Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Emulsion Styrene- Butadiene Rubber From the Republic of Korea

DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-833]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Emulsion Styrene-

Butadiene Rubber From the Republic of Korea

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 4, 1998.

FOR FURTHER INFORMATION CONTACT: Sunkyu Kim or James Nunno, Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, NW., Washington, DC

20230; telephone: (202) 482-2613 or (202) 482-0783, respectively.

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

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

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

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

otherwise indicated, all citations to the Department of Commerce's (the

Department's) regulations are references to 19 CFR part 351 (April 1,

1998).

Preliminary Determination

We preliminarily determine that emulsion styrene-butadiene rubber

(ESBR) from the Republic of Korea is being, or is likely to be, sold in

the United States at less than fair value (LTFV), as provided in

section 733 of the Act. The estimated margins of sales at LTFV are

shown in the ``Suspension of Liquidation'' section of this notice,

below.

Case History

Since the initiation of this investigation (see Notice of

Initiation of Antidumping Investigations: Emulsion Styrene-Butadiene

Rubber from Brazil, the Republic of Korea, and Mexico (63 FR 20575,

April 27, 1998), ``Notice of Initiation''), the following events have

occurred:

On May 8, 1998, the Department obtained a request from Hyundai

Petrochemical Co., Ltd. (``Hyundai'') to be excluded from participation

as a mandatory respondent in this investigation. On May 12, 1998, the

petitioner submitted a letter to the Department opposing Hyundai's

exclusion from this proceeding. On May 13, 1998, the Department

notified Hyundai that it was selected as a mandatory respondent. In

August 1998, Hyundai submitted a letter stating that it is unable to

participate in this investigation, and is not responding to our

questionnaires.

On May 18, 1998, the United States International Trade Commission

(ITC) issued an affirmative preliminary injury determination in this

case (see ITC Investigation Nos. 731-TA-794-796).

On May 21, 1998, the Department of Commerce (the Department) issued

the antidumping duty questionnaire to Kumho and Hyundai, the only two

producers, and/or exporters of the subject merchandise to the United

States identified in the petition. In June of 1998 the Department

received Kumho's response to Section A of the questionnaire. Kumho

submitted its response to Sections B and C of the questionnaire in July

of 1998.

On July 21, 1998, pursuant to section 733(c)(1)(A) of the Act, the

petitioners made a timely request to postpone the preliminary

determination. The petitioners filed an explanatory amendment to that

request on July 23, 1998. We granted this request and, on July 28,

1998, postponed the

[[Page 59515]]

preliminary determination until no later than October 28, 1998 (see

Notice of Postponement of Preliminary Determinations of Sales at Less

Than Fair Value: Emulsion Styrene-Butadiene Rubber From Brazil, the

Republic of Korea, and Mexico (63 FR 41544, August 4, 1998)).

On July 27, 1998, pursuant to section 773(b) of the Act, the

petitioners submitted a timely allegation, that Kumho had made sales in

the home market below the cost of production (COP). Our analysis of

that allegation indicated that there were reasonable grounds to believe

or suspect that Kumho sold ESBR in the home market at prices at less

than the COP. Accordingly, on August 21, 1998, we initiated a COP

investigation with respect to Kumho pursuant to section 773(b) of the

Act (see Memorandum from Team to Louis Apple, Director, Office 5, dated

August 21, 1998).

We issued supplemental questionnaires for Sections A, B, and C to

Kumho in August 1998 and received responses to these supplemental

questionnaires, along with revised U.S. and home market sales listings,

in September 1998.

We received Kumho's response to Section D of the questionnaire in

September 1998. We issued a supplemental questionnaire for Section D on

October 13, 1998, but the response to the supplemental questionnaire

was not received in time to be considered for purposes of the

preliminary determination. We will consider it, however, for the final

determination.

On September 24, 1998, the petitioners alleged that there is a

reasonable basis to believe or suspect that critical circumstances

exist with respect to imports of ESBR from Korea. We requested shipment

data from Kumho on September 28, 1998, and received this information on

October 13, 1998. The critical circumstances analysis for the

preliminary determination is discussed below under ``Critical

Circumstances.''

Postponement of Final Determination and Extension of Provisional

Measures

On October 21, 1998, Kumho requested that, in the event of an

affirmative preliminary determination in this investigation, the

Department postpone its final determination until no later than 135

days after the publication of this notice in the Federal Register,

pursuant to section 735(a)(2)(A) of the Act. In addition, Kumho

requested that the Department extend provisional measures pursuant to

section 733(d) of the Act from four months to not more than six months.

In accordance with 19 CFR 351.210(e), because: (1) Our preliminary

determination is affirmative; (2) Kumho accounts for a significant

proportion of exports of the subject merchandise; (3) no compelling

reasons for denial exist; and (4) Kumho has requested an extension of

provisional measures, we are granting this request and are postponing

the final determination until no later than 135 days after the

publication of this notice in the Federal Register. Suspension of

liquidation will be extended accordingly.

Scope of Investigation

For purposes of this investigation, the product covered is ESBR.

ESBR is a synthetic polymer made via free radical cold emulsion

copolymerization of styrene and butadiene monomers in reactors. The

reaction process involves combining styrene and butadiene monomers in

water, with an initiator system, an emulsifier system, and molecular

weight modifiers. ESBR consists of cold non-pigmented rubbers and cold

oil extended non-pigmented rubbers that contain at least one percent of

organic acids from the emulsion polymerization process.

ESBR is produced and sold, both inside the United States and

internationally, in accordance with a generally accepted set of product

specifications issued by the International Institute of Synthetic

Rubber Producers (IISRP). The universe of products subject to this

investigation are grades of ESBR included in the IISRP 1500 series and

IISRP 1700 series of synthetic rubbers. The 1500 grades are light in

color and are often described as ``Clear'' or ``White Rubber.'' The

1700 grades are oil-extended and thus darker in color, and are often

called ``Brown Rubber.'' ESBR is used primarily in the production of

tires. It is also used in a variety of other products, including

conveyor belts, shoe soles, some kinds of hoses, roller coverings, and

flooring.

Products manufactured by blending ESBR with other polymers, high

styrene resin master batch, carbon black master batch (i.e., IISRP 1600

series and 1800 series) and latex (an intermediate product) are not

included within the scope of this investigation.

The products under investigation are currently classifiable under

subheading 4002.19.0010 of the Harmonized Tariff Schedule of the United

States (HTSUS). Although the HTSUS subheading is provided for

convenience and customs purposes, the written description of the scope

of this investigation is dispositive.

Period of Investigation

The period of investigation (POI) is April 1, 1997, through March

31, 1998.

Facts Available

Section 776(a)(2) of the Act provides that, if an interested party:

(A) Withholds information that has been requested by the Department;

(B) fails to provide such information in a timely manner or in the form

or manner requested; (C) significantly impedes a proceeding under the

antidumping statute; or (D) provides such information but the

information cannot be verified, the Department shall, subject to

subsections 782(c)(1) and (e), use facts otherwise available in

reaching the applicable determination. Because Hyundai failed to

respond to the Department's questionnaire and because that failure is

not overcome by the application of subsections (c)(1) and (e) of

section 782, we must use facts otherwise available to calculate the

dumping margins for this company.

Section 776(b) of the Act provides that adverse inferences may be

used against a party that has failed to cooperate by not acting to the

best of its ability to comply with the Department's requests for

information. See also Statement of Administrative Action accompanying

the URAA, H.R. Rep. No. 316, 103d Cong., 2d Sess. 870 (1994) (SAA).

Hyundai's decision not to reply to the Department's antidumping

questionnaire demonstrates that it has failed to act to the best of its

ability to comply with a request for information under section 776 of

the Act. Thus, the Department has determined that, in selecting among

the facts otherwise available, an adverse inference is warranted.

Consistent with Department practice, as adverse facts available,

the Department is assigning to Hyundai the higher of: (1) The highest

margin stated in the petition; or (2) the highest margin calculated for

any respondent in this investigation. In this case, this margin is

118.88 percent, which is the highest margin alleged in the petition for

any Korean producer (see Initiation Checklist and the Notice of

Initiation for a discussion of the margin calculations in the

petition).

Section 776(b) states that an adverse inference may include

reliance on information derived from the petition or any other

information placed on the record. See also SAA at 829-831. Section

776(c) provides that, when the Department relies on secondary

information (e.g., the petition) as the facts otherwise available, it

must, to the extent practicable, corroborate that

[[Page 59516]]

information from independent sources that are reasonably at its

disposal. We reviewed the adequacy and accuracy of the information in

the petition during our pre-initiation analysis of the petition, to the

extent appropriate information was available for this purpose (e.g.,

import statistics, call reports, and data from business contacts). See

Notice of Initiation and April 21, 1998, ``Office of Antidumping

Investigations Initiation Checklist'' (``Initiation Checklist'').

For purposes of the preliminary determination, we were only able to

reexamine part of the information in the petition. We reexamined the

export price data provided in the petition in light of information

obtained during the investigation and, to the extent that it could be

corroborated, found that it continues to be of probative value.

However, the Department was provided no other useful information by the

respondents or other interested parties, and is aware of no other

independent sources of information, that would enable it to further

corroborate the remaining components of the margin calculation in the

petition. See the October 27, 1998, Memorandum to Louis Apple on The

Facts Available Rate and Corroboration of Secondary Information:

Preliminary Determination of Emulsion Styrene-Butadiene Rubber from the

Republic of Korea. We note that the SAA at 870 specifically states

that, where ``corroboration may not be practicable in a given

circumstance,'' the Department may nevertheless apply an adverse

inference.

Fair Value Comparisons

To determine whether sales of ESBR from Korea to the United States

were made at less than fair value, we compared the export price (EP) to

the Normal Value (NV), as described in the ``Export Price'' and

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

section 777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs

for comparison to weighted-average NVs.

On January 8, 1998, the Court of Appeals for the Federal Circuit

issued a decision in CEMEX v. United States, 1998 WL 3626 (Fed Cir.).

In that case, based on the pre-URAA version of the Act, the Court

discussed the appropriateness of using constructed value (CV) as the

basis for foreign market value when the Department finds home market

sales to be outside the ``ordinary course of trade.'' This issue was

not raised by any party in this proceeding. However, the URAA amended

the definition of sales outside the ``ordinary course of trade'' to

include sales below cost. See Section 771(15) of the Act. Consequently,

the Department has reconsidered its practice in accordance with this

court decision and has determined that it would be inappropriate to

resort directly to CV, in lieu of foreign market sales, as the basis

for NV if the Department finds foreign market sales of merchandise

identical or most similar to that sold in the United States to be

outside the ``ordinary course of trade.'' Instead, the Department will

use sales of similar merchandise, if such sales exist. The Department

will use CV as the basis for NV only when there are no above-cost sales

that are otherwise suitable for comparison. Therefore, in this

proceeding, when making comparisons in accordance with section 771(16)

of the Act, we considered all products sold in the home market as

described in the ``Scope of Investigation'' section of this notice,

above, that were in the ordinary course of trade for purposes of

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

were no sales of identical merchandise in the home market made in the

ordinary course of trade to compare to U.S. sales, we compared U.S.

sales to sales of the most similar foreign like product made in the

ordinary course of trade, based on the characteristics listed in

Sections B and C of our antidumping questionnaire.

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the comparison market at

the same level of trade (LOT) as the EP or constructed export price

(CEP) transaction. The NV LOT is that of the starting-price sales in

the comparison market or, when NV is based on CV, that of the sales

from which we derive selling, general and administrative (SG&A)

expenses and profit. For EP, the LOT is also the level of the starting-

price sale, usually the price of the exporter to the importer. For CEP

transactions, it is the level of the constructed sale from the exporter

to the importer.

To determine whether NV sales are at a different level of trade

than EP or CEP, we examined stages in the marketing process and selling

functions along the chain of distribution between the producer and the

unaffiliated customer. If the home market sales are at a different LOT

than sales made to the United States, and the difference affects price

comparability, as manifested in a pattern of consistent price

differences between the sales at different levels of trade in the home

market, we make a LOT adjustment under section 773(a)(7)(A) of the Act.

Finally, for CEP sales, if the NV level is more remote from the factory

than the CEP level and there is no basis for determining whether the

difference in the levels between NV and CEP affects price

comparability, we adjust NV under section 773(a)(7)(B) of the Act (the

CEP-offset provision). See Notice of Final Determination of Sales at

Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from

South Africa, 62 FR 61731 (November 19, 1997).

With respect to home market sales, Kumho reported two customer

categories (i.e., end users and distributors) and two channels of

distribution corresponding to each customer category. For its sales to

the United States, it also reported two customer categories (i.e., end

users and distributors) and two channels of distribution corresponding

to each customer category. Kumho reported only EP sales in the U.S.

market, and claimed that the selling functions that it performs in

connection with its home market and U.S. sales do not vary by customer

category or by distribution channel. In addition, Kumho considers all

home market and U.S. sales to be at the same level of trade.

Based on our analysis of the selling functions in the home market,

we found the selling functions to end users to be similar to the

selling functions to distributors. In addition, we noted that the two

U.S. channels of distribution did not differ with respect to selling

activities. Similar services, such as sales administration, billing,

warranties, and freight & delivery arrangement, where applicable, were

offered to all or some portion of customers in each channel.

Furthermore, we noted that EP sales involved basically the same selling

functions associated with the home market sales. Therefore, based upon

this information, we determined that the level of trade for all EP

sales is the same as that of the home market sales and to consider them

as constituting the same LOT in the two markets. Accordingly, all

comparisons are at the same LOT and an adjustment pursuant to section

773(a)(7)(A) of the Act is not warranted.

Export Price

In accordance with sections 772(a) and (c) of the Act, we

calculated EP for all of Kumho's sales, since the merchandise was sold

to the first unaffiliated purchaser in the United States prior to

importation, and CEP was not otherwise warranted based on the facts of

record.

We calculated EP based on the packed delivered price to

unaffiliated

[[Page 59517]]

purchasers in the United States. In accordance with section

772(c)(1)(B) of the Act, we added an amount for uncollected import

duties in Korea. We made deductions from the starting price for

movement expenses in accordance with section 772(c)(2)(A) of the Act;

these included, where appropriate, foreign domestic inland freight,

foreign brokerage and handling, international freight, and marine

insurance.

Affiliated-Party Transactions and Arm's-Length Test

Kumho reported that it made sales in the home market to affiliated

end users. Sales to affiliated customers in the home market not made at

arm's-length prices (if any) were excluded from our analysis because we

considered them to be outside the ordinary course of trade. See 19 CFR

351.102 (1998). To test whether these sales were made at arm's-length

prices, we compared on a model-specific basis the starting prices of

sales to affiliated and unaffiliated customers net of all movement

charges, direct selling expenses, and packing. Where, for the tested

models of subject merchandise, prices to the affiliated party were on

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

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

length. See 19 CFR 351.403(c) (1998). In instances where no price ratio

could be constructed for an affiliated customer because identical

merchandise was not sold to unaffiliated customers, we were unable to

determine that these sales were made at arm's-length prices and,

therefore, excluded them from our LTFV analysis. See Final

Determination of Sales at Less Than Fair Value: Certain Cold-Rolled

Carbon Steel Flat Products from Argentina (58 FR 37062, 37077 (July 9,

1993)). Where the exclusion of such sales eliminated all sales of the

most appropriate comparison product, we made a comparison to the next

most similar model.

Normal Value

In order to determine whether there is a sufficient volume of sales

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

compared Kumho's volume of home market sales of the foreign like

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

accordance with section 773(a)(1)(C) of the Act. Because Kumho'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 was viable for

Kumho.

Based on the information contained in the cost allegation submitted

by the petitioners, the Department found reasonable grounds to believe

or suspect that Kumho made sales in the home market at prices below

their COPs, in accordance with section 773(b)(1) of the Act. As a

result, the Department initiated an investigation to determine whether

Kumho made home market sales at prices below their COPs during the POI,

within the meaning of section 773(b) of the Act. See Memorandum from

the Team to Louis Apple, Director, Office 5, dated August 21, 1998.

Before making any fair value comparisons, we conducted the COP analysis

described below.

We calculated the COP based on the sum of Kumho's cost of materials

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

market SG&A expenses, financial expenses, and packing costs, in

accordance with section 773(b)(3) of the Act. In addition, we made the

following adjustments to Kumho's reported COP as follows: (1) we

recalculated Kumho's interest expense factor on a consolidated basis,

and (2) we adjusted the direct labor costs reported in the COP and CV

databases to reflect Kumho's weighted-average direct labor costs (see

Memorandum to the File from Stan Bowen, dated October 28, 1998).

We compared Kumho's weighted-average COP figures to home market

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

the Act, in order to determine whether sales had been made at prices

below their COPs. On a product-specific basis, we compared the COP to

home market price, less any applicable movement charges, direct and

indirect selling expenses, and packing expenses.

In determining whether to disregard home market sales made at

prices below the COP, we examined whether such sales were made: (1) In

substantial quantities within an extended period of time; and (2) at

prices which permitted the recovery of all costs within a reasonable

period of time in the normal course of trade, pursuant to section

773(b)(1) of the Act.

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

percent of Kumho'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 Kumho's sales

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

determined such sales to have been made in ``substantial quantities''

within an extended period of time, in accordance with section

773(b)(2)(B) of the Act. In such cases, we also determined that such

sales were not made at prices which would permit recovery of all costs

within a reasonable period of time, in accordance with section

773(b)(2)(D) of the Act. Therefore, we disregarded the below-cost

sales. Where all sales of a specific product were at prices below the

COP, we disregarded all sales of that product.

We found that, for certain models of ESBR, more than 20 percent of

Kumho's home market sales within an extended period of time were at

prices less than COP. Further, the prices did not provide for the

recovery of costs within a reasonable period of time. We, therefore,

disregarded the below-cost sales and used the remaining above-cost

sales as the basis for determining NV, in accordance with section

773(b)(1) of the Act. For those U.S. sales of ESBR for which there were

no comparable home market sales in the ordinary course of trade, we

compared the EP to CV, in accordance with section 773(a)(4) of the Act.

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

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

expenses, profit, and U.S. packing costs. 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 Kumho in connection with the

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

of trade, for consumption in Korea. As noted above, we recalculated

Kumho's interest expense factor on a consolidated basis, and we

adjusted the direct labor costs reported in the COP and CV databases to

reconcile with amounts reported in the Section D response.

We calculated NV for Kumho as noted in the ``Price to Price

Comparisons'' and ``Price to CV Comparisons'' sections of this notice,

below.

Price-to-Price Comparisons

We calculated NV based on packed, FOB or delivered prices to home

market unaffiliated customers and prices to affiliated customers that

we determined to be at arm's length. We made deductions, where

appropriate, for movement expenses consistent with section 773(a)(6)(B)

of the Act; these included inland freight and warehousing expenses. In

addition, we made adjustments for differences in cost attributable to

differences in physical characteristics of the merchandise pursuant to

section 773(a)(6)(C)(ii) of the Act, as well as for differences in

circumstances of sale (COS) in

[[Page 59518]]

accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR

351.410. We made COS adjustments for imputed credit expenses, bank

charges and commissions. We made no adjustment for imputed credit

expenses related to the pre-payment of value-added taxes (VAT), in

accordance with our long-standing practice. See, e.g., Notice of Final

Determination of Sales at Less Than Fair Value: Sulfur Dyes, Including

Sulfur Vat Dyes, from the United Kingdom, 58 FR 3253 (Jan. 8, 1993),

Notice of Final Determination of Sales at Not Less Than Fair Value:

Stainless Steel Bar from Italy, 59 FR 66921 (Dec. 28, 1994),

Ferrosilicon from Brazil; Final Results of Antidumping Duty

Administrative Review, 61 FR 59407 (Nov. 22, 1996), and Notice of

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination: Stainless Steel Wire Rod From

Italy, 63 FR 10831 (March 5, 1998). In those instances where Kumho had

not reported payment dates, we recalculated reported credit expenses

using the date of the preliminary determination as the payment date.

Because Kumho paid commissions to an unaffiliated agent on sales to the

United States, in calculating NV, we offset these commissions using the

weighted-average amount of indirect selling expenses, including

inventory carrying costs, incurred on the home market sales for the

comparison product, up to the amount of the U.S. commissions, in

accordance with 19 CFR 351.410(e). Finally, we deducted home market

packing costs and added U.S. packing costs, in accordance with section

773(a)(6)(A) and (B) of the Act.

Price-to-CV Comparisons

For price-to-CV comparisons, we made adjustments to CV in

accordance with section 773(a)(8) of the Act. Where we compared CV to

EP, we deducted from CV the weighted-average home market direct selling

expenses and added the weighted-average U.S. product-specific direct

selling expenses (i.e., credit expenses, bank charges, and commissions)

in accordance with section 773(a)(6)(C)(iii) of the Act. We offset U.S.

commissions using the weighted-average amount of indirect selling

expenses and inventory carrying costs incurred on the home market sales

for the comparison product, up to the amount of the U.S. commissions,

in accordance with 19 CFR 351.410(e).

Currency Conversion

Our preliminary analysis of Federal Reserve dollar-won exchange

rate data shows that the won declined rapidly at the end of 1997,

losing over 40% of its value between the beginning of November and the

end of December. The decline was, in both speed and magnitude, many

times more severe than any change in the dollar-won exchange rate

during the previous eight years. Had the won rebounded quickly enough

to recover all or almost all of the initial loss, the Department might

have been inclined to view the won's decline at the end of 1997 as

nothing more than a sudden, but only momentary drop, despite the

magnitude of that drop. As it was, however, there was no significant

rebound. Therefore, we have preliminarily determined that the decline

in the won at the end of 1997 was so precipitous and large that the

dollar-won exchange rate cannot reasonably be viewed as having simply

fluctuated during this time, i.e., as having experienced only a

momentary drop in value. Therefore, in making this preliminary

determination, the Department used daily rates exclusively for currency

conversion purposes for home market sales matched to U.S. sales

occurring between November 1 and December 31, 1997.

In the recently completed preliminary determination of Mushrooms

from Indonesia, an issue was raised regarding the use of two averaging

periods in the margin calculations to account for the effect of the

devaluation of the Indonesian rupiah. See, Notice of Preliminary

Determination of Sales at Less Than Fair Value and Postponement of

Final Determination: Certain Preserved Mushrooms from Indonesia

(Mushrooms from Indonesia) 63 FR 41783 (August 5, 1998). The

petitioners in Mushrooms from Indonesia argued that the Department

should calculate the weighted-average export price for two averaging

periods--January through June 1997 and July through December 1997--in

order to avoid a distortion of the dumping margins caused by the rapid

devaluation of the rupiah. The Department did not calculate two

averaging periods in the preliminary determination in Mushrooms from

Indonesia, but we are continuing to evaluate this issue. Although the

issue of using two different averaging periods has not been raised in

the instant investigation, the Korean won experienced a precipitous

drop in value during the POI. Therefore, in both this investigation and

Mushrooms from Indonesia, we will continue to examine this issue for

the final determinations. We invite the interested parties to comment

on this issue.

Critical Circumstances

On September 24, 1998, the petitioners alleged that there is a

reasonable basis to believe or suspect that critical circumstances

exist with respect to imports of ESBR from Korea. In accordance with 19

CFR 351.206(c)(2)(i), since this allegation was filed 20 days prior to

the Department's preliminary determination, we must issue our

preliminary critical circumstances determination not later than the

preliminary determination.

Section 733(e)(1) of the Act provides that if a petitioner alleges

critical circumstances, the Department will determine whether there is

a reasonable basis to believe or suspect that:

(A)(i) There is a history of dumping and material injury by reason

of dumped imports in the United States or elsewhere of the subject

merchandise, or

(ii) The person by whom, or for whose account, the merchandise was

imported knew or should have known that the exporter was selling the

subject merchandise at less than its fair value and that there was

likely to be material injury by reason of such sales, and

(B) There have been massive imports of the subject merchandise over

a relatively short period.

To determine that there is a history of dumping of the subject

merchandise, the Department normally considers evidence of an existing

antidumping duty order on ESBR in the United States or elsewhere to be

sufficient. The petitioner did not provide any information indicating a

``history of dumping'' of ESBR from Korea. Furthermore, we investigated

the existence of antidumping duty orders on ESBR from Korea in the

United States or elsewhere, and did not find any. We were also unable

to find other information that would have indicated a ``history of

dumping'' of ESBR.

In determining whether an importer knew or should have known that

the exporter was selling subject merchandise at less than fair value

and thereby causing material injury, the Department normally considers

margins over 15 percent for CEP sales and 25 percent for EP sales to

impute knowledge of dumping and of resultant material injury. In this

investigation, Kumho does not have a margin over 25 percent for EP

sales, and there are no CEP sales. Based on these facts, we determine

that the first criterion for ascertaining whether critical

circumstances exist is not satisfied. Therefore, we have not analyzed

the shipment data for this company to examine whether imports of ESBR

have been massive over a relatively short period. Thus, we

preliminarily determine that there is no reasonable basis to believe or

suspect that critical

[[Page 59519]]

circumstances exist with respect to exports of ESBR from Korea by Kumho

(see, e.g., Notice of Preliminary Determination of Sales at Less Than

Fair Value and Postponement of Final Determination: Collated Roofing

Nails From Korea, 62 FR 25895, 25898 (May 12, 1997)). Regarding all

other exporters, because we do not find that critical circumstances

exist for Kumho, we determine that critical circumstances do not exist

for Hyundai, or for companies covered by the ``All Others'' rate. We

will make a final determination concerning critical circumstances when

we make our final determination in this investigation, if that final

determination is affirmative.

Verification

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

information determined to be acceptable for use in making our final

determination.

Suspension of Liquidation

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

Customs Service to suspend liquidation of all imports of subject

merchandise that are entered, or withdrawn from warehouse, for

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

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

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

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

chart below. These suspension-of-liquidation instructions will remain

in effect until further notice. The weighted-average dumping margins

are as follows:

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

Weighted-

average

Exporter/manufacturer margin

percentage

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

Korea Kumho Petrochemical Co., Ltd......................... 13.91

Hyundai Petrochemical Co., Ltd............................. 118.88

All Others................................................. 13.91

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

Pursuant to section 735(c)(5)(A) of the Act, the Department has

excluded any zero and de minimis margins, and any margins determined

entirely under section 776 of the Act, from the calculation of the

``All Others Rate.''

ITC Notification

In accordance with section 733(f) of the Act, we have notified the

ITC of our determination. If our final determination is affirmative,

the ITC will determine before the later of 120 days after the date of

this preliminary determination or 45 days after our final determination

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry.

Public Comment

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

be submitted to the Assistant Secretary for Import Administration no

later than February 5, 1999, and rebuttal briefs no later than February

12, 1999. A list of authorities used and an executive summary of issues

should accompany any briefs submitted to the Department. Such summary

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

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

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

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

will be held on February 15, 1999, time and room to be determined, at

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

NW, Washington, DC 20230. Parties should confirm by telephone the time,

date, and place of the hearing 48 hours before the scheduled time.

Interested parties who wish to request a hearing, or to participate

if one is requested, must submit a written request to the Assistant

Secretary for Import Administration, U.S. Department of Commerce, Room

1870, within 30 days of the publication of this notice. Requests should

contain: (1) The party's name, address, and telephone number; (2) the

number of participants; and (3) a list of the issues to be discussed.

Oral presentations will be limited to issues raised in the briefs. If

this investigation proceeds normally, we will make our final

determination by no later than 135 days after the publication of this

notice in the Federal Register.

This determination is issued and published pursuant to sections

773(d) and 777(i) of the Act.

Dated: October 28, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-29552 Filed 11-3-98; 8:45 am]

BILLING CODE 3510-DS-P