Polyethylene Terephthalate Film from Korea: Preliminary Results of Antidumping Duty Administrative Review, Intent to Revoke the Order in Part, and Termination in Part

DEPARTMENT OF COMMERCE

[A-580-807]

Polyethylene Terephthalate Film from Korea: Preliminary Results

of Antidumping Duty Administrative Review, Intent to Revoke the Order

in Part, and Termination in Part

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review, Intent to Revoke the Order in Part, and

Termination in Part.

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SUMMARY: In response to a request from two respondents and three U.S.

producers, 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 three manufacturers/exporters of the subject

merchandise to the United States and the period June 1, 1994 through

May 31, 1995. The review indicates the existence of sales below normal

value for certain manufacturers/exporters during the period of review.

We preliminarily determine the dumping margin for Kolon Industries

(Kolon) to be [zero or de minimis] percent during the period June 1,

1994 through May 31, 1995. Based on three years of sales at not less

than normal value (NV), we intend to revoke the order with respect to

Kolon if the preliminary results of this review are affirmed in our

final results.

If these preliminary results are adopted in our final results of

review, we will instruct the U.S. Customs Service to assess antidumping

duties equal to the difference between the United States Price and NV.

On June 26, 1996, in accordance with 19 CFR 353.25, we issued a

revocation of the order with respect to Cheil Synthetics Inc. (Cheil).

Accordingly, we are terminating this review of Cheil.

Interested parties are invited 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

[[Page 36033]]

and (2) a brief summary of the argument (no longer than five pages,

including footnotes).

EFFECTIVE DATE: July 9, 1996.

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-

4475/0649.

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).

In addition, unless otherwise indicated, all citations to the

Department's regulations are to the current regulations, as amended by

the interim regulations published in the Federal Register on May 11,

1995 (60 FR 25130).

SUPPLEMENTARY INFORMATION:

Background

The Department published an antidumping duty order on PET film from

the Republic of Korea on June 5, 1991 (56 FR 25660). The Department

published a notice of ``Opportunity To Request Administrative Review''

of the antidumping duty order for the 1994/1995 review period on June

6, 1995 (60 FR 29821). On June 26, 1995, Cheil requested that the

Department conduct an administrative review of the antidumping duty

order on PET film from the Republic of Korea. On June 29, 1995, the

petitioners, E.I. DuPont Nemours & Co., Inc., Hoescht Celanese

Corporation, and ICI Americas, Inc. requested reviews of Cheil, Kolon,

SKC Limited (SKC), and STC corporation (STC). SKC and Kolon filed

requests for review on June 29, 1995 and June 30, 1995, respectively.

We initiated the review on July 14, 1995 (60 FR 36260).

The Department extended the time limits for completion of the

preliminary and final results of review. See Antidumping Duty

Administrative Reviews: Time Limits, 61 FR 8911 (March 6, 1996).

On June xx, 1996, the Department revoked the order in part with

respect to Cheil. Accordingly, we are terminating this review with

respect to Cheil.

Intent to Revoke

In its submission of June 30, 1995, Kolon requested, pursuant to 19

CFR 353.25(b), revocation of the order with respect to its sales of PET

film. Kolon certified in its June 30, 1995 submission that (1) it sold

the subject merchandise at not less than NV during the relevant review

period, and (2) that in the future it will not see the subject

merchandise at less than NV. Kolon indicated in its June 30, 1995

submission that it did not believe that the agreement required under 19

CFR 353.25(a)(2)(iii) was applicable to its request because there had

not been any finding that its sales were sold at less than NV.

On February 12, 1996, the Department issued an amended final

results of the first review of the antidumping duty order on PET film

from Korea (61 FR 5375). In this amended final, we determined that

Kolon made sales at less than NV during the relevant period. Therefore,

we permitted Kolon to perfect its timely request for revocation. On

June 25, 1996, Kolon amended its request to include, in accordance with

19 CFR 353.25(a)(2)(iii), an agreement to immediate reinstatement in

the order if any producer or reseller is subject to the order and the

Department concludes that Kolon sold below NV under section 353.22(f)

subsequent to revocation. Based on the final results of the two

preceding reviews and the preliminary results of this review, Kolon has

demonstrated three consecutive years of sales at not less than NV.

If the final results of this review demonstrate that Kolon sold the

merchandise at not less than NV, and if the Department determines that

it is not likely that Kolon will sell the subject merchandise at less

than NV in the future, we intend to revoke the order with respect to

merchandise produced and exported by Kolon.

Scope of the Review

Imports covered by this 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 review covers the period June 1, 1994 through May 31, 1995. The

Department is conducting this review in accordance with section 751 of

the Act, as amended.

Verification

As provided in section 782(i) of the Act, we verified information

provided by Kolon using standard verification procedures, including

onsite 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 version of the Kolon verification report.

United States Price (USP)

In calculating USP, the Department treated respondents' sales as

export price (EP) sales, as defined in section 772(a) of the Act, when

the merchandise was sold to unaffiliated U.S. purchasers prior to the

date of importation. The Department treated respondents' sales as

constructed export price (CEP) sales, as defined in section 772(b) of

the Act, when the merchandise was sold to unrelated U.S. purchasers

after importation.

EP was based on the ex-factory, f.o.b. Korean port, f.o.b.

customer's specific delivery point, c.i.f. U.S. port, or delivered,

packed prices to unrelated purchasers in the United States. We made

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

terminal handling charges, truck loading charges, containerization

charges, Korean and U.S. inland freight, ocean freight, wharfage

expenses, U.S. duties, and rebated in accordance with section 772(c) of

the Act.

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

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

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

U.S. brokerage charges, terminal handling charges, containerization

charges, Korean and U.S. inland freight, ocean freight, rebates,

wharfage expenses, and U.S. duties, in accordance with section 772(c)

of the Act. In accordance with section 772(d)(1) of the Act, we made

deductions for selling expenses associated with economic activities in

the United States, including warranties, credit, commissions, postage

expenses, bank charges and indirect selling expenses. Pursuant to

section 772(d)(3) of the Act, the price was further reduced by an

amount for profit to arrive at the CEP.

[[Page 36034]]

For SKC, we made an offset to interest expense for interest

revenue, and for post-sale cost and quantity adjustments that were not

reflected in the gross price. With respect to subject merchandise to

which value was added in the United States by SKC prior to sale to

unrelated customers, we deducted any increased value in accordance with

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

Normal Value

In order to determine whether there were sufficient sales of PET

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

NV, we compared the volume of home market sales of PET film to the

volume of PET film sold in the United States, in accordance with

section 773(a)(1)(B) of the Act. Each respondent's aggregate volume of

HM sales of the foreign like product was greater than five percent of

its respective aggregate volume of U.S. sales of the subject

merchandise. Therefore, we have based NV on HM sales.

Based on the fact that the Department had disregarded sales in the

first administrative review because they were made below the cost of

production (COP), the Department initiated a sales-below-cost of

production (COP) investigation for each of the respondents in

accordance with section 773(b) of the Act. (The first administrative

review was the most recently completed review at the time that we

issued our antidumping questionnaire.)

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

each HM sale was priced below the merchandise's COP. We calculated the

COP of the merchandise using Kolon's, SKC's, and STC's cost of

materials and fabrication for the foreign like product, plus amounts

for home market general expenses and packing costs in accordance with

section 773(b)(3) of the Act.

In accordance with section 773(b)(1) of the Act, in determining

whether to disregard home market sales made at prices below COP, we

examined whether such sales were made within an extended period of time

in substantial quantities, and whether such sales were made at prices

which would permit recovery of all costs within a reasonable period of

time.

Pursuant to section 773(b)(2)(C) of the Act, where less than 20

percent of a respondent's sales of a given model were at prices less

than COP, we did not disregard any below-cost sales of that model

because these below-cost sales were not made in substantial quantities.

We found that, for certain models of PET film, 20 percent or more of

the home market sales were sold at below-cost prices. Where 20 percent

or more of a respondent's home market sales of a given model were at

prices less than the COP, we disregarded the below-cost sales because

such sales were found to be made (1) in substantial quantities within

the POR (i.e., within an extended period of time) and (2) 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 (i.e., the

sales were made at prices below the weighted-average per unit COP for

the POR). We used the remaining above-cost sales as the basis of

determining NV if such sales existed, in accordance with section

773(b)(1). For those models of the subject merchandise for which there

were no above-cost sales available for matching purposes, we compared

U.S. price to constructed value (CV).

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

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

and general expenses. In accordance with section 773(e)(2)(A) of the

Act, we based selling, general, and administrative (SG&A) expenses and

profit on the amounts incurred and realized by the respondents in

connection with the production and sale of the foreign like product in

the ordinary course of trade for consumption in the foreign country.

For selling expenses we used the weighted-average HM selling expenses.

Pursuant to section 773(e)(3) of the Act, we included U.S. packing.

In accordance with section 773(a)(6), we adjusted NV, where

appropriate, by deducting home market packing expenses and adding U.S.

Packing expenses. We also adjusted NV to reflect deductions for HM

inland freight, loading charges, and credit expenses. For comparisons

to EP, we made an addition to NV for differences in warranty and credit

expenses as circumstance-of-sale adjustments pursuant to section

773(a)(6)(C) of the Act.

Level of Trade and CEP Offset

As set forth in section 773(a)(1)(B)(i) of the Act and in the

Statement of Administrative Action (SAA) accompanying the URAA,

reprinted in H.R. Doc. No. 316, 103d Cong., 2d Session 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. sale(s), the Department may compare sales in the U.S.

and foreign markets at a different level of trade.

In accordance with section 773(a)(7)(A) of the Act, if we compare a

U.S. sale at one level of trade to NV sales at a different level of

trade, the Department will adjust the NV to account for differences in

level of trade if two conditions are met. First there must be

differences between the actual selling functions performed by the

seller at the level of trade of the U.S. sale and at the level of trade

of the comparison market sale used to determine NV. Second, the

differences must affect price comparability as evidenced by a pattern

of consistent price differences between sales at the different levels

of trade in the market in which NV is determined. When CEP is

applicable, section 773(a)(7)(B) of the Act establishes the procedures

for making a CEP ``offset'' when two conditions exist: (1) NV is

established at a level of trade which constitutes a more advanced stage

of distribution than the level of trade of the CEP; and (2) the data

available do not provide an appropriate basis for a level-of-trade

adjustment.

In order to implement these principles, each of the respondents

provided information with respect to its selling activities associated

with each channel of distribution. All of the respondents identified

two channels of distribution in the home market: (1) wholesalers/

distributors and (2) end-users. For both channels, all of the

respondents perform similar selling functions such as market research

and after sales warranty services. Because channels of distribution do

not qualify as separate levels of trade when the selling functions

performed for each customer class are sufficiently similar, we

determined that there exists one level of trade for each of the

respondents' home market sales.

Each of the respondents made CEP and EP sales to the United States

market and claimed either a level of trade adjustment for its CEP

sales, or a CEP offset. The level of trade of the U.S. sale is

determined by the adjusted price of the CEP sale. Based on each of the

respondents' questionnaire responses to our requests for supplemental

information, we determined a difference between the actual selling

functions performed by respondents at the level of trade of the CEP

sale and the level of trade of the HM sale. The adjusted CEP sales do

not reflect the selling functions performed for end-users or

distributors in the Korean market.

Kolon provides inventory maintenance, after-sales and warranty

services, and advertising on behalf of its customer for HM sales. Kolon

does not provide these services on its CEP sales. SKC provides market

research,

[[Page 36035]]

engineering services, inventory maintenance, and delivery services on

its HM sales. SKC does not provide these services on its CEP sales. STC

provides inventory maintenance, after sales-services and warranty

assistance, entertainment of customers, and marketing research on its

HM sales. STC does not provide these services on its CEP sales.

Therefore, the selling functions performed by each of the respondents

for CEP sales are sufficiently different than for HM sales so as to

establish different levels of trade.

Because we compared these CEP sales to HM sales at a different

level of trade, we examined whether a level-of-trade adjustment may be

appropriate. In this case each of the respondents only sold at one

level of trade in the home market; therefore, there is no basis upon

which any of the respondents has demonstrated a consistent pattern of

price differences between levels of trade. Further, we do not have the

information which would allow us to examine pricing patterns of

respondents' sales of other similar products, and there is no other

respondent's or other information on the record to analyze whether the

adjustment is appropriate.

Because the data available do not provide an appropriate basis for

making a level-of-trade adjustment but the level of trade in Korea for

each respondent is at a more advanced stage than the level of trade of

the CEP sales, a CEP offset is appropriate in accordance with section

773(a)(7)(B) of the Act. Each respondent claimed a CEP offset, which we

applied to NV. We based the CEP offset amount on the amount of home

market indirect selling expenses, and limited the deduction for HM

indirect selling expenses to the amount of indirect selling expenses

incurred on sales in the United States, in accordance with section

772(d)(1)(D) of the Act. The level-of-trade methodology used in this

review is based on the facts particular to this review. The Department

will continue to examine its policy for making level-of-trade

comparisons and adjustments for the final results of this review.

Fair Value Comparisons

To determine whether sales of PET film in the United States were

made at less than fair value, we compared USP to the NV, as described

in the ``United States Price'' and ``Normal Value'' sections of this

notice. In accordance with section 777(A) of the Act, we calculated

monthly weighted-average prices for NV and compared these to individual

U.S. transactions.

Preliminary Results of Review

We preliminarily determine that the following margins exist for the

period June 1, 1994 through May 31, 1995:

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

Manufacturer/exporter Margin

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

Kolon........................................................ 0.14

SKC.......................................................... 1.91

STC.......................................................... 4.98

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

Parties to this proceeding may request disclosure within five days

of publication of this notice and any interested party may request a

hearing within 10 days of publication. Any hearing, if requested, will

be held 44 days after the date of publication, or the first working day

thereafter. Interested parties may submit case briefs and/or written

comments no later than 30 days after the date of publication. Rebuttal

briefs and rebuttals to written comments, limited to issues raised in

such briefs or comments, may be filed no later than 37 days after the

date of publication. The Department will publish the final results of

this administrative review, which will include the results of its

analysis of issues raised in any such written comments or at a hearing.

The Department shall determine, and Customs shall assess,

antidumping duties on all appropriate entries. Individual differences

between USP and NV may vary from the percentages stated above. The

Department will issue appraisement instructions directly to Customs.

The final results of this review shall be the basis for the assessment

of antidumping duties on entries of merchandise covered by the

determination and for future deposits of estimated duties.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of these administrative reviews

for all shipments of PET film from the Republic of 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 reviewed

firms will be the rate established in the final results of

administrative review; (2) for merchandise exported by manufacturers or

exporters not covered in these reviews but covered in the original

less-than-fair value (LTFV) investigation or a previous review, the

cash deposit will continue to be the most recent rate published in the

final determination or final results for which the manufacturer or

exporter received a company-specific rate; (3) if the exporter is not a

firm covered in these reviews, or the original investigation, but the

manufacturer is, the cash deposit rate will be that established for the

manufacturer of the merchandise in the final results of these reviews,

or the LTFV investigation; and (4) if neither the exporter nor the

manufacturer is a firm covered in these or any previous reviews, the

cash deposit rate will be 4.82%, the ``all others'' rate established in

the LTFV investigation.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 353.26(b) to file a certificate

regarding the reimbursement of antidumping duties prior to liquidation

of the relevant entries during these review periods. 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 Act (19 U.S.C. 1675(a)(1).

Dated: July 1, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-17464 Filed 7-8-96; 8:45 am]

BILLING CODE 3510-DS-M