Polyethylene Terephthalate Film, Sheet, and Strip from Taiwan: Preliminary Results of Antidumping Duty Administrative Review

ACTION:

Notice of preliminary results of antidumping duty administrative review.

SUMMARY:

Upon the request of the petitioners, the Department of Commerce (“the Department”) is conducting an administrative review of the antidumping duty order on Polyethylene Terephthalate Film, Sheet, and Strip (“PET film”) from Taiwan, with respect to Nan Ya Plastics Corporation, Ltd., (“Nan Ya”) and Shinkong Synthetic Fibers Corporation (“Shinkong”), in accordance with 19 CFR 351.213. The period of review (“POR”) is December 21, 2001, through June 30, 2003. Our preliminary results of review indicate that Nan Ya and Shinkong have sold subject merchandise at less than normal value (“NV”) during the POR. If these preliminary results are adopted in our final results of this administrative review, we will instruct U.S. Customs and Border Protection (“CBP”) to assess antidumping duties on Nan Ya's and Shinkong's entries of subject merchandise made during the POR, in accordance with section 751(a)(2)(C) of the Tariff Act of 1930, as amended (“The Act”), and 19 CFR 351.212(b). We invite interested parties to comment on these preliminary results. We will issue the final results of review no later than 120 days from the date of publication of this notice.

EFFECTIVE DATE:

April 8, 2004.

FOR FURTHER INFORMATION CONTACT:

Zev Primor or Tom Martin at (202) 482-4114 and (202) 482-3936, respectively; AD/CVD Enforcement Office IV, Group II, Import Administration, Room 1870, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

The Department initiated this administrative review on August 19, 2003, in response to a request for review by the petitioners. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 68 FR 50750 (August 22, 2003) (Initiation Notice). Since the initiation of this review, the following events have occurred.

On August 27, 2003, the Department issued the antidumping duty questionnaire to Nan Ya and Shinkong. After granting extensions to both respondents, we received responses to our questionnaire from both respondents in September and October 2003, respectively. We issued supplemental questionnaires to both respondents, pertaining to section A of the questionnaire on October 29, 2003, sections B and C of the questionnaire on November 6, 2003, and section D of the questionnaire on November 14, 2003. After the Department granted extensions, Nan Ya and Shinkong responded to these supplemental questionnaires. The Department sent an additional supplemental section B and C questionnaire to Nan Ya on February 9, 2004, and after requesting and receiving an extension of the deadline for the response, Nan Ya responded.

Scope of Review

For purposes of this administrative review, the products covered are all gauges of raw, pretreated, or primed PET film, whether extruded or coextruded. Excluded are metallized films and other finished films that have had at least one of their surfaces modified by the application of a performance-enhancing resinous or inorganic layer more than 0.00001 inches thick. Imports of PET film are classifiable in the Harmonized Tariff Schedule of the United States (“HTSUS”) under item number 3920.62.00. HTSUS subheadings are provided for convenience and customs purposes. The written description of the scope of this proceeding is dispositive.

Nan Ya Affiliation

In the less-than-fair-value investigation, the Department found that Nan Ya was affiliated with some of its U.S. customers. See Notice of Final Determination of Sales at Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip (PET Film) from Taiwan, 67 FR 35474 (May 20, 2002) (“LTFV Investigation”). In the instant review, Nan Ya claims that it is not affiliated with the U.S. customers found to be its affiliates in the LTFV Investigation. In making this claim, Nan Ya named an additional U.S. customer, a customer that was not at issue in the LTFV Investigation, and also denied that it was affiliated with Nan Ya. The Department has examined the issue of whether Nan Ya is affiliated with these U.S. customers through a family grouping. For these preliminary results, we continue to find, as we did in the LTFV Investigation, that Nan Ya is affiliated with these U.S. customers through this family grouping. We include in this finding the additional customer that was not at issue in the LTFV Investigation. See Memorandum from Thomas F. Futtner, Acting Office Director, to Holly A. Kuga, Acting Deputy Assistant Secretary, “Affiliation of Nan Ya Plastics Corporation, Ltd., with Certain U.S Customers,” dated April 1, 2004 (“Affiliation Memo”). Interested parties are invited to submit comments on this specific issue, especially with regard to affiliation through a family grouping.

Product Comparisons

In accordance with section 771(16) of the Act, all products produced by the respondents covered by the description in the “Scope of Review” section, above, and sold in Taiwan during the POR are considered to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. We have relied upon product type, product application, product thickness, and product grade to match U.S. sales of subject merchandise to comparison-market sales of the foreign like product or CV. Where there were no sales of identical merchandise in the home market to compare to U.S. sales, we compared U.S. sales to the next most similar foreign like product on the basis of the characteristics listed above.

Nan Ya Margin Calculation

A. Export Price and Constructed Export Price

In calculating U.S. price, we used export price (“EP”), as defined in section 772(a) of the Act, for all sales that Nan Ya reported as sold directly to unaffiliated U.S. customers, and constructed export price (“CEP”), as defined in section 772(b) of the Act, for all sales to customers that the Department has preliminarily determined to be Nan Ya's affiliates. See Affiliation Memo. We calculated EP using the packed prices charged to unaffiliated Taiwanese trading companies that requested U.S. shipping marks, or the first unaffiliated end-user in the United States (the starting price), and CEP using the packed price charged by the affiliated customer to the first unaffiliated purchaser in the United States.

We deducted from the starting price, where applicable, amounts for movement expenses in accordance with section 772(c)(2)(A) of the Act. In this case, movement expenses include foreign inland freight, international freight, brokerage and handling charges, and marine insurance. For CEP sales, we deducted these same charges, whether or not paid for by affiliates, in addition to customs duties, U.S. inland freight from port to warehouse, U.S. inland freight to unaffiliated customers, and warehousing, where applicable.

B. Normal Value

1. Selection of Comparison Market

In accordance with section 773(a)(1)(B) of the Act, to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating NV (i.e., the aggregate volume of home market sales of the foreign like product is greater than or equal to five percent of the aggregate volume of U.S. sales), we compared Nan Ya's volume of home market sales of the foreign like product to the volume of its U.S. sales of subject merchandise. We determined that sales in the home market provide a viable basis for calculating NV. Therefore, we based NV on home market sales to unaffiliated purchasers made in the usual commercial quantities and the ordinary course of trade.

For NV, we used the prices at which the foreign like product was first sold for consumption in Taiwan, in the usual commercial quantities, in the ordinary course of trade, and, to the extent possible, at the same level of trade (“LOT”) as the EP or CEP sales, as appropriate. After testing home market viability and whether home market sales were at below-cost prices, we calculated NV as noted in the “Calculation of NV Based on Home Market Prices” section below.

2. Cost of Production Analysis

Because the Department determined that Nan Ya made sales in the home market at prices below the cost of producing the subject merchandise in the LTFV Investigation and excluded such sales from NV, the Department determined that there are reasonable grounds to believe or suspect that Nan Ya made sales in the home market at prices below the cost of producing the merchandise in this administrative review. See section 773(b)(2)(A)(ii) of the Act. As a result, the Department initiated a COP inquiry for Nan Ya.

In response to a request made by Nan Ya to report its COP and CV information for period January 2002 through June 2003, instead of the POR, we requested that Nan Ya compare the COP from the first eleven days of the POR (December 21-31, 2001) to the rest of the POR. See Letter from Ronald Trentham to Nan Ya Plastics Corporation, dated September 25, 2003. The Department stipulated that if Nan Ya's December 21-31, 2001, costs were significantly different from the weighted-average costs it incurred for calendar year 2002 and through June 2003 (after accounting for exchange rate fluctuations and inflation), then Nan Ya would be responsible for submitting its December 21-31, 2001, COP and CV data. Nan Ya provided the Department with this COP comparison, and demonstrated that its December 21-31, 2001, costs were not significantly different from the weighted-average costs it incurred for calendar year 2002 through June 2003. See Memorandum from Thomas Martin, Import Compliance Specialist, to The File, dated October 1, 2003. The Department also applied this practice in Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Bar From Italy, 67 FR 3155 (January 23, 2002).

a. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated a weighted-average COP for Nan Ya based on the sum of the cost of materials and fabrication for the foreign like product, plus amounts for the home market general and administrative (“G&A”) expenses, including interest expenses. We relied on the COP data submitted by Nan Ya in its cost questionnaire responses.

b. Test of Home Market Sales Prices

On a model-specific basis, we compared the reported COP to the home market prices, adjusted for any applicable discounts and rebates, movement charges, selling expenses, and packing. We then compared the adjusted weighted-average COP for Nan Ya to the adjusted home market sales prices of the foreign like product, as required under section 773(b)(1) of the Act, in order to determine whether these sales had been made at prices below the COP in substantial quantities within an extended period of time (i.e., a period of 18 months), and, whether below-cost prices were sufficient to permit the recovery of all costs within a reasonable period of time.

c. 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 during the POR are at prices less than the COP, we do not disregard any below-cost sales of that product because we determine that the below-cost sales were not made in “substantial quantities” within an extended period of time. Where 20 percent or more of a respondent's sales of a given product during the POR are at prices less than the COP, we determine such sales to have been made in “substantial quantities” within an extended period of time in accordance with sections 773(b)(2)(B) and 773(b)(2)(C) of the Act. In such cases, because we compare prices to POR average costs, we also determine that such sales were not made at prices that would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. We compared the COP for subject merchandise to the reported home market prices less all applicable charges. Based on this test, we found that Nan Ya did have sales below cost which failed the cost test and, as a result, were removed from the home market data set.

3. Calculation of NV Based on Home Market Prices

We based home market prices on the packed prices to unaffiliated purchasers in Taiwan. We adjusted the starting price for reported quantity discounts and other discounts, for any differences in packing, in accordance with sections 773(a)(6)(A) and 773(a)(6)(B)(i) of the Act, and we deducted movement expenses pursuant to section 773(a)(6)(B)(ii) of the Act. In addition, where applicable, we adjusted the starting price for differences in circumstances of sale (“COS”) pursuant to section 773(a)(6)(C)(iii) of the Act by deducting direct selling expenses (credit expenses) incurred for home market sales, and adding U.S. direct selling expenses (credit expenses).

4. Level of Trade /Constructed Export Price Offset

In accordance with section 773(a)(1)(B)(i) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same LOT as the EP or CEP transactions, as appropriate. The NV LOT is that of the starting-price of 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 sales, the U.S. LOT 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 an affiliated importer after the deductions required under section 772(d) of the Act.

To determine whether NV sales are at a different LOT than EP or CEP transactions, 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 LOT 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 LOT of the export transaction, we make a LOT adjustment under section 773(a)(7)(A) of the Act.

We obtained information from Nan Ya about the marketing stages involved in the reported U.S. and home market sales, including a description of the selling activities performed by the respondents for each channel of distribution. In identifying LOTs for EP and CEP sales, and home market sales, we considered the selling functions reflected in the starting price before any adjustments. We expect that, if claimed LOTs are the same, the functions and activities of the seller should be similar. Conversely, if a party claims that LOTs are different for different groups of sales, the functions and activities of the seller should be dissimilar. Nan Ya did not request an LOT adjustment.

Nan Ya reported that it made EP and CEP sales of subject merchandise only to distributors (including the distributors that the Department finds to be affiliates) through a single channel of distribution in the U.S. market. Further, Nan Ya indicated that it performed certain types of selling functions (sales promotion, warranty services, technical advice and freight and delivery arrangements) for its U.S. distributors. See Memorandum from Thomas Martin and Zev Primor, Import Compliance Specialists, to the File, “Level of Trade Analysis for Nan Ya Plastics Corporation, Ltd.,” dated April 1, 2004 (“Nan Ya LOT Memo”). Because there is only one type of customer, a single channel of distribution, and the same selling functions are performed in equal degrees to all U.S. customers, we preliminarily determine that there is a single LOT with respect to Nan Ya's EP and CEP sales.

In the home market, Nan Ya reported that it sold subject merchandise to distributors and end-users. Further, it indicated that, for each of the two reported channels of distribution, it provided the same types of selling functions (sales promotion, warranty services, technical advice, and freight and delivery arrangements) in the same degree for each of the two types of customers. Because these selling functions are provided in equal degrees to all home market customers, we preliminary find that there is only one LOT in the home market.

Upon review of the record, we find that Nan Ya performed substantially similar selling functions for EP and CEP sales as compared to home market sales. The record indicates that there are minor differences between the selling functions performed for EP and CEP sales and home market sales. For example, Nan Ya provided some technical service for home market customers but not EP and CEP customers. However the information on the record indicates that there is insufficient qualitative differences in the selling functions performed by Nan Ya in making sales in the home market and United States market to find them to be distinct LOTs. Therefore, using the information on the record, we preliminarily determine that Nan Ya makes home market and U.S. sales, both EP and CEP, at the same LOT. As a result, no LOT adjustment is necessary. See Nan Ya LOT Memo.

Shinkong Margin Calculation

A. Export Price

In calculating U.S. price, we used EP, in accordance with section 772(a) of the Act, because Shinkong reported that it sold the merchandise directly to unaffiliated U.S. customers and CEP was not otherwise warranted for these transactions. We deducted from the starting price, where applicable, amounts for movement expenses in accordance with section 772(c)(2)(A) of the Act. In this case, movement expenses include foreign inland freight to the port of export, international freight, brokerage and handling charges, marine insurance, and harbor duties.

B. Normal Value

1. Selection of Comparison Market

In accordance with section 773(a)(1)(B) of the Act, to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating NV (i.e., the aggregate volume of home market sales of the foreign like product is greater than or equal to five percent of the aggregate volume of U.S. sales), we compared Shinkong's volume of home market sales of the foreign like product to the volume of its U.S. sales of subject merchandise. We determined that sales in the home market provide a viable basis for calculating NV. Therefore, we based NV on home market sales to unaffiliated purchasers made in the usual commercial quantities and the ordinary course of trade.

For NV, we used the prices at which the foreign like product was first sold for consumption in Taiwan, in the usual commercial quantities, in the ordinary course of trade, and, to the extent possible, at the same LOT as the EP sales. After testing home market viability and whether home market sales were at below-cost prices, we calculated NV as noted in the “Calculation of NV Based on Home Market Prices” section below.

2. Cost of Production Analysis

Because the Department determined that Shinkong made sales in the home market at prices below the cost of producing the subject merchandise in the LTFV Investigation and, therefore, excluded such sales from NV, the Department determined that there are reasonable grounds to believe or suspect that Shinkong made sales in the home market at prices below the cost of producing the merchandise in this administrative review. See section 773(b)(2)(A)(ii) of the Act. As a result, the Department initiated a COP inquiry for Shinkong.

a. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated a weighted-average COP for Shinkong based on the sum of the cost of materials and fabrication for the foreign like product, plus amounts for the home market G&A expenses, including interest expenses. We relied on the COP data submitted by Shinkong in its cost questionnaire responses.

b. Test of Home Market Sales Prices

On a model-specific basis, we compared the reported COP to the home market prices, adjusted for any applicable discounts and rebates, movement charges, selling expenses, and packing. We then compared the adjusted weighted-average COP for Shinkong to the adjusted home market sales prices of the foreign like product, as required under section 773(b) of the Act, in order to determine whether these sales had been made at prices below the COP in substantial quantities within an extended period of time (i.e., a period of 18 months), and, whether below-cost prices were sufficient to permit the recovery of all costs within a reasonable period of time.

c. 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 during the POR are at prices less than the COP, we do not disregard any below-cost sales of that product because we determine that the below-cost sales were not made in “substantial quantities” within an extended period of time. Where 20 percent or more of a respondent's sales of a given product during the POR are at prices less than the COP, we determine such sales to have been made in “substantial quantities” within an “extended period of time” in accordance with sections 773(b)(2)(B) and 773(b)(2)(C) of the Act. We have also compared prices to POR average costs. We determined that such sales were not made at prices that would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act, because the prices were below the per unit COP. We compared the COP for subject merchandise to the reported home market prices less all applicable charges. Based on this test, we found that Shinkong did have sales below cost which failed the cost test and, as a result, were removed from the home market data set.

3. Calculation of NV Based on Home Market Prices

We based home market prices on the packed prices to unaffiliated purchasers in Taiwan. We adjusted the starting price for reported quantity discounts and other discounts, for any differences in packing, in accordance with sections 773(a)(6)(A) and 773(a)(6)(B)(i) of the Act, and we deducted movement expenses pursuant to section 773(a)(6)(B)(ii) of the Act. In addition, where applicable, we adjusted the starting price for differences in COS, pursuant to section 773(a)(6)(C)(iii) of the Act by deducting direct selling expenses (credit expense and warranty expenses) incurred for home market sales, and adding U.S. direct selling expenses (credit expenses). No other adjustments to NV were claimed or allowed.

4. Level of Trade/Constructed Export Price Offset

In accordance with section 773(a)(1)(B)(i) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same LOT as the EP transactions. The NV LOT is that of the starting-price of 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 sales, the U.S. LOT is also the level of the starting-price sale, which is usually from exporter to importer.

To determine whether NV sales are at a different LOT than EP transactions, 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 LOT 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 LOT of the export transaction, we make a LOT adjustment under section 773(a)(7)(A) of the Act.

We obtained information from Shinkong about the marketing stages involved in the reported U.S. and home market sales, including a description of the selling activities performed by the respondents for each channel of distribution. In identifying LOTs for EP and home market sales, we considered the selling functions reflected in the starting price before any adjustments. We expect that, if claimed LOTs are the same, the functions and activities of the seller should be similar. Conversely, if a party claims that LOTs are different for different groups of sales, the functions and activities of the seller should be dissimilar. Shinkong did not request an LOT adjustment.

Shinkong reported that it made EP sales of subject merchandise to a single type of customer through a single channel of distribution in the U.S. market. Further, Shinkong indicated that it performed certain types of selling functions (packing, freight, and warranty services) for all U.S. customers. Because there is only one type of customer, a single channel of distribution, and the same selling functions are performed for every customer, we preliminarily determine that there is a single LOT with respect to Shinkong's EP sales.

In the home market, Shinkong reported that it sold subject merchandise to distributors and end-users. Further, it indicated that for each of the two reported channels of distribution, it provided the same types of selling functions (packing, freight services, and warranty services) in the same degree for each of the two types of customers. Because these selling functions are provided in equal degrees to all home market customers, we preliminarily find that there is only one LOT in the home market.

Upon review of the record, we find that Shinkong performed the same selling functions for its home market that it does for U.S. sales (packing, freight services, and warranty services), and as such, we preliminarily find that the selling functions performed by Shinkong for the EP transactions and for home market sales are the same, and the prices do not vary according to the services provided. See Shinkong's September 22, 2003, response to the Department's Section A questionnaire at A-10,11. Because EP sales are made at the same LOT as home market sales, no LOT adjustment is warranted. See Memorandum from Thomas Martin and Zev Primor, Import Compliance Specialists, to the File, “Level of Trade Analysis for Shinkong Synthetic Fibers Corporation,” dated April 1, 2004.

Currency Conversions

We converted foreign currencies into U.S. dollars, pursuant to section 773A of the Act, using the exchange rates in effect on the dates of the U.S. sales, as obtained from the Federal Reserve Bank, the Department's preferred source for exchange rates.

Preliminary Results of Review

As a result of our review, we preliminarily determine that the following weighted-average dumping margins exist for the period December 21, 2001, through June 30, 2003:

The Department will disclose the calculations used in its 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 publication date of this notice. See 19 CFR 351.310(c). If requested, a hearing will be held 44 days after the date of publication of this notice, or the first business day thereafter. Interested parties may submit case briefs within 30 days of the date of publication of this notice. See 19 CFR 351.309(c). Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than 7 days after the deadline for filing case briefs. See 19 CFR 351.309(d). Parties who submit written arguments are requested to submit with each argument: (1) A statement of the issue, (2) a brief summary of the argument and (3) a table of authorities. Further, we request that parties submitting written comments provide the Department with an additional copy of the public version of any such comments on a diskette. The Department will publish the notice of the final results of this administrative review, which will include the results of its analysis of issues raised in any written comments or hearing, within 120 days from the publication date of this notice.

Assessment

Upon completion of this administrative review, the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an importer-specific assessment rate for merchandise subject to this review. If the importer-specific assessment rate is above de minimis, we will instruct CBP to assess the importer-specific rate uniformly on all entries made during the POR. The Department will issue appropriate assessment instructions directly to the CBP within 15 days of publication of the final results of review. If these preliminary results are adopted in the final results of review, we will direct CBP to assess the resulting assessment rates against the entered customs values for the subject merchandise on each of the importers' entries during the review period.

Cash Deposit

The following cash deposit requirements will be effective upon publication of these final results for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of these final results of administrative review, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate for each of the reviewed companies will be the rate listed in the final results of review (except that if the rate for a particular product is de minimis, i.e., less than 0.5 percent, no cash deposit will be required for that company); (2) for previously investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the original LTFV Investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be the “all others” rate of 2.56 percent, which is the “all others” rate established in the LTFV Investigation. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Interested Parties

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) 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 the 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.