[Federal Register Volume 77, Number 150 (Friday, August 3, 2012)]
[Notices]
[Pages 46391-46401]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19056]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-868]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Large Residential 
Washers From the Republic of Korea

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

ACTION: Notice of Preliminary Determination of Sales at Less Than Fair 
Value.

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SUMMARY: We preliminarily determine that large residential washers 
(washers) from the Republic of Korea (Korea) are being sold, or are 
likely to be sold, in the United States at less than fair value (LTFV), 
as provided in section 733(b) of the Tariff Act of 1930, as amended 
(the Act).
    Interested parties are invited to comment on this preliminary 
determination. Because we are postponing the final determination, we 
will make our final determination not later than 135 days after the 
date of publication of this preliminary determination in the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: David Goldberger or Henry Almond, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue NW., 
Washington, DC 20230; telephone: (202) 482-4136 or (202) 482-0049, 
respectively.

Preliminary Determination

    We preliminarily determine that washers from Korea are being sold, 
or are likely to be sold, in the United States at LTFV, as provided in 
section 733(b) of the Act. The estimated margins of sales at LTFV are 
shown in the ``Suspension of Liquidation'' section of this notice.

Background

    Since the initiation of this investigation on January 19, 2012, the 
following events have occurred.\1\
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    \1\ See Large Residential Washers From the Republic of Korea and 
Mexico: Initiation of Antidumping Duty Investigations, 77 FR 4007 
(January 26, 2012) (Initiation Notice).
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    On February 21, 2012, the United States International Trade 
Commission (ITC) preliminarily determined that there is a reasonable 
indication that imports of washers from Korea are materially injuring 
the United States industry.\2\ On March 7, 2012, we issued section A of 
the questionnaire (i.e., the section covering general information), as 
well as sections B through E of the questionnaire (i.e., the sections 
covering comparison market sales, U.S. sales, cost of production (COP) 
information, and further manufacturing information, respectively) to 
Daewoo Electronics Corporation (Daewoo), LG Electronics, Inc. (LG), and 
Samsung Electronics Co., Ltd. (Samsung).
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    \2\ See ITC Investigation Nos. 701-TA-488 and 731-TA-1199-1200 
(Publication No. 4306).
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    We received responses to section A of the questionnaire from LG and 
Samsung in April 2012, and to sections B, C, and D of the questionnaire 
in May 2012. No responses to section E of the questionnaire were 
necessary. Daewoo did not respond to the questionnaire. See 
``Application of Facts Available'' section, below.
    On May 10, 2012, Whirlpool Corporation (hereafter, the petitioner) 
requested that the date for the issuance of the preliminary 
determination in this investigation be fully extended pursuant to 
section 733(c)(1) of the Act and 19 CFR 351.205(e). On May 16, 2012, 
pursuant to sections 733(c)(1)(A) and (c)(2) of the Act and 19 CFR 
351.205(f), the Department postponed the preliminary determination 
until no later than July 27, 2012.\3\
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    \3\ See Large Residential Washers From the Republic of Korea and 
Mexico: Postponement of Preliminary Determinations of Antidumping 
Duty Investigations, 77 FR 30261 (May 22, 2012).
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    On May 17, 2012, the petitioner submitted a request for the 
Department to amend the scope of this and the concurrent antidumping 
and countervailing duty investigations of washers from Mexico and 
Korea, respectively, and to exclude certain products from those 
investigations. Samsung and LG objected to the petitioner's scope 
exclusion request on May 23 and May 24, 2012, respectively. On July 11, 
2012, General Electric Company and its operating division GE Appliances 
& Lighting (GE), a domestic producer and importer of washers, declared 
its support for the petitioner's scope exclusion request. On July 18, 
2012, Staber Industries, Inc. (Staber), a domestic producer of washers, 
also filed a letter in support of the petitioner's scope exclusion 
request. See ``Scope Comments'' section of this notice.
    We issued supplemental questionnaires and received responses to 
these supplemental questionnaires from May through July 2012.\4\
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    \4\ We did not consider any data submissions received after July 
17, 2012, for purposes of the preliminary determination.
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    On June 11, 2012, the petitioner alleged that targeted dumping was 
occurring with respect to washers produced and exported from Korea by 
LG and Samsung. On July 5, 2012, the petitioner revised its targeted 
dumping allegation for LG.
    On July 13, 2012, Samsung and LG requested a postponement of the 
final determination.
    On July 25, 2012, the petitioner alleged that Samsung has engaged 
in fraudulent conduct that undermines the integrity of this 
investigation. While this allegation was not received in time to be 
considered for the preliminary determination, it will be examined 
thoroughly and addressed as appropriate over the course of this 
proceeding.

Postponement of Final Determination

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for extension of provisional 
measures from a four-month period to not more than six months.
    Pursuant to section 735(a)(2) of the Act, on July 13, 2012, Samsung 
and LG requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until

[[Page 46392]]

not later than 135 days after the date of the publication of the 
preliminary determination in the Federal Register, and extend the 
provisional measures to not more than six months. In accordance with 19 
CFR 351.210(b), because (1) our preliminary determination is 
affirmative for LG and Samsung, (2) LG and Samsung account for a 
significant proportion of exports of the subject merchandise, and (3) 
no compelling reasons for denial exist, we are granting LG's and 
Samsung's requests and are postponing the final determination until no 
later than 135 days after the publication of this notice in the Federal 
Register. Suspension of liquidation will be extended accordingly.

Period of Investigation

    The period of investigation (POI) is October 1, 2010, through 
September 30, 2011. This period corresponds to the four most recent 
fiscal quarters prior to the month of the filing of the petition (i.e., 
December 2011).

Scope of Investigation

    The product covered by this investigation is all large residential 
washers and certain subassemblies thereof from Korea.
    For purposes of this investigation, the term ``large residential 
washers'' denotes all automatic clothes washing machines, regardless of 
the orientation of the rotational axis, except as noted below, with a 
cabinet width (measured from its widest point) of at least 24.5 inches 
(62.23 cm) and no more than 32.0 inches (81.28 cm).
    Also covered are certain subassemblies used in large residential 
washers, namely: (1) All assembled cabinets designed for use in large 
residential washers which incorporate, at a minimum: (a) At least three 
of the six cabinet surfaces; and (b) a bracket; (2) all assembled tubs 
\5\ designed for use in large residential washers which incorporate, at 
a minimum: (a) A tub; and (b) a seal; (3) all assembled baskets \6\ 
designed for use in large residential washers which incorporate, at a 
minimum: (a) A side wrapper;\7\ (b) a base; and (c) a drive hub;\8\ and 
(4) any combination of the foregoing subassemblies.
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    \5\ A ``tub'' is the part of the washer designed to hold water.
    \6\ A ``basket'' (sometimes referred to as a ``drum'') is the 
part of the washer designed to hold clothing or other fabrics.
    \7\ A ``side wrapper'' is the cylindrical part of the basket 
that actually holds the clothing or other fabrics.
    \8\ A ``drive hub'' is the hub at the center of the base that 
bears the load from the motor.
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    Excluded from the scope are stacked washer-dryers and commercial 
washers. The term ``stacked washer-dryers'' denotes distinct washing 
and drying machines that are built on a unitary frame and share a 
common console that controls both the washer and the dryer. The term 
``commercial washer'' denotes an automatic clothes washing machine 
designed for the ``pay per use'' market meeting either of the following 
two definitions:
    (1) (a) It contains payment system electronics;\9\ (b) it is 
configured with an externally mounted steel frame at least six 
inches high that is designed to house a coin/token operated payment 
system (whether or not the actual coin/token operated payment system 
is installed at the time of importation); (c) it contains a push 
button user interface with a maximum of six manually selectable wash 
cycle settings, with no ability of the end user to otherwise modify 
water temperature, water level, or spin speed for a selected wash 
cycle setting; and (d) the console containing the user interface is 
made of steel and is assembled with security fasteners;\10\ or
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    \9\ ``Payment system electronics'' denotes a circuit board 
designed to receive signals from a payment acceptance device and to 
display payment amount, selected settings, and cycle status. Such 
electronics also capture cycles and payment history and provide for 
transmission to a reader.
    \10\ A ``security fastener'' is a screw with a non-standard head 
that requires a non-standard driver. Examples include those with a 
pin in the center of the head as a ``center pin reject'' feature to 
prevent standard Allen wrenches or Torx drivers from working.
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    (2) (a) it contains payment system electronics; (b) the payment 
system electronics are enabled (whether or not the payment 
acceptance device has been installed at the time of importation) 
such that, in normal operation,\11\ the unit cannot begin a wash 
cycle without first receiving a signal from a bona fide payment 
acceptance device such as an electronic credit card reader; (c) it 
contains a push button user interface with a maximum of six manually 
selectable wash cycle settings, with no ability of the end user to 
otherwise modify water temperature, water level, or spin speed for a 
selected wash cycle setting; and (d) the console containing the user 
interface is made of steel and is assembled with security fasteners.
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    \11\ ``Normal operation'' refers to the operating mode(s) 
available to end users (i.e., not a mode designed for testing or 
repair by a technician).
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    Also excluded from the scope are automatic clothes washing machines 
with a vertical rotational axis and a rated capacity of less than 3.7 
cubic feet, as certified to the U.S. Department of Energy pursuant to 
10 CFR 429.12 and 10 CFR 429.20, and in accordance with the test 
procedures established in 10 CFR part 430.
    The products subject to this investigation are currently 
classifiable under subheading 450.20.0090 of the Harmonized Tariff 
System of the United States (HTSUS). Products subject to this 
investigation may also enter under HTSUS subheadings 8450.11.0040, 
8450.11.0080, 8450.90.2000, and 8450.90.6000. Although the HTSUS 
subheadings are provided for convenience and customs purposes, the 
written description of the merchandise subject to this scope is 
dispositive.

Scope Comments

    In accordance with the preamble to the Department's 
regulations,\12\ in our Initiation Notice we set aside a period of time 
for parties to raise issues regarding product coverage, and encouraged 
all parties to submit comments within 20 calendar days of publication 
of the Initiation Notice. No interested party submitted comments during 
that period. However, on May 17, 2012, the petitioner indicated that it 
wanted to amend the scope of the investigations, and requested that the 
Department exclude automatic washing machines with a vertical 
rotational axis and a rated capacity of less than 3.70 cubic feet from 
the scope of this and the concurrent antidumping and countervailing 
duty investigations of washers from Mexico and Korea, respectively. 
Subsequently, we received comments from Samsung and LG objecting to the 
petitioner's scope exclusion request, and comments from GE and Staber 
supporting the request. We also contacted U.S. Customs and Border 
Protection (CBP) seeking its input on whether the petitioner's proposed 
scope exclusion request, if granted by the Department, would be 
enforceable by CBP. Based on the comments received from the interested 
parties and information provided by CBP, we are amending preliminarily 
the scope of the investigations to exclude top-load washers with a 
vertical rotational axis and a rated capacity of less than 3.70 cubic 
feet. It is within the Department's authority to define the scope of an 
investigation. See section 732(b)(1) of the Act. Further, it is the 
Department's practice to provide ample deference to the petitioner with 
respect to the merchandise from which it intends to seek relief. See 
memorandum entitled ``Preliminary Exclusion of Top-Load Washing 
Machines with a Rated Capacity Less than 3.70 Cubic Feet from the Scope 
of the Investigations,'' dated concurrently with this notice, for 
further discussion.
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    \12\ See Antidumping Duties; Countervailing Duties; Final Rule, 
62 FR 27296, 27323 (May 19, 1997).

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[[Page 46393]]

Application of Facts Available

    Section 776(a) of the Act provides that the Department shall, 
subject to section 782(d) of the Act, apply ``the facts otherwise 
available'' if (1) necessary information is not available on the record 
of an antidumping proceeding or (2) an interested party or any other 
person: (A) Withholds information that 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 
of the Act; (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) of the Act.
    Where 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 so inform the party submitting the 
response and will, to the extent practicable, provide that party with 
an opportunity to remedy or explain the deficiency. Section 782(e) of 
the Act provides that the Department ``shall not decline to consider 
information that is submitted by an interested party and is necessary 
to the determination but does not meet all the applicable requirements 
established by the administering authority'' if the information is 
submitted in a timely manner, can be verified, is not so incomplete 
that it cannot be used, and the interested party acted to the best of 
its ability in providing the information.
    In this case, Daewoo did not respond to the Department's 
questionnaire by the established deadline nor did it request an 
extension of time to submit its response. Thus, the Department 
preliminarily determines that necessary information is not available on 
the record to serve as the basis for the calculation of a margin for 
Daewoo. See section 776(a)(1) of the Act. We also preliminarily find 
that Daewoo withheld information requested by the Department and 
significantly impeded the proceeding. See section 776(a)(2)(A) and (C) 
of the Act.\13\
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    \13\ See also e.g., Certain Lined Paper Products from India: 
Notice of Final Results of the First Antidumping Duty Administrative 
Review, 74 FR 17149 (April 14, 2009), and accompanying Issues and 
Decision Memorandum at Comment 2.
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    Therefore, pursuant to sections 776(a)(1) and 776(a)(2)(A) and (C) 
of the Act, the Department preliminarily determines that the use of the 
facts otherwise available is warranted for Daewoo. Because Daewoo 
failed to provide any information in this investigation, sections 
782(d) and (e) of the Act are not applicable in this case.

Application of Adverse Facts Available and Selection of Adverse Facts 
Available Rate

    Section 776(b) of the Act provides that, if the Department finds an 
interested party has failed to cooperate by not acting to the best of 
its ability to comply with requests for information, the Department may 
use an inference that is adverse to the interests of that party in 
selecting from the facts otherwise available.\14\ 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 Statement of Administrative Action accompanying the 
Uruguay Round Agreements Act, H.R. Doc. No. 103-316, Vol. 1 (1994) 
(SAA) at 870. Furthermore, ``affirmative evidence of bad faith on the 
part of a respondent is not required before the Department may make an 
adverse inference.''\15\ In this case, the Department has determined 
that Daewoo failed to cooperate to the best of its ability in this 
proceeding by refusing to participate in the Department's 
investigation. Therefore, the Department has preliminarily determined 
an adverse inference is warranted in selecting from the facts otherwise 
available pursuant to section 776(b) of the Act.\16\
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    \14\ See, e.g., Notice of Final Results of Antidumping Duty 
Administrative Review, and Final Determination to Revoke the Order 
In Part: Individually Quick Frozen Red Raspberries from Chile, 72 FR 
70295, 70297 (December 11, 2007).
    \15\ See Antidumping Duties; Countervailing Duties; Final Rule, 
62 FR 27296, 27340 (May 19, 1997); see also Nippon Steel Corp. v. 
United States, 337 F.3d 1373, 1382-83 (Fed. Cir. 2003).
    \16\ See, e.g., Stainless Steel Sheet and Strip in Coils From 
Japan: Preliminary Results of Antidumping Duty Administrative 
Review, 70 FR 18369 (April 11, 2005), unchanged in Stainless Steel 
Sheet and Strip in Coils from Japan: Final Results of Antidumping 
Duty Administrative Review, 70 FR 37759 (June 30, 2005) (KSC/JFE's 
counsel contacted the Department to state that KSC/JFE would not be 
submitting a response to the Department's antidumping 
questionnaire).
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Corroboration of Secondary Information Used as Adverse Facts Available

    Where the Department applies adverse facts available (AFA) because 
a respondent 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 authorizes the Department to rely on information derived from the 
petition, a final determination, a previous administrative review, or 
other information placed on the record. See also 19 CFR 351.308(c) and 
the SAA at 868-870. In selecting a rate for AFA, the Department selects 
a rate that is sufficiently adverse to ensure that the uncooperative 
party does not obtain a more favorable result by failing to cooperate 
than if it had fully cooperated. Normally, it is the Department's 
practice to use the highest rate from the petition in an investigation 
when a respondent fails to act to the best of its ability to provide 
the necessary information.\17\ The rates in the petition, as adjusted 
at initiation, range from 31.03 percent to 82.41 percent. See 
Initiation Notice at 4010.
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    \17\ See, e.g., Notice of Preliminary Determination of Sales at 
Less Than Fair Value and Postponement of Final Determination: 
Purified Carboxymethylcellulose From Finland, 69 FR 77216 (December 
27, 2004) (unchanged in Notice of Final Determination of Sales at 
Less Than Fair Value: Purified Carboxymethylcellulose From Finland, 
70 FR 28279 (May 17, 2005)).
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    When using facts otherwise available, section 776(c) of the Act 
provides that, where the Department relies on secondary information 
(such as the petition) rather than information obtained in the course 
of an investigation, it must corroborate, to the extent practicable, 
information from independent sources that are reasonably at its 
disposal. The SAA clarifies that ``corroborate'' means the Department 
will satisfy itself that the secondary information to be used has 
probative value. See SAA at 870. To corroborate secondary information, 
the Department will examine, to the extent practicable, the reliability 
and relevance of the information used.\18\ The Department's regulations 
state that independent sources used to corroborate such evidence may 
include, for example, published prices lists, official import 
statistics and customs data, and information obtained from interested 
parties during the particular investigation. See 19 CFR 351.308(d) and 
the SAA at 870.
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    \18\ See Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or 
Less in Outside Diameter, and Components Thereof, From Japan: 
Preliminary Results of Antidumping Duty Administrative Reviews and 
partial Termination of Administrative Reviews, 62 FR 57391, 57392 
(November 6, 1996) (unchanged in Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, From Japan, and Tapered Roller 
Bearings, Four Inches or Less in Outside Diameter, and Components 
Thereof, From Japan: Final Results of Antidumping Administrative 
Reviews and Termination in Part, 62 FR 11825 (March 13, 1997)).
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    For the purposes of this investigation and to the extent 
appropriate information was available, we reviewed the adequacy and 
accuracy of the information in the petition during our

[[Page 46394]]

pre-initiation analysis and for purposes of this preliminary 
determination. See Antidumping Investigation Initiation Checklist dated 
January 19, 2012 (Initiation Checklist), at 6 through 11. See also 
Initiation Notice at 4009-4011. We examined evidence supporting the 
calculations in the petition to determine the probative value of the 
margins alleged in the petition for use as AFA for purposes of this 
preliminary determination. During our pre-initiation analysis we 
examined the key elements of the U.S. price and normal value (NV) 
calculations used in the petition to derive margins. During our pre-
initiation analysis we also examined information from various 
independent sources provided either in the petition or in supplements 
to the petition that corroborates key elements of the U.S. price and NV 
calculations used in the petition to derive estimated margins. See Id.
    We have selected the petition rate of 82.41 percent (as adjusted at 
initiation) as the appropriate AFA rate to apply in this case. This 
rate achieves the purpose of applying an adverse inference, i.e., it is 
sufficiently adverse to ensure that the uncooperative party does not 
obtain a more favorable result by failing to cooperate than if it had 
fully cooperated.\19\
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    \19\ See KYD, Inc. v. United States, 607 F.3d 760, 767 (Fed. 
Cir. 2010).
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    Based on our examination of the information, as discussed in detail 
in the Initiation Checklist and the Initiation Notice, we consider the 
petitioner's calculation of the U.S. price and NV underlying the 82.41 
percent rate to be reliable. Therefore, because we confirmed the 
accuracy and validity of the information underlying the calculation of 
margins in the petition by examining source documents as well as 
publicly available information, we preliminarily determine that the 
82.41 percent margin is reliable for purposes of this investigation.
    With respect to the relevance aspect of corroboration, 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 
AFA, the Department will disregard the margin and determine an 
appropriate margin.\20\ Similarly, the Department does not apply a 
margin that has been discredited or judicially invalidated.\21\ The 
82.41 percent rate reflects commercial practices of the washer industry 
and, as such, is relevant to Daewoo. The courts have acknowledged that 
the consideration of the commercial behavior inherent in the industry 
is important in determining the relevance of the selected AFA rate to 
the uncooperative respondent by virtue of it belonging to the same 
industry.\22\ Such consideration typically encompasses the commercial 
behavior of other respondents under investigation and the selected AFA 
rate is gauged against the margins we calculate for those respondents. 
Therefore, we compared the model-specific margins we calculated for LG 
and Samsung for the POI to the adjusted petition rate of 82.41 percent. 
We found model-specific margins calculated for LG and Samsung in this 
investigation in the range of and above the 82.41 percent petition 
margin. See memorandum entitled ``Corroboration of Secondary 
Information Used as Adverse Facts Available,'' dated concurrently with 
this notice. Accordingly, the AFA rate is relevant as applied to Daewoo 
for this investigation because it falls within the range of model-
specific margins we calculated for LG and Samsung in this 
investigation. A similar corroboration methodology has been upheld by 
the Court of Appeals for the Federal Circuit.\23\ Further, this 
methodology is consistent with our past practice.\24\
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    \20\ See, e.g., Fresh Cut Flowers From Mexico; Final Results of 
Antidumping Duty Administrative Review, 61 FR 6812, 6814 (February 
22, 1996), where the Department disregarded the highest margin in 
that case as best information available (the predecessor to facts 
available), because the margin was based on another company's 
uncharacteristic business expense resulting in an unusually high 
margin.
    \21\ See D & L Supply Co. v. United States, 113 F.3d 1220, 1221 
(Fed. Cir. 1997).
    \22\ See, e.g., Ferro Union, Inc. v. United States, 44 F. Supp. 
2d 1310, 1334 (1999).
    \23\ See PAM, S.p.A. v. United States, 582 F.3d 1336, 1340 (Fed. 
Cir. 2009).
    \24\ See Narrow Woven Ribbons With Woven Selvedge From the 
People's Republic of China: Final Determination of Sales at Less 
Than Fair Value, 75 FR 41808, 41811 (July 19, 2010).
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    Accordingly, we have determined that the AFA rate of 82.41 percent 
is corroborated ``to the extent practicable'' as provided in section 
776(c) of the Act. See also 19 CFR 351.308(d). Therefore, with respect 
to Daewoo, we have used, as AFA, the adjusted petition margin of 82.41 
percent.

Targeted Dumping Allegations

    The statute allows the Department to employ the average-to-
transaction margin-calculation methodology under the following 
circumstances: (1) There is a pattern of export prices that differ 
significantly among purchasers, regions, or periods of time; and (2) 
the Department explains why such differences cannot be taken into 
account using the average-to-average or transaction-to-transaction 
methodology. See section 777A(d)(1)(B) of the Act.
    On June 11, 2012, the petitioner submitted allegations of targeted 
dumping with respect to LG and Samsung and asserted that the Department 
should apply the average-to-transaction methodology in calculating the 
margins for these respondents. In its allegations, the petitioner 
asserted that there are patterns of U.S. sales prices for comparable 
merchandise that differ significantly among time periods, customers, 
and regions.\25\ See the Petitioner's Allegations of Targeted Dumping 
submission dated June 11, 2012, at pages 3-6. On July 5, 2012, the 
petitioner revised its targeted dumping allegation for LG with respect 
to time period.
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    \25\ The petitioner relied on the Department's targeted dumping 
test in Certain Steel Nails from the United Arab Emirates: Notice of 
Final Determination of Sales at Not Less Than Fair Value, 73 FR 
33985 (June 16, 2008), and Certain Steel Nails from the People's 
Republic of China: Final Determination of Sales at Less Than Fair 
Value and Partial Affirmative Determination of Critical 
Circumstances, 73 FR 33977 (June 16, 2008) (collectively Nails), as 
applied in more recent investigations such as Notice of Final 
Determination of Sales at Less Than Fair Value and Negative Critical 
Circumstances Determination: Bottom Mount Combination Refrigerator-
Freezers From the Republic of Korea, 77 FR 17413 (March 26, 2012) 
(Refrigerators).
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A. Targeted Dumping Test

    We conducted time-period, customer, and regional targeted dumping 
analyses for LG and Samsung using the methodology we adopted in Nails 
and recently articulated in Multilayered Wood Flooring From the 
People's Republic of China: Final Determination of Sales at Less Than 
Fair Value, 76 FR 64318 (October 18, 2011) (Wood Flooring), and 
accompanying Issues and Decision Memorandum at Comment 4, and 
Refrigerators.
    The methodology we employed involves a two-stage test; the first 
stage addresses the pattern requirement and the second stage addresses 
the significant-difference requirement. See section 777A(d)(1)(B)(i) of 
the Act, Nails, Wood Flooring, and Refrigerators. In this test we made 
all price comparisons on the basis of identical merchandise (i.e., by 
control number or CONNUM).
LG
    We based all of our targeted dumping calculations on the U.S. net 
price which we determined for U.S. sales by LG in our standard margin 
calculations. For further discussion of the test and results, see 
memorandum entitled ``Preliminary Determination Margin

[[Page 46395]]

Calculation for LG Electronics Inc. and LG Electronics USA, Inc. 
(collectively, ``LG'') (LG Calculation Memo), dated concurrently with 
this notice. As a result of our analysis, we preliminarily determine 
that there is a pattern of U.S. prices for comparable merchandise that 
differs significantly among certain time periods, customers, and 
regions for LG, in accordance with section 777A(d)(1)(B)(i) of the Act 
and our current practice as discussed in Nails, Wood Flooring, and 
Refrigerators.
Samsung
    We based all of our targeted dumping calculations on the U.S. net 
price which we determined for Samsung's U.S. sales in our standard 
margin calculations. For further discussion of the test and results, 
see memorandum entitled ``Preliminary Determination Margin Calculation 
for Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. 
(collectively, ``Samsung'') (Samsung Calculation Memo), dated 
concurrently with this notice. As a result of our analysis, we 
preliminarily determine that there is a pattern of U.S. prices for 
comparable merchandise that differs significantly among certain time 
periods, customers, and regions for Samsung, in accordance with section 
777A(d)(1)(B)(i) of the Act and our current practice as discussed in 
Nails, Wood Flooring, and Refrigerators.

B. Price Comparison Method

    Section 777A(d)(1)(B)(ii) of the Act states that the Department may 
compare the weighted average of the NV to export prices (EPs) (or 
constructed export prices (CEPs)) of individual transactions for 
comparable merchandise if the Department explains why differences in 
the patterns of EPs (or CEPs) cannot be taken into account using the 
average-to-average methodology. As described above, we preliminarily 
determine that, with respect to sales by LG and Samsung, for certain 
time periods, customers, and regions there was a pattern of prices that 
differed significantly.
    For both LG and Samsung, we find that these differences cannot be 
taken into account using the average-to-average methodology because the 
average-to-average methodology conceals differences in the patterns of 
prices between the targeted and non-targeted groups by averaging low-
priced sales to the targeted group with high-priced sales to the non-
targeted group. Therefore, for the preliminary determination, we find 
that the standard average-to-average methodology does not take into 
account LG's and Samsung's price differences because the alternative 
average-to-transaction methodology yields a material difference in the 
margin. Accordingly, for this preliminary determination we applied the 
average-to-transaction methodology to all U.S. sales made by LG and 
Samsung. In applying this methodology, consistent with our practice, we 
did not offset negative comparison results with positive comparison 
results. See Refrigerators and accompanying Issues and Decision 
Memorandum at Comment 2. See also the LG Calculation Memo and the 
Samsung Calculation Memo for further discussion.

Fair Value Comparisons

    To determine whether sales of washers from Korea to the United 
States were made at LTFV, 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, below. In accordance with section 
777A(d)(1)(B) of the Act, we compared transaction-specific EPs and CEPs 
to weighted-average NVs for LG and Samsung. See ``Targeted Dumping 
Allegations'' section, above.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the respondents in Korea during the POI 
that fit the description in the ``Scope of Investigation'' section of 
this notice to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We compared U.S. sales 
to sales made in the home market, where appropriate. Where there were 
no sales of identical merchandise in the home market made in the 
ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade.
    In making product comparisons, we matched foreign like products 
based on the physical characteristics reported by the respondents in 
the following order of importance: finished unit or subassembly; load, 
agitator and axis type; capacity measurement; drying system; finish; 
user interface display; specialty cycle; door/lid material; motor type; 
water heater; and shoecare function.
    We excluded from our analysis U.S. and comparison market sales of 
top-load washers with a vertical rotational axis and a rated capacity 
of less than 3.70 cubic feet. See ``Scope of Investigation'' and 
``Scope Comments'' sections, above.

Export Price/Constructed Export Price

    For certain U.S. sales made by LG, we used the EP methodology, in 
accordance with section 772(a) of the Act, because the subject 
merchandise was sold directly to the first unaffiliated purchaser in 
the United States before the date of importation by the producer or 
exporter of the subject merchandise outside the United States, and the 
use of the CEP methodology was not otherwise warranted based on the 
facts of record.
    For the remaining U.S. sales made by LG and all of Samsung's U.S. 
sales, we calculated CEP in accordance with section 772(b) of the Act 
because the subject merchandise was first sold (or agreed to be sold) 
in the United States after the date of importation by or for the 
account of the producer or exporter, or by a seller affiliated with the 
producer or exporter, to a purchaser not affiliated with the producer 
or exporter.

A. LG

    With respect to EP sales, we based the starting price on the packed 
prices to unaffiliated purchasers in the United States. For those sales 
where the shipment date preceded the invoice date, we used the shipment 
date as the date of sale, in accordance with our practice.\26\ We 
increased the starting price by the amount of billing adjustments. We 
also increased the starting price by the amount of duty drawback 
reported by LG, in accordance with section 772(c)(1)(B) of the Act. We 
made deductions for discounts and rebates, as appropriate. We also made 
deductions for movement expenses, in accordance with section 
772(c)(2)(A) of the Act; these expenses included, where appropriate, 
foreign inland freight, foreign brokerage and handling, international 
freight, and marine insurance. Regarding foreign inland freight, LG 
used an affiliated company to arrange delivery of its merchandise to 
the port of exportation. Because LG's affiliate did not provide the 
same service to unaffiliated parties, nor did LG use unaffiliated 
companies for its deliveries, we were unable to test the arm's-length 
nature of the expenses paid by LG. Therefore, we based these expenses 
on the affiliate's costs. For further discussion, see the LG 
Calculation Memo.
---------------------------------------------------------------------------

    \26\ See, e.g., Certain Frozen Warmwater Shrimp from Thailand: 
Final Results and Final Partial Rescission of Antidumping Duty 
Administrative Review, 71 FR 52065 (September 12, 2007), and 
accompanying Issues and Decision Memorandum at Comment 11.
---------------------------------------------------------------------------

    We based CEP on the packed prices to unaffiliated purchasers in the 
United

[[Page 46396]]

States. We increased the starting price by the amount of billing 
adjustments, where appropriate, and duty drawback reported by LG. We 
made deductions for discounts and rebates, as appropriate.
    We made deductions for movement expenses for LG's CEP transactions, 
in accordance with section 772(c)(2)(A) of the Act; these expenses 
included, where appropriate, foreign inland freight (adjusted as noted 
above), foreign brokerage and handling, international freight, marine 
insurance, U.S. brokerage and handling, U.S. warehousing, and U.S. 
inland freight.
    In accordance with section 772(d)(1) of the Act and 19 CFR 
351.402(b), we deducted those selling expenses associated with economic 
activities occurring in the United States, including direct selling 
expenses (i.e., imputed credit expenses, bank charges, flooring fees, 
advertising expenses, and warranty expenses), offset by restocking fees 
collected by LG, where applicable, and indirect selling expenses 
(including inventory carrying costs).
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by LG and its affiliate on their sales of the 
subject merchandise in the United States and the profit associated with 
those sales.

B. Samsung

    We based CEP on the packed prices to unaffiliated purchasers in the 
United States. We increased the starting price by the amount of billing 
adjustments reported by Samsung. We made deductions for discounts and 
rebates, as appropriate. We did not make an adjustment for duty 
drawback, as claimed by Samsung, because Samsung did not include the 
duties drawn-back upon export in its reported COP.\27\
---------------------------------------------------------------------------

    \27\ For purpose of the preliminary determination, we used the 
COP information that Samsung reported in its July 3, 2012, 
supplemental section D questionnaire response. While Samsung 
submitted an additional cost response on July 20, 2012, which 
responds to the Department's request to include the duties drawn 
back upon export in its reported costs, this response was received 
too late to be considered for the preliminary determination. We will 
verify Samsung's claimed duty drawback and product-specific duty 
costs and consider this information for use in the final 
determination.
---------------------------------------------------------------------------

    We made deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these expenses included, where appropriate, 
foreign inland freight, foreign loading, foreign brokerage and 
handling, international freight, marine insurance, U.S. brokerage and 
handling, U.S. customs duties (including processing fees and harbor 
maintenance fees), U.S. warehousing, U.S. inland insurance, and U.S. 
inland freight. With respect to foreign brokerage and handling, foreign 
inland freight, foreign loading, and international freight expenses, 
Samsung used an affiliated company to provide these services. Because 
Samsung's affiliate did not provide the same services to unaffiliated 
parties, nor did Samsung use unaffiliated companies for these services, 
we were unable to test the arm's-length nature of the expenses paid by 
Samsung. Therefore, we based these expenses on the affiliate's costs. 
For further discussion, see the Samsung Calculation Memo.
    In accordance with section 772(d)(1) of the Act and 19 CFR 
351.402(b), we deducted those selling expenses associated with economic 
activities occurring in the United States, including direct selling 
expenses (i.e., imputed credit expenses, advertising expenses, and 
warranty expenses), and indirect selling expenses (including inventory 
carrying costs).
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by Samsung and its affiliate on their sales of 
the subject merchandise in the United States and the profit associated 
with those sales.
    Furthermore, we included in our calculation of CEP certain U.S. 
sales affected by an allegedly unforeseen event that affected several 
transactions, including certain sales that Samsung contends were sold 
before the POI. We preliminarily determine that these sales were made 
during the POI and, therefore, we have included them in our preliminary 
margin analysis. See the Samsung Calculation Memo for further 
discussion.
    Samsung argues that expenses associated with this event should not 
be included in our margin calculation consistent with the Department's 
practice with respect to the treatment of ``extraordinary'' expenses. 
Alternatively, Samsung maintains that these expenses should be treated 
as indirect selling expenses. However, we do not find this type of 
event to be extraordinary because Samsung failed to demonstrate that it 
is highly abnormal and so unusual in nature that it could not possibly 
have been foreseen as part of running a business. Even if this event 
is, as Samsung argues, completely unexpected in the sale of washers, 
the petitioner placed information on the record calling into question 
this claim.\28\ While this event was noteworthy to Samsung, it does not 
rise to the level of the events that the Department has deemed 
extraordinary in past cases, such as losses caused by a severe 
hurricane or viral infection that are ``unrelated or incidentally 
related to the ordinary and typical activities of the entity, in light 
of the entity's environment.'' \29\ Accordingly, we included the 
expenses associated with this event in our calculation of CEP. 
Furthermore, based on the nature of these expenses, we treated them as 
warranty expenses. Because the details relating to the event at issue 
and the expenses associated with this event are business proprietary, 
see the Samsung Calculation Memo for further discussion.
---------------------------------------------------------------------------

    \28\ See the petitioner's July 2, 2012, submission on this 
topic.
    \29\ See Certain Pasta From Italy: Notice of Final Results of 
the Twelfth Administrative Review, 75 FR 6352 (February 9, 2010), 
and accompanying Issues and Decision Memorandum at Comment 9. See 
also Final Determination of Sales at Less Than Fair Value: Certain 
Activated Carbon from the People's Republic of China, 72 FR 9508 
(March 2, 2007), and accompanying Issues and Decision Memorandum at 
Comment 25; and Certain Frozen Warmwater Shrimp from Brazil: Final 
Results and Partial Rescission of Antidumping Duty Administrative 
Review, 72 FR 52061 (September 12, 2007), and accompanying Issues 
and Decision Memorandum at Comment 1.
---------------------------------------------------------------------------

Normal Value

A. Home Market Viability

    In order to determine whether there is 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 equal to or greater than five percent of the aggregate volume of 
U.S. sales), we compared each respondent's volume of home market sales 
of the foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with sections 773(a)(1)(A) and (B) of the 
Act.
    In this investigation, we determined that LG's and Samsung's 
aggregate volume of home market sales of the foreign like product was 
greater than five percent of the aggregate volume of U.S. sales of the 
subject merchandise. Therefore, we used home market sales as the basis 
for NV, in accordance with section 773(a)(1)(B) of the Act.

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

    During the POI, LG and Samsung sold foreign like product to 
affiliated customers. We did not conduct the arm's-length test with 
respect to LG, because LG reported the downstream

[[Page 46397]]

sales made by its affiliated reseller, rather than the sales it made to 
its affiliated reseller. We used these downstream sales in our analysis 
for the preliminary determination.
    To test whether Samsung's sales to affiliated customers were made 
at arm's-length prices, we compared, on a product-specific basis, the 
starting prices of sales to affiliated and unaffiliated customers, net 
of all applicable billing adjustments, discounts and rebates, movement 
charges, direct selling expenses and packing expenses. Where the price 
to the affiliated party was, on average, within a range of 98 to 102 
percent of the price of the same or comparable merchandise sold to 
unaffiliated parties, we determined that sales made to the affiliated 
party were at arm's length. See 19 CFR 351.403(c).\30\ Sales to 
affiliated customers in the home market that were not made at arm's-
length prices were excluded from our analysis because we considered 
them to be outside the ordinary course of trade. See section 771(15) of 
the Act and 19 CFR 351.102(b)(35).
---------------------------------------------------------------------------

    \30\ See also Stainless Steel Sheet and Strip in Coils From 
Japan: Preliminary Results of Antidumping Duty Administrative 
Review, 74 FR 39615 (August 7, 2009), unchanged in Stainless Steel 
Sheet and Strip in Coils form Japan: Final Results of Antidumping 
Duty Administrative Review, 75 FR 6631 (February 10, 2010).
---------------------------------------------------------------------------

    With respect to Samsung's sales to affiliated resellers, we 
determined that sales to certain affiliated resellers were not made at 
arm's-length prices and, therefore, excluded these sales from our 
analysis. As this result was a direct consequence of our decision to 
exclude top-load washers with a vertical rotational axis and a rated 
capacity of less than 3.70 cubic feet from the scope of investigation 
(see ``Scope of Investigation,'' ``Scope Comments,'' and ``Product 
Comparisons'' sections, above), we have not required Samsung to report 
the related downstream sales.

C. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (LOT) as the EP or CEP. Sales are made at different 
LOTs if they are made at different marketing stages (or their 
equivalent). See 19 CFR 351.412(c)(2). Substantial differences in 
selling activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. 
Id.\31\ In order to determine whether the comparison market sales were 
at different stages in the marketing process than the U.S. sales, we 
reviewed the distribution system in each market (i.e., the chain of 
distribution), including selling functions, class of customer (customer 
category), and the level of selling expenses for each type of sale.
---------------------------------------------------------------------------

    \31\ See also Certain Orange Juice From Brazil: Final Results of 
Antidumping Duty Administrative Review and Notice of Intent Not To 
Revoke Antidumping Duty Order in Part, 75 FR 50999, 51001 (August 
18, 2010), and accompanying Issues and Decision Memorandum at 
Comment 7 (OJ from Brazil).
---------------------------------------------------------------------------

    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying LOTs 
for EP and comparison market sales (i.e., NV based on either home 
market or third country prices),\32\ we consider the starting prices 
before any adjustments. For CEP sales, we consider only the selling 
activities reflected in the price after the deduction of expenses and 
profit under section 772(d) of the Act.\33\
---------------------------------------------------------------------------

    \32\ Where NV is based on CV, we determine the NV LOT based on 
the LOT of the sales from which we derive selling expenses, general 
and administrative (G&A) expenses, and profit for CV, where 
possible.
    \33\ See Micron Tech., Inc. v. United States, 243 F.3d 1301, 
1314-16 (Fed. Cir. 2001).
---------------------------------------------------------------------------

    When the Department is unable to match U.S. sales of the foreign 
like product in the comparison market at the same LOT as the EP or CEP, 
the Department may compare the U.S. sale to sales at a different LOT in 
the comparison market. In comparing EP or CEP sales at a different LOT 
in the comparison market, where available data make it possible, we 
make an LOT adjustment under section 773(a)(7)(A) of the Act. Finally, 
for CEP sales only, if the NV LOT is at a more advanced stage of 
distribution than the LOT of the CEP and there is no basis for 
determining whether the difference in LOTs between NV and CEP affects 
price comparability (i.e., no LOT adjustment was possible), the 
Department shall grant a CEP offset, as provided in section 
773(a)(7)(B) of the Act.\34\
---------------------------------------------------------------------------

    \34\ See, e.g., OJ from Brazil, 75 FR at 51001.
---------------------------------------------------------------------------

    In this investigation, we obtained information from LG and Samsung 
regarding the marketing stages involved in making the reported home 
market and U.S. sales, including a description of the selling 
activities performed by each respondent for each channel of 
distribution. Company-specific LOT findings are summarized below.
LG
    LG reported that it made U.S. sales through three channels of 
distribution (i.e., direct EP sales to original equipment manufacturer 
(OEM) customers, CEP sales to OEM customers, and CEP sales out of 
inventory of LG-branded products). For all three channels of 
distribution, LG reported that it performed the following selling 
functions in Korea for sales to U.S. customers: Strategic/economic 
planning, sales forecasting; marketing (advertising, sales/marketing 
support, market research); packing; order input; direct sales 
personnel; warranty services; and freight and delivery services. These 
selling activities can be generally grouped into three selling function 
categories for analysis: (1) Sales and marketing; (2) freight and 
delivery services; and (3) warranty and technical support. Accordingly, 
based on the selling function categories, we find that LG performed 
sales and marketing, freight and delivery services, and warranty and 
technical support for U.S. sales, and that these functions were 
performed at the same or similar level of intensity in all three 
distribution channels in the U.S. market. Because the selling functions 
performed by LG in Korea do not differ significantly among channels, we 
preliminarily determine that there is one LOT in the U.S. market.
    With respect to the home market, LG reported that it made sales 
through four channels of distribution (i.e., sales to construction 
companies, sales to unaffiliated retailers, sales to unaffiliated 
retailers for which LG was responsible for delivery and installation at 
the end-user's location, and sales made by its affiliated retailer, 
HiPlaza, to unaffiliated end-users).
    LG reported that it performed the following selling functions for 
sales to all home market customers: Sales forecasting, product 
development/market research, advertising, sales promotion, packing, 
inventory maintenance, order input, direct sales personnel/sales 
support, warranty services, payment of commissions, and freight and 
delivery services. In addition to these activities, LG reported that 
HiPlaza maintained an extensive retail presence in Korea during the 
POI, and performed the following additional selling functions for its 
sales to unaffiliated retail customers: Sales forecasting, advertising, 
sales promotion, inventory maintenance, order input, direct sales 
personnel/sales support, and the payment of commissions.
    These selling activities can be generally grouped into four selling 
function categories for analysis: (1) Sales and marketing; (2) freight 
and delivery services; (3) inventory maintenance and warehousing; and 
(4) warranty and technical support. Accordingly, we find that LG 
performed sales and marketing, freight and delivery services, and 
inventory maintenance and warehousing at the same relative level of 
intensity for its

[[Page 46398]]

three reported sales channels to unaffiliated customers in the home 
market. Thus, we consider these three channels to constitute one LOT. 
Regarding sales made by LG's affiliated retailer, we find that HiPlaza 
performed additional sales and marketing, and inventory maintenance 
functions for sales to its customers. These additional selling 
functions are sufficient to determine that HiPlaza's home market sales 
were at a more advanced LOT than those made by LG to unaffiliated 
customers. Accordingly, based on the totality of the facts and 
circumstances, we preliminarily determine that LG made sales at two 
LOTs in the home market.
    Finally, we compared the U.S. LOT to the home market LOTs and found 
that the selling functions LG performed for its home market customers 
are more advanced than those performed for its U.S. customers. That is, 
there is a broader range of selling functions performed in the home 
market (at both home market LOTs) than in the U.S. market, and these 
functions are performed at a higher level of intensity than in the U.S. 
market. This difference is sufficient to determine that LG's U.S. LOT 
is different from the home market LOTs. Therefore, based on the 
totality of the facts and circumstances, we preliminarily determine 
that sales to the home market during the POI were made at different 
LOTs than sales to the United States. Additionally, because LG's home 
market LOTs are at a more advanced stage of distribution than its U.S. 
LOT and no LOT adjustment is possible, a CEP offset is warranted. 
Accordingly, we granted a CEP offset pursuant to section 773(a)(7)(B) 
of the Act.
Samsung
    Samsung reported that it made CEP sales through two channels of 
distribution (i.e., direct sales to unaffiliated customers and CEP 
sales out of inventory). Samsung reported that it packed subject 
merchandise in Korea and provided freight and delivery services for 
sales to its CEP customers. Samsung also performed sales/marketing 
support and market research for its CEP sales. These selling activities 
can be generally grouped into two selling function categories for 
analysis: (1) Sales and marketing and (2) freight and delivery 
services. Accordingly, based on the selling function categories, we 
find that Samsung performed freight and delivery and sales and 
marketing activities for U.S. sales. Because the selling functions 
performed by Samsung in Korea were the same in both channels of 
distribution, we preliminarily determine that there is one LOT in the 
U.S. market.
    With respect to the home market, Samsung reported that it made 
sales through two channels of distribution (i.e., sales to unaffiliated 
customers and sales to affiliated resellers). Samsung reported that it 
performed the following selling functions for sales to all home market 
customers: Sales forecasting, strategic/economic planning, personnel 
training/exchange, provision of engineering services, advertising, 
sales promotion, distributor/dealer training, packing, inventory 
maintenance, order input/processing, employment of direct sales 
personnel, sales/marketing support, market research, technical 
assistance, provision of rebates and cash discounts, provision of 
warranty services, provision of guarantees, provision of after-sales 
services, and provision of freight and delivery services.
    These selling activities can be generally grouped into four selling 
function categories for analysis: (1) Sales and marketing; (2) freight 
and delivery services; (3) inventory maintenance and warehousing; and 
(4) warranty and technical support. Accordingly, we find that Samsung 
performed sales and marketing, freight and delivery services, inventory 
maintenance and warehousing, and warranty and technical support for its 
home market sales. Because the selling functions Samsung performed were 
the same in both channels of distribution, we preliminarily determine 
that Samsung made sales at one LOT in the home market.
    Finally, we compared the U.S. LOT to the home market LOT and found 
that the selling functions Samsung performed for home market customers 
are more advanced than those performed for its U.S. customers. This 
difference is sufficient to determine that the U.S. LOT is different 
from the home market LOT. Therefore, based on the totality of the facts 
and circumstances, we preliminarily determine that sales to the home 
market during the POI were made at a different LOT than sales to the 
United States. Additionally, because Samsung's home market LOT is at a 
more advanced stage of distribution than its U.S. LOT and no LOT 
adjustment is possible, a CEP offset is warranted. Accordingly, we 
granted a CEP offset pursuant to section 773(a)(7)(B) of the Act.

D. Cost of Production Analysis

    Based on our analysis of an allegation contained in the petition, 
we found that there were reasonable grounds to believe or suspect that 
LG's and Samsung's sales of washers in the home market were made at 
prices below their COP. Accordingly, pursuant to section 773(b) of the 
Act, we initiated a country-wide sales-below-cost investigation to 
determine whether LG's and Samsung's sales were made at prices below 
their respective COPs.
1. The Petitioner's Allegation Regarding Input Suppliers
    Section 771(33)(G) of the Act defines an affiliated party as any 
person who controls any other person and such other person. The Act 
further states that 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. The SAA, at 838, 
provides that a company may be in a position to exercise restraint or 
direction through, among other factors, close supplier relationships in 
which the supplier or buyer becomes reliant on the other. The 
Department's regulations at 19 CFR 351.102(b) provide that control will 
not exist on the basis of these factors unless the relationship has the 
potential to impact decisions concerning the production, pricing, or 
cost of the subject merchandise.
    The petitioner alleged that LG and Samsung control certain of their 
respective input suppliers by virtue of a close supplier relationship 
and, therefore, are affiliated within the meaning of section 771(33)(G) 
of the Act. Specifically, the petitioner asserted that each of the 
suppliers in question is reliant on either LG or Samsung for a 
significant percentage of its total sales, and for certain forms of 
financial assistance. See the petitioner's April 20, June 6, June 11, 
June 15, and July 7, 2012, submissions. Accordingly, the petitioner 
requested that we obtain relevant sales and cost data for the top input 
suppliers of LG and Samsung in order to determine whether the prices 
between the respondents and their suppliers were at arm's length.
    We issued supplemental questionnaires to LG and Samsung requesting 
additional information so that we could analyze whether the respondents 
were in a position to exert control over the suppliers at issue. See 
the Department's May 7 and June 18, 2012, questionnaires. LG submitted 
detailed supplier-specific information on May 25 and July 2, 2012, in 
response to the Department's requests. See LG's July 2, 2012, response 
at pages 6-8, and Exhibits A-50 through A-53 (Supplier 2011 Financial 
Statements), Exhibit A-54 (Data on LG Purchases and Supplier Total 
Sales), Exhibits A-55 through A-58 (2011 Supply Agreements), and

[[Page 46399]]

Exhibit A-60 (Sample Loan Contract). Samsung submitted detailed 
supplier-specific information on May 31 and June 27, 2012. See 
Samsung's June 27, 2012, response at pages 1--5 and Exhibit 1 
(Samsung's purchases), Exhibit 2 (Unaffiliated Supplier Financial 
Statements), Exhibit 3 (Supply Agreements), Exhibits 4-6 (Direct Loan 
Details), and Exhibits 7-8 (Details of Loans provided under IBK Fund).
    In light of the petitioner's allegations, we reviewed the 
information provided by LG and Samsung and considered several factors 
in assessing whether there is evidence that the relationships between 
the respondents and their suppliers had the potential to impact pricing 
and production decisions. Among the factors we considered in our 
analysis were: (1) The terms and provisions of supply agreements 
between the respondents and their suppliers, (2) the relative 
percentage that sales to the respondents represented of each of the 
suppliers' total sales, (3) the terms of any financing agreements with 
the suppliers, if any, and (4) the overall profitability of the input 
suppliers. For both LG and Samsung, among other things, we found that 
none of their top input suppliers sold exclusively to them. Based on 
our analysis of the record information, for LG, we determined that the 
evidence does not support a conclusion that the relationship between LG 
and its suppliers is sufficiently close to warrant a finding of 
control, pursuant to section 771(33)(G) of the Act. Likewise, for 
Samsung, we determined that the information on the record does not 
support a finding that the relationship between Samsung and its 
suppliers is sufficiently close to warrant a finding of control. 
Therefore, we preliminarily find that LG and Samsung and their 
respective top input suppliers are not affiliated under section 
771(33)(G) of the Act. See memoranda entitled ``Cost of Production and 
Constructed Value Calculation Adjustments for the for the Preliminary 
Determination--LG Electronics Inc. and LG Electronics USA, Inc.'' (LG 
Cost Calculation Memo), and ``Cost of Production and Constructed Value 
Calculation Adjustments for the Preliminary Determination--Samsung 
Electronics Corporation,'' dated concurrently with this notice.
2. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus an amount for G&A expenses, interest 
expenses, and home market packing costs. See ``Test of Home Market 
Sales Prices'' section below for treatment of home market selling 
expenses. Based on the review of record evidence, neither LG nor 
Samsung appeared to experience significant changes in the cost of 
manufacturing during the POI. Therefore, we followed our normal 
methodology of calculating an annual weighted-average cost.
    We relied on the COP data submitted by LG and Samsung. For LG, we 
relied on the COP data submitted except that for LG we revised the G&A 
expense ratio to express all G&A expenses recorded on LG's company-wide 
financial statements as a percentage of LG's company-wide 
unconsolidated cost of goods sold. We also revised the research and 
development (R&D) component of the G&A calculation to include a portion 
of R&D expenses reflected on LG's consolidated financial statements. 
See memorandum entitled ``Cost of Production and Constructed Value 
Calculation Adjustments for the for the Preliminary Determination--LG 
Electronics Inc. and LG Electronics USA, Inc.'' (LG Cost Calculation 
Memo), dated concurrently with this notice.
3. Test of Home Market Sales Prices
    On a product-specific basis, we compared the adjusted weighted-
average COP to the home market sales of the foreign like product, as 
required under section 773(b) of the Act, in order to determine whether 
the sale prices were below the COP. The prices were exclusive of any 
applicable billing adjustments, discounts and rebates, movement 
charges, and actual direct and indirect selling expenses. In 
determining whether to disregard home market sales made at prices less 
than their COP, we examined, in accordance with sections 773(b)(1)(A) 
and (B) of the Act, whether such sales were made: (1) Within an 
extended period of time in substantial quantities, and (2) at prices 
which permitted the recovery of all costs within a reasonable period of 
time.
4. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of the respondent's sales of a given product during the POI are 
at prices less than the COP, we do not disregard any below-cost sales 
of that product, because we determine that in such instances the below-
cost sales were not made in substantial quantities. Where 20 percent or 
more of the respondent's sales of a given product during the POI are at 
prices less than the COP, we disregard those sales of that product, 
because we determine that in such instances the below-cost sales 
represent substantial quantities within an extended period of time, in 
accordance with section 773(b)(1)(A) of the Act. In such cases, we also 
determine whether such sales were made at prices which would not permit 
recovery of all costs within a reasonable period of time, in accordance 
with section 773(b)(1)(B) of the Act.
    We found that, for certain specific products, more than 20 percent 
of LG's and Samsung's home market sales during the POI were at prices 
less than the COP and, in addition, the below-cost sales did not 
provide for the recovery of costs within a reasonable period of time. 
We therefore excluded these sales and used the remaining sales, if any, 
as the basis for determining NV, in accordance with section 773(b)(1) 
of the Act.

E. Calculation of Normal Value Based on Comparison Market Prices

LG
    We calculated NV based on delivered prices to unaffiliated 
customers. For those sales where the shipment date preceded the invoice 
date, we used the shipment date as the date of sale. We made 
deductions, where appropriate, from the starting price for discounts 
and rebates. We also made deductions for movement expenses, including 
inland freight, handling, and warehousing, under section 
773(a)(6)(B)(ii) of the Act. Regarding inland freight, handling, and 
warehousing, LG paid an affiliated company to arrange unaffiliated 
subcontractors to perform these services. Because LG's affiliate did 
not provide the same service to unaffiliated parties, nor did LG use 
unaffiliated companies for these services, we were unable to test the 
arm's-length nature of the expenses paid by LG. Therefore, we based 
these expenses on the affiliate's costs. See the LG Calculation Memo 
for further discussion.
    For comparisons to EP sales, we made adjustments under section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 for differences in 
circumstances of sale for direct selling expenses, i.e., imputed 
credit, bank charges, direct advertising and promotional expenses, 
warranty expenses, and commissions.
    For comparisons to CEP sales, in accordance with section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410, we deducted from NV 
direct selling expenses, i.e., imputed credit, bank charges, direct 
advertising and promotional expenses, warranty expenses, and 
commissions. We made a CEP offset pursuant to section 773(a)(7)(B) of 
the Act and 19 CFR 351.412(f). We calculated the CEP offset as the 
lesser of the indirect selling expenses on the home market sales or

[[Page 46400]]

the indirect selling expenses deducted from the starting price in 
calculating CEP.
    For comparisons to both EP and CEP sales, we reclassified certain 
expenses that were incurred by LG's affiliated retailer in maintaining 
its retail presence in the Korean market as indirect selling expenses 
because these expenses related to rent, sales staff salaries, and other 
overhead expenses and did not result from or bear a direct relationship 
to particular sales.\35\ In addition, we disregarded the expense 
associated with credit card interest support that LG claimed as a 
direct selling expense because LG allocated this expense to all home 
market sales, rather than limiting the allocation to those sales 
incurring the expense, as requested by the Department. We also 
reclassified as indirect selling expenses the expenses LG reported as 
home market rebates pertaining to gift cards and loyalty points because 
LG did not demonstrate adequately that the reported amounts had been 
applied only to those sales which were purportedly eligible for these 
rebates. See the LG Calculation Memo.
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    \35\ See Notice of Preliminary Determination of Sales at Less 
Than Fair Value, Postponement of Final Determination, and Negative 
Critical Circumstances Determination: Bottom Mount Combination 
Refrigerator-Freezers From the Republic of Korea, 76 FR 67675, 67685 
(November 2, 2011); unchanged in Refrigerators.
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    For all price-to-price comparisons, where commissions were granted 
in the home market but not in the U.S. market, we made an upward 
adjustment to NV for the lesser of: (1) The amount of commission paid 
in the home market; or (2) the amount of indirect selling expenses 
(including inventory carrying costs) incurred in the U.S. market. See 
19 CFR 351.410(e).
    Furthermore, we made adjustments for differences in costs 
attributable to differences in the physical characteristics of the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 
19 CFR 351.411. We also deducted home market packing costs and added 
U.S. packing costs in accordance with section 773(a)(6)(A) and (B) of 
the Act.
Samsung
    We calculated NV based on delivered prices to unaffiliated 
customers and/or prices to affiliated customers that we determined to 
be at arm's length. We increased the starting price by the amount of 
billing adjustments. We made deductions, where appropriate, from the 
starting price for discounts and rebates. We also made deductions for 
movement expenses, including inland freight and warehousing expenses, 
under section 773(a)(6)(B)(ii) of the Act.
    In accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410, we deducted from NV direct selling expenses (i.e., imputed 
credit expenses, advertising expenses, and warranty expenses).
    Regarding inland freight, warehousing, and warranty expenses, 
Samsung paid affiliated companies to perform these services in the home 
market. Because Samsung's affiliates did not provide the same service 
to unaffiliated parties, nor did Samsung use unaffiliated companies for 
these services, we were unable to test the arm's-length nature of the 
expenses paid by Samsung. Therefore, we based these expenses on the 
affiliates' costs. See the Samsung Calculation Memo for further 
discussion.
    Furthermore, we made adjustments for differences in costs 
attributable to differences in the physical characteristics of the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 
19 CFR 351.411. We also deducted home market packing costs and added 
U.S. packing costs in accordance with section 773(a)(6)(A) and (B) of 
the Act.
    Finally, we made a CEP offset pursuant to section 773(a)(7)(B) of 
the Act and 19 CFR 351.412(f). We calculated the CEP offset as the 
lesser of the indirect selling expenses on the home market sales or the 
indirect selling expenses deducted from the starting price in 
calculating CEP.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act based on the exchange rates in effect on the 
dates of the U.S. sales as certified by the Federal Reserve Bank.

Verification

    As provided in section 782(i) of the Act, we will verify 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
CBP to suspend liquidation of all imports of subject merchandise from 
Korea that are entered, or withdrawn from warehouse, for consumption on 
or after the date of publication of this notice in the Federal 
Register.
    Consistent with our practice, where the product under investigation 
is also subject to a concurrent countervailing duty investigation, we 
instruct CBP to require a cash deposit \36\ equal to the amount by 
which the NV exceeds the EP or CEP, less the amount of the 
countervailing duty determined to constitute an export subsidy.\37\ In 
this case, although the product under investigation is also subject to 
a concurrent countervailing duty investigation, with respect to LG and 
Samsung, the Department preliminarily found no countervailing duty 
attributable to export subsidies. Therefore, we have not offset the 
cash deposit rates shown below for LG or Samsung for purposes of this 
preliminary determination. However, with respect to Daewoo, the 
Department did find preliminarily countervailing duties attributable to 
export subsidies. Therefore, for Daewoo, we offset the AFA antidumping 
margin (i.e., 82.41 percent) by the countervailing duty rate 
attributable to export subsidies (i.e., 3.30 percent).\38\ See 
Memorandum entitled ``Preliminary Determination Margin Calculation for 
Daewoo Electronics Corporation,'' dated concurrently with this notice.
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    \36\ See Modification of Regulations Regarding the Practice of 
Accepting Bonds During the Provisional Measures Period in 
Antidumping and Countervailing Duty Investigations, 76 FR 61042 
(October 3, 2011).
    \37\ See, e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Carbazole Violet Pigment 23 From India, 69 FR 
67306, 67307 (November 17, 2004).
    \38\ See Large Residential Washers From the Republic of Korea: 
Preliminary Affirmative Countervailing Duty Determination and 
Alignment of Final Determination With Final Antidumping 
Determination, 77 FR 33181 (June 5, 2012).
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    We will instruct CBP to require a cash deposit equal to the 
weighted-average amount by which the NV exceeds EP or CEP, as indicated 
in the chart below. These suspension-of-liquidation instructions will 
remain in effect until further notice. The weighted-average dumping 
margins are as follows:

------------------------------------------------------------------------
                                                       Weighted-average
               Exporter/manufacturer                  margin  percentage
------------------------------------------------------------------------
Daewoo Electronics Corporation.....................               79.11
LG Electronics, Inc................................               12.15
Samsung Electronics Co., Ltd.......................                9.62
All Others.........................................               11.36
------------------------------------------------------------------------

    The ``All Others'' rate is derived exclusive of all de minimis or 
zero margins and margins based entirely on AFA. We have based our 
calculation of the ``All Others'' rate on the weighted-average of the 
margins calculated for LG and Samsung using publicly-ranged data. 
Because we cannot apply our normal methodology of calculating a

[[Page 46401]]

weighted-average margin due to requests to protect business-proprietary 
information, we find this rate to be the best proxy of the actual 
weighted-average margin determined for these respondents.\39\ For 
further discussion of this calculation, see memorandum entitled 
``Calculation of the All Others Rate for the Preliminary Determination 
of the Antidumping Duty Investigation of Large Residential Washers from 
Korea,'' dated concurrently with this notice.
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    \39\ See, e.g., Certain Frozen Warmwater Shrimp From India: 
Final Results of Antidumping Duty Administrative Review, Partial 
Rescission, and Final No Shipment Determination, 76 FR 41203, 41205 
(July 13, 2011).
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ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Disclosure

    The Department will disclose to parties the calculations performed 
in connection with this preliminary determination within five days of 
the date of publication of this notice. See 19 CFR 351.224(b).

Public Comment

    Case briefs for this investigation must be submitted to the 
Department no later than seven days after the date of the final 
verification report issued in this proceeding. Rebuttal briefs must be 
filed five days from the deadline date for case briefs. See 19 CFR 
351.309(d). A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes. Case briefs must present all arguments that 
continue to be relevant to the Department's final determination, in the 
submitter's view. See 19 CFR 351.309(c)(2). Section 774 of the Act 
provides that the Department will hold a public hearing to afford 
interested parties an opportunity to comment on arguments raised in 
case or rebuttal briefs, provided that such a hearing is requested by 
an interested party. See 19 CFR 351.310(c). If a request for a hearing 
is made in this investigation, the hearing will tentatively be held two 
days after the rebuttal brief deadline date at the U.S. Department of 
Commerce, 14th Street and Constitution Avenue NW, Washington, DC 20230. 
Parties should confirm by telephone the time, date, and place of the 
hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, 
within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs.
    We will make our final determination no later than 135 days after 
the publication of this notice in the Federal Register.
    This determination is published pursuant to sections 733(f) and 
777(i) of the Act and 19 CFR 351.205(c).

    Dated: July 27, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2012-19056 Filed 8-2-12; 8:45 am]
BILLING CODE 3510-DS-P