Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-580-807]

Polyethylene Terephthalate Film, Sheet, and Strip From the

Republic of Korea; Preliminary Results of Antidumping Duty

Administrative Review

AGENCY: Import Administration/International Trade Administration/

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review.

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SUMMARY: In response to requests from three respondents, three U.S.

producers, and one interested party, the Department of Commerce (the

Department) has conducted an administrative review of the antidumping

duty order on polyethylene terephthalate film, sheet, and strip from

the Republic of Korea. The review covers four manufacturers/exporters

of the subject merchandise to the United States generally for the

period November 30, 1990 through May 31, 1992.

We have preliminarily determined that sales have been made below

the foreign market value (FMV). If these preliminary results are

adopted in our final results of administrative review, we will instruct

U.S. Customs to assess antidumping duties equal to the difference

between the United States price (USP) and the FMV.

Interested parties are invited to comment on these preliminary

results.

EFFECTIVE DATE: July 8, 1994.

FOR FURTHER INFORMATION CONTACT: Roy F. Unger, Jr., or Thomas F.

Futtner, Office of Antidumping Compliance, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue NW., Washington, DC 20230, telephone:

(202) 482-0651/3814.

SUPPLEMENTARY INFORMATION:

Background

On June 5, 1991, the Department of Commerce published in the

Federal Register (56 FR 25660) the antidumping duty order on

polyethylene terephthalate (PET) film from the Republic of Korea. On

June 8, 1992, the Department published (57 FR 24244) a notice of

``Opportunity to Request an Administrative Review'' of this antidumping

duty order for the period November 30, 1990, through May 31, 1992 (56

FR 25660). We received timely requests for review from Cheil

Synthetics, Inc. (Cheil), SKC Limited (SKC), Kolon Industries, Inc.

(Kolon), and STC Corporation (STC). The petitioners, E.I. DuPont

Nemours & Co., Inc., Hoechst Celanese Corporation and ICI Americas,

Inc., requested an administrative review for the same four Korean

manufacturers/exporters of PET film.

For most of the respondents the review period covers November 30,

1990 through May 31, 1992, on July 22, 1992 (57 FR 32521). Because

Cheil was determined to have a de minimis margin in the Preliminary

Determination of Sales at Less-Than-Fair-Value (LTFV) (56 FR 16305),

Cheil's period of review (POR) begins on April 22, 1991, when

suspension of its merchandise was first ordered, and runs through May

31, 1992. The Department has now conducted this review in accordance

with section 751 of the Tariff Act of 1930, as amended (the Act).

Scope of the Review

Imports covered by the review are shipments of all gauges of raw,

pretreated, or primed polyethylene terephthalate film, sheet, and

strip, whether extruded or coextruded. The films excluded from this

review are metallized films and other finished films that have had at

least one of their surfaces modified by the application of a

performance-enhancing resinous or inorganic layer of more than 0.00001

inches (0.254 micrometers) thick. Roller transport cleaning film which

has at least one of its surfaces modified by the application of 0.5

micrometers of SBR latex has also been ruled as not within the scope of

the order.

PET film is currently classifiable under Harmonized Tariff Schedule

(HTS) subheading 3920.62.00.00. The HTS subheading is provided for

convenience and for U.S. Customs purposes. The written description

remains dispositive as to the scope of the product coverage. The POR

was November 30, 1990, through May 31, 1992, for SKC, Kolon, and STC.

Cheil's POR was April 22, 1991, through May 31, 1992.

United States Price

In calculating USP, the Department treated respondents' sales as

purchase price (PP), as defined in section 772 of the Act, when the

merchandise was sold to unrelated U.S. purchasers prior to importation.

The Department treated respondents' sales as exporter's sale price

(ESP), as defined in section 772 of the Act, when the merchandise was

sold to unrelated U.S. purchasers after importation.

PP was based on ex-factory, f.o.b. Korean port, f.o.b. customer's

specific delivery point, c.i.f. U.S. port, or packed and delivered

price to unrelated purchasers in the United States. We made

adjustments, where applicable, for Korean and U.S. brokerage and

handling, terminal handling charges, Korean and U.S. inland freight,

ocean freight, marine insurance, containerization expenses and taxes,

sample movement charges, return movement charges, discounts, wharfage

expense, consolidated freight charges, and U.S. duties in accordance

with section 772(d)(2) of the Act.

ESP was based on ex-warehouse, f.o.b. customer's specific delivery

point, or packed and delivered prices to unrelated purchasers in the

United States. We made adjustments, where applicable, for Korean and

U.S. brokerage and handling, Korean and U.S. inland freight, ocean

freight, marine insurance, consolidated freight charges, miscellaneous

handling charges, containerization expenses and taxes, wharfage

expenses, warranty expenses, rebates, discounts, U.S. duties, U.S.

commissions, U.S. credit expense and indirect selling expenses (which

include inventory carrying costs and pre-sale warehousing expenses), in

accordance with section 772(d)(2) of the Act.

For ESP sales, we deducted indirect selling expenses which included

U.S. inventory carrying expenses and U.S. pre-sale warehousing

expenses. We allowed an ESP offset to FMV, where appropriate, amounting

to the lesser of the weighted-average total of home market indirect

selling expenses, or the total U.S. indirect selling expenses in

accordance with 19 CFR 353.56(b)(2).

For both PP and ESP, we added duty drawback, where applicable,

pursuant to section 772(d)(1)(B) of the Act.

Kolon paid an unrelated insurance company a percentage of sales

value on all of its sales to U.S. customers. During verification, we

discovered that Kolon reported the incorrect rate for this insurance.

We corrected Kolon's reported U.S. inland insurance expense to reflect

the correct rate.

We adjusted USP for taxes in accordance with our practice as

outlined in Siliconmanganese from Venezuela, Preliminary Determination

of Sales at Less Than Fair Value, 59 FR 31204, June 17, 1994.

With respect to subject merchandise to which value was added in the

United States by SKC and STC prior to sale to unrelated U.S. customers,

we deducted any increased value in accordance with section 772(e)(3) of

the Act. The value added consists of the cost associated with the

production and sale of the further-processed merchandise, other than

the cost associated with the imported PET film, and a proportional

amount of profit or loss related to the value added. Profit or loss was

calculated by deducting from the sales price of the further-processed

merchandise all production and selling costs incurred by SKC and STC in

the value-added process. The profit or loss was then allocated

proportionally to all components of cost.

No other adjustments were claimed or allowed.

Foreign Market Value

In order to determine whether there were sufficient sales of PET

film in the home market to serve as a viable basis for calculating

foreign market value (FMV), we compared the volume of home market sales

of PET film to the volume of third country sales of PET film, in

accordance with section 773(a)(1) of the Act. All four respondents had

viable home markets with respect to sales of PET film made during the

POR.

In general, the Department relies on monthly weighted-average

prices in the calculation of FMV. However, in accordance with the test

described in the following paragraph, we determined that the annual

weighted-average FMVs did not vary significantly from the monthly

weighted-average FMVs. Therefore, in accordance with section 353.44 of

the Department's regulations, we calculated FMVs for each model based

on annual weighted-average prices.

To determine whether a POR weighted-average price was

representative of the transactions under consideration, we performed a

three-step test. See Antifriction Bearings from Japan, et al.; Final

Results of Review, 58 FR 42289 (1993). First, we compared the monthly

weighted-average home market price for each model with the weighted-

average POR price of that model. We calculated the proportion of each

model's sales whose POR weighted-average price did not vary more than

plus or minus ten percent from the monthly weighted-average prices. We

did this test for each model of PET film. Second, we compared the

volume of sales of all models of PET film whose POR weighted-average

price did not vary more than plus or minus ten percent from the monthly

weighted-average price with the total volume of sales of PET film. If

the POR weighted-average price of at least 90 percent of sales of PET

film did not vary more than plus or minus ten percent from the monthly

weighted-average price, we considered the POR weighted-average price to

be representative of the transactions under consideration. Third, we

tested whether there was any correlation between fluctuations in price

and time for each model. Where the correlation coefficient was less

than 0.05 (where a coefficient approaching 1.0 indicates a direct

relation between price and time), we concluded that there was no

significant relation between price and time.

Based on this analysis, we determined that the POR weighted-average

price of sales of PET film by respondents did not vary more than plus

or minus ten percent from the monthly weighted-average price,

indicating that the POR weighted-average price was representative of

the transactions under consideration. Additionally, we determined that

there was no significant relation between price and time during the

POR. Therefore, we used the POR weighted-average price for purposes of

our calculation.

Because SKC and STC made some home market sales to related parties

during the POR we tested these sales to ensure that, on average, the

related party sales were at ``arms-length.'' See Antifriction Bearings

from France et al.; Final Results of Review, 57 FR 28388 (1992). We

determined that SKC's home market sales of PET film to related parties

were on average at ``arms-length'', while STC's home market sales of

PET film to related parties on average were not at ``arms-length.''

Accordingly, we did not use STC's related party home market sales for

comparison to U.S. sales.

Because many of Cheil's and SKC's sales were determined to have

been made below cost of production (COP) during the original LTFV

investigation, the Department, pursuant to section 773(b) of the Act,

initiated COP investigations of Cheil and SKC for purposes of this

administrative review. Furthermore, based on an allegation by

petitioners, we also determined that reasonable grounds existed to

believe or suspect that sales below cost had been made by Kolon and STC

of PET film. Thus, we initiated a COP investigation with respect to

Kolon and STC.

We performed a model-specific cost of production test, in which we

examined whether each home market sale was priced below the

merchandise's cost of production. The Department defines the cost of

production as the sum of direct material, direct labor, variable and

fixed factory overhead, general expenses, and packaging. For each

model, we compared this sum to the reported home market unit price, net

of price adjustments and movement expenses. In accordance with Section

773(b) of the Tariff Act, we also examined whether the home market

sales of each model were made at prices below their cost of production

in substantial quantities over an extended period of time, and whether

such sales were made at prices which would permit recovery of all costs

within a reasonable period of time in the normal course of trade.

For each model where less than ten percent, by quantity, of the

home market sales during the period of review were made at prices below

the cost of production, we included all sales of that model in the

computation of FMV. For each model where ten percent or more, but less

than ninety percent, of the home market sales during the period of

review were priced below the merchandise's cost of production, we

excluded from the calculation of FMV those home market sales which were

priced below the merchandise's cost of production, provided that these

below-cost sales were made over an extended period of time. For each

model where ninety percent or more of the home market sales during the

period of review were priced below the cost of production, we

disregarded all sales of that model from our analysis.

In order to determine whether below-cost sales had been made over

an extended period of time, we compared the number of months in which

below-cost sales occurred for each product to the number of months

during the period of review in which each model was sold. If a product

was sold in fewer than three months during the review period, we did

not exclude the below-cost sales unless there were below-cost sales in

each month of sale. If a product was sold in three or more months, we

did not exclude the below-cost sales unless there were below-cost sales

in at least three months during the period of review.

We calculated the COP for the merchandise using Cheil's, SKC's,

Kolon's and STC's cost of manufacturing (COM) and general expenses, in

accordance with section 353.51(c) of the Department's regulations (19

CFR 353.51(c)(1993)). Respondents' COM consisted of materials, labor,

and overhead costs incurred during film manufacturing. General expenses

consisted of general and administrative expenses as well as net

interest expenses normally included in general expenses for COP. In our

analysis, we discovered that Cheil did not include home market packing

costs in its calculation of COP. Accordingly, we added Cheil's reported

home market packing costs to each model's COP.

Based upon data collected during verification of Kolon and STC, we

made the following cost adjustments: We reallocated STC's technical

revenues offset against STC's reported general expenses instead of

against STC's materials cost, as reported. We readjusted the reported

labor costs to include all those labor costs actually reported in the

general ledger. We reallocated STC's reported variable overhead cost on

the basis of actual PET film output rather than relying on the reported

basis of production capacity. We disallowed STC's claim for a start-up

costs adjustment because the costs were not actually reflected in STC's

financial records. We readjusted STC's materials costs to reflect arms-

length prices paid to unrelated parties for raw PET chips. For Kolon,

we corrected errors in reported interest rate ratios contained in

Kolon's net interest expense reported for CV purposes.

When all home market sales of a such or similar product in the

contemporaneous month (as identified in the model match) were excluded

from our analysis because the home market sales were priced below the

cost of production, or when no home market sales of such or similar

merchandise were found, then we used the constructed value of the

merchandise sold in the United States as the basis for FMV. We

calculated the constructed value, in accordance with Section 773(e) of

the Tariff Act, as the sum of the cost of manufacture of the product

sold in the United States, home market selling, general and

administrative (SG&A) expenses, and home market profit. The cost of

manufacture of the product sold in the United States is the sum of

direct material, direct labor, and variable and fixed factory overhead

expenses. For home market SG&A expenses, we used the larger of the

actual SG&A expenses reported by the respondents or ten percent of the

cost of manufacture, the statutory minimum for foreign SG&A expenses.

For home market profit, we used the larger of the actual profit

reported by the respondents or the statutory minimum of eight percent

of the sum of cost of manufacture and SG&A expenses.

We calculated FMV based on delivered prices to unrelated customers

and, where appropriate, to related customers in the home market. In

calculating FMV, we made adjustments, where appropriate, for rebates,

Korean inland freight and insurance, Korean brokerage and loading

charges, home market credit expenses. We adjusted for Korean

consumption tax in accordance with our decision in Siliconmanganese

from Venezuela, Preliminary Determination of Sales at Less Than Fair

Value, 59 FR 31204, June 17, 1994. We deducted home market packing

costs from the home market price and added U.S. packing costs to the

FMV. We also made, where applicable, difference-in-merchandise

adjustments. For SKC, we added a duty adjustment where the price SKC

reported did not include import duties.

Due to a clerical error, Kolon incorrectly reported its home market

freight expense in its questionnaire response. During verification, we

determined the actual home market freight expense charge and adjusted

Kolon's home market sales data accordingly.

For comparison to PP sales, pursuant to 19 CFR 353.56, we made

circumstance-of-sale adjustments to FMV, where appropriate, for post-

sale warehousing expenses, Korean and U.S. bank charges, U.S. credit

expenses, and U.S. warranty expenses. We made further adjustments,

where appropriate, for U.S. commissions in accordance with 19 CFR

353.56(a)(2). Where commissions were paid on U.S. sales and not paid on

home market sales, we allowed an offset to FMV amounting to the lesser

of the weighted-average home market indirect selling expenses, or the

U.S. commissions in accordance with 19 CFR 353.56(b) of the

regulations.

For comparison to ESP sales, we allowed an ESP offset to FMV,

amounting to the lesser of the weighted-average total of home market

indirect selling expenses, or the total U.S. indirect selling expenses

in accordance with 19 CFR 353.56(b)(2).

No other adjustments were claimed or allowed.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that the

following margins exist for the periods indicated:

------------------------------------------------------------------------

Manufacturer exporter Percent margin

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November 30, 1990 through May 31, 1992:

SKC Limited............................... 1.03.

Kolon Industries.......................... 0.44 (de minimis).

STC Corporation........................... 5.86.

April 22, 1991 through May 31, 1992:

Cheil Synthetics.......................... 0.05 (de minimis).

------------------------------------------------------------------------

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries.

Individual differences between United States price and foreign

market value may vary from the percentages stated above. Upon

completion of the review the Department will issue appraisement

instructions on each exporter directly to the U.S. Customs Service.

Furthermore, the following deposit requirements will be effective

for all shipments of polyethylene terephthalate film, sheet, and strip,

entered, or withdrawn from warehouse, for consumption on or after the

publication date of the final results of this administrative review, as

provided by section 751(a)(1) of the Act.

(1) The cash deposit rate for the reviewed companies will be those

rates established in the final results of this review. Since the rates

for Cheil and Kolon were de minimis, there will be no cash deposits on

shipments from these firms of subject merchandise;

(2) For previously reviewed or investigated companies not listed

above, the cash deposit rate will continue to be the company-specific

rate published for the most recent period;

(3) If the exporter is not a firm covered in this review, a prior

review, or in the original LTFV investigation, but the manufacturer is,

the cash deposit rate will be the rate established for the most recent

period for the manufacturer of the merchandise; and

(4) If neither the exporter nor the manufacturer is a firm covered

in this or any previous review conducted by the Department, the cash

deposit rates will be 4.82%, the all other rate established in the LTFV

investigation.

These deposit requirements shall remain in effect until publication

of the final results of the next administrative review.

Interested parties may request disclosure within five days of the

date of publication of this notice, and may request a hearing within

ten days of the date of publication. Any hearing, if requested, will be

held as early as convenient for the parties but not later than 44 days

after the date of publication or the first work day thereafter. Case

briefs or other written comments from interested parties may be

submitted not later than 30 days after the date of publication of this

notice. Rebuttal briefs and rebuttal comments, limited to issues in the

case briefs, may be filed not later than 37 days after the date of

publication. The Department will publish the final results of this

administrative review, including the results of its analysis of issues

raised in any such written comments.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR

353.22.

Dated: June 29, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-16608 Filed 7-7-94; 8:45 am]

BILLING CODE 3510-DS-P