to the questionnaire, with three of the five companies 
ultimately advising the Department that they did not have shipments or 
sales of subject merchandise to the United States during the POR. The 
remaining company, Dongil, failed to respond to the Department's 
antidumping questionnaire. On August 2, 2005, we

[[Page 59442]]

informed Dongil that, because it failed to respond to the Department's 
antidumping questionnaire, and had not informed the Department as to 
whether it had sales or shipments of subject merchandise to the United 
States during the POR, we may use AFA to determine its dumping margin. 
Dongil did not respond to the Department's August 2, 2005, letter.
    Because Dongil failed to provide the necessary information 
requested by the Department, pursuant to section 776(a)(2)(A) of the 
Act, we must establish the margins for this company based on the facts 
otherwise available.

Use of Adverse Inferences

    In selecting from among the facts otherwise available, pursuant to 
section 776(b) of the Act, an adverse inference is warranted when the 
Department has determined that a respondent has ``failed to cooperate 
by not acting to the best of its ability to comply with a request for 
information.'' Section 776(b) of the Act goes on to state that an 
adverse inference may include reliance on information derived from (1) 
The petition; (2) a final determination in the investigation under this 
title; (3) any previous review under section 751 or determination under 
section 753, or (4) any other information on the record.
    Adverse inferences are appropriate ``to ensure that the party does 
not obtain a more favorable result by failing to cooperate than if it 
had cooperated fully.'' See SAA at 870; Timken Co. V, United States, 
354 F.3d 1334, 1345 (Fed. Cir. 2004); Mannesmannrohren-Werke AG v. 
United States, 77 F. Supp. 2d 1302 n.7 (CIT 1999). The Court of Appeals 
for the Federal Circuit (CAFC), in Nippon Steel Corporation v. United 
States, 337 F. 3d 1373, 1381 (Fed. Cir. 2003), provided an explanation 
of the ``failure to act to the best of its ability'' standard, holding 
that the Department need not show intentional conduct existed on the 
part of the respondent, but merely that a ``failure to cooperate to the 
best of a respondent's ability'' existed, i.e., information was not 
provided ``under circumstances in which it is reasonable to conclude 
that less than full cooperation has been shown.'' Id. at 1383. The CAFC 
did acknowledge, however, that ``deliberate concealment or inaccurate 
reporting'' would certainly be a reason to apply AFA, although it 
indicated that inadequate responses to agency inquiries ``would 
suffice'' as well. Id.
    To examine whether the respondent ``cooperated'' by ``acting to the 
best of its ability'' under section 776(b) of the Act, the Department 
considers, inter alia, the accuracy and completeness of submitted 
information and whether the respondent has hindered the calculation of 
accurate dumping margins. See Mannesmannrohren-Werke AG v. United 
States, 120 F.Supp. 2d 1075,1096 (CIT 2000).
    The record shows that Dongil failed to cooperate to the best of its 
ability, within the meaning of section 776(b) of the Act. In reviewing 
the evidence on the record, the Department finds that Dongil failed to 
provide requested information. Moreover, Dongil failed to offer any 
explanation for its failure to respond to our antidumping questionnaire 
or August 2, 2005, letter. As a general matter, it is reasonable for 
the Department to assume that Dongil possessed the records necessary to 
participate in this review; however, by not supplying the information 
the Department requested, Dongil failed to cooperate to the best of its 
ability. As Dongil has failed to cooperate to the best of its ability, 
we are applying an adverse inference pursuant to section 776(b) of the 
Act. As AFA for Dongil, we have used a rate of 102.28 percent, which is 
the highest margin from any segment of the proceeding. Specifically, 
this rate was the highest margin alleged for any Korean company in the 
petition and is the rate used as AFA for Hanbo in the final 
determination of the less-than-fair-value (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). This rate was also used as AFA for both Hanbo and Dongil in 
the last completed administrative review of this order. See Steel 
Concrete Reinforcing Bars From the Republic of Korea: Notice of Final 
Results and Final Partial Rescission of Antidumping Duty Administrative 
Review, 69 FR 54642 (September 9, 2004).

Corroboration of Information

    Section 776(c) of the Act requires the Department to corroborate, 
to the extent practicable, secondary information used as FA. Secondary 
information is defined as ``{i{time} nformation derived from the 
petition that gave rise to the investigation or review, the final 
determination concerning the subject merchandise, or any previous 
review under section 751 concerning the subject merchandise.'' See SAA 
at 870 and 19 CFR 351.308(d).
    The SAA further provides that the term ``corroborate'' means that 
the Department will satisfy itself that the secondary information to be 
used has probative value. See SAA at 870. Thus, to corroborate 
secondary information, the Department will, to the extent practicable, 
examine the reliability and relevance of the information used. During 
the LTFV investigation, we examined the reliability of the 102.28 
percent rate selected as AFA for Hanbo and found it to be reliable. See 
Memorandum to Troy H. Cribb, Assistant Secretary for Import 
Administration, from Holly A. Kuga, Acting Deputy Assistant Secretary 
for AD/CVD Enforcement, Group II, ``The Use of Facts Available for 
Hanbo Iron & Steel Co. Ltd., and Corroboration of Secondary 
Information,'' dated January 16, 2001, and placed on the record of this 
review concurrently with these preliminary results. There is no 
information on the record of this review to demonstrate that this rate 
is no longer reliable.
    As to the relevance of the AFA rate, the CAFC has stated that 
Congress ``intended for an adverse facts available rate to be a 
reasonably accurate estimate of the respondent's actual rate, albeit 
with some built-in increase intended as a deterrent to non-
compliance.'' F.Lli De Cecco Di Filippo Fara S. Martino S.p.A., v. 
U.S., 216 F.3d 1027, 1032 (Fed. Cir. 2000). The Department considers 
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 AFA, the Department will 
disregard the selected margin and determine an appropriate margin. See, 
e.g., Fresh Cut Flowers from Mexico: Final Results of Antidumping 
Administrative Review, 61 FR 6812 (February 22, 1996).
    With respect to the rate selected for Dongil, we note that in 
determining the relevant AFA rate, the Department assumes that if an 
uncooperative respondent could have demonstrated that its dumping 
margin is lower than the highest prior margin, it would have provided 
information showing the margin to be less. See Rhone Poulenc, Inc. v. 
United States, 899 F.2d 1185, 1190-91 (Fed. Cir. 1990) (Rhone Poulenc). 
In Rhone Poulenc, the CAFC found that the presumption that, ``the 
highest prior margin was the best information of current margins'' was 
a permissible interpretation of 19 U.S.C. 1677e(c). See Rhone Poulenc, 
899 F.2d at 1190. In upholding this presumption, the CAFC cited the 
rationale underlying the adverse inference rule, that the presumption 
``reflects a common sense inference that the highest prior margin is 
the most probative evidence of current margins because, if it were not 
so, the importer, knowing of the rule, would have produced current 
information showing the margin to be less.'' Id. In other proceedings, 
the

[[Page 59443]]

Department has used the highest margin in the proceeding as AFA.
    See, e.g., Freshwater Crawfish Tail Meat from the People's Republic 
of China; Notice of Final Results of Antidumping Duty Administrative 
Review, 68 FR 19504, 19508 (April 21, 2003). In fact, the Department 
used the 102.28 percent rate as AFA in the final determination of the 
LTFV investigation with respect to Hanbo and, subsequently, applied it 
to both Dongil and Hanbo in the last completed administrative review. 
Therefore, Dongil had notice that the 102.28 percent rate may be used 
as the AFA rate that would be applied for its failure to cooperate. 
Consequently, in keeping with Rhone Poulenc, we consider the 102.28 
percent rate to be the most probative evidence of current margin for 
Dongil because, if it were not so, Dongil, knowing 102.28 percent rate 
may be assigned as AFA, would have produced current information showing 
the margin to be less. Further, since Dongil's current margin is 102.28 
percent, assigning a rate less than this amount as AFA would allow 
Dongil to benefit from its non-cooperation. Therefore, we consider the 
102.28 percent rate to be relevant.
    Accordingly, we have determined, to the extent practicable, that 
the rate selected as AFA are both reliable and relevant. Therefore, we 
have corroborated this rate in accordance with section 776(c) of the 
Act.

Affiliation

    We preliminarily find that DSM, KISCO, HSI, and Dongkuk Industries 
Co., Ltd. (DKI) \3\ are affiliated through to sections 771(33)(A) and 
771(33)(F) of the Act. Pursuant to section 771(33)(A) of the Act, the 
following persons, among others, are affiliated: ``Members of a family, 
including brothers and sisters (whether by the whole or half blood), 
spouse, ancestors, and lineal descendants. * * * '' See section 
771(33)(A) of the Act. The record shows that certain senior executives 
of DSM, KISCO, HSI, and DKI are descendants of a common progenitor, the 
late Kyung-Ho Chang. These members of the Chang family are related as 
uncles, nephews, and first cousins. Since the details of these 
relationships are business proprietary information, please see the 
Memorandum from Thomas F. Futtner, Acting Office Director, to Stephen 
J. Claeys, Deputy Assistant Secretary for Import Administration, 
``Whether to Collapse Dongkuk Steel Mill Co., Ltd., Korea Iron and 
Steel Co., Ltd., and Hwanyoung Steel Ind. Co. Ltd. Into a Single 
Entity,'' dated October 2, 2006 (Collapsing Memorandum). Accordingly, 
consistent with the definition of ``family'' under section 771(33)(A) 
of the Act, the Department's prior practice, the controlling precedent 
(see Ferro Union Inc. v. Wheatland Tube Co., 44 F. Supp. 2d 1310, 1325-
1326 (CIT 1999) (Ferro Union Inc.)), our findings in 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) (LTFV Final Determination)), and the most 
recently completed review in which the Department calculated a dumping 
margin for DSM/KISCO (see Steel Concrete Reinforcing Bar From The 
Republic of Korea: Final Results of Antidumping Duty Administrative 
Review, 69 FR 19399 (April 13, 2004)), the Department preliminarily 
determines that certain senior executives of DSM, KISCO, DKI, and HSI 
are members of the Chang family, and thus are affiliated. See 
Collapsing Memorandum.
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    \3\ DKI is a manufacturer of cold-rolled steel, pickled and 
oiled coils, and hot-dip galvanized coil. DKI is also a trading 
company that exports various steel products. DKI does not produce 
subject merchandise.
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    Section 771(33)(F) of the Act states that, ``two or more persons 
directly or indirectly controlling, controlled by, or under common 
control with, any person,'' shall be considered to be affiliated. A 
person includes any interested party as well as any other individual, 
enterprise, or entity. See 19 CFR 351.102. The courts have agreed that 
a family group is an entity and thus is a ``person,'' for purposes of 
section 771(33)(F) of the Act. See Ferro Union Inc., 44 F. Supp. 2d at 
1326; Dongkuk Steel Mill Co., v. United States, Slip Op. 05-75 at 13 
(CIT June 22, 2005) (Dongkuk). As further defined by section 771(33) of 
the Act, ``a person shall be considered to control another person if 
the person is legally or operationally in a position to exercise 
restraint or direction over the other person.'' See section 771(33) of 
the Act. The record shows that certain members of the Chang family are 
senior executives of these companies. See Collapsing Memorandum. 
Additionally, these same members of the Chang family are the largest 
shareholders of DSM, KISCO, and DKI. Id. Further, KISCO is the largest 
shareholder of HSI. Accordingly, the Chang family's leadership 
positions within these companies, as well as the fact that they control 
the largest blocks of outstanding shares in DSM, KISCO, and DKI (and 
KISCO is the largest shareholder in HSI), puts the Chang family in a 
position to legally and/or operationally control DSM, KISCO, DKI, and 
HSI, thus satisfying the requirements of affiliation under section 
771(33)(F) of the Act. The Court of International Trade (CIT) upheld 
the Department's similar finding of affiliation in the 2001-2002 Final 
Results. See Dongkuk, Slip. Op 05-75 at 4.
    In addition, section 771(33)(E) of the Act states that two or more 
persons shall be considered to be affiliated if any person directly or 
indirectly owns 5 percent or more of the outstanding voting shares of 
an organization. In this case, record evidence demonstrates that KISCO 
directly owns over 5 percent of HSI's outstanding shares. Therefore, we 
find that KISCO is affiliated with HSI pursuant to section 771(33)(E) 
of the Act. See Collapsing Memorandum.

Collapsing

    Section 351.401(f)(1) of the Department's regulations states that 
in an antidumping proceeding the Department ``will treat two or more 
affiliated producers as a single entity where those producers have 
production facilities for similar or identical products that would not 
require substantial retooling of either facility in order to 
restructure manufacturing priorities and the Secretary concludes that 
there is a significant potential for the manipulation of price or 
production.'' See 19 CFR 351.401(f)(1).
    Section 351.401(f)(2) of the Department's regulations identifies 
factors to be considered to determine whether there is a significant 
potential for manipulation. These include: (i) The level of common 
ownership; (ii) the extent to which managerial employees or board 
members of one firm sit on the board of directors of an affiliated 
firm; and (iii) whether operations are intertwined, such as through the 
sharing of sales information, involvement in production and pricing 
decisions, the sharing of facilities or employees, or significant 
transactions between the affiliated producers.
    As discussed above, and in the accompanying Collapsing Memorandum, 
based on the evidence on the record in this review, we have 
preliminarily determined that DSM is affiliated with KISCO and HSI by 
virtue of common control by the Chang family. See sections 771(33)(A) 
and (F) of the Act. Accordingly, the Department preliminarily 
determines that the first of the three requirements for collapsing the 
companies has been met. The CIT upheld the Department's decision to 
collapse DSM and KISCO in the 2001-2002 Final Results. See Dongkuk, 
Slip. Op 05-75 at 16-17.

[[Page 59444]]

    Having determined that DSM, KISCO, and HSI are affiliated, the 
Department examines whether the producers have production facilities 
for similar or identical products that would not require ``substantial 
retooling * * * in order to restructure manufacturing priorities.'' Cf. 
Notice of Preliminary Results of New Shipper Review of the Antidumping 
Duty Order on Certain Pasta From Italy, 69 FR 319, 321 (January 5, 
2004). Based on the questionnaire responses submitted by DSM, KISCO, 
and HSI, the Department has preliminarily determined that the three 
companies' production facilities would not require substantial 
retooling to restructure manufacturing priorities. See Collapsing 
Memorandum.
    Further, based on the record of this proceeding, the Department 
preliminarily determines that significant potential for manipulation of 
price or production exists. In analyzing whether there exists a 
potential for price or production manipulation, the Department may 
consider the following factors: (1) The level of common ownership; (2) 
the extent to which managerial employees or directors of one firm also 
sit on the board of the other firm; and (3) whether operations are 
intertwined. See 19 CFR 351.401(f)(2). Based on information supplied by 
DSM, KISCO, and HSI, the Department preliminarily determines that each 
of these factors has been satisfied in this segment of the proceeding. 
See Collapsing Memorandum for a full discussion of the issues. As the 
CIT recognized in Dongkuk, the agency's concern is with the potential 
for manipulation, which continues to exist in this case. See Dongkuk, 
Slip. Op 05-75 at 17.
    Based on these reasons, we find that DSM, KISCO, and HSI are 
affiliated producers with similar or identical production facilities 
that would not require substantial retooling of either facility in 
order to restructure manufacturing priorities. We also find that there 
exists a significant potential for the manipulation of price or 
production. Therefore, we have collapsed DSM, KISCO, and HSI, and are 
treating them as a single entity for purposes of these preliminary 
results.

Comparison Methodology

    In order to determine whether the respondents sold rebar to the 
United States at prices less than NV, the Department compared the 
constructed export price (CEP) of individual U.S. sales to the monthly 
weighted-average NV of sales of the foreign like product made in the 
ordinary course of trade. See section 777A(d)(2) of the Act; see also 
section 773(a)(1)(B)(i) of the Act. Section 771(16) of the Act defines 
foreign like product as merchandise that is identical or similar to 
subject merchandise and produced by the same person and in the same 
country as the subject merchandise. Thus, we considered all products 
covered by the scope of the order, that were produced by the same 
person and in the same country as the subject merchandise and sold by 
respondents in the comparison market during the POR, to be foreign like 
products, for the purpose of determining appropriate product 
comparisons to rebar sold in the United States.
    The Department compared U.S. sales to sales made in the comparison 
market within the contemporaneous window period, which extends from 
three months prior to the month in which the U.S. sale was made until 
two months after the month in which the U.S. sale was made. In making 
product comparisons, the Department selected identical foreign like 
products based on the physical characteristics reported by the 
respondents in the following order of importance: type of steel, yield 
strength, size, and coating. The Department reclassified the yield 
strength designation of certain merchandise based on its preliminary 
finding that the merchandise was weldable. For further information, see 
the analysis memorandum for DSM/KISCO/HSI, dated concurrently with this 
notice.

Duty Drawback

    Before increasing a respondent's reported U.S. sales prices by the 
amount of duty drawback, pursuant to section 772(c)(1)(B) of the Act, 
the Department's practice is to examine whether: (1) Import duties and 
rebates are directly linked to, and are dependent upon, one another, 
or, in the context of a duty exemption, the exemption is linked to the 
exportation of subject merchandise and (2) the company claiming the 
adjustment can demonstrate that there are sufficient imports of raw 
materials to account for the duty drawback received on exports of the 
manufactured product. See Steel Wire Rope from the Republic of Korea; 
Final Results of Antidumping Duty Administrative Review, 61 FR 55965, 
55968 (October 30, 1996); see also, Stainless Steel Sheet and Strip in 
Coils from Mexico; Final Results of Antidumping Duty Administrative 
Review, 68 FR 6889 (February 11, 2003) and accompanying Issues and 
Decision Memorandum at Comment 5.
    DSM reported that it received duty drawback pursuant to Korea's Act 
on Special Cases Concerning the Refundment of Customs Duties, Etc., 
Levied on Raw Materials for Export (Duty Refund Program). DSM reported 
that it received certain ``drawback'' amounts associated with duties 
paid on imported inputs pursuant to the Korean Government's individual 
application system, where the duty is rebated based upon each 
applicant's use of the imported input. Since the applicable criteria 
have been met in this case, in calculating CEP for DSM/KISCO/HSI, the 
Department has preliminarily added an amount for duty drawback to the 
reported prices. We made additions to the starting price for duty 
drawback in accordance with section 772(c)(1)(B) of the Act.

Level of Trade and CEP Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determined NV based on sales in the comparison market 
at the same level of trade (LOT) as the CEP sales. 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 expenses and profit. For CEP sales, the U.S. LOT is 
the level of the constructed export sale from the exporter to its 
affiliate. The Department adjusts CEP, pursuant to section 772(d) of 
the Act, prior to performing the LOT analysis, as articulated in 19 CFR 
351.412. See Micron Technology, Inc. v. United States, 243 F.3d, 1301, 
1315 (Fed. Cir. 2001).
    To determine whether NV sales are at a different LOT than the 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. 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 difference in the levels between NV and CEP 
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, 61732 (November 19, 1997).
    In determining whether the respondents made sales at separate LOTs, 
we obtained information from

[[Page 59445]]

DSM, HSI and KISCO regarding the marketing stages for the reported U.S. 
and comparison market sales, including a description of the selling 
activities performed by respondents for each channel of distribution. 
Generally, if the reported LOTs are the same, the functions and 
activities of the seller at each level should be similar. Conversely, 
if a party reports that LOTs are different for different groups of 
sales, the selling functions and activities of the seller for each 
group should be dissimilar.
    In implementing these principles in this review, we asked DSM/
KISCO/HSI 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/KISCO/HSI identified one 
channel of distribution in the home market: direct sales from its 
factory to its customers. DSM/KISCO/HSI also identified three types of 
home market customers: end-users, distributors or government entities. 
Regardless of the type of customer, DSM/KISCO/HSI performed the same 
type of selling functions in the home market. Because DSM/KISCO/HSI 
provided these services to each type of customer through one channel of 
distribution, we have determined that one level of trade exists for 
DSM/KISCO/HSI's HM sales.
    For the U.S. market, DSM/KISCO/HSI reported one channel of 
distribution-sales to unaffiliated U.S. customers through Dongkuk 
International, Inc. (DKA), DSM's affiliated U.S. sales company.\4\ All 
of DSM/KISCO/HSI's U.S. sales were CEP transactions and DSM/KISCO/HSI 
performed the same selling functions in each instance. Therefore, the 
U.S. market has one LOT.
---------------------------------------------------------------------------

    \4\ As noted above, all U.S. sales were made by DSM.
---------------------------------------------------------------------------

    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/KISCO/HSI's U.S. affiliate performed many services 
associated with its U.S. sales. The differences in selling functions 
performed for DSM/KISCO/HSI's home market and CEP transactions indicate 
that HM sales involved a more advanced stage of distribution than CEP 
sales. In the home market, DSM/KISCO/HSI provides services normally 
found further down the chain of distribution that are normally 
performed by the affiliated reseller in the U.S. market.
    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/KISCO/HSI 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/KISCO/HSI'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/KISCO/HSI 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/KISCO/HSI. Therefore, we applied the CEP offset to NV. 
See Memorandum to the File from the Team, Level of Trade Analysis: DSM/
KISCO/HSI, dated concurrently with this notice.

Constructed Export Price

    We based the price of DSM/KISCO/HSI's U.S. sales of subject 
merchandise on CEP, in accordance with section 772(b) of the Act, 
because DSM sold subject merchandise to unaffiliated purchasers in the 
United States after importation through its U.S. affiliate, DKA. We 
calculated CEP using prices, less discounts, for packed subject 
merchandise delivered to the first unaffiliated purchaser in the United 
States. In accordance with sections 772(c)(2)(A) and 772(d)(1) and (3) 
of the Act, we made deductions from the starting price, where 
appropriate, for the following expenses: foreign and U.S. inland 
freight, foreign and U.S. brokerage and handling, international 
freight, marine insurance, U.S. duties, U.S. warehousing expense, 
direct and indirect selling, to the extent these expenses are 
associated with economic activity in the United States, and CEP profit.

Normal Value

    After testing home market viability, whether comparison market 
sales to affiliates were at arm's-length prices, and whether comparison 
market sales were at below cost prices, we calculated NV for DSM/KISCO/
HSI as noted in the ``Price-to-Price Comparisons'' section of this 
notice.

A. Home Market Viability

    In accordance with section 773(a)(1)(C) of the Act, 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 is 
greater than or equal to five percent of the aggregate volume of U.S. 
sales), we compared the aggregate volume of DSM/KISCO/HSI's home market 
sales of the foreign like product to the aggregate volume of its U.S. 
sales of subject merchandise. Because the aggregate volume of DSM/
KISCO/HSI's home market sales of foreign like product is more than five 
percent of the aggregate volume of its U.S. sales of subject 
merchandise, we based NV on sales of the foreign like product in the 
respondent's home market. See section 773(a)(1)(C)(ii) of the Act.

B. Affiliated Party Transactions and Arm's-Length Test

    The Department may calculate 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 exporter or producer, i.e., sales at arm's-length. 
See 19 CFR 351.403(c). Sales to affiliated customers for consumption in 
the home market that were determined not to be at arm's-length were 
excluded from our analysis. DSM/KISCO/HSI reported sales of the foreign 
like product to affiliated customers. To test whether these sales were 
made at arm's-length prices, the Department compared the prices of 
sales of comparable merchandise to affiliated and unaffiliated 
customers, net of all rebates, movement charges, direct selling 
expenses, and packing. Pursuant to 19 CFR 351.403(c), and in accordance 
with the Department's practice, when the prices charged to an 
affiliated party were, on average, between 98 and 102 percent of the 
prices charged to unaffiliated parties for merchandise comparable to 
that sold to the affiliated party, we determined that the sales to the 
affiliated party were at arm's-length. See Antidumping Proceedings: 
Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186 
(November 15, 2002). DSM/KISCO/HSI's sales to its affiliated home 
market customers did not pass the arm's-length test. Therefore, we have 
excluded these sales from our analysis.

C. Cost of Production Analysis

    In the most recently completed proceeding segment in which DSM/
KISCO received a calculated dumping margin, the Department determined 
that these companies sold certain foreign

[[Page 59446]]

like product at prices below the cost of producing the merchandise and 
excluded such sales from the calculation of NV. See Steel Concrete 
Reinforcing Bar from The Republic of Korea: Notice of Preliminary 
Results of Antidumping Duty Administrative Review, 68 FR 57883, 57885 
(October 7, 2003) (no change at final). Therefore, in accordance with 
section 773(b)(2)(A)(ii) of the Act, there are reasonable grounds to 
believe or suspect that during the instant POR, DSM/KISCO/HSI sold 
foreign like product at prices below the cost of producing the 
merchandise. As a result, the Department initiated a cost of production 
(COP) inquiry with respect to DSM/KISCO/HSI.
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, for each unique 
foreign like product sold by DSM/KISCO/HSI during the POR, we 
calculated a weighted-average COP based on the sum of the respondent's 
materials and fabrication costs, general and administrative expenses, 
interest expenses, and import duties normally associated with imported 
material. See Stainless Steel Sheet and Strip in Coils from Mexico; 
Final Results of Antidumping Duty Administrative Review 68 FR 6889 
(February 11, 2003). For further information, see the analysis 
memorandum for DSM/KISCO/HSI, dated concurrently with this notice.
2. Test of Comparison Market Sales Prices
    In order to determine whether sales were made at prices below the 
COP on a product specific basis, we compared the respondent's weighted-
average COP to the prices of its home market sales of foreign like 
product, as required under section 773(b) of the Act. In accordance 
with sections 773(b)(1)(A) and (B) of the Act, 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. We 
compared the COP to home market sales prices, less any applicable 
movement charges and direct and indirect selling expenses.
3. Results of the 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 are made at prices 
less than the COP, we do not disregard any below cost sales of that 
product because the below cost sales are not made in ``substantial 
quantities.'' Where 20 percent or more of a respondent's sales of a 
given product are made at prices less than the COP during the POR, we 
determine that such sales are made in ``substantial quantities'' and 
within an extended period of time pursuant to sections 773(b)(2)(B) and 
(C) of the Act. In such cases, because we use POR average costs, we 
also determine, in accordance with section 773(b)(2)(D) of the Act, 
that such sales are not made at prices that would permit recovery of 
all costs within a reasonable period of time. In the instant review, 
based on this test, we did not disregard below cost sales for DSM/
KISCO/HSI.

Price-to-Price Comparisons

    Where it was appropriate to base NV on prices, we used the prices 
at which the foreign like product was first sold for consumption in the 
home market, in the usual commercial quantities, in the ordinary course 
of trade, and, to the extent possible, at the same LOT as the 
comparison U.S. sale. We calculated NV using prices, less any discounts 
or rebates, for packed foreign like product delivered to unaffiliated 
purchasers or, where appropriate, affiliated purchasers in the home 
market. In accordance with sections 773(a)(6)(A), (B), and (C) of the 
Act, where appropriate, we deducted from the starting price the 
following home market expenses: movement, packing, and credit. 
Additionally, we added interest revenue to the starting price. We added 
to the starting price the following U.S. expenses: Packing, credit, and 
other direct selling expenses. Finally, where appropriate, we made 
price adjustments for physical differences in the merchandise and made 
a reasonable allowance for other selling expenses where commissions 
were paid in only one of the markets under consideration.
    See 773(a)(6)(C)(ii) of the Act and 19 CFR 351.410(e).

Currency Conversion

    Pursuant to section 773A(a) of the Act, we converted amounts 
expressed in foreign currencies into U.S. dollar amounts based on the 
exchange rates in effect on the dates of the U.S. sales, as certified 
by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following weighted-average dumping margins exist for the period 
September 1, 2004, through August 31, 2005:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/Exporter                      (percent)
------------------------------------------------------------------------
Dongkuk Steel Mill Co. Ltd./Korea Iron and Steel Co., Ltd./         0.00
 Hwanyoung Steel Ind. Co. Ltd..............................
Dongil Industries Co Ltd...................................       102.28
------------------------------------------------------------------------

Public Comment

    Within 10 days of publicly announcing the preliminary results of 
this review, we will disclose to interested parties any calculations 
performed in connection with the preliminary results. See 19 CFR 
351.224(b). Any interested party may request a hearing within 30 days 
of the publication of this notice in the Federal Register. See 19 CFR 
351.310(c). If requested, a hearing will be held 44 days after the date 
of publication of this notice in the Federal Register, or the first 
workday thereafter. Interested parties are invited to comment on the 
preliminary results of this review. The Department will consider case 
briefs filed by interested parties within 30 days after the date of 
publication of this notice in the Federal Register. Also, interested 
parties may file rebuttal briefs, limited to issues raised in the case 
briefs. The Department will consider rebuttal briefs filed not later 
than five days after the time limit for filing case briefs. Parties who 
submit arguments are requested to submit with each argument: (1) A 
statement of the issue, (2) a brief summary of the argument and (3) a 
table of authorities. Further, we request that parties submitting 
written comments provide the Department with a diskette containing an 
electronic copy of the public version of such comments. Unless the 
deadline for issuing the final results of review is extended, the 
Department will issue the final results of this administrative review, 
including the results of its analysis of issues raised in the written 
comments, within 120 days of publication of the preliminary results in 
the Federal Register.

Assessment Rates

    In accordance with 19 CFR 351.212(b)(1), in these preliminary 
results of review we calculated importer-specific assessment rates 
because the importer is known for all of the sales made by the 
collapsed entity. Since the collapsed entity reported the entered 
value, we calculated ad valorem assessment rates for the collapsed 
entity by summing, on an importer-specific basis, the dumping margins 
calculated for all of the collapsed entity's sales to the importer and 
dividing this amount by the total quantity of those sales. If the

[[Page 59447]]

importer-specific assessment rate is above de minimis (i.e., 0.50 
percent ad valorem or greater), we will instruct CBP to assess the 
importer-specific rate uniformly, as appropriate, on all entries of 
subject merchandise during the POR that were entered by the importer or 
sold to the customer. The Department will issue appropriate assessment 
instructions based on the final results of review directly to CBP 
within 15 days of publication of those final results.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003 (68 FR 23954). This clarification will apply to entries of 
subject merchandise during the period of review produced by companies 
included in these final results of review for which the reviewed 
companies did not know their merchandise was destined for the United 
States. In such instances, we will instruct CBP to liquidate unreviewed 
entries at the all-others rate if there is no rate for the intermediate 
company involved in the transaction. For a full discussion of this 
clarification, see Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).

Cash Deposit Requirements

    The following cash deposit requirements will be effective for all 
shipments of the subject merchandise 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 rates for the companies 
examined in the instant review will be the rate established in the 
final results of this review (except that if the rate for a particular 
company is de minimis, i.e., less than 0.5 percent, no cash deposit 
will be required for that company); (2) for previously investigated or 
reviewed companies not listed above, 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 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 subject merchandise; and (4) the 
cash deposit rate for all other manufacturers or exporters will 
continue to be the ``all others'' rate of 22.89 percent, the ``all 
others'' rate made effective by the LTFV investigation. See LTFV Final 
Determination. These cash deposit rates, when imposed, 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 351.402(f)(2) to file a certificate 
regarding the reimbursement of antidumping and countervailing 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 and countervailing 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: October 2, 2006.
Joseph A. Spetrini,
Acting Assistant Secretary, for Import Administration.
[FR Doc. E6-16678 Filed 10-6-06; 8:45 am]
BILLING CODE 3510-DS-P