Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide (PPD- T) From the Netherlands; Preliminary Results of Antidumping Administrative Review

DEPARTMENT OF COMMERCE

[A-421-805]

Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide (PPD-

T) From the Netherlands; Preliminary Results of Antidumping

Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of the antidumping duty

administrative review; Aramid fiber formed of poly para-phenylene

terephthalamide from The Netherlands.

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SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on aramid fiber

formed of poly para-phenylene terephthalamide (PPD-T aramid) from the

Netherlands in response to requests by respondent, Akzo Nobel Aramid

Products, Inc. and Aramid Products V.o.F. (Akzo) and petitioner, E.I.

du Pont de Nemours and Company. This review covers sales of this

merchandise to the United States during the period June 1, 1995 through

May 31, 1996, by Akzo Nobel V.o.F. The results of the review indicate

the existence of dumping margins for the above period.

We invite interested parties to comment on these preliminary

results. Parties who submit arguments are requested to submit with the

argument (1) a statement of the issue and (2) a brief summary of the

argument.

EFFECTIVE DATE: March 7, 1997.

FOR FURTHER INFORMATION CONTACT: Nithya Nagarajan at (202) 482-0193,

Eugenia Chu at (202) 482-3964, or Ellen Knebel at (202) 482-1398,

Import Administration, International Trade Administration, U.S.

Department of Commerce, Room 7866, 14th Street and Constitution Avenue,

N.W., Washington D.C. 20230.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995,

[[Page 10525]]

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 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 in the Federal Register the antidumping

duty order on PPD-T aramid from the Netherlands on June 24, 1994 (59 FR

32678). On June 6, 1996, we published in the Federal Register (61 FR

28840) a notice of opportunity to request an administrative review of

the antidumping duty order on PPD-T aramid from the Netherlands

covering the period June 1, 1995, through May 31, 1996.

In accordance with 19 CFR 353.22(a)(1), Akzo and petitioner

requested that we conduct an administrative review for the

aforementioned period. On August 8, 1996, the Department published a

notice of ``Initiation of Antidumping Review'' (60 FR 41373). The

Department is now conducting this administrative review pursuant to

section 751 of the Act.

Scope of Review

The products covered by this review are all forms of PPD-T aramid

from the Netherlands. These consist of PPD-T aramid in the form of

filament yarn (including single and corded), staple fiber, pulp (wet or

dry), spun-laced and spun-bonded nonwovens, chopped fiber, and floc.

Tire cord is excluded from the class or kind of merchandise under

review. This merchandise is currently classifiable under the Harmonized

Tariff Schedule (HTS) item numbers 5402.10.3020, 5402.10.3040,

5402.10.6000, 5503.10.1000, 5503.10.9000, 5601.30.0000, and

5603.00.9000. The HTS item numbers are provided for convenience and

Customs purposes. The written description of the scope remains

dispositive.

Verification

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

provided by the respondent, using standard verification procedures,

including on-site 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 public versions of the

verification reports, available to the public in Room B-099 of the H.C.

Hoover Building (the main Commerce Building).

Transactions Reviewed

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

required to determine the normal value (NV) and export price (EP) or

constructed export price (CEP) of each entry of subject merchandise.

Because there can be a significant lag between entry date and sale date

for CEP sales, it has been the Department's practice to examine U.S.

CEP sales during the period of review. See Gray Portland Cement and

Clinker from Japan; Final Results of Antidumping Duty Administrative

Review, 58 FR 48826 (1993) (the Department did not consider ESP (now

CEP) entries which were sold after the POR). The Court of International

Trade (CIT) has upheld the Department's practice in this regard. See

The AD Hoc Committee of Southern California Producers of Gray Portland

Cement v. United States, Slip Op. 95-195 (CIT December 1, 1995).

Product Comparisons

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

products produced and sold by the respondent in the home market during

the POR, (and covered by the Scope of the Review) to be foreign like

products for purposes of product comparisons to U.S. sales. Where there

were no sales of identical or similar merchandise in the home market to

compare to U.S. sales, we compared U.S. sales to the constructed value

(CV) of the product sold in the U.S. market during the comparison

period.

Normal Value Comparisons

In order to determine whether there was a sufficient volume of

sales in the home market to serve as a viable basis for calculating NV,

we compared Akzo's volume of home market sales of the foreign like

product to the volume of U.S. sales of the subject merchandise, in

accordance with section 773(a)(1)(C) of the Act. Because Akzo's

aggregate volume of home market sales of the foreign like product was

greater than five percent of its aggregate volume of U.S. sales of the

subject merchandise, we determined that the home market provides a

viable basis for calculating NV for Akzo.

To determine whether sales of PPD-T aramid by Akzo to the United

States were made at less than NV, we compared the CEP (Akzo had no EP

sales) to the NV, as described in the ``Constructed Export Price'' and

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

777A(d)(2), we calculated monthly weighted-average prices for NV and

compared them to individual U.S. transactions.

Constructed Export Price

The Department based its margin calculation on CEP, as defined in

section 772 (b), (c), and (d) of the Act, for those sales to the first

unaffiliated purchaser that took place after importation into the

United States.

We calculated CEP based on delivered prices in connection with

sales to unaffiliated purchasers in the United States. When

appropriate, the Department made adjustments for discounts, rebates,

credit expenses, and direct selling expenses. We deducted those

indirect selling expenses, including inventory carrying costs, that

related to commercial activity in the United States. We also made

deductions for movement expenses (international freight, brokerage and

handling, U.S. duties, domestic inland freight, and insurance).

Finally, pursuant to section 772(d)(3), an adjustment was made for CEP

profit.

Normal Value

In order to determine whether there was a sufficient volume of

sales in the home market to serve as a viable basis for calculating NV,

we compared respondent's volume of home market sales of the foreign

like product to the volume of U.S. sales of the subject merchandise, in

accordance with section 773(a)(1)(C) of the Act. Because Akzo's

aggregate volume of the home market sales of the foreign like product

was greater than five percent of its aggregate volume of U.S. sales for

the subject merchandise, we determined that the home market provides a

viable basis for calculating NV on home market sales.

Where appropriate, we adjusted for discounts, credit expenses,

warranty expenses, inland freight, and inland insurance. We also

adjusted the starting price for billing adjustments to the invoice

price.

We made adjustments, where appropriate, for physical differences in

merchandise (DIFMER) in accordance with section 773(a)(6)(C)(ii) of the

Act. A weighted-average (upward, if applicable) DIFMER adjustment was

applied, as reported by respondent. In addition, in accordance with

section 773(a)(6), we deducted home market packing costs and added U.S.

packing costs.

[[Page 10526]]

Arm's Length Sales

Sales to affiliated customers in the home market not made at arm's

length were excluded from our analysis, in accordance with 19 CFR

353.45(a). To test whether these sales were made at arm's length, we

compared the starting prices of sales to affiliated and unaffiliated

customers, net of all movement charges, direct selling expenses,

discounts, and packing. Where the price to the affiliated party was, on

average, 99.5 percent or more of the price to the unaffiliated party,

we determined that the sales made to the affiliated party were at arm's

length.

Cost of Production Analysis

In the most recently completed administrative review of Akzo, we

disregarded sales found to be below the cost of production (COP).

Therefore, in accordance with section 773(b)(2)(A)(ii) of the Act, the

Department has reasonable grounds to believe or suspect that sales

below the COP may have occurred during this review period. Thus,

pursuant to section 773(b) of the Act, we initiated a COP investigation

of Akzo in the instant review.

In accordance with section 773(b)(3) of the Act, we calculated an

average COP, by model, based on the sum of the cost of materials and

fabrication employed in producing 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 used

the home market sales data and COP information provided by Akzo in its

questionnaire responses.

After calculating a weighted-average COP, we tested whether home

market sales of PPD-T aramid were made at prices below COP within an

extended period of time in substantial quantities, and whether such

prices permit recovery of all costs within a reasonable period of time.

We compared model-specific COP to the reported home market prices less

any applicable movement charges, discounts, rebates, and direct and

indirect selling expenses.

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

Akzo's sales of a given model were at prices less than 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.''

In accordance with sections 773(b)(2) (B) and (D), where 20 percent or

more of home market sales of a given product were at prices less than

the COP, we disregarded only the below-cost sales where such sales were

found to be made within an extended period of time and at prices which

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

time.

We found that, for certain types of PPD-T aramid, more than 20

percent of the home market sales were sold at below-cost prices in

substantial quantities within the period of review. We therefore find

that these below-cost sales were made in substantial quantities within

an extended period of time. To determine whether prices were such as to

provide for recovery of costs within a reasonable period of time, we

tested whether the per unit price was above the weighted average per

unit cost of production for the POR. If it was, we disregarded those

below cost sales and 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 PPD-T aramid for which there were no

above-cost sales available for matching purposes, we compared CEP to

CV.

Price-to-Price Comparisons

Pursuant to section 777A(d)(2), we compared the CEPs of individual

U.S. transactions to the monthly weighted-average NV of the foreign

like product where there were sales at prices above COP, as discussed

above. We based NV on packed, ex-factory or delivered prices to

unaffiliated purchasers in the home market. We made adjustments, where

applicable, in accordance with section 773(a)(6) of the Act. Where

applicable, we made adjustments to home market price for discounts,

rebates, inland freight and insurance. To adjust for differences in

circumstances of sale between the home market and the United States, we

reduced home market prices by an amount for home market credit

expenses. In order to adjust for differences in packing between the two

markets, we adjusted home market price by deducting HM packing costs

and adding U.S. packing costs. Prices were reported net of value added

taxes (VAT) and, therefore, no deduction for VAT was necessary. We made

adjustments, where appropriate, for physical differences in merchandise

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

Level of Trade

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

Statement of Administrative Action (SAA) at 829-831, to the extent

practicable, the Department will calculate NV based on sales at the

same level of trade as U.S. sales. (For both EP and CEP, ``U.S. Sale''

refers to the transition between the foreign exporter and the importer,

whether affiliated or independent.) When the Department is unable to

find sales in the comparison market at the same level of trade as the

U.S. sales, the Department will adjust the NV to account for the

difference 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 NV sale. Second, the difference must affect price

comparability as evidenced by a pattern of consistent price differences

between sales at different levels of trade in the country in which NV

is determined.

When CEP is applicable, section 773(a)(7)(B) of the Act establishes

the procedure for making a CEP offset when NV is established at level

of trade which constitutes a more advanced stage of distribution than

the CEP level of trade, but the data available does not provide an

appropriate basis for a level of trade adjustment. In addition, to

qualify for a CEP offset, the level of trade in the home market must

also constitute a more advanced stage of distribution than the level of

trade of the CEP sale.

Akzo reported one level of trade and one channel of distribution in

the home market (direct to end users/converters). For the U.S. market,

Akzo reported that all sales were made on a CEP basis. The level of

trade of the U.S. sale is determined for the CEP rather than for the

starting price. The CEP sales do not reflect certain selling functions

such as customer sales contacts, technical services, and inventory

maintenance, that are reflected in Akzo's home market sales to end

users/converters. Therefore, the selling functions performed for Akzo's

CEP sales are sufficiently different than those performed for Akzo's

home market sales to consider CEP sales and home market sales to be at

a different level of trade.

Because we compared these CEP sales to home market sales at a

different level of trade, we examined whether a level of trade

adjustment may be appropriate. In this case, Akzo only sold at one

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

which to discern whether there is a pattern of consistent price

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

information which would allow us to examine pricing patterns on Akzo's

sales of other products and there are no other respondents or other

record information on which such an analysis could be based.

Because the data available do not provide an appropriate basis for

making a level of trade adjustment but the level of trade of the home

market sale is a more advanced stage of distribution

[[Page 10527]]

than the level of trade of the CEP sale, a CEP offset is appropriate.

Akzo has claimed a CEP offset. We applied the CEP offset to NV or CV,

as appropriate.

We based the CEP offset amount on the amount of the home market

indirect selling expenses. We limited the home market indirect selling

expense deduction by the amount of the indirect selling expenses

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

772(d)(1)(D).

Constructed Value

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

based on the sum of Akzo's cost of materials and fabrication employed

in producing the subject merchandise, SG&A and profit incurred and

realized in connection with production and sale of the foreign like

product, and U.S. packing costs. In accordance with section

773(e)(2)(A), we based SG&A and profit on the amounts incurred and

realized by Akzo in connection with the production and sale of the

foreign like product in the ordinary course of trade, for consumption

in the foreign country. We used the costs of materials, fabrication,

and SG&A as reported in the CV portion of Akzo's questionnaire

response. We used the U.S. packing costs as reported in the U.S. sales

portion of Akzo's questionnaire response. We based selling expenses and

profit on the information reported in the home market sales portion of

Akzo's questionnaire response. See Certain Pasta from Italy; Notice of

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination, 61 FR 1344, 1349 (January 19,

1996). For selling expenses, we used the average of the home market

selling expenses weighted by the total quantity sold. For actual

profit, we first calculated the difference between the home market

sales value and home market COP for all home market sales in the

ordinary course of trade, and divided the sum of these differences by

the total home market COP for these sales. We then multiplied this

percentage by the COP for each U.S. model to derive an actual profit.

We derived the CEP offset amount from the amount of the indirect

selling expenses on sales in the home market. We limited the home

market indirect selling expense deduction by the amount of the indirect

selling expenses incurred on sales to the United States.

Preliminary Results of the Review

As a result of our comparison of CEP and NV, we preliminarily

determine that the following weighted-average dumping margin exists:

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

Margin

Manufacturer/exporter Period (percent)

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Akzo.................................... 06/01/95-05/31/96 28.40

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Parties to the proceeding may request disclosure within 5 days of

the date of publication of this notice. Any interested party may

request a hearing within 10 days of publication. Any hearing, if

requested, will be held 44 days after the publication of this notice,

or the first workday thereafter. Interested parties may submit case

briefs within 30 days of the date of publication of this notice.

Rebuttal briefs, which must be limited to issues raised in the case

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

publication. Parties who submit argument are requested to submit with

the argument (1) a statement of the issue and (2) a brief summary of

the argument. The Department will publish a notice of final results of

this 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.

Upon issuance of the final results of review, the Department shall

determine, and the U.S. Customs Service shall assess, antidumping

duties on all appropriate entries. Because the inability to link sales

with specific entries prevents calculations of duties on an entry-by-

entry basis, we will calculate an importer-specific ad valorem duty

assessment rate for each class or kind of merchandise based on the

ratio of the total amount of antidumping duties calculated for the

examined sales made during the POR to the total customs value of the

sales used to calculate those duties. This rate will be assessed

uniformly on all entries of that particular importer made during the

POR. (This is equivalent to dividing the total amount of the

antidumping duties, which are calculated by taking the difference

between statutory NV and statutory CEP, by the total statutory CEP

value of the sales compared, and adjusting the result by the average

difference between CEP and customs value for all merchandise examined

during the POR).

Furthermore, the following deposit requirements will be effective

for all shipments of PPD-T aramid from the Netherlands entered, or

withdrawn from warehouse, for consumption on or after the publication

date, as provided for by section 751(a)(2)(c) of the Act: (1) The cash

deposit rate for the reviewed company will be the rate established in

the final results of this review; (2) if the exporter is not a firm

covered in this review, or the original LTFV investigation, but the

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

the most recent period for the manufacturer of the merchandise; and (3)

for all other producers and/or exporters of this merchandise, the cash

deposit rate shall be 66.92 percent, the ``all others'' rate

established in the LTFV investigation (59 FR 32678, June 24, 1994), as

explained before. These deposit rates, when imposed, shall remain in

effect until publication of the final results of the next

administrative review.

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.

This administrative review and notice are published pursuant to

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

353.22(c)(5).

Dated: February 27, 1997.

Robert S. LaRussa

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-5700 Filed 3-6-97; 8:45 am]

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