Preliminary Results of Antidumping Duty Administrative Review; Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide From the Netherlands

DEPARTMENT OF COMMERCE

International Trade Administration

[A-421-805]

Preliminary Results of Antidumping Duty Administrative Review;

Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide From the

Netherlands

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review.

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EFFECTIVE DATE: July 8, 1999.

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. DuPont de Nemours and Company. This review covers

sales of this merchandise to the United States during the period June

1, 1997, through May 31, 1998, by Akzo. 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.

FOR FURTHER INFORMATION CONTACT: Russell Morris, Office of AD/CVD

Enforcement VI, Import Administration, International Trade

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

Constitution Avenue, NW, Washington, DC 20230; Telephone: (202) 482-

1775.

The Applicable Statute and Regulations

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's

regulations are to the regulations at 19 CFR Part 351 (April 1998).

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 10, 1998, we published in the Federal Register (63 FR

31717) a notice of ``Opportunity to Request an Administrative Review''

of this order covering the period June 1, 1997, through May 31, 1998.

In accordance with 19 CFR 351.213(b), Akzo and petitioner requested

that we conduct an administrative review for the aforementioned period.

On July 28, 1998, the Department published a notice of ``Initiation of

Antidumping Review'' (63 FR 40258). 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 of the United States (``HTSUS'') 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 HTSUS item numbers are provided for

convenience and Customs purposes. The written description of the scope

remains dispositive.

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. See Section 751(a)(2)(A). 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 (``POR''). 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

[[Page 36842]]

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,

914 F. Supp. 535, 544-45 (CIT 1995).

Comparisons to NV

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

products covered by the Scope of the Review which were sold by the

respondent in the home market during the POR 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 home market during the comparison

period.

Furthermore, pursuant to section 777A(d)(2) of the Act, where there

were home market sales that passed the cost of production (``COP'')

test, as discussed below, we compared the CEPs of individual U.S.

transactions to the monthly weighted-average NV of the foreign like

product.

Constructed Export Price

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

sections 772(b), (c), and (d) of the Act, because all sales to the

first unaffiliated purchaser in the United States took place after

importation.

We calculated CEP based on delivered prices to unaffiliated

purchasers in the United States. Where appropriate, we reduced these

prices to reflect rebates. In accordance with section 772(d)(1) of the

Act, we deducted direct selling expenses, e.g., credit expenses, and

indirect selling expenses, including inventory carrying costs, which

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) in

accordance with section 772(c)(2) of the Act. Finally, we also deducted

from CEP an amount for profit in accordance with sections 772(d)(3) and

(f) of the Act.

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

like product to the volume of its U.S. sales of the subject

merchandise. Pursuant to sections 773(a)(1)(B) and (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.

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

unaffiliated purchasers in the home market. We made adjustments for

discounts and rebates. Where applicable we deducted home market packing

costs and added U.S. packing costs. In accordance with section

773(a)(6) of the Act, where applicable, we made deductions from the

starting price for inland freight and inland insurance. In addition, we

made a circumstances of sale adjustment for imputed credit expenses, in

accordance with section 773(a)(6)(C)(iii) of the Act. 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. We based this adjustment on the

difference in the variable costs of manufacturing for the foreign like

product and the subject merchandise.

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 deducted from CEP under section 772(d) of the Act.

Cost of Production Analysis

In the most recently completed administrative review of Akzo, we

disregarded sales found to be below the 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 the

weighted 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 selling, general and

administrative expenses 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 permitted 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 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 section 773(b)(2)(B) and (D) where 20 percent or

more of home market sales of a given product during the POR were at

prices less than the COP, we found that such sales were made in

substantial quantities within an extended period of time. Because the

sales prices would not permit recovery of all costs within a reasonable

period of time, we disregarded those below-cost sales and used the

remaining above-cost sales to determine NV in accordance with section

773(b)(1). For those models of PPD-T aramid for which there were no

home market sales available for matching purposes, we compared CEP to

CV.

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, selling, general and

administrative expenses (``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,

[[Page 36843]]

1349 (January 19, 1996). For selling expenses, we used the average of

the home market selling expenses weighted by the respective quantities

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 deducted from CEP under section 772(d) of the Act.

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 as the EP or CEP. The NV level of trade 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 SG&A expenses and

profit. For EP, the U.S. level of trade is also the level of the

starting-price sale, which is usually from exporter to importer. For

CEP, it is the level of the transaction between the exporter to the

importer for which we construct the import price.

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

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

functions along the chain of distribution between the producer and the

unaffiliated customer. If the comparison-market sales are at a

different level of trade, and the difference affects price

comparability, as manifested in a pattern of consistent price

differences between the sales on which NV is based and comparison-

market sales at the level of trade of the export transaction, we make a

level of trade 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, 61732-33 (November 19, 1997) (``South Africa

Final'').

In the present case, we were not able to compare U.S. CEP sales to

HM sales at the same level of trade. First we compared the CEP to the

HM sales to determine whether a level-of-trade adjustment was

appropriate, in accordance with the principles discussed above. For

purposes of our analysis, we examined information regarding the

distribution systems in both the United States and the Netherlands

markets, including the selling functions, classes of customer, and

selling expenses. Upon consideration of the above mentioned factors,

the Department determined that there is one level of trade and one

channel of distribution in the home market (direct to end users) and a

different level of trade in the U.S. market (sales to an affiliated

distributor). However, the data available do not provide an appropriate

basis to determine a level of trade adjustment. Further, we determined

that Akzo's NV sales to end-users/converters in the home market, as

well as CV, are at a more advanced stage of distribution than CEP

sales. As a result, the Department has preliminarily determined to

grant Akzo an adjustment to NV in the form of a CEP Offset.

For a detailed description of our level-of-trade analysis for these

preliminary results, see the June 30, 1999, Analysis Memorandum to The

File, on file in the Import Administration's Central Records Unit (Room

B-099) of the main Commerce building.

Currency Conversion

For purposes of the preliminary results, we made currency

conversions in accordance with section 773A of the Act, based on the

exchange rates in effect on the dates of the U.S. sales as certified by

the Federal Reserve Bank of New York. See Change in Policy Regarding

Currency Conversions, 61 FR 9434 (March 8, 1996). Section 773A(a) of

the Act 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 as a general matter that a fluctuation

exists when the daily exchange rate differs from a benchmark by 2.25

percent. See South Africa Final. The benchmark is defined as the

rolling average of rates for the past 40 business days. When we

determine that a fluctuation exists, we substitute the benchmark for

the daily rate, in accordance with established practice. Therefore, for

purposes of the current review, we have made currency conversions based

on the official exchange rates in effect on the dates of the U.S. sales

based on the methodology discussed above.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that the

following weighted-average dumping margin exists:

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

Weighted-

Average

Exporter/manufacturer Margin

(percent)

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Akzo....................................................... 3.00

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We will disclose the calculations used in our analysis to parties

to this proceeding within five days of the publication date of this

notice. See 19 CFR 351.224(b). Any interested party may request a

hearing within 30 days of the date of publication of this notice. See

19 CFR 351.310(c). Any hearing, if requested, will be held 44 days

after the date of publication, or the first workday thereafter.

Interested parties may submit case briefs within 30 days of the date of

publication of this notice. Parties who submit case briefs in this

proceeding should provide a summary of the arguments not to exceed five

pages and a table of statutes, regulations, and cases cited. Rebuttal

briefs, limited to issues raised in the case briefs, may be filed not

later than 37 days after the date of publication. The Department will

publish a notice of 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 the hearing, within 120 days from the

publication of these preliminary results.

Assessment Rate

Pursuant to 19 CFR 351.212(b), the Department calculated an

assessment rate for Akzo's entries of the subject merchandise. Upon

completion of this review, the Department will instruct the U.S.

Customs Service to assess antidumping duties on appropriate entries by

applying the assessment rate to the entered value of the merchandise.

If these preliminary results are adopted in our final results, we will

instruct the Customs Service to assess antidumping duties on Akzo's

entries of the merchandise subject to the review.

Cash Deposit Requirements

To calculate the cash-deposit rate for Akzo in this administrative

review, we divided the total dumping margins for Akzo by the total net

value of Akzo's sales during the review period. Furthermore, the

following deposit rates will be effective upon publication of the

[[Page 36844]]

final results of this administrative review for all shipments of aramid

fiber from the Netherlands entered, or withdrawn from warehouse, for

consumption on or after the publication date, as provided by section

751(a)(2)(C) of the Act: (1) The cash deposit rate for Akzo will be the

rate established in the final results of this review, except if the

rate is less than 0.5 percent and, therefore, de minimis, the cash

deposit will be zero; (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 final results

in which that manufacturer or exporter participated; (3) if the

exporter is not a firm covered in this review, a prior review, or the

original less-than-fair-value (``LTFV'') investigation, but the

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

the most recent final results for the manufacturer of the merchandise;

and (4) if neither the exporter nor the manufacturer is a firm covered

in this or any previous review conducted by the Department, the cash

deposit rate will be 66.26 percent, the ``All Others'' rate established

in the LTFV investigation. See Notice of Antidumping Duty Order and

Amended Final Determination of Sales at Less Than Fair Value: Aramid

Fiber Formed of Poly-Phenylene Terephthalamide From The Netherlands, 59

FR 32678-01 (June 24, 1996).

These cash deposit requirements, when imposed, shall remain in

effect until publication of the final results of the next

administrative review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 351.402 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 determination is issued and published in accordance with

sections 751(a)(1) and 777(i)(1) of the Act.

June 30, 1999.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-17395 Filed 7-7-99; 8:45 am]

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