Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of the Final Determination: Certain Polyester Staple Fiber From the Republic of Korea

DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-839]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of the Final Determination: Certain Polyester

Staple Fiber From the Republic of Korea

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 8, 1999.

FOR FURTHER INFORMATION CONTACT: Vincent Kane, Craig Matney, or Suresh

Maniam, Office 1, AD/CVD Enforcement, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington, D.C. 20230;

telephone: (202) 482-2815, (202) 482-1778, or (202) 482-0176,

respectively.

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

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

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

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

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

Department's) regulations refer to the regulations codified at 19 CFR

Part 351 (April 1998).

Preliminary Determination

We preliminarily determine that certain polyester staple fiber

(PSF) from the Republic of Korea (Korea) is being sold, 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 are shown in

the Suspension of Liquidation section of this notice.

Case History

This investigation was initiated on April 22, 1999 (see Initiation

of Antidumping Duty Investigations: Certain Polyester Staple Fiber from

the Republic of Korea and Taiwan, 64 FR 23053 (April 29, 1999)

(Initiation Notice)). Since the initiation of this investigation, the

following events have occurred:

On May 17, 1999, the United States International Trade Commission

(ITC) preliminarily determined that there is a reasonable indication

that imports of PSF are materially injuring the United States industry.

On May 24, 1999, the Department requested comments from interested

parties regarding the criteria to be used for model matching purposes.

The parties submitted comments on our proposed model matching criteria

on May 26, 1999.

On June 4 and 8, 1999, the Department issued antidumping

questionnaires to Samyang Corporation (Samyang), Sam Young Synthetics

Co. (Sam Young), and Geum Poong Corporation (Geum Poong) (see

memorandum dated June 17, 1999, to Deputy Assistant Secretary Richard

W. Moreland (Respondent Selection Memorandum), which is on file in

Import Administration's Central Records Unit). The respondents

submitted their initial responses to the questionnaires between July 2

and 30, 1999. Between July 14 and August 5, 1999, E.I. DuPont de

Nemours, Inc.; Arteva Specialities S.a.r.l., d/b/a KoSa; Wellman, Inc.;

and Intercontinental Polymers, Inc. (hereinafter collectively referred

to as ``the petitioners'') filed comments on the questionnaire

responses. After analyzing the initial responses and the petitioners'

comments, we issued supplemental questionnaires to the respondents

between August 9 and 11, 1999. We received responses to these

supplemental questionnaires between August 31 and September 3, 1999.

On July 28 and August 10, 1999, the petitioners requested that the

Department initiate an investigation of sales below the cost of

production (COP) for Samyang and Sam Young, respectively. On August 17

and 18, 1999, based on our review of the petitioners' below cost

allegation, we initiated a cost investigation for Samyang and Sam Young

(see memoranda dated August 17, 1999 and August 18, 1999, to Senior

Director Susan Kuhbach, which is on file in Import Administration's

Central Records Unit). On August 19, 1999, we requested that these two

companies respond to Section D of the antidumping questionnaires

concerning COP and constructed value (CV). We received the responses on

September 9, 1999.

On August 16, 1999, the petitioners made a timely request for a

postponement of the preliminary determination pursuant to section

[[Page 60777]]

733(c)(1)(A) of the Act. On August 25, 1999, the Department extended

the preliminary determination until no later than September 29, 1999.

See Notice of Postponement of Preliminary Antidumping Duty

Determinations: Certain Polyester Staple Fiber from the Republic of

Korea and Taiwan, 64 FR 47766 (September 1, 1999). On September 29,

1999, the petitioners requested another extension. In response, the

Department extended the preliminary determination until no later than

October 4, 1999. See Notice of Postponement of Preliminary Antidumping

Duty Determinations: Certain Polyester Staple Fiber from the Republic

of Korea and Taiwan, 64 FR 55248 (October 12, 1999). On October 4,

1999, based on petitioners' September 29, 1999 request for extension,

the Department further extended the preliminary determination until no

later than October, 29, 1999. See Notice of Postponement of Preliminary

Antidumping Duty Determinations: Certain Polyester Staple Fiber from

the Republic of Korea and Taiwan, 64 FR 55700 (October 14, 1999).

Between September 16 and October 20, 1999, the petitioners

requested that the Department use quarterly averaging periods in our

analysis rather than annual averaging periods (see Fair Value

Comparisons section below).

On October 8 and October 15, 1999, we issued Section D supplemental

questionnaires to Sam Young and Samyang, respectively. We received

responses to these questionnaires between October 15 and October 22,

1999.

Postponement of Final Determination and Extension of Provisional

Measures

Pursuant to section 735(a)(2) of the Act, on October 4, Samyang

requested that, in the event of an affirmative preliminary

determination, the Department postpone its final determination in this

investigation. On October 6, Sam Young and Geum Poong also requested

that, in the event of an affirmative preliminary determination, the

Department postpone its final determination in this investigation. In

accordance with 19 CFR 351.210(b), because (1) our preliminary

determination is affirmative, (2) the requesting exporters account for

a significant proportion of exports of the subject merchandise, and (3)

no compelling reasons for denial exist, we are granting the

respondents' request and are postponing the final determination until

no later than 135 days after the publication of this notice in the

Federal Register. The respondents have further requested that the

Department extend provisional measures from a four-month period to not

more than six months. Suspension of liquidation will be extended

accordingly.

Period of Investigation

The period of investigation (POI) is April 1, 1998, through March

31, 1999.

This period corresponds to each respondent's four most recent

fiscal quarters prior to the filing of the petition.

Scope of Investigation

For the purposes of this investigation, the product covered is

certain polyester staple fiber. Certain polyester staple fiber is

defined as synthetic staple fibers, not carded, combed or otherwise

processed for spinning, of polyesters measuring 3.3 decitex (3 denier,

inclusive) or more in diameter. This merchandise is cut to lengths

varying from one inch (25 mm) to five inches (127 mm). The merchandise

subject to this investigation may be coated, usually with a silicon or

other finish, or not coated. Certain polyester staple fiber is

generally used as stuffing in sleeping bags, mattresses, ski jackets,

comforters, cushions, pillows, and furniture. Merchandise of less than

3.3 decitex (less than 3 denier) classified under the Harmonized Tariff

Schedule of the United States (HTSUS) at subheading 5503.20.00.20 is

specifically excluded from this investigation. Also specifically

excluded from this investigation are polyester staple fibers of 10 to

18 denier that are cut to lengths of 6 to 8 inches (fibers used in the

manufacture of carpeting).

The merchandise subject to this investigation is classified in the

HTSUS at subheadings 5503.20.00.40 and 5503.20.00.60. Although the

HTSUS subheadings are provided for convenience and customs purposes,

the written description of the merchandise under investigation is

dispositive.

Scope Comments

As stated in the Initiation Notice, we set aside a period for

parties to raise issues regarding product coverage. We received

comments on the scope from various interested parties on May 12, 1999,

and rebuttal comments on June 7, 1999.

Stein Fibers, an importer of PSF from Korea, argued that under the

criteria set forth in the Department's regulations at 19 CFR

351.225(k)(2) to determine whether products are covered or excluded by

the scope (also known as the ``Diversified Products'' criteria),

regenerated fiber does not fall under the scope of this investigation.

First, Stein Fibers asserted that regenerated fiber is a low-quality

product that is not comparable to U.S.-produced high-quality virgin and

recycled PSF. Second, Stein Fibers contended that the quality

differences result in different expectations by the ultimate user and

in the product's ultimate use. Third, Stein Fibers stated that

regenerated PSF and U.S.-made virgin or recycled PSF do not compete

with each other and, therefore, their channels of trade are dissimilar.

Finally, Stein Fibers claimed that regenerated fiber is never

advertised or displayed, while particular brands of U.S.-made virgin or

recycled 1PSF are prominently displayed and advertised in the bedding

departments of many department stores.

Gates Formed-Fibre Products, Inc. (Gates), a PSF importer, stated

that the black and colored fiber extruded from textile fiber waste that

it imports for the manufacture of substrate for automobile trunk liners

is a different class or kind of merchandise than the products covered

by the petition. Therefore, Gates argued, black automotive substrate

(BAS) should be excluded from the scope of the investigation because:

(1) It cannot be used for the fill applications described in the

petition; (2) it is distinct from other fiber products; (3) it should

be excluded based on consideration of the ``Diversified Products''

criteria as set forth in the Department's regulations; (4) the

petitioners are considering its exclusion; and (5) if excluded, there

would be no risk of circumvention.

With respect to the ``Diversified Products'' criteria, Gates

submitted specific comments on each of the criteria. First, Gates

claimed that BAS differs from fiber fill product in all possible model

matching criteria. Second, Gates stated that the ultimate purchaser

would not accept BAS for use in the manufacture of merchandise such as

pillows and ski jackets which require fiber fill. Third, Gates asserted

that fiber fill is distributed by importers to manufacturers of

pillows, comforters, jackets, etc., which then resell their products to

distributors and large retailers. BAS is used in the manufacture of

trunk liners which are then sold to original equipment manufacturers or

their suppliers. Fourth, BAS cannot be used for fill applications.

Fifth, products using fiber fill are advertised directly to consumers

while BAS for trunk liners is not advertised to consumers.

Far Eastern Textile Ltd. (Far Eastern) and Nan Ya Plastics

Corporation (Nan Ya), the respondents in the companion antidumping

investigation of PSF from Taiwan, noted that low-melt PSF is used

[[Page 60778]]

exclusively for bonding and acts as an adhesive to hold other fibers

together for non-woven batting in high-loft products. Since low-melt

PSF itself is not used as filling and is not similar in appearance to

cotton or wool, Far Eastern and Nan Ya stated that low-melt PSF is

clearly outside the scope of investigation. Moreover, Far Eastern and

Nan Ya asserted that low-melt PSF is outside the scope of investigation

in consideration of the ``Diversified Products'' criteria set forth in

section 351.225(k)(2) of the Department's regulations. First, according

to Far Eastern and Nan Ya, with respect to product characteristics,

low-melt PSF consists of an outer sheath and an inner core as opposed

to single-component PSF. Second, with respect to the expectations of

the ultimate user and the ultimate use, Far Eastern and Nan Ya pointed

out that low-melt PSF is used as a bonding agent, not as a filler or

loft material, which is the expectation of the ultimate purchaser for

polyester staple fibers. Third, Far Eastern and Nan Ya stated that

while the channels of trade may be similar, the Department has

consistently recognized that no single criterion is dispositive.

Finally, Far Eastern and Nan Ya noted that they supply the U.S. market

with a particular specification of low-melt PSF suitable for furniture

and bedding manufacturing that is not available domestically in the

United States.

Saehan Industries Inc. and Samyang Corporation (Saehan/Samyang),

Korean producers and exporters of PSF, stated that conjugate polyester

staple fiber (conjugate PSF) and low-melt polyester staple fiber (low-

melt PSF) do not fall under the scope of this investigation. Saehan/

Samyang argued that conjugate PSF should be excluded from the scope

because there is no U.S. industry producing this product. 1Saehan/

Samyang stated that low-melt PSF is not ``fiber for fill'' and is,

thus, not the product targeted by the petitioners. Moreover, Saehan/

Samyang claimed that under the ``Diversified Products'' criteria,

conjugate PSF and low-melt PSF are outside the scope of this

investigation. First, Saehan/Samyang noted that the manufacturing

process for conjugate fiber creates a natural curl or spiral, resulting

in greater ``fluff.'' ``Regular'' fibers, produced by the petitioners,

are straight or mechanically crimped and lack the loft of conjugate

fiber. Second, Saehan/Samyang cited testimony given before the ITC

asserting that end-users expect greater loft and a down-like quality

from conjugate fibers which is not characteristic of the mechanically-

crimped fibers produced by DuPont, one of the petitioners. Third,

Saehan/Samyang stated that ``regular'' PSF and conjugate PSF are both

used in the production of furniture and home furnishings and,

therefore, they are not sold in different channels of trade. However,

Saehan/Samyang argued that channels of trade is less significant as a

criterion in this case because there are no different channels of trade

for any products used in this industry. Fourth, the ultimate use of

conjugate PSF is to create a certain level of loft. In the United

States, it is either used to provide high-loft characteristics, or it

is mixed with ``regular'' fiber to achieve different levels of loft,

and these two fibers are not interchangeable. Fifth, Saehan/Samyang

stated that although these products are not advertised or displayed in

the same way as products sold directly in the retail market,

manufacturers and customers treat the two products very differently.

The petitioners objected to the interested parties' requests that

regenerated, low-melt, BAS, and conjugate PSF be excluded from the

scope of the investigation. According to the petitioners, these

products are all PSF, meet the definition of the scope, and are

captured within the scope intended by the petitioners. Furthermore, the

petitioners claimed that all of these imported products are

domestically available. The petitioners added that there is no basis

for creating a separate class or kind of merchandise relating to the

PSF under consideration.

For purposes of this preliminary determination and in consideration

of comments by interested parties, the Department has not modified the

scope of this investigation because the current language reflects the

product coverage requested by the petitioners, and we have determined

that regenerated, low-melt, BAS, and conjugate PSF fall within that

scope. On the issue of whether BAS is a separate class or kind of

merchandise under the ``Diversified Products'' criteria, we will make a

determination in the final determination of this investigation.

Selection of Respondents

Section 777A(c)(1) of the Act directs the Department to calculate

individual dumping margins for each known exporter and producer of the

subject merchandise. However, section 777A(c)(2) of the Act gives the

Department discretion, when faced with a large number of exporters/

producers, to limit its examination to a reasonable number of such

companies if it is not practicable to examine all companies. Where it

is not practicable to examine all known producers/exporters of the

subject merchandise, this provision permits the Department to

investigate either: (1) a sample of exporters, producers, or types of

products that is statistically valid based on the information available

at the time of selection; or (2) exporters and producers accounting for

the largest volume of the subject merchandise that can reasonably be

examined.

On June 7, 1999, we received a request from Sung Lim Company Ltd.

to participate as a voluntary respondent in this investigation. On June

17, 1999, we received a similar request from Estal Industrial Company.

However, we determined that it was not practicable in this

investigation to examine all known producers/exporters of the subject

merchandise. Instead we found that, given our resources, we would be

able to investigate the three producers/exporters with the greatest

export volume (see Case History section above). For a more detailed

discussion of respondent selection in this investigation, see our

Respondent Selection Memorandum.

Critical Circumstances

On July 30, 1999, the petitioners alleged that there is a

reasonable basis to believe or suspect that critical circumstances

exist with respect to the subject merchandise. In accordance with 19

CFR 351.206(c)(2)(i), because this allegation was filed at least 20

days prior to our 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 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.

With respect to the first criterion, i.e., a history of dumping and

material injury in the United States or elsewhere, the European Union

(EU) imposed antidumping duties on synthetic polyester fibers from

Korea on January 8, 1993. The merchandise subject to the EU antidumping

duty order was classified under Common Nomenclature

[[Page 60779]]

(CN) 5503.20.00, which is the equivalent of HTSUS subheading 5503.20.00

and, thus, covers the subject merchandise in the instant investigation.

On July 29, 1999, the EU terminated the antidumping duty order.

Based on the recent existence of this order, there is sufficient

evidence to determine that there is a history of dumping of the subject

merchandise and a history of material injury as a result thereof.

Because there is a history of dumping and material injury by reason of

dumped imports in the EU of the subject merchandise, the first

statutory criterion of the test for finding critical circumstances is

met. Therefore, we must consider the second statutory criterion:

whether or not the imports of the subject merchandise have been massive

over a relatively short period.

In determining whether there are ``massive imports'' over a

``relatively short time period,'' the Department ordinarily bases its

analysis on import data for at least the three months preceding (the

``base period'') and following (the ``comparison period'') the filing

of the petition. Imports normally will be considered massive when

imports during the comparison period have increased by 15 percent or

more compared to imports during the base period (see 19 CFR

351.206(h)). The Department examines respondent-specific shipment

information or aggregate import statistics when respondent-specific

shipment information is not available.

To determine whether imports of the subject merchandise have been

massive over a relatively short period, we compared each respondent's

export volume for the three months prior to the filing of the petition

(i.e., January through March 1999) to that during the three months

subsequent to the filing of the petition (i.e., April through June

1999). For the ``all other'' exporters, although we found massive

imports for the mandatory respondents, in this case we also had usable

aggregate import data. Therefore, we performed the analysis using total

imports from Korea, less those imports accounted for by the respondents

(see Notice of Final Determination of Sales at Less Than Fair Value:

Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Japan, 64 FR

24329, 24338 (Comment 2) (May 6, 1999)).

Based on our analysis, we preliminarily determine that the increase

in imports was greater than 15 percent for each of the respondents.

Therefore, because (1) there is a history of dumping and material

injury, and (2) each of the respondents had more than a 15 percent

increase in import volume, we preliminarily determine that critical

circumstances exist for each of the companies under investigation.

Also, based on our analysis of the import data as described above, we

preliminarily determine that critical circumstances do not exist for

the ``all other'' exporters.

We note that Sam Young and Geum Poong have argued that the increase

in imports was a direct result of an anticipated, publicized freight

rate increase and submitted documentation in support of their argument.

In making a determination of whether there have been massive imports

for purposes of a critical circumstances determination under 19 CFR

351.206(h), the Department normally examines the volume and value of

imports, seasonal trends, and the share of domestic consumption

accounted for by the imports. Anticipated increases in freight rates

are not among the factors that the Department normally takes into

consideration when making such a determination. After reviewing the

information submitted by the respondents, we believe that the

respondents have failed to demonstrate that increased freight rates are

a seasonal trend. Therefore, we preliminarily determine that an

increase in freight rates is not relevant for our determination of

whether there have been massive imports of the subject merchandise.

We will make a final determination concerning critical

circumstances when we make our final determination in this

investigation.

Product Comparisons

Pursuant to section 771(16) of the Act, all products produced and

sold by the respondents in the comparison market that fit the

definition contained in the Scope of the Investigation section of this

notice and were sold during the POI comprise the foreign like product.

For purposes of this preliminary determination, we have relied on the

following criteria, in order of significance, to match U.S. sales of

PSF to comparison market sales of the foreign like product: (1) Fiber

composition (conjugate, single component, crimped, low melt, etc.); (2)

fiber type (virgin, recycled, blended, regenerated); (3) cross section;

(4) finish; and (5) denier. Also, because Samyang specified grade of

product in both the comparison market and the U.S. market, we attempted

to make comparisons of the same grade for Samyang (see memorandum to

file on Preliminary Determination Calculations for Samyang, dated

October 29, 1999, (Samyang Calculations Memo) which is on file in

Import Administration's Central Records Unit).

In making our comparisons, we performed the cost test and

disregarded all sales that failed this test (see the Results of the COP

Test section below). We then attempted to compare products sold in the

U.S. and the comparison market that were identical with respect to the

product matching criteria above. Where we did not find any comparison

market sales of merchandise that was identical in these respects to the

merchandise sold in the United States, we compared U.S. products with

the most similar merchandise sold in the comparison market. Where there

were no appropriate comparison market sales of comparable merchandise,

we compared the merchandise sold in the United States to CV, in

accordance with section 773(a)(4) of the Act.

Fair Value Comparisons

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

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

comparison market prices or CV, as described in the Export Price and

Normal Value sections below.

The petitioners allege that due to a significant change in the

value of the won and declining prices during the POI, the Department

should use quarterly averaging periods rather than a POI average

period. The petitioners cite the Department's determination that there

was a ``sustained movement'' in the exchange rate during the POI.

Furthermore, the petitioners state that the exchange rate appreciated

by 20 to 30 percent over the POI. The petitioners argue that the

Department has in the past used different averaging periods to avoid

the distortive effects on the dumping analysis when there is a

significant change in the exchange rate (see, Notice of Final

Determination of Sales at Less Than Fair Value: Stainless Steel Sheet

and Strip in Coils From the Republic of Korea (``Sheet and Strip from

Korea''), 64 FR 30664, 30676 (June 8, 1999)).

With regard to declining prices, the petitioners contend that, for

the largest volume control numbers, sales prices in both the U.S. and

home market dropped significantly during the POI. The petitioners argue

that in past cases, when there was a ``significant and consistent''

price decline in the market, the Department used different averaging

periods (see, Notice of Final Determination of Sales at Less Than Fair

Value: Static Random Access Memory Semiconductors From the Republic of

Korea (``SRAMS''), 63 FR 8934, 8935 (February 23, 1998). The

[[Page 60780]]

petitioners claim that in the SRAMS case, unit prices of SRAMS fell by

32 percent during the POI.1 In this case, since some

products had a price decline as high as 40 percent, the petitioners

request the Department to use quarterly averaging periods to avoid the

combined distortive effects that exchange rate and price changes would

have on the dumping analysis if POI averaging was used.

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\1\ See petitioners' submission dated October 20, 1999, at 3.

The percentage change in price was derived by calculating unit

prices on the basis of import statistics.

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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.

However, when a currency has undergone a sustained movement, section

773A(b) of the Act directs the Department to allow a 60-day adjustment

period. A sustained movement has occurred when the weekly average of

the actual daily rates exceeds the weekly average of the benchmark

rates by more than five percent for eight consecutive weeks. The

benchmark is defined as the moving average of exchange rates for the

past 40 business days (see Policy Bulletin 96-1: Currency Conversions,

61 FR 9434, March 8, 1996). This adjustment is only required when the

foreign currency is appreciating against the U.S. dollar. In this case,

the Department found a sustained exchange rate movement in the won

during March and April of 1998. We therefore used a fixed exchange rate

for a period of 60 days after the ``sustained movement'' (i.e., from

May 5 to July 5, 1998).

As noted, the ``sustained movement'' of the won occurred in March

and April of 1998. Our POI is April 1998 to March 1999. Therefore, half

of the ``sustained movement'' occurred outside the POI. In looking only

at the month of April 1998, the won appreciated roughly 8.5

percent.2 The resulting effect on normal value is minimal in

comparison to the effect on normal value caused by the exchange rate

decline during November and December of 1997. That decline was the

change in currency value that prompted the Department to use different

averaging periods in Sheet and Strip from Korea. Furthermore, we found

that, while the actual exchange rate varied over the POI and at one

point appreciated by over 20 percent compared to the beginning of the

POI, on average, the actual exchange rate did not appreciate out of the

ordinary. For example, the average exchange rate for the last month of

the POI was only 13 percent higher than the average exchange rate for

the first month. Also, this movement did not occur abruptly.

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\2\ Calculated by subtracting the dollar/won rate on April 1,

1998 from the dollar/won rate on April 30, 1998 and dividing the

result by the dollar/won rate on April 1, 1998.

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Because the gradual movement of the exchange rate during our POI

differs from the situation which occurred in Sheet and Strip from

Korea, and because the magnitude of the exchange rate change is not

large, we find that the change in the value of the won relative to the

dollar is not a basis for adopting a different averaging period.

With regard to the petitioners' claim concerning declining prices

during the POI, section 777A(d)(1)(A)(i) of the Act allows the

Department to use a weighted average-to-average comparison when

comparing export prices to home market prices. Section 351.414(d)(3) of

the Department's regulations, which discusses the length of averaging

periods, states that the Department normally will use weighted averages

for the entire POI, but that when prices differ significantly over the

course of the POI, the Department may calculate weighted averages for

shorter periods.

In this case, for Samyang, we examined changes in the average

monthly gross unit price for the subject merchandise sold in the United

States and the average monthly gross unit price for the subject

merchandise sold in the home market. For Sam Young, we performed the

same analysis, except we examined the average monthly U.S. sales prices

and the average monthly gross unit prices for the subject merchandise

sold in the Canadian market.3 In analyzing the data, we did

not find a significant and consistent price decline during the POI.

While monthly average prices were higher at the beginning of the POI

than at the end, several months during the POI showed either price

increases or virtually no change at all, while other months showed

price decreases. Further, we did not find a significant divergence

between the two markets.

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\3\ Geum Poong did not have a viable home or third country

market and, therefore, we analyzed price movements only for its U.S.

sales..

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In addition to our market-to-market analysis, we also examined, for

Samyang, the data on an individual control number basis. We first

examined changes in the average monthly prices of the three largest

U.S. control numbers (representing a significant percentage of total

U.S. sales) and their respective matching home market control numbers.

Second, we examined the price trends for the four largest home market

control numbers (representing a significant percentage of total home

market sales). A similar analysis was performed for Sam Young, using

the Canadian price in lieu of home market prices. Because Geum Poong

did not have a viable home or third country market, we looked at only

the movement of prices in the U.S. market. In analyzing the individual

control number data for Samyang, Sam Young, and Geum Poong, we found

that there was not a significant and consistent decrease in prices.

Prices fluctuated both upward and downward throughout the POI.

Based on our analysis, we find that there was not a significant and

consistent decline in prices over the POI (see Samyang Calculations

Memo, and memoranda to file on Preliminary Determination Calculations

for Sam Young, dated October 29, 1999 (Sam Young Calculations Memo),

and Preliminary Determination Calculations for Guem Poong, dated

October 29, 1999 (Geum Poong Calculations Memo), which are on file in

Import Administration's Central Records Unit). Therefore, in accordance

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

average EPs for comparison to POI weighted-average NVs.

Date of Sale

Samyang and Sam Young reported that the date on which the material

terms of sale were set was the invoice date for sales in both the

comparison market and the U.S. market. For its sales in the U.S.

market, Geum Poong reported the invoice date as the date on which the

material terms of sale were set. As noted above, Geum Poong did not

have a viable comparison market. The basis for the companies' reporting

invoice date as the date of sale is described below.

Samyang reported that it negotiated price and quantity with its

U.S. customers, and that a purchase order or other initial sales

agreement document was generated confirming the order. However,

according to Samyang, changes in price and quantity occurred after the

initial sales document was issued and the terms of sale were not fixed

until the invoice was issued. Therefore, Samyang reported its U.S.

sales prices based on invoice date. Regarding home market sales,

Samyang reported that purchase orders were seldom issued. Consequently,

Samyang also reported its home market sales based on invoice date.

Sam Young reported that it negotiated price and quantity with its

U.S. and Canadian customers. Once agreement was reached, Sam Young

faxed a confirmation to its customer and the customer then issued a

purchase order to Sam Young. Sam Young claimed,

[[Page 60781]]

however, that changes in price and quantity occurred after the purchase

order had been issued and, therefore, price and quantity were not fixed

until the date on which the invoice was issued. For this reason, Sam

Young initially reported invoice date as the date of sale. For certain

comparison market sales, Sam Young used the tax invoice date as the

date of sale.

Geum Poong reported that it negotiated price and quantity with its

U.S. customers by telephone or by fax. For sales negotiated by fax,

once an agreement was reached, a purchase order or order acceptance

sheet was issued. However, according to Geum Poong, changes in price

and quantity occurred after the order was accepted and the purchase

order was issued and that the terms of sale were not fixed until the

invoice was issued. Therefore, Geum Poong reported its U.S. sales based

on invoice date.

The petitioners questioned all three respondents' use of invoice

date as the date of sale. Based on our review of the information

submitted, we determined that neither Samyang, Sam Young, nor Geum

Poong provided sufficient evidence of significant changes in price and

quantity between the issuance of the order confirmation and invoice

date. Therefore, on September 14, 1999, we requested that Samyang

report its U.S. sales based on initial purchase order date. On

September 16, 1999, we requested that Sam Young report U.S. and

Canadian sales and that Geum Poong report U.S. sales based on initial

order confirmation date. For purposes of this preliminary

determination, we used initial order confirmation date as the date of

sale for all three respondents' U.S. sales and for Sam Young's Canadian

sales. For Samyang's home market sales, since no purchase order was

issued, we used the sales reported on the basis of invoice date. We

will consider this issue further for purposes of the final

determination.

Export Price

In accordance with section 772 of the Act, we based U.S. price on

EP. Section 772(a) of the Act defines EP as the price at which the

subject merchandise is first sold before the date of importation by the

exporter or producer outside the United States to an unaffiliated

purchaser in the United States, or to an unaffiliated purchaser for

exportation to the United States. Consistent with these definitions, we

found that all of the respondents' sales during the POI were EP sales.

For all respondents, we calculated EP based on prices charged to the

first unaffiliated customer in the United States.

As the starting U.S. price, we relied on the gross unit price shown

on sales invoices. These prices were delivered and FOB prices to

unaffiliated customers in the United States. In accordance with section

772(c)(2) of the Act, we reduced the EP, where appropriate, by movement

expenses, including foreign inland freight, international freight,

brokerage, export taxes, U.S. customs duties, and other miscellaneous

charges. We increased EP, where appropriate, for duty drawback in

accordance with section 772(c)(1)(B) of the Act.

Normal Value

A. Selection of Comparison Markets

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 each respondent's volume of home market sales of the

foreign like product to the volume of their U.S. sales of the subject

merchandise.

Samyang had a viable home market for PSF and reported home market

sale for purposes of calculating normal value. Sam Young did not have a

viable home market. However, it had a viable third country market and

reported third country sales for purposes of calculating normal value.

For Geum Poong, which had no viable home or third country market, we

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

the section on Calculation of Normal Value Based on Constructed Value

below.

Adjustments made in deriving the normal values for each company are

described in detail in the sections on Calculation of Normal Value

Based on Comparison Market Prices and Calculation of Normal Value Based

on Constructed Value, below.

B. Cost of Production Analysis

Based on the timely cost allegations filed on July 28 and August

10, 1999, and in accordance with section 773(b)(2)(A)(i) of the Act, we

found reasonable grounds to believe or suspect that Samyang's PSF sales

made in Korea and Sam Young's PSF sales made to Canada were made at

prices below COP. As a result, the Department has conducted

investigations to determine whether these respondents made sales in

their respective comparison markets at prices below their respective

COPs during the POI within the meaning of section 773(b) of the Act. We

conducted the COP analysis described below.

1. Calculation of COP

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

weighted-average COP for PSF, based on the sum of the cost of materials

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

and administrative (G&A) expenses and packing costs. For Samyang, we

adjusted reported direct material costs to reflect the market price of

inputs purchased from unaffiliated sellers, because cost of production

data was not provided by the affiliated suppliers (see Samyang

Calculations Memo). For Sam Young, we revised the reported per unit

total materials costs because we noted an apparent discrepancy in the

total production quantity used by Sam Young to calculate its per-unit

costs (see Sam Young Calculations Memo). For Geum Poong, we revised the

reported per unit total materials costs to correct for an apparent

discrepancy in its duty drawback adjustment (see Geum Poong

Calculations Memo). In addition, for all three companies, we revised

general and administrative expenses and interest expenses based on our

corrections to their reported cost of manufacturing.

2. Test of Home Market Sales Prices

We compared the adjusted, weighted-average, COP for Samyang and Sam

Young to its home market or Canadian market sales of the foreign like

product. The prices were net of movement charges, taxes, rebates,

commissions, and other direct and indirect selling expenses. This is

accordance with 773(b) of the Act, and was done to determine whether

these sales had been made at prices below the COP within an extended

period of time (i.e., a period of one year) in substantial quantities

4 and whether such prices were sufficient to permit the

recovery of all costs within a reasonable period of time.

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

\4\ In accordance with section 773(b)(2)(C)(i) of the Act, we

determined that sales made below the COP were made in substantial

quantities if the volume of such sales represented 20 percent or

more of the volume of sales under consideration for the

determination of normal value.

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

3. Results of the COP Test

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

percent of a respondent's sales of a given product were at prices less

than the COP, we did not disregard any below-cost sales of that product

because we determined that the below-cost sales were not made in

``substantial quantities.'' Where 20 percent or more of a respondent's

sales of a given product during the 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. Because we compared prices to

[[Page 60782]]

the POI average COP, 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.

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

Samyang's and Sam Young's respective comparison market sales were made

within an extended period of time at prices less than the 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 sales as the basis for determining normal

value, in accordance with section 773(b)(1) of the Act.

For those U.S. sales of PSF for which there were no comparable

comparison market sales in the ordinary course of trade, we compared

EPs to CV in accordance with section 773(a)(4) of the Act. See the

section on Calculation of Normal Value Based on Constructed Value

below.

C. Calculation of Normal Value Based on Comparison Market Prices

We performed price-to-price comparisons where there were sales of

comparable merchandise in the comparison market that did not fail the

cost test. We calculated NV based on FOB or delivered prices to

comparison market customers. We made deductions from the starting

price, where appropriate, for movement expenses and discounts. In

accordance with sections 773(a)(6) (A) and (B) of the Act, we deducted

comparison market packing costs and added U.S. packing costs. In

addition, we made circumstances of sale (COS) adjustments for direct

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

When comparing U.S. sales with comparison market sales of similar,

but not identical, merchandise, we also made adjustments to NV for

physical differences in the merchandise pursuant to 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, using POI-average costs.

We also made adjustments, in accordance with 19 CFR 351.410(e), for

indirect selling expenses incurred in the comparison market or U.S.

sales where commissions were granted on sales in one market but not in

the other (the ``commission offset''). Specifically, where commissions

were granted in the comparison market but not in the U.S. market, we

made an upward adjustment to NV for the lesser of (1) the amount of the

commission paid in the comparison market, or (2) the amount of indirect

selling expenses incurred in the U.S. market. Company-specific

adjustments of NV are described below.

Samyang

We calculated normal value based on FOB or delivered prices to

unaffiliated purchasers in the home market and made deductions for the

following movement expenses: foreign inland freight and loading fees.

We made COS adjustments by deducting direct selling expenses incurred

for home market sales (credit expenses, technical services charges, and

bank negotiation fees) and adding U.S. direct selling expenses (credit

expenses, letter of credit fees, bank charges, and postage charges) in

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

Sam Young

We calculated normal value based on FOB prices to unaffiliated

purchasers in the Canadian market and made deductions for the following

movement expenses: foreign inland freight, wharfage, container taxes,

terminal handling fees, and brokerage and handling. We made COS

adjustments by deducting direct selling expenses incurred for third-

country market sales (credit expenses, bill of lading charges, letter

of credit fees, wire transfer fees, and document handling fees) and

adding U.S. direct selling expenses (credit expenses, bill of lading

charges, letter of credit fees, wire transfer fees, and document

handling fees) in accordance with section 773(a)(6)(C)(iii) of the Act.

We offset commission expenses in accordance with section 351.410(e) of

the Department's regulations in the manner described above.

D. Calculation of Normal Value Based on Constructed Value

Section 773(a)(4) of the Act provides that where normal value

cannot be based on comparison market sales, normal value may be based

on the constructed value. Accordingly, for Samyang and Sam Young, for

those models of PSF for which we could not determine the NV based on

comparison market sales, either because (1) there were no sales of a

comparable product, or (2) all sales of comparison products failed the

COP test, we based NV on the CV. In addition, for Geum Poong, which did

not have a viable comparison market, we based NV on CV.

Sections 773 (e)(1) and (e)(2)(A) of the Act provide that the CV

shall be based on the sum of the cost of materials and fabrication for

the foreign like product, plus amounts for selling, general, and

administrative expenses (SG&A), profit, and U.S. packing costs. For

Samyang and Sam Young, we calculated the cost of materials and

fabrication based on the methodology described in the Calculation of

COP section above. We based SG&A and profit for Samyang and Sam Young

on the actual amounts reported as realized by the respondent in

connection with the production and sale of the foreign like product in

the ordinary course of trade for consumption in the comparison market,

in accordance with section 773(e)(2)(A) of the Act. Because there is no

viable comparison market for Geum Poong and, hence, no company-specific

profit or non-U.S. selling expenses, we calculated Geum Poong's profit

and selling expenses in accordance with section 773(e)(2)(B)(iii) of

the Act. Specifically, we calculated weighted average amounts for

selling expenses and profit based on the selling expenses incurred and

profit earned by Samyang and Sam Young in their respective comparison

markets on sales in the ordinary course of trade. Consistent with

section 351.405(b)(2) of the Department's regulations and section

773(e)(2)(B)(iii) of the Act, this profit amount does not exceed the

amount normally realized by exporters or producers in connection with

the sale for consumption in the home market of merchandise that is in

the same general category of products as the subject merchandise,

represented by Samyang's home market profit.

In addition, for each respondent we added U.S. packing costs as

described in the Export Price section of this notice.

We made adjustments to CV for differences in COS in accordance with

section 773(e)(8) of the Act and 19 CFR 351.410. We made COS

adjustments by deducting direct selling expenses incurred on comparison

market sales and adding U.S. direct selling expenses.

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 constructed export price (CEP)

transaction. The normal value 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

constructed sale from the exporter to the importer.

[[Page 60783]]

In this case, the respondents made only EP sales in the United

States during the POI. To determine whether normal value sales are at a

different level of trade than EP, 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 normal value 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. 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).

In implementing these principles in this investigation, we obtained

information from Samyang and Sam Young about the channels of

distribution involved in the reported U.S. and comparison market sales,

including a description of the selling activities performed by the

respondents for each channel of distribution. In identifying levels of

trade for EP and comparison market sales, we considered the selling

functions reflected in the starting price before any adjustments.

Samyang

In this investigation, we found that Samyang has three channels of

distribution in the home market and two channels for U.S. sales. In

both the U.S. and home markets, Samyang sells to end users and

distributors. In the home market, Samyang also sells to distributors

which not only distribute PSF, but also use it for their own

production. For each of the channels of distribution in the U.S. and

home markets, Samyang provides the same selling functions, though it

provides the functions to varying degrees. We found that these selling

functions were minimal in both the U.S. and home markets.

Because the same selling functions are performed in each channel in

each market, despite variations in degree for certain functions, we

found a single level of trade in the United States, and a single,

identical level of trade in the home market. Thus, it was unnecessary

to make any level-of-trade adjustment for comparison of EP and home

market prices.

Sam Young

In this investigation, we found that Sam Young has one channel of

distribution in the comparison market and one channel in the U.S.

market. In both the U.S. and comparison markets, Sam Young sells to

distributors. For each of these channels of distribution, Sam Young

provides the same selling functions and to the same degree. In both the

comparison market and the U.S. market, Sam Young generally makes the

same freight and delivery arrangements. Packing is also the same in

both markets.

Because the single channel of distribution in the Canadian market

is the same as the single channel of distribution in the U.S. market,

we found a single level of trade in the United States, and a single,

identical level of trade in the comparison market. It was, thus,

unnecessary to make any level-of-trade adjustment for comparison of EP

and comparison market prices.

Geum Poong

In this investigation, we found that Geum Poong has one channel of

distribution in the U.S. market. Geum Poong had no viable home or third

country markets. When normal value is based on constructed value, the

normal value level of trade is that of the sales from which we derive

SG&A expenses and profit (see Notice of Preliminary Determination of

Sales at Less Than Fair Value and Postponement of Final Determination:

Fresh Atlantic Salmon from Chile, 63 FR 2664 (January 16, 1998)). For

Geum Poong, we based selling expenses and profit on a weighted average

of selling expenses incurred and profits earned by Samyang and Sam

Young. Because Sam Young's and Samyang's comparison market selling

functions do not vary significantly from Geum Poong's U.S. selling

functions, we made no level-of-trade adjustment for Geum Poong.

Currency Conversions

We made currency conversions in accordance with section 773A of the

Act. From early March to early May 1998, there was a sustained movement

(appreciation) in the value of the Korean won (see Policy Bulletin 96-

1, Notice: Change in Policy Regarding Currency Conversions, 61 FR 9434

(March 8, 1996)). In accordance with the policy described in the Policy

Bulletin, we applied a fixed exchange rate for the 60-calendar day

period following the sustained movement. That exchange rate was taken

from the last day of the sustained movement period, i.e., the last day

of the so-called ``recognition period.''

For the remainder of the POI, we followed the Department's practice

of using daily exchange rates from the Federal Reserve Bank to convert

foreign currencies into U.S. dollars, except where the daily rate

involves a fluctuation. A fluctuation occurs where the actual daily

rate differs from the benchmark rate by 2.25 percent. The benchmark is

defined as the moving average of daily rates for the past 40 business

days. When we determine that a fluctuation exists, we substitute the

benchmark rate for the daily rate.

Verification

In accordance with section 782(i) of the Act, we intend to verify

information to be used 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 entries of PSF from Korea

produced or exported by the companies listed below that are entered, or

withdrawn from warehouse, for consumption on or after 90 days prior to

the date of publication of this notice in the Federal Register. For

companies not listed below (i.e., ``all others''), we are directing the

Customs Service to suspend liquidation of all entries of PSF from Korea

that are entered, or withdrawn from warehouse, for consumption on or

after the date of publication of this notice in the Federal Register.

We are also instructing the Customs Service to require a cash deposit

or the posting of a bond equal to the weighted-average amount by which

the normal value exceeds the EP, as indicated in the chart below. These

instructions suspending liquidation will remain in effect until further

notice.

The weighted-average dumping margins are as follows:

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

Weighted-

average

Exporter/producer margin

(percent)

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

Samyang Corporation..................................... 3.51

Sam Young Synthetics Co................................. 6.33

Geum Poong Corporation.................................. 26.39

All Others.............................................. 7.99

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

ITC Notification

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

ITC of our preliminary determination. If our final antidumping

determination is affirmative, the ITC will determine whether these

imports are materially injuring, or threaten material injury to, the

U.S. industry. The deadline for that

[[Page 60784]]

ITC determination would be the later of 120 days after the date of this

preliminary determination or 45 days after the date of our final

determination.

Disclosure

We will disclose the calculations used in our analysis to parties

in this proceeding within five days of the publication of this notice.

See 19 CFR 351.224(b).

Public Comment

For this investigation, case briefs must be submitted no later than

February 15, 2000. Rebuttal briefs must be filed no later than February

22, 2000. A list of authorities used, a table of contents, and an

executive summary of issues should accompany any briefs submitted to

the Department. Executive summaries should be limited to five pages

total, including footnotes.

Section 774 of the Act provides that the Department will hold a

hearing to afford interested parties an opportunity to comment on

arguments raised in case of rebuttal briefs, provided that such a

hearing is requested by any interested party. Interested parties who

wish to request a hearing, or to participate if one is requested, must

submit a written request within 30 days of the publication of this

notice. Requests should specify the number of participants and provide

a list of the issues to be discussed. Oral presentations will be

limited to issues raised in the briefs. If a hearing is requested, it

will be held on February 25, 2000, at the U.S. Department of Commerce,

14th Street and Constitution Avenue, N.W., Washington, D.C. 20230.

Parties should confirm by telephone the time, date, and place of the

hearing 48 hours before the scheduled time.

If this investigation proceeds normally, we will make our final

determination no later than 135 days after the publication of this

notice in the Federal Register.

This determination is published pursuant to sections 733(d) and

777(i)(1) of the Act.

Dated: October 28, 1999.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-29208 Filed 11-5-99; 8:45 am]

BILLING CODE 3510-DS-P