Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From Korea: Preliminary Results of Antidumping Duty Administrative Reviews

DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-815 & A-580-816]

Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat

Products From Korea: Preliminary Results of Antidumping Duty

Administrative Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative reviews.

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

SUMMARY: In response to requests from three respondents and from the

petitioners in the original investigation, the Department of Commerce

(``the Department'') is conducting administrative reviews of the

antidumping duty orders on certain cold-rolled and corrosion-resistant

carbon steel flat products from Korea. These reviews cover three

manufacturers and exporters of the subject merchandise. The period of

review (``POR'') is August 1, 1995, through July 31, 1996.

We preliminarily determine that sales have been made below normal

value (``NV''). If these preliminary results are adopted in our final

results of administrative reviews, we will instruct U.S. Customs to

assess antidumping duties based on the difference between

[[Page 47423]]

export price (``EP'') or constructed export price (``CEP'') and NV.

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; and (2) a

brief summary of the argument.

EFFECTIVE DATE: September 9, 1997.

FOR FURTHER INFORMATION CONTACT: Fred Baker (Dongbu), Steve Bezirganian

(POSCO), Thomas Killiam or Alain Letort (Union), or John Kugelman,

Enforcement Group III--Office 8, Import Administration, International

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

Constitution Avenue, NW., Room 7866, Washington, DC 20230; telephone

(202) 482-2924 (Baker), -1395 (Bezirganian), -2704 (Killiam), -4243

(Letort), or -0649 (Kugelman).

SUPPLEMENTARY INFORMATION:

Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (``the Act'') by

the Uruguay Round Agreements Act (``URAA''). In addition, unless

otherwise indicated, all citations to the Department's regulations are

references to the provisions codified at 19 CFR part 353 (April 1997).

Although the Department's new regulations, codified at 19 CFR part 351

(62 FR 27296--May 19, 1997), do not govern these proceedings, citations

to those regulations are provided, where appropriate, to explain

current departmental practice.

Background

The Department published antidumping duty orders on certain cold-

rolled and corrosion-resistant carbon steel flat products from Korea on

August 19, 1993 (58 FR 44159). The Department published a notice of

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

duty orders for the 1995/96 review period on August 12, 1996 (61 FR

41768). On August 31, 1996, respondents Dongbu Steel Co., Ltd.

(``Dongbu''), Union Steel Manufacturing Co., Ltd. (``Union''), and

Pohang Iron and Steel Co., Ltd. (``POSCO''), requested that the

Department conduct administrative reviews of the antidumping duty

orders on cold-rolled and corrosion-resistant carbon steel flat

products from Korea. On the same day, the petitioners in the original

less-than-fair-value (``LTFV'') investigations (AK Steel Corporation;

Bethlehem Steel Corporation; Inland Steel Industries, Inc.; LTV Steel

Co., Inc.; National Steel Corporation; and U.S. Steel Group, a unit of

USX Corporation) filed a similar request. We initiated these reviews on

September 13, 1996 (61 FR 48882--September 17, 1996).

On October 7, 1996, the petitioners requested, pursuant to section

751(a)(4) of the Act, that the Department determine whether antidumping

duties had been absorbed by the respondents during the POR. Section

751(a)(4) provides for the Department, if requested, to determine,

during an administrative review initiated two years or four years after

publication of the order, whether antidumping duties have been absorbed

by a foreign producer or exporter subject to the order if the subject

merchandise is sold in the United States through an importer who is

affiliated with such foreign producer or exporter. Section 751(a)(4)

was added to the Act by the URAA.

The regulations governing these reviews do not address this

provision of the Act. However, for transition orders as defined in

section 751(c)(6)(C) of the Act, i.e., orders in effect as of January

1, 1995, section 351.213(j)(2) of the Department's new antidumping

regulations provides that the Department will make a duty-absorption

determination, if requested, in any administrative review initiated in

1996 or 1998. See 19 CFR 351.213(j)(2), 62 FR at 27394. As noted above,

while the new regulations do not govern the instant reviews, they

nevertheless serve as a statement of departmental policy. Because the

orders on certain cold-rolled and corrosion-resistant carbon steel flat

products from Korea have been in effect since 1993, they are transition

orders in accordance with section 751(c)(6)(C) of the Act. Since these

reviews were initiated in 1996 and a request for a duty-absorption

inquiry was made, the Department will undertake a duty-absorption

inquiry as part of these administrative reviews.

The Act provides for a determination on duty absorption if the

subject merchandise is sold in the United States through an affiliated

importer. In these cases, all reviewed firms sold through importers

that are ``affiliated'' within the meaning of section 751(a)(4) of the

Act. Furthermore, we have preliminarily determined that there are

dumping margins for the following firms with respect to the percentages

of their U.S. sales, by quantity, indicated below:

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

Percentage of U.S.

Class or kind of affiliate's sales

Name of firm merchandise with dumping

margins

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

Dongbu......................... Cold-Rolled....... 0.00%.

Corrosion- 5.98%

Resistant.

POSCO.......................... Cold-Rolled....... 10.07%

Corrosion- 10.63%.

Resistant.

Union.......................... Cold-Rolled....... No U.S. sales in

POR.

Corrosion- 7.88%.

Resistant.

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

We presume that the duties will be absorbed for those sales which

were dumped. This presumption can be rebutted with evidence that the

unaffiliated purchasers in the United States will pay the ultimately

assessed duty. However, there is no such evidence on the record. Under

these circumstances, we preliminarily find that antidumping duties have

been absorbed by the above-listed firms on the percentages of U.S.

sales indicated. If interested parties wish to submit evidence that the

unaffiliated purchasers in the United States will pay the ultimately

assessed duty, they must do so no later than 15 days after publication

of these preliminary results.

Under the Act, the Department may extend the deadline for

completion of administrative reviews if it determines that it is not

practicable to complete the review within the statutory time limit of

365 days. On February 18, 1997, and again on July 18, 1997, the

Department extended the time limits for the preliminary results in

these cases. See Certain Cold-Rolled and Corrosion-Resistant Carbon

Steel Flat Products from Korea; Extension of Time Limits for

Antidumping Duty Administrative Reviews, 62 FR 40333 (July 28, 1997).

The Department is conducting these administrative reviews in

accordance with section 751 of the Act.

Scope of the Reviews

The review of ``certain cold-rolled carbon steel flat products''

covers cold-rolled (cold-reduced) carbon steel flat-rolled products, of

rectangular shape, neither clad, plated nor coated with metal, whether

or not painted, varnished or coated with plastics or other nonmetallic

substances, in coils (whether or not in successively superimposed

layers) and of a width of 0.5 inch or greater, or in straight lengths

which, if of a thickness less than 4.75 millimeters, are of a width of

0.5 inch or greater and which measures at least 10 times the thickness

or if of a thickness of 4.75 millimeters or more are of a width which

exceeds 150

[[Page 47424]]

millimeters and measures at least twice the thickness, as currently

classifiable in the Harmonized Tariff Schedule (``HTS'') under item

numbers 7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0090,

7209.17.0030, 7209.17.0060, 7209.17.0090, 7209.18.1530, 7209.18.1560,

7209.18.2550, 7209.18.6000, 7209.25.0000, 7209.26.0000, 7209.27.0000,

7209.28.0000, 7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.23.1500,

7211.23.2000, 7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060,

7211.23.6085, 7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030,

7211.29.6080, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000,

7215.50.0015, 7215.50.0060, 7215.50.0090, 7215.90.5000, 7217.10.1000,

7217.10.2000, 7217.10.3000, 7217.10.7000, 7217.90.1000, 7217.90.5030,

7217.90.5060, 7217.90.5090. Included in this review are flat-rolled

products of nonrectangular cross-section where such cross-section is

achieved subsequent to the rolling process (i.e., products which have

been ``worked after rolling'')--for example, products which have been

beveled or rounded at the edges. Excluded from this review is certain

shadow mask steel, i.e., aluminum-killed, cold-rolled steel coil that

is open-coil annealed, has a carbon content of less than 0.002 percent,

is of 0.003 to 0.012 inch in thickness, 15 to 30 inches in width, and

has an ultra flat, isotropic surface.

The review of ``certain corrosion-resistant carbon steel flat

products'' covers flat-rolled carbon steel products, of rectangular

shape, either clad, plated, or coated with corrosion-resistant metals

such as zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based

alloys, whether or not corrugated or painted, varnished or coated with

plastics or other nonmetallic substances in addition to the metallic

coating, in coils (whether or not in successively superimposed layers)

and of a width of 0.5 inch or greater, or in straight lengths which, if

of a thickness less than 4.75 millimeters, are of a width of 0.5 inch

or greater and which measures at least 10 times the thickness or if of

a thickness of 4.75 millimeters or more are of a width which exceeds

150 millimeters and measures at least twice the thickness, as currently

classifiable in the HTS under item numbers 7210.30.0030, 7210.30.0060,

7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000,

7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000,

7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000,

7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000,

7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530,

7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090.

Included in this review are flat-rolled products of nonrectangular

cross-section where such cross-section is achieved subsequent to the

rolling process (i.e., products which have been ``worked after

rolling'')--for example, products which have been beveled or rounded at

the edges. Excluded from this review are flat-rolled steel products

either plated or coated with tin, lead, chromium, chromium oxides, both

tin and lead (``terne plate''), or both chromium and chromium oxides

(``tin-free steel''), whether or not painted, varnished or coated with

plastics or other nonmetallic substances in addition to the metallic

coating. Also excluded from this review are clad products in straight

lengths of 0.1875 inch or more in composite thickness and of a width

which exceeds 150 millimeters and measures at least twice the

thickness. Also excluded from this review are certain clad stainless

flat-rolled products, which are three-layered corrosion-resistant

carbon steel flat-rolled products less than 4.75 millimeters in

composite thickness that consist of a carbon steel flat-rolled product

clad on both sides with stainless steel in a 20%-60%-20% ratio.

These HTS item numbers are provided for convenience and customs

purposes. The written descriptions remain dispositive.

The POR is August 1, 1995 through July 31, 1996. These reviews

cover sales of certain cold-rolled and corrosion-resistant carbon steel

flat products by Dongbu, Union, and POSCO.

Verification

As provided in section 782(i)(3) of the Act, we verified

information provided by the respondents using standard verification

procedures, including on-site inspection of the manufacturers'

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.

Transactions Reviewed

In accordance with section 751 of the Act, the Department is

required to determine the EP (or CEP) and NV of each entry of subject

merchandise.

In determining NV, based on our review of the submissions by Dongbu

and Union, the Department determined that Dongbu and Union need not

report ``downstream'' sales by affiliated resellers in the home market

because of their small quantity. With respect to POSCO, based on our

review of the respondent's submissions, the Department determined that

POSCO need not report the home market downstream sales of the service

centers in which it owns a minority stake because it appears that they

would have a minimal effect upon the calculation of NV, and such

reporting would constitute an enormous burden. See Memorandum to

Richard O. Weible from Steve Bezirganian (August 29, 1997).

For purposes of these reviews, we are treating POSCO, Pohang Coated

Steel Co., Ltd. (``POCOS''), and Pohang Steel Industries Co., Ltd.

(``PSI'') as affiliated parties and have ``collapsed'' them as a single

producer of certain cold-rolled carbon steel flat products (POSCO and

PSI) and certain corrosion-resistant carbon steel flat products (POSCO,

POCOS, and PSI). POSCO, POCOS, and PSI were already collapsed in

previous segments of these proceedings. See, e.g., Final Determinations

of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat

Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain

Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-

Length Carbon Steel Plate from Korea, 58 FR 37176 (July 9, 1993). The

POSCO group has submitted no information which would cause us to change

that treatment.

Product Comparisons

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

cold-rolled carbon steel flat products produced by the respondents,

covered by the descriptions in the ``Scope of the Reviews'' section of

this notice, supra, and sold in the home market during the POR, to be

foreign like products for the purpose of determining appropriate

product comparisons to U.S. sales of cold-rolled carbon steel flat

products. Likewise, we considered all corrosion-resistant carbon steel

flat products produced by the respondents and sold in the home market

during the POR to be foreign like products for the purpose of

determining appropriate product comparisons to corrosion-resistant

[[Page 47425]]

carbon steel flat products sold in the United States. 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 Appendix V of the

Department's September 19, 1996 antidumping questionnaire. In making

the product comparisons, we matched foreign like products based on the

physical characteristics reported by the respondent and verified by the

Department. Where sales were made in the home market on a different

weight basis from the U.S. market (theoretical versus actual weight),

we converted all quantities to the same weight basis, using the

conversion factors supplied by the respondents, before making our fair-

value comparisons.

Fair-Value Comparisons

To determine whether sales of certain cold-rolled and corrosion-

resistant carbon steel flat products by the respondents to the United

States were made at less than fair value, we compared EP (or CEP) to

NV, as described in the ``Export Price (or Constructed Export Price)''

and ``Normal Value'' sections of this notice. In accordance with

section 777A(d)(2) of the Act, we calculated monthly weighted-average

prices for NV and compared these to individual U.S. transactions.

Use of Home-Market Sales

Section 773(a)(1)(C)(iii) of the Act provides that the Department

will use third-country sales as the basis for normal value if ``the

particular market situation in the exporting country does not permit a

proper comparison with the export price or the constructed export

price.'' Section B.2.a(1) of the Statement of Administrative Action,

which accompanied the passage of the URAA (H.R. Doc. No. 3106, 103rd

Cong., 2nd Sess. 829-831 (1994)) (``SAA''), further states that

``Commerce may determine that home market sales are inappropriate as a

basis for determining normal value if the particular market situation

would not permit a proper comparison.'' SAA at 822. The statute does

not define ``particular market situation,'' but the SAA indicates that

``such a situation might exist where a single sale in the home market

constitutes five percent of sales to the United States or where there

is government control over pricing to such an extent that home market

prices cannot be considered to be competitively set.'' Id.

On October 24 and November 22, 1996, and again on March 17, 1997,

the petitioners alleged that the Government of Korea controls steel

prices in Korea and that the home-market prices reported by respondents

are therefore not true market prices. Claiming that the home market

could not be used, the petitioners requested that the Department

collect third-country sales information for each of the Korean

respondents, and use the respondents' sales of subject merchandise to

third countries for purposes of comparison with prices in the U.S.

market.

On April 15, 1997, the Department published in the Federal Register

its notice of final results of administrative reviews in the previous

segment of these proceedings. In that notice the Department found that

``while there (was) some evidence of a substantial level of Korean

government involvement in domestic steel pricing, there was not

``convincing'' evidence that the Korean government controlled domestic

steel prices ``to such an extent that home market prices cannot be

considered to be competitively set.' '' In other words, petitioners

failed to meet the burden of demonstrating that there is a ``reasonable

basis for believing that a ``particular market situation'' exists.''

See ``Explanation to the Final Rules,'' section 351.404, in the new

regulations at 62 FR 27357 (May 19, 1997). We determined, therefore,

that the Korean home market was viable and appropriate as a basis for

NV. No factual information has been submitted in the record of these

proceedings that would lead us to modify this decision. We determine,

therefore, that the Korean home market still provides an appropriate

basis for calculating NV.

Date of Sale

It is the Department's current practice normally to use the invoice

date as the date of sale; we may, however, use a date other than the

invoice date if we are satisfied that a different date better reflects

the date on which the exporter or producer establishes the material

terms of sale. See 19 CFR 351.401(i) (62 FR at 27411).

The questionnaire we sent to the respondents on September 19, 1997

instructed them to report the date of invoice as the date of sale; it

also stated, however, that ``[t]he date of sale cannot occur after the

date of shipment.'' Because in these reviews the date of shipment in

many instances preceded the date of invoice, we cannot use the date of

invoice as the new regulations prescribe. Accordingly, as allowed by

the exception set forth in Sec. 351.401(i) of the new regulations, we

used the dates of sale described below. These sale dates reflect the

dates on which the exporter or producer established the material terms

of sale.

A. Dongbu

Rather than the date of invoice, we used the date of shipment as

the date of sale for home-market sales by Dongbu, and the contract date

as the date of sale for Dongbu's U.S. sales. We based the date of sale

on those dates because the material terms of sale could, and did,

change until those dates.

B. POSCO

Rather than the date of invoice, we used the date of shipment as

the date of sale for all sales by the POSCO group. We based the date of

sale on this date because the material terms of sale could, and did,

change until that date.

C. Union

Rather than the date of invoice, we used the date of shipment as

the date of sale for home-market sales by Union, and the contract date

as the date of sale for Union's U.S. sales. We based the date of sale

on those dates because the material terms of sale could, and did,

change until those dates.

Export Price (or Constructed Export Price)

We calculated the price of United States sales based on EP, in

accordance with section 772(a) of the Act, when the subject merchandise

was sold to unaffiliated purchasers in the United States prior to the

date of importation. In certain instances, however, we determined that

CEP, as defined in section 772(b) of the Act, was a more appropriate

basis for comparison with NV.

We determined that some of the sales Dongbu reported as EP sales

were actually CEP sales because they were sold to the first

unaffiliated customer in the U.S. after importation into U.S. customs

territory. We also determined that some of those sales were made

outside the period of review. We will review these sales in the review

covering the period during which those sales were made. With regard to

Union, we used CEP as the basis for comparison with NV in certain

instances where sales were made prior to importation and Union's U.S.

affiliate had substantial involvement in the U.S. sale. In these cases,

our determination was based on the following facts: (a) Union America

(``UA'') and later Dongkuk International (``DKA''), Union's sales

office in the United States, was the importer of record and took title

to the merchandise; (b) UA or DKA financed the relevant sales

transactions; (c) UA

[[Page 47426]]

arranged to have the merchandise further processed by an outside

contractor in the United States on a fee-for-service basis and paid for

the further processing; and (d) UA or DKA assumed the seller's risk.

Although these are the only sales we are reclassifying as CEP, for

the final review results we will consider whether other sales claimed

by respondents to be indirect EP sales should in fact be reclassified

as CEP sales. We will reexamine the issues surrounding the affiliate's

selling activities and sales operations in the United States in

determining whether a particular sale should be considered indirect EP

or CEP.

For all three respondents, we calculated EP based on packed prices

to unaffiliated customers in the United States. Where appropriate, we

made deductions from the starting price for foreign inland freight,

foreign brokerage and handling, international freight, marine

insurance, U.S. inland freight, U.S. brokerage and handling, U.S.

Customs duties, and that portion of markups by affiliated trading

companies categorized as movement expenses; we also added duty drawback

to the starting price.

We calculated CEP based on packed prices to unaffiliated customers

in the United States. Where appropriate, we made deductions from the

starting price for foreign inland freight, foreign brokerage and

handling, international freight, marine insurance, U.S. inland freight,

U.S. brokerage and handling, U.S. Customs duties, commissions, credit

expenses, warranty expenses, indirect selling expenses, and further

processing in the United States; we also added duty drawback to the

starting price. Finally, we made an adjustment for profit in accordance

with section 772(d)(3) of the Act.

Normal Value

Based on a comparison of the aggregate quantity of home-market and

U.S. sales, we determined that the quantity of the foreign like product

sold in the exporting country was sufficient to permit a proper

comparison with the sales of the subject merchandise to the United

States, pursuant to section 773(a) of the Act. Therefore, in accordance

with section 773(a)(1)(B)(i) of the Act, we based NV on the price at

which the foreign like product was first sold for consumption in the

home market, in the usual commercial quantities and in the ordinary

course of trade. We excluded certain ``overrun'' sales in the home

market from our sales comparisons because these sales were outside the

ordinary course of trade.

Where appropriate, we deducted rebates, discounts, inland freight

(offset, where applicable, by freight revenue), inland insurance, and

packing. We also deducted value-added tax (``VAT'') since the reported

gross unit price included VAT. Based on our verification of home-market

sales responses, we made adjustments to NV, where appropriate, for

differences in credit expenses (offset, where applicable, by interest

income), warranty expenses, post-sale warehousing, and for differences

in weight basis. We also made adjustments, where appropriate, for home-

market indirect selling expenses to offset U.S. commissions in EP and

CEP comparisons.

In comparisons to EP and CEP sales, we also increased NV by U.S.

packing costs in accordance with section 773(a)(6)(A) of the Act. We

made adjustments to NV for differences in cost attributable to

differences in physical characteristics of the merchandise, pursuant to

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

Differences in Levels of Trade

In accordance with section 773(a)(1)(A) of the Act and the SAA at

829-831, to the extent practicable, the Department will calculate NV

based on sales at the same level of trade (``LOT'') as the U.S. sale

(either EP or CEP). When there are no sales in the comparison market at

the same LOT as the U.S. sale(s), the Department may compare sales in

the U.S. and foreign markets at a different LOT, and adjust NV if

appropriate. The NV LOT is that of the starting price of sales in the

home market. See, e.g., Certain Circular Welded Carbon Steel Pipes and

Tubes from Taiwan; Preliminary Results of Antidumping Duty

Administrative Review, 62 FR 31070 (June 6, 1997).

As the Department explained in Gray Portland Cement and Clinker

from Mexico: Final Results of Antidumping Duty Administrative Review,

(``Cement from Mexico'') (62 FR 17148, 17156--April 9, 1997), for both

EP and CEP, the relevant transaction for the LOT analysis is the sale

from the exporter to the importer. While the starting price for CEP is

that of a subsequent resale to an unaffiliated buyer, the construction

of the CEP results in a price that would have been charged if the

importer had not been affiliated. Because the expenses deducted under

section 772(d) represent selling activities in the United States, the

deduction of these expenses may yield a different LOT for the CEP than

for the later resale (which we use for the starting price).

To determine whether home-market sales were at a different LOT than

U.S. sales, we examine whether the home-market sales were at different

stages in the marketing process than the U.S. sales. The marketing

process in both markets begins with goods being sold by the producer

and extends to the sale to the final user. The chain of distribution

between the producer and the final user may have many or few links, and

each respondent's sales occur somewhere along this chain. In the United

States, the respondent's sales are generally to an importer, whether

independent or affiliated. We review and compare the distribution

systems in the home market and the United States, including selling

functions, class of customer, and the extent and level of selling

expenses for each claimed LOT. Customer categories such as distributor,

retailers or end-users are commonly used by respondents to describe

levels of trade, but without substantiation, they are insufficient to

establish that a claimed LOT is valid. An analysis of the chain of

distribution and of the selling functions substantiates or invalidates

the claimed levels of trade. If the claimed levels are different, the

selling functions performed in selling to each level should also be

different. Conversely, if levels of trade are nominally the same, the

selling functions performed should also be the same. Different levels

of trade necessarily involve differences in selling functions, but

differences in selling functions, even substantial ones, are not alone

sufficient to establish a difference in the levels of trade.

Differences in levels of trade are characterized by purchasers at

different stages of marketing or their equivalent, which may be

different stages in the chain of distribution and sellers performing

qualitatively or quantitatively different functions in selling to them.

When we compare U.S. sales to home-market sales at a different LOT,

we make a LOT adjustment if the difference in LOT affects price

comparability. We determine any effect on price comparability by

examining sales at different levels of trade in the home market (or the

third-country market) used to calculate NV. Any price effect must be

manifested in a pattern of consistent price differences between home-

market (or third-country) sales used for comparison and sales at the

equivalent LOT of the export transaction. See, e.g. Granular

Polytetrafluorethylene Resin from Italy; Preliminary Results of

Antidumping Duty Administrative Review, 62 FR 26283, 26285 (May 13,

1997); Cement from Mexico at 17148.) To quantify the

[[Page 47427]]

price differences, we calculate the difference in the weighted average

of the net prices of the same models sold at different levels of trade

in the home market. Net prices are used because any difference will be

due to differences in LOT rather than other factors. We use the average

percentage difference between these weighted averages to adjust NV when

the LOT of NV is different from that of the export sale. If there is a

pattern of no price differences, then the difference in LOT does not

have a price effect and no adjustment is necessary.

In the case of CEP sales, section 773 of the statute also provides

for an adjustment to NV if it is compared to U.S. sales at a different

LOT, provided the NV is more remote from the factory than the CEP sales

and we are unable to determine whether the difference in levels of

trade between CEP and NV affects the comparability of their prices.

This latter situation might occur when there is no home-market (or

third-country) LOT equivalent to the U.S. sales level, or where there

is an equivalent home-market (or third-country) level, but the data are

insufficient to support a conclusion on price effect. See, e.g.,

Certain Corrosion Resistant Carbon Steel Flat Products and Cut-to-

Length Carbon Steel Plate from Canada; Final Results of Antidumping

Duty Administrative Reviews, 62 FR 18448, 18466 (April 15, 1997). This

adjustment, the CEP offset, is identified in section 773(a)(7)(B) and

is the lower of the (1) indirect selling expenses of the home-market

(or third-country) sale; or (2) indirect selling expenses deducted from

the starting price used to calculate CEP. The CEP offset is not

automatic each time we use CEP. See Mechanical Transfer Presses from

Japan, Final Results of Antidumping Administrative Review, 62 FR 17148,

17156 (October 9, 1996). The CEP offset is made only when the LOT of

the home-market (or third country) sale is more advanced than the LOT

of the U.S. CEP sale and there is not an appropriate basis for

determining whether there is an effect on price comparability. See,

e.g., Cement from Mexico, at 17156.

A. Dongbu

In its questionnaire responses, Dongbu stated that there were no

differences in its selling activities by customer categories within

each market. In order independently to confirm the absence of separate

levels of trade within or between the U.S. and home-markets, we

examined Dongbu's questionnaire responses for indications that Dongbu's

functions as a seller differed qualitatively and quantitatively among

customer categories. See commentary to Sec. 351.412 of the Department's

new regulations (62 FR at 27371).

Dongbu sold to local distributors and end-users in the U.S. market.

In the home market, Dongbu also sold to local distributors and end-

users. At both stages of distribution, Dongbu performed the same

selling and marketing functions for all its home-market and U.S.

customers. In accordance with section 773(a)(1)(B)(i) of the Act, we

consider the selling functions reflected in the starting price of home-

market sales before any adjustments. Our analysis of the questionnaire

response leads us to conclude that sales within or between each market

are not made at different levels of trade. Accordingly, we

preliminarily find that all sales in the home market and the U.S.

market were made at the same level of trade. Therefore, all price

comparisons are at the same level of trade and any adjustment pursuant

to section 773(a)(7) of the Act is unwarranted.

B. POSCO

In its questionnaire responses, POSCO stated that its home-market

sales by affiliated service centers were at a different level of trade

than its other home-market sales and its U.S. sales (regardless of the

customer category). The respondent indicated that the service centers

provide certain selling functions to all of their customers, while

POSCO and its selling arms (e.g., POCOS or PSI) provide a different set

of selling functions to all of their customers (including the service

centers).

In order independently to confirm the presence of separate levels

of trade within or between the U.S. and home markets, we examined

POSCO's questionnaire responses for indications of substantive

differences in selling and marketing functions, and reviewed this issue

during the sales verification in Korea. See commentary to Sec. 351.412

of the Department's new regulations (62 FR at 27371).

The POSCO group did not provide evidence of differences in selling

functions to support its characterization of its home-market service-

center sales as a different level of trade from its U.S. sales and its

other home-market sales. The POSCO group indicated at verification that

selling functions were unchanged from the second administrative review

period, and for that segment of these proceedings the Department

treated all POSCO group sales in both markets as having been at the

same level of trade. Accordingly, we preliminarily find that all sales

in the home market and the U.S. market were made at the same level of

trade. Therefore, all price comparisons are at the same level of trade

and any adjustment pursuant to section 773(a)(7) of the Act is

unwarranted.

C. Union

In its questionnaire responses, Union stated that there were no

differences in its selling activities by customer categories within

each market. In order independently to confirm the absence of separate

levels of trade within or between the U.S. and home markets, we

examined Union's questionnaire responses for indications that Union's

functions as a seller differed, qualitatively and quantitatively, among

customer categories. See commentary to Sec. 351.412 of the Department's

new regulations (62 FR at 27371).

Union sold to unrelated distributors and end-users in the U.S.

market. In the home market, Union sold to unrelated distributors and

end-users and to related distributors for sale to unrelated end-users.

At both stages of distribution, Union performed the same selling and

marketing functions for sales to all its home-market and U.S. sales. In

identifying the level of trade for CEP sales, we considered only the

selling activities reflected in the U.S. price after deduction of

expenses and profit under section 772(d) of the Act. In accordance with

section 773(a)(1)(B)(i) of the Act, we consider the selling functions

reflected in the starting price of home-market sales before any

adjustments. Our analysis of the questionnaire response leads us to

conclude that sales within and between each market are not made at

different levels of trade. Accordingly, we preliminarily find that all

sales in the home market and the U.S. market were made at the same

level of trade. Therefore, all price comparisons are at the same level

of trade and any adjustment pursuant to section 773(a)(7) of the Act is

unwarranted.

Cost-of-Production Analysis

At the time the questionnaires were issued in these reviews, the

LTFV investigations were the most recently completed segments of these

proceedings in which POSCO had participated. Because we disregarded

certain below-cost sales by POSCO in the investigations, we found

reasonable grounds in these reviews, in accordance with section

773(b)(2)(A)(ii) of the Act, to believe or suspect that POSCO made

sales in the home market at prices below the cost of producing the

merchandise.

[[Page 47428]]

Furthermore, based on the fact that we had disregarded certain sales by

Dongbu and Union in the first administrative review of the antidumping

duty order on certain corrosion-resistant flat products because they

were made below the COP, we found reasonable grounds in these reviews,

in accordance with section 773(b)(2)(A)(ii) of the Act, to believe or

suspect that Dongbu and Union made sales of certain corrosion-resistant

flat products in the home market at prices below the cost of producing

the merchandise. Finally, petitioners alleged, on January 8, 1997, that

Dongbu sold certain cold-rolled carbon steel flat products in the home

market at prices below COP. Based on these allegations, the Department

determined, on April 9, 1997, that it had reasonable grounds to believe

or suspect that Dongbu had sold the subject merchandise in the home

market at prices below the COP. We therefore initiated cost

investigations with regard to Dongbu, POSCO, and Union in order to

determine whether the respondents made home-market sales during the POR

at prices below their COP 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 selling, general, and administrative expenses

(``SG&A''), and packing costs in accordance with section 773(b)(3) of

the Act.

For certain POCOS and POSCO control numbers, we revised the cost of

manufacturing (``COM'') to reflect differences in production costs

associated with differences in quality, thickness, and coating weight.

B. Test of Home-Market Prices

We used the respondents' weighted-average COP, as adjusted (see

above), for the period July 1995 to June 1996. 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 determining

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

examined whether (1) within an extended period of time, such sales were

made in substantial quantities, and (2) such sales were made at prices

which permitted the recovery of all costs within a reasonable period of

time. On a product-specific basis, we compared the COP to the home-

market prices (not including VAT), less any applicable movement

charges, discounts, and rebates.

C. Results of COP Test

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

percent of 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 POR were at prices less than the

COP, we found that sales of that model were made in ``substantial

quantities'' within an extended period of time, in accordance with

sections 773(b)(2)(B) and (C) of the Act, and were not at prices which

would permit recovery of all costs within an extended period of time,

in accordance with section 773(b)(2)(D) of the Act. When we found that

below-cost sales had been made in ``substantial quantities'' and were

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

reasonable period of time, we disregarded the below-cost sales in

accordance with section 773(b)(1) of the Act. Where all contemporaneous

sales of a specific comparison product were at prices below the COP, we

calculated NV based on CV.

D. Calculation of CV

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

based on the sum of respondents' cost of materials, fabrication, SG&A,

U.S. packing costs, interest expenses, and profit. In accordance with

sections 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. For selling expenses,

we used the weighted-average home-market selling expenses. Based on our

verification of the cost responses submitted by POSCO, we adjusted that

respondent's reported CV to reflect adjustments to COM and G&A, as

detailed in the ``Calculation of COP'' section of this notice. We also

made adjustments, where appropriate, for home-market indirect selling

expenses to offset U.S. commissions in EP and CEP comparisons.

Currency Conversion

For purposes of the preliminary results, we made currency

conversions based on the official exchange rates in effect on the dates

of the U.S. sales as certified by the Federal Reserve Bank of New York.

Section 773A(a) directs the Department to use a daily exchange rate in

order to convert foreign currencies into U.S. dollars, unless the daily

rate involves a ``fluctuation.'' In accordance with the Department's

practice, we have determined that a fluctuation exists when the daily

exchange rate differs from a benchmark by 2.25 percent. See, e.g.,

Certain Stainless Steel Wire Rods from France: Preliminary Results of

Antidumping Duty Administrative Review (61 FR 8915, 8918--March 6,

1996). The benchmark is defined as the rolling average of rates for the

past 40 business days. When we determined a fluctuation existed, we

substituted the benchmark for the daily rate.

Preliminary Results of the Reviews

As a result of these reviews, we preliminarily determine that the

following weighted-average dumping margins exist:

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

Weighted-

Producer/manufacturer/exporter average margin

(percent)

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

Certain Cold-Rolled Carbon Steel Flat Products:

Dongbu................................................ 0.00

POSCO................................................. 3.40

Certain Corrosion-Resistant Carbon Steel Flat Products:

Dongbu................................................ 0.09

POSCO0................................................ 0.32

Union................................................. 0.63

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

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 of this notice. The Department will publish a

notice of the final results of the administrative review, including its

analysis of issues raised in any written comments or at a hearing, not

later than 120 days after the date of publication of this notice.

Cash Deposit

The following cash deposit requirements will be effective upon

publication of the final results of this administrative review for all

shipments of the subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the publication date, as

provided for by section

[[Page 47429]]

751(a)(1) of the Act: (1) The cash deposit rate for each respondent

will be the rate established in the final results of these

administrative reviews (except that no deposit will be required for

firms with zero or de minimis margins, i.e., margins lower than 0.5

percent); (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 these reviews, a prior review, or the original

LTFV investigations, 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 these or any prior reviews, the

cash deposit rate will be 14.44 percent (for certain cold-rolled carbon

steel flat products) and 17.70 percent (for certain corrosion-resistant

carbon steel flat products), the ``all others'' rate established in the

LTFV investigations. These deposit requirements, when imposed, shall

remain in effect until publication of the final results of the next

administrative reviews.

This notice also 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.

These administrative reviews and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

Dated: September 2, 1997.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 97-23857 Filed 9-8-97; 8:45 am]

BILLING CODE 3510-DS-P