Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea: Preliminary Results of Antidumping Duty Administrative Review and Termination in Part

DEPARTMENT OF COMMERCE

[A-580-807]

Polyethylene Terephthalate Film, Sheet, and Strip From the

Republic of Korea: Preliminary Results of Antidumping Duty

Administrative Review and Termination in Part

AGENCY: Import Administration, International Trade Administration,

Department of Commerce and Termination in Part.

ACTION: Notice of preliminary results of antidumping duty

administrative review, 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 two manufacturers/exporters of the subject

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

May 31, 1996. The review indicates the existence

[[Page 10528]]

of sales below normal value during the period of review.

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 November 14, 1996, in accordance with 19 CFR 353.25, we issued a

revocation of the order with respect to Kolon Industries (Kolon).

Accordingly, we are terminating this review of Kolon.

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 (no longer than five pages, including

footnotes).

EFFECTIVE DATE: March 7, 1997.

FOR FURTHER INFORMATION CONTACT:

Michael J. Heaney or Linda Ludwig, Import Administration, International

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

Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-

4475/3833.

APPLICABLE STATUTE: Unless otherwise indicted, 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 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 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 1995/1996 review period on June

6, 1996 (61 FR 28840). On June 29, 1996, the petitioners, E.I. DuPont

Nemours & Co., Inc., Hoescht Celanese Corporation, and ICI Americas,

Inc. requested reviews of Kolon, SKC Limited (SKC), and STC Corporation

(STC). SKC and Kolon filed requests for review on June 27, 1996 and

June 28, 1996, respectively. We initiated the review on August 8, 1996

(61 FR 41373).

On November 14, 1996, the Department revoked the order in part with

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

respect to 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, 1995 through May 31, 1996. The

Department is conducting this review in accordance with section 751 of

the Act, as amended.

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 f.o.b. 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 rebates in

accordance with section 772(c) of the Act.

CEP was based on 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, 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.

For SKC, we made an offset to interest of 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)(C) 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

third 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 third 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 SKC's, and STC's cost of materials and

fabrication for the foreign like product, plus amounts for home market

selling, general and administrative (SG&A) 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

[[Page 10529]]

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

compared model-specific prices less any applicable movement charges.

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

percent of a respondent's sales of a given model where 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,

within an extended period of time. 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

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

home market sales were sold at below-cost prices. We therefore excluded

these sales from our analysis 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 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 SG&A expenses. In accordance with section 773(e)(2)(A) of the Act,

we based 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 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 or 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 determine whether sales in the comparison market are at

a different level of trade than the CEP, we examined whether the

comparison sales were at different stages in the marketing process than

the CEP. We made this determination on the basis of a review of the

distribution system in the comparison market, including selling

functions, class of customer, and the level of selling expenses for

each type of sale. Different stages of marketing necessarily involve

differences in selling functions, but differences in selling functions,

even substantial ones, are not alone sufficient to establish a

difference in level of trade. Similarly, while customer categories such

as ``distributor'' and ``wholesaler'' may be useful in identifying

different levels of trade, they are insufficient in themselves to

establish that there is a difference in level of trade. See Certain

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

Length Carbon Steel Plate from Canada: Preliminary Results of

Antidumping Duty Administrative Review, 61 FR 51896 (October 4, 1996).

In order to implement these principles, each of the respondents

provided information with respect to its selling activities associated

with each stage of marketing. Both of the respondents identified two

stages of marketing in the home market: (1) wholesalers/distributors

and (2) end-users. For both stages, SKC and STC perform similar selling

functions such as market research and after sales warranty services.

Because customer description do not necessarily 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 respondent's home market sales. Because

STC and SKC performed similar marketing functions on EP and home market

sales, we determined that EP and HM sales were at the same the level of

trade for both respondents.

SKC 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.

For both EP and CEP the relevant transaction for determining the level

of trade is the sale from the exporter to the importer, whether

unaffiliated or affiliated. Based on SKC's questionnaire responses and

response to our request for supplemental information, we determined a

difference between the actual selling functions performed by SKC for

the CEP sales and those performed for HM sales. SKC provides

engineering services, and inventory maintenance services on its HM

sales. SKC does not provide these services on its CEP sales. SKC also

provides a greater degree of computer, legal, accounting, audit and/or

business systems development services on its home market sales than it

does on its CEP sales. Therefore, the selling functions performed by

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

establish different levels of trade. In addition, these differences in

selling functions indicated that the home market sales occur at a more

advanced stage of distribution than the CEP sales.

Because we compared SKC's 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 SKC 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

[[Page 10530]]

trade. Further, we do not have the information which would allow us to

examine pricing patterns of SKC's sales of other 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

SKC 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. SKC claimed a CEP offset, which we applied to

NV. To calculate the CEP offset, we took the amount of home market

indirect selling expenses, and deducted this amount from NV, on home

market comparison sales. We limited HM indirect selling expenses to the

amount of indirect selling expenses incurred on sales in the United

States.

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, 1995 through May 31, 1996:

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Manufacturer/exporter Margin

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SKC.................................................. 1.57

STC.................................................. 0.37

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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,

within 120 days after the publication of this notice.

The Department shall determine, and Customs shall assess,

antidumping duties on all appropriate entries. Because the inability to

link sales with specific entries prevents calculation of duties on an

entry-by-entry basis, we have calculated an importer specific ad

valorem duty assessment rate for the 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 these 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 antidumping duties, which

are calculated by taking the difference between NV and U.S. Price, by

the total U.S. value of the sales compared, and adjusting the result by

the average difference between U.S. price and customs value for all

merchandise examined during the POR.) 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, except if the rate was less than 0.50 percent,

and therefore, de minimis within the meaning of 19 CFR 353.6, in which

case the cash deposit rate will be zero; (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: March 3, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-5710 Filed 3-6-97; 8:45 am]

BILLING CODE 3510-DS-M