Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea; Preliminary Results of Antidumping Duty Administrative Review and Notice of Intent To Revoke Order in Part

DEPARTMENT OF COMMERCE

[A-580-807]

Polyethylene Terephthalate Film, Sheet, and Strip From the

Republic of Korea; Preliminary Results of Antidumping Duty

Administrative Review and Notice of Intent To Revoke Order in Part

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review, and Notice of Intent to Revoke in Part.

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

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

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

Department) is conducting an administrative review of the antidumping

duty order on polyethylene terephthalate film, sheet, and strip (PET

film) from the Republic of Korea. The review covers four manufacturers/

exporters of the subject merchandise to the United States during the

periods June 1, 1992 through May 31, 1993 and June 1, 1993 through May

31, 1994. The reviews indicate the existence of dumping margins for

certain firms during the relevant periods.

We are announcing our intent to revoke the order for Cheil

Synthetics, Inc. (Cheil). We preliminarily determined that Cheil has

not sold the subject merchandise at less than foreign market value

(FMV) in these reviews and for at least three consecutive

administrative review periods. Cheil has also submitted a certification

that it will not sell at less than FMV in the future.

We have preliminarily determined that sales have been made below

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

our final results of administrative review, we will instruct the U.S.

Customs Service (U.S. Customs) to assess antidumping duties equal to

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

We invite interested parties to comment on these preliminary

results. Parties who submit argument in this proceeding are requested

to submit with the argument (1) a statement of the issue and (2) a

brief summary of the argument.

EFFECTIVE DATE: September 29, 1995.

FOR FURTHER INFORMATION CONTACT:

Michael J. Heaney or John Kugelman, 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) 482-4475 or 482-0649,

respectively.

SUPPLEMENTARY INFORMATION:

Background

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

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

from the Republic of Korea. On June 7, 1993 and June 7, 1994, the

Department published (58 FR 31941 and 59 FR 29411) the respective

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

antidumping duty order for the periods June 1, 1992 through May 31,

1993 (second review) and June 1, 1993 through May 31, 1994 (third

review). We received timely requests for review from Kolon Industries,

Inc. (Kolon), SKC Limited (SKC), and STC Corporation (STC) for the

second review. The petitioners, E.I. DuPont Nemours & Co., Inc.,

Hoechst Celanese Corporation, and ICI Americas, Inc., requested reviews

of Cheil, Kolon, SKC, and STC for the second review. We received timely

requests for review from Cheil, Kolon, SKC, and STC for the third

review. The petitioners also requested reviews for Cheil, Kolon, SKC,

and STC for the third review. Toray, a domestic interested party, also

requested reviews of Cheil, Kolon, SKC, and STC for the third review.

On July 21, 1993 and July 15, 1994, the Department published (58 FR

39007 and 59 FR 36160) the respective notices of initiation for the

second and third reviews.

[[Page 50548]]

The Department is now conducting these reviews in accordance with

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

otherwise indicated, all citations to the statute and to the

Department's regulations are in reference to the provisions as they

existed on December 31, 1994.

We have preliminarily determined to revoke the antidumping duty

order for Cheil. Cheil submitted a request in accordance with 19 CFR

353.25(b) to revoke the order with respect to its sales of PET film in

the United States; that request constituted a request for review.

Cheil's request was accompanied by a certification that it had not sold

PET film to the United States at less than FMV for at least a three-

year period, including the subject review periods, and would not do so

in the future. Since we preliminarily determine that Cheil has not sold

the subject merchandise at less than FMV for at least the required

three-year period, we intend to revoke the order with respect to Cheil.

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. The Department has determined that

roller transport cleaning film which has at least one of its surfaces

modified by the application of 0.5 micrometers of SBR latex is 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.

Verification

As provided in section 776(b) of the Act, we verified information

provided by Cheil and SKC for the second review by using standard

verification procedures including inspection of the manufacturer's

facilities, the examination of relevant sales and financial records,

and selection of original documentation containing relevant

information. Our verification results are outlined in the public

versions of the verification reports.

United States Price (USP)

In calculating USP, the Department treated respondents' sales as

purchase price (PP) sales, as defined in section 772(b) 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) sales, as defined in section 772(c) 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, delivered prices

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, 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 expenses, and indirect selling expenses (which

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

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

We increased both PP and ESP by the amount of import duties which

were rebated or which were not collected by reason of the exportation

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

We adjusted USP for taxes in accordance with our practice as

outlined in Silicomanganese 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 costs associated with the

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

the costs associated with the imported PET film, an 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 and 19 CFR 353.48 (a). All

four respondents had viable home markets with respect to sales of PET

film made during the PORs.

Due to the existence of sales below the cost of production (COP) in

the original investigation for Cheil and SKC, which was the last

completed proceeding at the time we initiated the COP investigations,

the Department had reasonable grounds to believe or suspect that sales

below the COP may have occurred during these reviews. See Oil Country

Tubular Goods from Canada Preliminary Results of Antidumping Duty

Administrative Review, 59 FR 18798, 18799 (April 20, 1994).

Accordingly, the Department initiated a COP investigation for Cheil and

SKC for the second and third administrative reviews in accordance with

section 773 (b) of the Act.

Furthermore, based on an allegation by petitioners, the Department

also determined that reasonable grounds existed to believe or suspect

that sales below cost had been made by Kolon and STC in the third

administrative review. See Carbon Steel Butt-Weld Pipe Fittings from

Taiwan; Preliminary Results of Administrative Review, 59 FR 66001

(December 22, 1994). Thus, the Department initiated a COP investigation

for Kolon and STC for the third administrative review in accordance

with section 773(b) of the Act. However, because the petitioners filed

an untimely allegation of sales below cost for Kolon and STC for the

second review, we did not initiate a sales below cost investigation for

these companies for that period.

We performed a model-specific COP test, in which we examined

whether each home market sale was priced below the merchandise's COP.

We calculated the COP of the merchandise

[[Page 50549]]

using Cheil's, SKC's, Kolon's, and STC's cost of materials and

fabrication, and general expenses, in accordance with 19 CFR 353.51(c).

Respondent's materials and fabrication expenses consisted of materials,

labor, and overhead costs incurred for film manufacturing. General

expenses consisted of general and administrative expenses as well as

net interest expenses. For each model, we compared this sum to the

reported home market unit price, net of price adjustments and movement

expenses.

We relied upon data submitted by the respondents (See August 17,

1995 memo from the Director of the Office of Accounting to the AS/IA

regarding cost methodology) except in the following instances where

costs were not appropriately quantified or valued.

For SKC, we adjusted the cost of manufacturing for A-grade and B-

grade film types to correct for yield differences between grades. We

corrected general and administrative expenses to exclude dividend

income and include the amortization of new stock issuance costs. We

recalculated interest expense using amounts reported in SKC's financial

statements, rather than the amount reported in the combined financial

statements of the Sunkyong Group. Finally, we increased SKC's material

costs for dimethyl terephthalate and terephthallic acid purchased from

a related part to reflect the related party's cost of producing those

materials.

For Cheil, we recalculated general and administrative expenses

based on the total activity of the company reported in Cheil's 1992 or

1993 income statements, rather than on a departmental basis. We

disallowed certain income as an offset to interest expense, since Cheil

could not substantiate that the income was short-term in nature. For

the second review, we increased Cheil's material cost for ethylene

glycol purchased from a related party to reflect the related party's

production costs.

In accordance with section 773(b) of the Act, we also examined

whether the home market sales of each model were made at prices below

its COP 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 POR were made at prices below the COP, 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 POR were priced below the merchandise's

COP, we excluded from the calculation of FMV those home market sales

which were priced below the merchandise's COP, provided that the 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 POR

were priced below the COP, we disregarded all sales of that model from

our analysis. See Preliminary Results and Partial Termination of

Antidumping Duty Administrative Reviews; Tapered Roller Bearings, Four

inches or Less in Outside Diameter, and Certain Components Thereof,

from Japan, 58 FR 69336, 69338 (December 30, 1993).

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 POR in which each model was sold. If a product was sold in

fewer than three months during the POR, 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 POR.

See Notice of Final Determination of Sales at Less Than Fair Value:

Certain Carbon Steel Butt Weld Pipe Fittings from Thailand, 60 FR

10552, 10554 (February 27, 1995).

In addition, the Department also determined that no evidence was

presented to indicate that below-cost COP prices would permit recovery

of all costs within a reasonable period of time in the normal course of

trade. Therefore, in accordance with section 773(b) we disregarded

these below-cost sales from our FMV calculations.

In accordance with section 773(b) of the Act, where home market

sales (as identified in the model match) were excluded from our

analysis because they were priced below the COP, or where the remaining

sales were determined to be inadequate as a basis for determining

foreign market value, 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 materials and fabrication expenses of the

product sold in the United States, home market general expenses, and

home market profit. In accordance with section 773(b)(i) of the Act,

for home market general expenses, we used the larger of the actual

general expenses reported by the respondents or ten percent of the cost

of materials and fabrication expenses, the statutory minimum for

general 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 the cost of materials, fabrication and

general expenses in accordance with section 773(b)(i) of the Act.

For those models which we determined were not sold below the COP

and were of a sufficient quantity to calculate FMV, we calculated FMV

based on delivered prices to unrelated 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, and home market credit expenses in accordance with section

773(a)(1) of the Act. 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 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

Department's 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:

[[Page 50550]]

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

Percent

Manufacturer/exporter Period margin

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

Cheil................................... 06/01/92-05/31/93 0.01

Cheil................................... 06/01/93-05/31/94 0.01

Kolon................................... 06/01/92-05/31/93 0.12

Kolon................................... 06/01/93-05/31/94 0.12

SKC..................................... 06/01/92-05/31/93 12.34

SKC..................................... 06/01/93-05/31/94 16.20

STC..................................... 06/01/92-05/31/93 0.08

STC..................................... 06/01/93-05/31/94 0.94

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

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between United States price and FMV 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.

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 or at a hearing.

Furthermore, the following deposit requirements will be effective

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

from Korea, entered, or withdrawn from warehouse, for consumption on or

after the publication date of the final results of these administrative

reviews, 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 the review of the third

period. If the rates for Cheil and Kolon remain de minimis, (i.e., less

than 0.5 percent) there will be no cash deposits required 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 4.88 percent, the ``all-others'' rate established

in the LTFV investigation (56 FR 16305).

These deposit requirements shall remain in effect until publication

of the final results of the next administrative review.

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: September 21, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-24302 Filed 9-28-95; 8:45 am]

BILLING CODE 3510-DS-M