Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Foam Extruded PVC and Polystyrene Framing Stock From the United Kingdom

[[Page 22021]]

DEPARTMENT OF COMMERCE

International Trade Administration

[A-412-817]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Foam Extruded PVC and

Polystyrene Framing Stock From the United Kingdom

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: May 13, 1996.

FOR FURTHER INFORMATION CONTACT: Ellen Grebasch, Dorothy Tomaszewski,

or Erik Warga, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)

482-3773, (202) 482-0631, or (202) 482-0922, respectively.

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (``the Act'') are references to the provisions

effective January 1, 1995, the effective date of the amendments made to

the Act by the Uruguay Rounds Agreements Act (``URAA'').

Preliminary Determination

As explained in the memoranda from the Assistant Secretary for

Import Administration dated November 22, 1995, and January 11, 1996,

the Department of Commerce (``the Department'') has exercised its

discretion to toll all deadlines for the duration of the partial

shutdowns of the Federal Government from November 15 through November

21, 1995, and December 16, 1995, through January 6, 1996. Thus, the

deadline for the preliminary determination in this investigation has

been extended by 28 days, i.e., one day for each day (or partial day)

the Department was closed. As such, the deadline for this determination

is no later than May 3, 1996.

We preliminarily determine that foam extruded PVC and polystyrene

framing stock (``framing stock'') from the United Kingdom (``U.K.'') is

being, or is likely to be, sold in the United States at less than fair

value (``LTFV''), as provided in section 733 of the Act. The estimated

margins of sales at LTFV are shown in the ``Suspension of Liquidation''

section of this notice.

Case History

Since the initiation of this investigation (Notice of Initiation of

Antidumping Duty Investigation: Foam Extruded PVC and Polystyrene

Framing Stock from the United Kingdom (60 FR 52370, October 6, 1995),

the following events have occurred:

On October 25, 1995, the United States International Trade

Commission (``ITC'') issued an affirmative preliminary injury

determination in this case (see ITC Investigation No. 731-TA-738).

On November 9, 1995, the Department issued an antidumping duty

questionnaire to each of the three U.K. companies (Ecoframe Ltd.,

(``Ecoframe'') Magnolia Group PLC, (``Magnolia'') and Robobond Ltd.,

(``Robobond'')) that produced and sold the subject merchandise during

the period of investigation (``POI''), September 1, 1994, through

August 31, 1995. The questionnaire is divided into four sections.

Section A requests general information concerning a company's corporate

structure and business practices, the merchandise under investigation

that it sells, and the sales of the merchandise in all of its markets.

Sections B and C request home market sales listings and U.S. sales

listings, respectively. Section D requests information on the cost of

production (``COP'') of the foreign like product and constructed value

(``CV'') of the subject merchandise.

On January 11, 1996, Robobond submitted a letter requesting that it

be excused from reporting its home market and U.S. sales made from

inventory, referred to as ``501 stock'' sales, on the grounds that the

transactions were small quantities, represented a small percentage of

overall sales, and would be burdensome to report and verify. See

``Export Price'' and ``Normal Value'' sections of this notice, below.

Ecoframe requested on January 11 and March 3, 1996, that the

Department exclude from its margin analysis ``ecopasta,'' ``special

offer'' and scrap sales in both the United States and home markets, as

well as a ``special circumstance'' sale to one U.S. customer. See

``Export Price'' and ``Normal Value'' sections of this notice, below.

On February 9, 1996, Magnolia requested (1) a quantity adjustment

(see ``Normal Value'' section of this notice, below) and (2) the

exclusion of certain home market sales from reporting requirements. The

Department granted Magnolia's exclusion request by a March 25, 1996,

letter.

Based on timely allegations by petitioner, Marley Mouldings, the

Department began investigations into whether the three respondents had

made sales in the home market at prices that were below COP pursuant to

section 773(b) of the Act (see February 28 and March 4, 1996, memoranda

from team to Gary Taverman).

On February 16, 1996, petitioner made a timely request that,

pursuant to section 733(c)(1)(A) of the Act, the Department postpone

its preliminary determination in this proceeding. Accordingly, we

postponed the preliminary determination until not later than May 3,

1996 (61 FR 7240, February 27, 1996). (As noted above, all deadlines

were tolled 28 days as a result of the two federal government shutdowns

totaling 28 days; therefore, the original deadline of February 15,

1996, had already been extended to March 14, 1996.)

Respondents submitted responses to the various sections of the

questionnaire from December 1995 through April 1996. For respondents'

responses to sections A, B and C, the Department issued supplemental

requests for information from February through April 1996. Responses to

these supplemental requests were received in March and April 1996.

Robobond and Ecoframe also filed supplements to their section D

responses on April 17 and May 1, 1996, respectively.

Petitioner filed comments on Robobond's response to section D on

April 29, 1996. Robobond argued in April 30 and May 2, 1996, letters

that petitioner's comments were too late to be considered for the

preliminary determination.

Postponement of Final Determination

On April 25, 1996, Robobond requested that, pursuant to section

735(a)(2)(A) of the Act, in the event of an affirmative preliminary

determination in this investigation, the Department postpone its final

determination until not later than 135 days after the publication of

the affirmative preliminary determination in the Federal Register. In

accordance with 19 CFR 353.20(b), inasmuch as our preliminary

determination is affirmative, Robobond accounts for a significant

proportion of exports of the subject merchandise, and we are not aware

of the existence of any compelling reasons for denying the request, we

are granting Robobond's request and postponing the final determination.

Consistent with the General Agreement on Tariffs and Trade

(``GATT''), section 773(d) of the Act permits the Department to extend

suspension of liquidation from four to six months at the request of

exporters representing a significant proportion of exports of the

subject merchandise. The structure of the statute integrally links a

[[Page 22022]]

request to extend the final determination and extension of suspension

of liquidation. This linkage balances the goals of providing an

expeditious remedy to the domestic industry against the desire to avoid

undue harm to the exporters who have requested extension of the final

determination. Accordingly, we consider a request by an exporter to

extend the final determination as containing an implied request to

extend suspension of liquidation. We are, therefore, extending

suspension of liquidation in this case.

Scope of Investigation

This investigation covers all extruded PVC and polystyrene framing

stock regardless of color, finish, width or length. Finished frames

assembled from foam extruded PVC and polystyrene framing stock are

excluded. The merchandise under investigation is currently classifiable

under subheadings 3924.90.20.00; 3926.90.90.90; 3926.90.95.90; and

3926.90.98.90 of the Harmonized Tariff Schedules of the United States

(``HTS''). Although the HTS subheadings are provided for convenience

and customs purposes, our written description of the scope of these

investigations is dispositive.

Period of Investigation

The POI is September 1, 1994, through August 31, 1995.

Fair Value Comparisons

To determine whether sales of the subject merchandise by

respondents to the United States were made at less than fair value, we

compared the export price (``EP'') to the Normal Value (``NV''), as

described in the ``Export Price'' and ``Normal Value'' sections of this

notice. In accordance with section 777A(d)(1)(A)(i), we compared POI-

wide weighted-average EPs to weighted-average NVs. In determining

averaging groups for comparison purposes, we considered the

appropriateness of such factors as physical characteristics and level

of trade.

A. Physical Characteristics

In accordance with section 771(16) of the Act, we considered all

products covered by the description in the Scope of Investigation

section, above, produced in the United Kingdom and sold in the home

market during the POI, to be foreign like products for purposes of

determining appropriate product comparisons to U.S. sales. Where there

were no sales of identical merchandise in the home market to compare to

U.S. sales, we compared U.S. sales to the next most similar foreign

like product on the basis of the characteristics listed in the

Department's antidumping questionnaire. In making the product

comparisons, we relied on the following criteria (in order of

preference): material; weight per linear foot; profile type; width;

finish type (pasta/compo, foil, mylar, laminated/wrapped, embossed

plain substrate, embossed substrate with foil, embossed substrate with

mylar, wet system (e.g., paint), or other); and total number of

finishes.

B. Level of Trade

In accordance with section 773(a)(7)(A) of the Act and the

Statement of Administrative Action accompanying the Uruguay Round

Agreements Act (``SAA''), H.R. Doc. No. 316, 103d Cong., 2d Sess. 829-

831 (1994), to the extent practicable, the Department will calculate NV

based on sales at the same level of trade as the U.S. sale. When the

Department is unable to find sale(s) in the comparison market at the

same level of trade as the U.S. sales(s), the Department may compare

sales in the U.S. and foreign markets at one or more different levels

of trade.

Of the three respondents in this proceeding, only Robobond reported

that different levels of trade existed, claiming that its sales from

inventory are at a different level than its non-inventory sales.

We preliminarily find that different levels of trade do not exist

for Robobond. In its level-of-trade claim, Robobond stated that sales

from inventory constituted a separate level from non-inventory sales.

We are not satisfied that this difference rises to the level of a

different level of trade. See May 3, 1996, memorandum, on file in Room

B-099 of the Main Commerce Building. However, we will examine this

issue further at verification and consider arguments that parties may

make during the briefing process.

What Robobond has characterized as a level-of-trade difference

appears to stem from a concern that comparisons be made using

comparable quantities. However, Robobond has not explained how

comparable quantities might be defined or whether price comparability

is affected by comparing different quantities. The Department must, in

considering the question of level of trade categorization, ensure there

are different selling functions at the alleged different levels, and

distinguish differences in level of trade from other differences among

sales, such as quantity differences. See SAA at 830. While differences

in quantity may be an appropriate factor to consider in making fair

value comparisons, such differences do not constitute level-of-trade

differences.

Accordingly, we preliminarily find that no level of trade

differences exist and that level of trade does not need to be

considered in price averaging.

Export Price

We calculated EP, in accordance with subsections 772(a) and (c) of

the Act, for each of the respondents, where the subject merchandise was

sold directly to the first unaffiliated purchaser in the United States

prior to importation and use of constructed export price was not

otherwise warranted based on the facts of record.

We made company-specific adjustments as follows:

Ecoframe

We calculated EP based on packed, ex-works, FOB port, and delivered

prices to unaffiliated customers in the United States. Where

appropriate, we made deductions from the starting price (gross unit

price) for the following charges: international freight (including

plant-to-port-of-exit freight; brokerage and handling; and ocean

freight).

For sales of a particular model to one U.S. customer, Ecoframe

requested exclusion because certain designing and tooling costs had

been paid separately by the customer. Rather than exclude these sales,

we increased export price to account for the revenue. The Department

may consider such revenue to be a component of the price charged to the

customer. See Final Results of Antidumping Duty Administrative Review:

Certain Forged Steel Crankshafts from the United Kingdom (56 FR 5975,

February 14, 1991). We will fully examine the nature of this revenue

during verification of Ecoframe's questionnaire response.

We excluded Ecoframe's scrap sales to U.S. customers. These were

sales that were discounted when it was discovered after sale that the

merchandise sold as prime merchandise was actually substandard. The

sales involved relatively insignificant quantities. We did not exclude

``ecopasta'' or ``special offer'' sales because Ecoframe did not

adequately explain why such sales should be excluded nor does the

record indicate that the sales were extraordinary.

Finally, we recalculated credit expenses because the reported

figure did not comport with the narrative description.

Magnolia

We calculated EP based on packed, delivered prices to unaffiliated

customers in the United States. Where

[[Page 22023]]

appropriate, we made deductions from the starting price (gross unit

price) for the following charges: international freight (including

plant-to-port-of-exit freight; U.K. inland insurance; brokerage and

handling; ocean freight; marine insurance; U.S. inland port-to-

warehouse freight; U.S. inland warehouse-to-customer freight; U.S.

inland insurance; and other U.S. transportation charges) and U.S. duty.

Robobond

We calculated EP based on packed, delivered/duty unpaid and ex-

works prices to unaffiliated customers in the United States. Where

appropriate, we made deductions from the starting price (gross unit

price) for the following charges: international freight (including UK

inland freight, UK brokerage & handling, ocean freight, U.S. brokerage

and handling, and U.S. inland freight). We added to the starting price

an amount for reported freight revenue, where appropriate. We

recalculated reported credit expenses using the average U.S.-dollar

prime interest rate because the interest rate used for the reported

figures was not based on information from the POI but rather on

information provided by a bank for purposes of the questionnaire

response.

We did not exclude ``501 stock'' sales because the record does not

indicate that these sales were materially different from Robobond's

other U.S. sales. Although Robobond characterized these sales as being

a separate level of trade based on seller function, such a difference,

if found to exist, is properly considered in the context of making fair

value comparisons rather than by exclusions. As discussed above,

Robobond has not established that these sales are at a different level

of trade.

Normal Value

Cost of Production Analysis

As noted in the ``Case History'' section above, based on the

petitioners' allegations, the Department found reasonable grounds to

believe or suspect that each respondent made sales in the home market

at prices below the cost of producing the merchandise. As a result, the

Department initiated investigations to determine whether the

respondents made home market sales during the POI at prices below their

respective COPs within the meaning of section 773(b) of the Act.

Before making any fair value comparisons, we conducted the COP

analysis described below.

A. Calculation of COP

We calculated the COP based on the sum of each respondent's cost of

materials and fabrication for the foreign like product, plus amounts

for home market general, and administrative expenses (``G&A'') and

packing costs in accordance with section 773(b)(3) of the Act. We

relied on the respondents' submitted COP amounts except in the

following specific instances wherein the reported costs were improperly

valued:

Ecoframe: different costs had been reported for identical

products and were weight averaged to derive a single, product-

specific cost; and the reported amount for variable overhead was

recalculated to exclude packing expenses.

Magnolia: indirect selling expenses were recalculated to adjust

for improper allocation.

Robobond: reported G&A expenses were adjusted to reflect

expenses for all affiliated companies; and reported depreciation

expenses were revised to reflect Robobond's historical treatment of

depreciation rather than an accounting practice adopted after the

filing of the petition.

B. Test of Home Market Prices

We used the respondents' adjusted weighted-average COP for the POI.

We compared the weighted-average COP figures to home market sales of

the foreign-like product as required under section 773(b) of the Act,

in order to determine whether these sales had been made at below-cost

prices within an extended period of time in substantial quantities, and

were not at prices which permit recovery of all costs within a

reasonable period of time. On a product-specific basis, we compared the

COP to the home market prices, less any applicable movement charges and

direct and indirect selling expenses.

C. Results of COP Test

Pursuant to section 773(b)(2)(C) where less than 20 percent of a

respondent's sales of a given product were at prices less than the COP,

we did not disregard any below-cost sales of that product because we

determined that the below-cost sales were not made in ``substantial

quantities.'' Where 20 percent or more of a respondent's sales of a

given product during the POI were at prices less than the COP, we

disregarded the below-cost sales because such sales were found to be

made in substantial quantities within an extended period of time (in

accordance with section 773(b)(2)(B) of the Act) and at prices which

would not permit recovery of all costs within a reasonable period of

time (in accordance with section 773(b)(2)(D) of the Act).

Where there were no above-cost sales available for matching

purposes, export prices that would have been compared to home market

prices for these models were instead compared to CV.

D. Calculation of CV

In accordance with section 773(e)(1) of the Act, we calculated CV

based on the sum of a respondent's cost of materials, fabrication,

selling, general, and administrative expenses (``SG&A'') and U.S.

packing costs as reported in the U.S. sales databases. In accordance

with section 773(e)(2)(A) of the Act, we based SG&A and profit on the

amounts incurred and realized by the respondent in connection with the

production and sale of the foreign like product in the ordinary course

of trade, for consumption in the foreign country. Where appropriate, we

calculated each respondent's CV based on the methodology described in

the calculation of COP above. For selling expenses, we used the

weighted-average home market selling expenses. For Robobond, we

calculated interest based on actual interest expenses incurred rather

than the reported figure, which improperly included an adjustment for

imputed interest.

Adjustments to Prices

We made company-specific adjustments to prices used as NV, as

follows:

Ecoframe

We calculated NV based on packed, delivered prices to unaffiliated

customers. We made deductions from the starting price for inland

freight. In addition, where appropriate, we adjusted for differences in

circumstances of sale for imputed credit expenses, credit insurance

expenses, and commissions (including appropriate offsets). We adjusted

reported gross unit prices to reflect the actual unit price of the

quantity delivered.

We excluded Ecoframe's scrap sales to home market customers. Some

were sales that were discounted when it was discovered after sale that

the merchandise sold as prime merchandise was actually substandard;

others were off-prime production sold as scrap. All types of excluded

sales involved relatively insignificant quantities. We did not exclude

``ecopasta'' or ``special offer'' sales because Ecoframe did not

adequately explain why such sales should be excluded nor does the

record indicate that the sales were extraordinary.

Magnolia

We calculated NV based on packed, delivered prices to unaffiliated

customers. We made deductions from the starting price for inland

freight and early payment discounts. In addition, we adjusted for

differences in circumstances of sale for imputed credit

[[Page 22024]]

expenses (which we recalculated using the proper base price). Magnolia

also reported an amount upon which to base an adjustment for

differences in quantities sold between the U.S. and U.K. markets,

pursuant to 19 CFR 353.55(a). Although Magnolia claimed that it

incurred differing manufacturing costs depending on quantity, it did

not demonstrate, nor did data on the record show, that pricing

differences were related to quantity. Accordingly, we have not made the

requested adjustment.

Robobond

We calculated NV based on packed, ex-works or delivered prices to

unaffiliated customers. We made deductions from the starting price for

inland freight, where appropriate. We added to the starting price an

amount for reported freight revenue, where appropriate. In addition, we

adjusted for differences in circumstances of sale for imputed credit

expenses, post-sale clearing of accounts receivable (U.S. and home

market), bank charges (U.S. and home market), post-sale

``overcharging'' credits, post-sale ``shortage'' credits, and customer-

specific freight charges not allocable to specific sales. We

reclassified as indirect selling expenses reported direct selling

expenses for bad debt and for net expense freight on return

merchandise. Neither expense was attributable to specific customers. We

recalculated reported credit expenses using the average U.K.-pound-

sterling lending rate because the interest rate used for the reported

figures was not based on information from the POI but rather on

information provided by a bank for purposes of the questionnaire

response.

For each respondent, we made adjustments, where appropriate, for

physical differences in the merchandise in accordance with section

773(a)(6)(C)(ii) of the Act. Where the difference in merchandise

adjustment for every comparison product exceeded 20 percent, we based

NV on CV. In addition, in accordance with section 773(a)(6)(B), we

deducted home market packing costs and added U.S. packing costs for all

respondents.

We did not exclude ``501 stock'' sales from the home market sales

listing for the reasons described in the ``Export Price'' section of

this notice, above.

Price to CV Comparisons

Where we compared CV to export prices, we deducted from CV the

weighted-average home market direct selling expenses and added the

weighted-average U.S. product-specific direct selling expenses (where

appropriate) in accordance with section 773(a)(8) of the Act.

Currency Conversion

We made currency conversions into U.S. dollars based on the

official exchange rates in effect on the dates of the U.S. sales as

certified by the Federal Reserve Bank. Section 773A(a) of the Act

directs the Department to use a daily exchange rate in order to convert

foreign currencies into U.S. dollars. Further, section 773A(b) directs

the Department to allow a 60-day adjustment period when a currency has

undergone a sustained movement. A sustained movement has occurred when

the weekly average of actual daily rates exceeds the weekly average of

benchmark rates by more than five percent for eight consecutive weeks.

The benchmark is defined as the moving average of rates for the past 40

business days. (For an explanation of this method, see Policy Bulletin

96-1: Currency Conversions (61 FR 9434, March 8, 1996)). Such an

adjustment period is required only when a foreign currency is

appreciating against the U.S. dollar. The use of an adjustment period

was not warranted in this case because the U.K. pound did not undergo a

sustained movement, nor were there currency fluctuations during the

POI.

Verification

As provided in section 782(i) of the Act, we will verify all

information determined to be acceptable for use in making our final

determination.

Suspension of Liquidation

In accordance with section 733(d) of the Act, we are directing the

Customs Service to suspend liquidation of all imports of subject

merchandise that are entered, or withdrawn from warehouse, for

consumption on or after the date of publication of this notice in the

Federal Register. We will instruct the Customs Service to require a

cash deposit or the posting of a bond equal to the weighted-average

amount by which the NV exceeds the export price, as indicated in the

chart below. These suspension of liquidation instructions will remain

in effect until further notice.

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

Weighted-

average

Exporter/manufacturer margin

percentage

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

Ecoframe................................................... 27.26

Robobond/Simons............................................ 2.60

Magnolia................................................... 81.24

All Others................................................. 4.29

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

Pursuant to section 733(d)(1)(A) and section 735(c)(5) of the Act,

the Department has not included zero and de minimis weighted-average

dumping margins and margins determined entirely under section 776 of

the Act, from the calculation of the ``all others'' deposit rate.

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.

Public Comment

Case briefs or other written comments in at least ten copies must

be submitted to the Assistant Secretary for Import Administration no

later than August 1, 1996, and rebuttal briefs, no later than August 8,

1996. A list of authorities used and an executive summary of issues

should accompany any briefs submitted to the Department. Such summary

should be limited to five pages total, including footnotes. In

accordance with section 774 of the Act, we will hold a public hearing,

if requested, to afford interested parties an opportunity to comment on

arguments raised in case or rebuttal briefs. Tentatively, the hearing

will be held on August 15, 1996, the time and place to be determined,

at the U.S. Department of Commerce, 14th Street and Constitution

Avenue, N.W., Washington, D.C. 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, Room

B-099, within ten 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. If this investigation proceeds normally, we will make our final

determination by 135 days after the publication of this notice in the

Federal Register.

This determination is published pursuant to section 733(f) of the

Act.

[[Page 22025]]

Dated: May 3, 1996.

Paul L. Joffe,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-11822 Filed 5-10-96; 8:45 am]

BILLING CODE 3510-DS-P