Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From the Republic of Korea; Notice of Preliminary Results of Antidumping Duty Administrative Review and Intent Not To Revoke Antidumping Duty Order in Part

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of antidumping duty administrative review and intent not to revoke antidumping duty order in part.

SUMMARY:

In response to requests from three respondents and from the petitioners in the original investigation, the Department of Commerce (“the Department”) is conducting (the sixth) administrative reviews of the antidumping duty orders on certain cold-rolled and corrosion-resistant carbon steel flat products from Korea. These reviews cover three manufacturers and exporters of the subject merchandise. The period of review (”POR”) is August 1, 1998, through July 31, 1999.

We preliminarily determine that sales have been made below normal value (“NV”). If these preliminary results are adopted in our final results of administrative reviews, we will instruct U.S. Customs to assess antidumping duties equal to the difference between export price (“EP”) or constructed export price (“CEP”) and NV.

Interested parties are invited to comment on these preliminary results. Parties who submit argument in this proceeding are requested to submit with the argument: (1) A statement of the issue; and (2) a brief summary of the argument.

EFFECTIVE DATE:

September 7, 2000.

FOR FURTHER INFORMATION CONTACT:

Marlene Hewitt ((Dongbu Steel Co., Ltd. (Dongbu) and Union Steel Manufacturing Co., Ltd. (Union)), Michael Panfeld ((Pohang Iron and Steel Co., (POSCO), Pohang Coated Steel Co., Ltd. (POCOS), and Pohang Steel Industries Co., Ltd. (PSI)—(the POSCO Group)), or James Doyle, Enforcement Group III—Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Room 7866, Washington, D.C. 20230; telephone (202) 482-1385 (Hewitt), -0172 (Panfeld), or -0159 (Doyle).

SUPPLEMENTARY INFORMATION:

Applicable Statute

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's regulations are references to the provisions codified at 19 CFR Part 351 (April 1999).

Background

The Department published antidumping duty orders on certain cold-rolled and corrosion-resistant carbon steel flat products from Korea on August 19, 1993 (58 FR 44159). The Department published a notice of “Opportunity to Request an Administrative Review” of the antidumping duty orders for the 1998/99 review period on August 11, 1999 (64 FR 43649). On August 31, 1999, respondent POSCO and Dongbu requested that the Department conduct an administrative review of the antidumping duty orders on corrosion-resistant and cold-rolled carbon steel flat products from Korea. On August 31, 1999, petitioners in the original less-than-fair-value (LTFV) investigations (AK Steel Corporation; Bethlehem Steel Corporation; Inland Steel Industries, Inc.; LTV Steel Company; National Steel Corporation; and U.S. Steel Group A Unit of USX Corporation) requested that the Department conduct administrative reviews of the antidumping duty orders on cold-rolled and corrosion-resistant carbon steel flat products from Korea with respect to all three of the aforementioned respondents. We initiated these reviews on September 24,1999 (64 FR 53318) October 1, 1999.

Under section 751(a)(3) of the Act the Department may extend the deadline for completion of administrative reviews if it determines that it is not practicable to complete the review within the statutory time limit of 365 days. The Department extended the time limits for the preliminary results in these cases. See Certain Cold-Rolled Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel Flat Products from Korea: Antidumping Duty Administrative Reviews: Extension of Time Limit, 65 FR 20135 (April 14, 2000).

The Department is conducting these administrative reviews in accordance with section 751 of the Act.

Scope of the Reviews

The review of “certain cold-rolled carbon steel flat products” covers cold-rolled (cold-reduced) carbon steel flat-rolled products, of rectangular shape, neither clad, plated nor coated with metal, whether or not painted, varnished or coated with plastics or other nonmetallic substances, in coils (whether or not in successively superimposed layers) and of a width of 0.5 inch or greater, or in straight lengths which, if of a thickness less than 4.75 millimeters, are of a width of 0.5 inch or greater and which measures at least 10 times the thickness or if of a thickness of 4.75 millimeters or more are of a width which exceeds 150 millimeters and measures at least twice the thickness, as currently classifiable in the Harmonized Tariff Schedule (“HTS”) under item numbers 7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0090, 7209.17.0030, 7209.17.0060, 7209.17.0090, 7209.18.1530, 7209.18.1560, 7209.18.2550, 7209.18.6000, 7209.25.0000, 7209.26.0000, 7209.27.0000, 7209.28.0000, 7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.23.1500, 7211.23.2000, 7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060, 7211.23.6085, 7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030, 7211.29.6080, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7215.50.0015, 7215.50.0060, 7215.50.0090, 7215.90.5000, 7217.10.1000, 7217.10.2000, 7217.10.3000, 7217.10.7000, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090. Included in this review are flat-rolled products of non-rectangular cross-section where such cross-section is achieved subsequent to the rolling process (i.e., products which have been “worked after rolling”)—for example, products which have been beveled or rounded at the edges. Excluded from this review is certain shadow mask steel, i.e., aluminum-killed, cold-rolled steel coil that is open-coil annealed, has a carbon content of less than 0.002 percent, is of 0.003 to 0.012 inch in thickness, 15 to 30 inches in width, and has an ultra flat, isotropic surface.

The review of “certain corrosion-resistant carbon steel flat products” covers flat-rolled carbon steel products, of rectangular shape, either clad, plated, or coated with corrosion-resistant metals such as zinc, aluminum, or zinc-, aluminum-, nickel-or iron-based alloys, whether or not corrugated or painted, varnished or coated with plastics or other nonmetallic substances in addition to the metallic coating, in coils (whether or not in successively superimposed layers) and of a width of 0.5 inch or greater, or in straight lengths which, if of a thickness less than 4.75 millimeters, are of a width of 0.5 inch or greater and which measures at least 10 times the thickness or if of a thickness of 4.75 millimeters or more are of a width which exceeds 150 millimeters and measures at least twice the thickness, as currently classifiable in the HTS under item numbers 7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090. Included in this review are flat-rolled products of non-rectangular cross-section where such cross-section is achieved subsequent to the rolling process (i.e., products which have been “worked after rolling”)—for example, products which have been beveled or rounded at the edges. Excluded from this review are: Flat-rolled steel products either plated or coated with tin, lead, chromium, chromium oxides, both tin and lead (“terne plate”), or both chromium and chromium oxides (“tin-free steel”), whether or not painted, varnished or coated with plastics or other nonmetallic substances in addition to the metallic coating; clad products in straight lengths of 0.1875 inch or more in composite thickness and of a width which exceeds 150 millimeters and measures at least twice the thickness; and certain clad stainless flat-rolled products, which are three-layered corrosion-resistant carbon steel flat-rolled products less than 4.75 millimeters in composite thickness that consist of a carbon steel flat-rolled product clad on both sides with stainless steel in a 20%-60%-20% ratio.

These HTS item numbers are provided for convenience and Customs purposes. The written descriptions remain dispositive.

The POR is August 1, 1998 through July 31, 1999. These reviews cover entries associated with sales of certain cold-rolled and corrosion-resistant carbon steel flat products by Dongbu, Union, and the POSCO Group (see “Affiliated Parties” section below).

Verification

We verified information provided by the POSCO Group with respect to sales, including on-site inspection of facilities of the manufacturer, the examination of relevant accounting and financial records, and selection of original documentation containing relevant information. Our verification results are outlined in the sales, and cost verification reports. See the August 9, 2000, Sales Verification Report (“Sales Report”) from Michael Panfeld and Stephen Shin through Jim Doyle to Edward Yang to the File, and the August 14, 2000, Cost Verification Report (“Cost Report”) from Theresa L. Caherty to Neal M. Halper, respectively.

Facts Available

Section 776(a) of the Act provides that, if an interested party withholds information that has been requested by the Department, fails to provide such information in a timely manner or in the form or manner requested, significantly impedes a proceeding under the antidumping statute, or provides information which cannot be verified, the Department shall use, subject to sections 782(d) and (e) of the Act, facts otherwise available in reaching the applicable determination. Pursuant to section 782(e), the Department shall not decline to consider submitted information if all of the following requirements are met: (1) The information is submitted by the established deadline; (2) the information can be verified; (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination; (4) the interested party has demonstrated that it acted to the best of its ability; and (5) the information can be used without undue difficulties.

The POSCO Group

We have applied partial adverse facts available with regard to two home market expense fields reported by the POSCO Group. First, POSCO did not report imputed credit expenses on a transaction-specific basis, despite having the ability to do so. Additionally, POSCO did not report certain rebate expenses on a transaction-specific basis, despite having the ability to do so. For both of these expenses, we asked POSCO to report the expense on a transaction-specific basis. See for example, the Department's October 4, 1999 questionnaire at B-25 and B-29. POSCO stated that it was not able to report transaction-specific imputed credit costs because it “maintains an open account system.” See POSCO's December 6, 1999 response at 43 and 68. With respect to rebates, POSCO stated that it “has no means to tie a rebate to a specific sale because rebates can relate to numerous transactions.” See ibid at 55. However, at verification, the Department determined that POSCO was able to tie specific rebates and could calculate transaction-specific imputed credit costs. For a further discussion of these issues, see the August 30, 2000, Preliminary Results Analysis Memorandum (”Prelim Memo”) from Michael Panfeld through James Doyle to the File and the Sales Report at p. 10, 12.

Section 776(a)(2)(B) of the Act requires the Department to use facts available when a party does not provide the Department with information by the established deadline or in the form and manner requested by the Department. Additionally, Section 776(b) of the Act provides that adverse inferences may be used when a party has failed to cooperate by not acting to the best of its ability to comply with the Department's requests for information. See also Statement of Administrative Action accompanying the URAA, H.R. Rep. No. 316, Vol. 1, 103d Cong., 2d Sess. 870 at 868-870 (1994) (SAA). For these two home market expense fields, we have applied an adverse assumption, because the POSCO Group did not act to the best of its ability in responding to the Department's questionnaire nor did the POSCO Group report the data in the manner requested. As a result, the POSCO Group's reported imputed credit and certain rebate expenses cannot serve as a reliable basis for reaching a preliminary determination (see section 782(e)(3) of the Act). We have instead relied on partial facts available for those figures for the purpose of calculating a dumping margin to the POSCO Group for this preliminary determination. For a detailed proprietary discussion of our treatment of these two fields, see Preliminary Analysis Memo at page 6 and at Appendix I.

Transactions Reviewed

Consistent with prior reviews, we excluded reported overrun sales in the home market from our sales comparisons because such sales were outside the ordinary course of trade.

The POSCO Group

According to section 351.403(d) of the Department's regulations, downstream sales to home market affiliates accounting for less than five (5) percent of total sales are normally excluded from the normal value calculation. Since the POSCO Group's sales to affiliated resellers exceeded the Department's 5 percent threshold, the Department has required the POSCO Group to report the home market downstream sales of the four affiliated service centers with the largest volume of sales of subject merchandise in each case. If the sales to the affiliated service centers did not pass the arm's length test, we used the resales made by these affiliated service centers. To test whether the POSCO Group's sales were made at arm's length, we compared the prices of sales to affiliated and unaffiliated customers net of all movement charges, direct selling expenses, discounts and packing. Where prices to the affiliated parties were on average 99.5 percent or more of the price to the unaffiliated party, we determined that sales made to the related party were at arm's length. Where no affiliated customer ratio could be calculated because identical merchandise was not sold to unaffiliated customers, we were unable to determine that these sales were made at arm's length and, therefore, excluded them from our analysis. See Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9, 1993). Where the exclusion of such sales eliminated all sales of the most appropriate comparison product, we made comparisons to the next most similar model.

Dongbu

In determining NV, based on our review of the submissions by Dongbu, the Department determined that Dongbu need not report “downstream” sales by affiliated resellers in the home market because such sales were less than the 5% threshold.

Affiliated Parties

For purposes of these reviews, we are treating POSCO, POCOS, and PSI as affiliated parties and have “collapsed” them, i.e., treated them as a single producer of certain cold-rolled carbon steel flat products (POSCO and PSI) and certain corrosion-resistant carbon steel flat products (POSCO, POCOS, and PSI). We refer to the collapsed respondent as the POSCO Group. POSCO, POCOS, and PSI were treated as collapsed in a previous segment of these proceedings. See, e.g. Preliminary Determinations of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products from Korea, 61 FR 51882, 51884 (October 4, 1996). The POSCO Group has submitted no new information which would cause us to reconsider that determination.

As we have determined in past administrative reviews, we are treating Union and Dongkuk Industries Co., Ltd. (“DKI”) as a single producer of certain cold-rolled carbon steel flat products. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From Korea: Preliminary Results of Antidumping Duty Administrative Reviews, 60 FR 65284 (December 19, 1995). Additionally, we are treating Union and DKI as a single producer of certain corrosion-resistant carbon steel flat products. See the August 31, 1999 Collapsing Memorandum from Marlene Hewitt through James Doyle to Edward Yang. We have found no indication on the record that the underlining facts have substantively changed.

Dongbu and Union

On March 24, 2000, Petitioners alleged that Dongbu and Union are affiliated with POSCO based on Dongbu and Union's dependence on POSCO as their primary supplier of hot-rolled coil (HRC), the primary input in the production of subject merchandise. Petitioners indicated that these purchases are substantial and the Department should determine whether, under its recently articulated “greater-than-fifty-percent-dependence-for-five-years” test, Dongbu and Union are affiliated with POSCO. See Mitsubishi Heavy Industries v. United States, Slip Op. 99-46 (Ct. Int'l Trade May 26, 1999). Petitioners propose that POSCO is in a position to exercise restraint or direction over the purchasers, Dongbu and Union, because Dongbu and Union are dependent upon POSCO to continue their production of hot-rolled coil.

We preliminarily determine that the record evidence does not show a close supplier relationship between POSCO, Dongbu and Union. Specifically, the record evidence shows that both Union and Dongbu source a significant supply of hot-rolled coil from other companies. Thus, the Department finds no affiliation between Union, Dongbu and POSCO. This is consistent with a previous review in which petitioners also alleged affiliation based on a close supplier relationship. In that case we determined that there was no affiliation. See e.g. Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Final Results of Antidumping Duty Administrative Reviews, 62 FR 18404, 18412 (April 15, 1997).

Product Comparisons

In accordance with section 771(16) of the Act, we considered all cold-rolled carbon steel flat products produced by the respondents, covered by the descriptions in the “Scope of the Reviews” section of this notice, supra, and sold in the home market during the POR, to be foreign like products for the purpose of determining appropriate product comparisons to U.S. sales of cold-rolled carbon steel flat products. Likewise, we considered all corrosion-resistant carbon steel flat products produced by the respondents and sold in the home market during the POR to be foreign like products for the purpose of determining appropriate product comparisons to corrosion-resistant carbon steel flat products sold in the United States.

For certain product characteristics (i.e., quality and surface finish) Dongbu reported an additional sub-code. The Department has included the additional codes that Dongbu reported in the aforementioned category in the Department's product matching methodology. See the March 6, 2000 Final Results Analysis Memorandum from Juanita Chen through James Doyle to the File.

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 in Appendix V of the Department's antidumping questionnaire. In making the product comparisons, we matched foreign like products based on the physical characteristics reported by the respondent. Where sales were made in the home market on a different weight basis from the U.S. market (theoretical versus actual weight), we converted all quantities to the same weight basis, using the conversion factors supplied by the respondents, before making our fair-value comparisons.

Fair-Value Comparisons

To determine whether sales of certain cold-rolled and corrosion-resistant carbon steel flat products by the respondents to the United States were made at less than normal value, we compared the export price (“EP”) or constructed export price (“CEP”) to the normal value (“NV”), as described in the “Export Price/Constructed Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(2) of the Act, we calculated monthly weighted-average prices for NV and compared these to individual U.S. transactions.

Particular Market Situation in the Home Market

On November 12, 1999, the petitioners alleged that the Korean home market should not be used to determine NV because there were economic distortions constituting a “particular market situation” in Korea during the period of review. Petitioners allege that economic distortions make it impossible to obtain reliable measures of normal value in Korea, or to make proper comparisons of normal value with U.S. sales. This economic distortion, according to petitioners, is: The Government of Korea (“GOK”) controls home market prices of cold-rolled and corrosion-resistant steel. Petitioners propose that the Department instead rely upon third country sales as the basis for normal value.

We preliminarily determine that the information submitted by petitioners and the questionnaire responses by the respondents do not show that there is a particular market situation in Korea that warrants disregarding the home market in this case. Although updated, petitioners provided the same type of evidence we previously considered to be insufficient for determining a particular market situation exists (e.g. price lists, market reports, and news articles). Furthermore, the direct analysis and narrative provided by the petitioners either address POSCO as a whole or cut-to-length carbon steel plate (which was the proceeding for which they filed the original direct analysis) and not cold-rolled or corrosion-resistant carbon steel flat products from Korea specifically. This is consistent with previous reviews in which petitioners also alleged a particular market situation in Korea's home market based on alleged government control of pricing. In those cases, we determined that the Korean home market was viable and appropriate as a basis for NV. See e.g., Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Preliminary Results of Antidumping Duty Administrative Reviews, 62 FR 47422, 47425 (September 9, 1997). This issue was not discussed in the final results of the review in question.

Request for Revocation

The POSCO Group

On August 31, 1999, POSCO submitted a request, in accordance with 19 CFR 351.222(e), that the Department revoke the order covering cold-rolled carbon steel flat products from Korea with respect to its sales of this merchandise. In accordance with 19 CFR 351.222(e), these requests were accompanied by certifications from POSCO that it had not sold the subject merchandise at less than NV for a three-year period and in commercial quantities, including this review period, and would not do so in the future. POSCO also agreed to immediate reinstatement in the relevant antidumping order, as long as any firm is subject to the order, if the Department concludes under 19 CFR 351.216 that, subsequent to revocation, POSCO sold the subject merchandise at less than NV.

The Department conducted verifications of POSCO's responses for this period of review. In the two prior reviews of this order we determined that POSCO sold cold-rolled carbon steel flat products from Korea at not less than NV or at de minimis margins. We have preliminarily determined that POSCO sold cold-rolled carbon steel flat products at not less than NV during the instant review period.

However, in determining whether a requesting party is entitled to a revocation inquiry, the Department must be able to determine that the company has continued to participate meaningfully in the U.S. market during each of the three years at issue. See Pure Magnesium from Canada, 63 FR 26147 (May 12, 1998). This practice has been codified by § 351.222(e) where a party requesting a revocation review is required to certify that they have sold the subject merchandise in commercial quantities. See also § 351.222(d)(1) of the Department's regulations, which state that, “before revoking an order or terminating a suspended investigation, the Secretary must be satisfied that, during each of the three (or five) years, there were exports to the United States in commercial quantities of the subject merchandise to which a revocation or termination will apply.” (emphasis added); See also, the preamble of the Department's latest revision of the revocation regulation stating: “The threshold requirement for revocation continues to be that respondent not sell at less than normal value for at least three consecutive years and that, during those years, respondent exported subject merchandise to the United States in commercial quantities” (emphasis added) Amended Regulation Concerning the Revocation of Antidumping and Countervailing Duty Orders, 64 FR 51236, 51237 (September 22, 1999).

For purposes of revocation, the Department must be able to determine that past margins reflect a company's normal commercial activity. Sales during the POR which, in the aggregate, are an abnormally small quantity do not provide a reasonable basis for determining that the discipline of the order is no longer necessary to offset dumping. As the Department has previously stated, the commercial quantities requirement is a threshold matter. See e.g., Pure Magnesium from Canada, 64 FR 50489, 50490 (September 17, 1999). Thus, a party must have meaningfully participated in the marketplace in order to substantiate the need for further inquiry regarding whether continued imposition of the order is warranted.

Based on the current record, we find that POSCO did not sell merchandise in the United States in commercial quantities during the fourth administrative review (one of the three consecutive reviews cited by POSCO to support its request for revocation). During the POR covered by that review (August 1996 though July 1997), POSCO appeared to have made only one sale in the United States. Moreover, the total tonnage of this sale was small. See Prelim Memo August 30, 2000 at Appendix II. By contrast, during the period covered by the antidumping investigation, which was only six months long (January 1992 through June 1992), POSCO made several thousand sales whose total quantity is 400 times greater than the quantity for the fourth administrative. In other words, POSCO's sales for the entire year covered by the fourth review period were only 0.27% of its sales volume during the six-months covered by the investigation. Similarly, during the current POR, POSCO sold approximately 400 times more subject merchandise in the United States than during the fourth administrative review.

Consequently, although POSCO received a de minimis margin during the fourth administrative review, this margin was not based on commercial quantities within the meaning of the revocation regulation. The number of sales and total sales volume is so small, both in absolute terms, and in comparison with the period of investigation and other review periods (see Analysis memo), that it does not provide any meaningful information of POSCO's normal commercial experience. Therefore, we find that POSCO did not meaningfully participate in the marketplace for purposes of qualifying for a revocation inquiry and thus, because it has not sold the subject merchandise for three years in commercial quantities within the meaning of 351.222(e) does not qualify for a revocation inquiry.

Date of Sale

It is the Department's current practice normally to use the invoice date as the date of sale, although we may use a date other than the invoice date if we are satisfied that a different date better reflects the date on which the exporter or producer establishes the material terms of sale. See 19 CFR 351.401(i). We have preliminarily determined that there is no reason to depart from the Department's treatment of date of sale for these respondents. Consistent with prior reviews, for home market sales, we used the reported date of the invoice from the Korean manufacturer; for U.S. sales we have followed the Department's methodology from the prior reviews, and have based date of sale on invoice date from the U.S. affiliate, unless that date was subsequent to the date of shipment from Korea, in which case that shipment date is the date of sale. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Final Results of Antidumping Duty Administrative Reviews, 65 FR 13359, 13362 (March 13, 2000) and accompanying Decision Memo at comment 6.

Export Price/Constructed Export Price

We calculated the price of U.S. sales based on CEP, in accordance with section 772(b) of the Act, except for U.S. sales made by the POSCO Group to one customer, which we have classified as “export price” sales. The Act defines the term “constructed export price” as “the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter, as adjusted under subsections (c) and (d).” In contrast, “export price” is defined as “the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States.” Sections 772(a)-(b) of the Act (emphasis added).

In determining whether to classify sales as either EP or CEP, the Department must examine the totality of the circumstances surrounding the U.S. sales process, and assess whether the reviewed sales were made “in the United States” for purposes of section 772(b) of the Act. In the instant case, the record establishes that Dongbu, the POSCO Group, and Union's affiliates in the United States (1) took title to the subject merchandise; and (2) invoiced and received payment from the unaffiliated U.S. customers. Thus, as the record stands, because these functions are more than ancillary the Department has determined that these sales should be classified as CEP transactions.

For Dongbu, Union, and the POSCO Group, we calculated CEP based on packed prices to unaffiliated customers in the United States. Where appropriate, we made deductions from the starting price for foreign inland freight, foreign inland insurance, foreign brokerage and handling, international freight, marine insurance, U.S. inland freight, U.S. brokerage and handling, U.S. Customs duties, commissions, credit expenses, warranty expenses, inventory carrying costs incurred in the United States, and other indirect selling expenses. Pursuant to section 772(d)(3) we made an adjustment for CEP profit. Where appropriate, we added interest revenue to the gross unit price.

Consistent with the Department's normal practice, we added the reported duty drawback to the gross unit price. We did so in accordance with the Department's long-standing test, which requires: (1) That the import duty and rebate be directly linked to, and dependent upon, one another; and (2) that the company claiming the adjustment demonstrate that there were sufficient imports of imported raw materials to account for the duty drawback received on the exports of the manufactured product.

For POSCO, we calculated EP for one customer located outside the United States based on packed prices to unaffiliated purchasers in the United States. We made deductions for foreign inland freight, brokerage and handling, ocean freight, marine insurance, U.S. inland freight (where applicable), and U.S. Customs duties in accordance with section 772(c)(2)(A) of the Act. Additionally, we added to the U.S. price an amount for duty drawback. Pursuant to section 772(c)(1)(B) of the Act.

Normal Value

Based on a comparison of the aggregate quantity of home market and U.S. sales, we determined that the quantity of the foreign like product sold in the exporting country was sufficient to permit a proper comparison with the sales of the subject merchandise to the United States, pursuant to section 773(a) of the Act. Therefore, in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the price at which the foreign like product was first sold for consumption in the home market, in the usual commercial quantities and in the ordinary course of trade.

Where appropriate, we deducted rebates, discounts, inland freight (offset, where applicable, by freight revenue), inland insurance, and packing. We made adjustments to NV, where appropriate, for differences in credit expenses (offset, where applicable, by interest income), warranty expenses, post-sale warehousing, and differences in weight basis. We also made adjustments, where appropriate, for home market indirect selling expenses to offset U.S. commissions in CEP comparisons.

We also increased NV by U.S. packing costs in accordance with section 773(a)(6)(A) of the Act. We made adjustments to NV for differences in cost attributable to differences in physical characteristics of the merchandise, pursuant to section 773(a)(6)(C)(ii) of the Act. In accordance with the Department's practice, where all contemporaneous matches to a U.S sale observation resulted in difference-in-merchandise adjustments exceeding 20 percent of the cost of manufacturing (“COM”) of the U.S. product, we based NV on constructed value (“CV”).

Differences in Levels of Trade

In accordance with section 773(a)(1)(B)(i) of the Act and the Statement of Administrative Action (“SAA”) at 829-831, to the extent practicable, the Department will calculate NV based on sales at the same level of trade as the U.S. sales (either EP or CEP). When the Department is unable to find sales in the comparison market at the same level of trade as the U.S. sale(s), the Department may compare sales in the U.S. and foreign markets at different levels of trade, and adjust NV if appropriate. The NV level of trade is that of the starting-price sales in the home market. As the Department explained in Gray Portland Cement and Clinker From Mexico: Final Results of Antidumping Duty Administrative Review, 62 FR 17148, 17156, April 9, 1997, for both EP and CEP, the relevant transaction for the level-of-trade analysis is the sale from the exporter to the importer.

To determine whether comparison market NV sales are at a different Level of Trade (LOT) than EP or CEP, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and 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)(&)(A) of the Act.

When NV is established at a level of trade which constitutes a more advanced stage of distribution than the level of trade of the CEP, 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, November 19, 1997, and Granular Polytetrafluoroethylene Resin From Italy; Preliminary Results of Antidumping Duty Administrative Review, 63 FR 25826, 25827, May 11, 1998.

A. Dongbu

In its questionnaire responses, Dongbu states that there were no significant differences in its selling activities by customer categories within or between each market. Therefore, Dongbu states that it is not distinguishing between LOT for these reviews and that it is not claiming a level of trade adjustment nor claiming a CEP offset. Our analysis of the questionnaire responses detailing the selling functions provided by Dongbu in the United States and home market leads us to conclude that sales within or between each market are not made at different levels of trade. We also note that the selling functions described by Dongbu in these reviews are consistent with the selling functions described for the previous reviews of these orders, in which we determined no distinct levels of trade. See Notice of Preliminary Results: Certain Cold-Rolled Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel Flat Products from Korea, 64 FR 48767, 48772 (September 9, 1999). Accordingly, we preliminarily find that all sales in the home market and the U.S. market were made at the same level of trade. Therefore, all price comparisons are at the same level of trade and any adjustment pursuant to section 773(a)(7) of the Act is unwarranted.

B. Union

Union argues that, with the Department's classification of Union's U.S. sales as CEP sales, and its view of Dongkuk International Inc.'s (“DKA's”) role in the sales process as more than ancillary for the U.S. sales, it is incumbent on the Department to recognize that U.S. sales and home market sales are at different levels of trade. Furthermore, Union notes that because the difference in the level of trade cannot be quantified, Union is eligible for a CEP offset. Union states that home market sales are at a different level of trade from CEP sales, a level representing a more advanced stage of distribution. Union asserts that the Department's practice in a CEP situation is to compare the level of trade of the U.S. sale after the deduction of the selling expenses with the level of trade of the home market product with no deduction; therefore, the indirect selling expenses incurred for the selling functions associated with the U.S. sale, i.e., the contact, and other ancillary functions (in particular the arranging of credit terms) have been deducted from the U.S. sales price, but remain in the home market price.

In identifying the level of trade for home market sales, we consider the selling functions reflected in the starting price of home market sales before any adjustments, pursuant to section 773(a)(1)(B)(i) of the Act. Union's description of selling functions in the home market makes no distinction with regard to customer categories or channels of trade, and there is no evidence on the record indicating that such functions vary within the home market. Thus, we conclude that all of Union's home market sales are at a single level of trade. In identifying the level of trade for CEP sales, we considered only the selling activities reflected in the U.S. price after deduction of expenses and profit under section 772(d) of the Act. Based upon our review of the activities, we also conclude that all of the U.S. sales are at a single level of trade.

We find that Union performed similar functions for its U.S. sales to DKA as it did for its sales to home market customers. Although the expenses related to DKA's activities have been deducted from CEP, the expenses incurred by Union in selling to DKA are still reflected in CEP. Because we find there are no substantive differences in selling functions provided by Union for its home market customers as compared to DKA, there is no difference in level of trade and, therefore, no basis for granting a level of trade adjustment or a CEP offset. This is consistent with our treatment of level of trade for Union in prior administrative reviews. See Notice of Preliminary Results: Certain Cold-Rolled Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel Flat Products from Korea, 64 FR 48767, 48772 (September 9, 1999).

C. The POSCO Group

In its questionnaire responses, the POSCO Group stated that its home-market sales by affiliated service centers were at a different level of trade than its other home-market sales and its U.S. sales (regardless of the customer category). The respondent indicated that the service centers provide certain selling functions to all of their customers, while POSCO, POCOS and PSI provide a different set of selling functions to all of their customers (including the service centers).

In order to confirm the presence of separate levels of trade within or between the U.S. and home markets, we examined the respondent's questionnaire responses for indications of substantive differences in selling and marketing functions. See the preamble to section 351.412 of the Department's new regulations (62 FR 27296, at 27371 May 19, 1997).

In its November 3, 1999 and its January 28, 2000 section A responses, the POSCO Group claimed that there are two channels of distribution in the home market: one channel of distribution consists of sales made by POSCO, POCOS, and PSI, while they claim that a second channel of distribution consists of the sales made by the affiliated service centers. Our analysis of the questionnaire responses and review of the sales functions at the service center leads us to conclude that the cumulative functions of the POSCO Group and the service centers for sales made by the service centers are essentially the same as the cumulative functions of the POSCO Group for sales made by the POSCO Group (e.g., the only substantive additional function that the affiliated service centers perform is the slitting and shearing of coils, which is not a sales function, but rather a manufacturing operation). Thus, we conclude that all sales in the home market are at a single level of trade. Similarly, although the POSCO group has both CEP and EP sales in the U.S. market, the selling functions performed on sales to affiliated and unaffiliated U.S. customers are the same. Thus, we conclude that all U.S. sales are at a single level of trade. Finally, the Department also finds that POSCO, POCOS, and PSI all provide comparable services to their customers in each market. Thus, our review of the record evidence leads us to conclude that sales within or between each market are not made at different levels of trade. Accordingly, we find that all sales in the home market and the U.S. market were made at the same level of trade. Therefore, all price comparisons are at the same level of trade and an adjustment pursuant to section 773(a)(7) is unwarranted.

Cost of Production/Constructed Value

At the time the questionnaires were issued in these reviews, the fifth annual administrative reviews were the most recently completed segments of these proceedings in which each of the three respondents had participated. In accordance with section 773(b)(2)(A)(ii) of the Act, and consistent with the Department's practice, because we disregarded certain below-cost sales by each of the three respondents in the fifth reviews, we found reasonable grounds in these reviews to believe or suspect that those respondents made sales in the home market at prices below the cost of producing the merchandise. We therefore initiated cost investigations with regard to Dongbu, Union, and the POSCO Group, in order to determine whether the respondents made home market sales during the POR at prices below their cost of production (COP) within the meaning of section 773(b)(2)(A)(ii) of the Act.

Before making concordance matches, we conducted the COP analysis described below.

A. Calculation of COP

We calculated the COP for Dongbu, Union, and the POSCO Group based on the sum of each respondent's cost of materials and fabrication for the foreign like product, plus amounts for home-market selling expenses, general, and administrative expenses (“SG&A”), and packing costs in accordance with section 773(b)(3) of the Act.

We relied on Dongbu, Union, and POSCO's information as submitted with the exception of POSCO, where we adjusted the cost of manufacturing to account for product-specific variances which POSCO calculated on an overall basis.

B. Test of Home-Market Prices

We used the respondents' weighted-average COP, as adjusted (see above), for the period July 1998 to June 1999. We compared the weighted-average COP figures to home-market sales of the foreign like product as required under section 773(b) of the Act. In determining whether to disregard home-market sales made at prices below the COP, as required under section 773(b)(1)2(A)&(B)of the Act, we examined whether (1) within an extended period of time, such sales were made in substantial quantities, and (2) such sales were made at prices which permitted the recovery of all costs within a reasonable period of time. On a product-specific basis, we compared the COP to the home-market prices (not including VAT), less any applicable movement charges, discounts, and rebates.

C. Results of 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 POR were at prices less than the COP, we found that sales of that model were made in “substantial quantities” within a reasonable period of time, in accordance with sections 773(b)(2)(B) and (C) of the Act, and were not 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. In such cases, we disregarded the below-cost sales in accordance with section 773(b)(1) of the Act.

D. Calculation of CV

In accordance with section 773(e) of the Act, we calculated constructed value (CV) for Dongbu, Union, and the POSCO Group based on the sum of respondents' cost of materials, fabrication, SG&A, including interest expenses, U.S. packing costs, and profit. In accordance with section 773(e)(2)(A) of the Act, we based SG&A and profit on the actual amounts incurred and 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 foreign country. For selling expenses, we used the weighted-average home-market selling expenses. As noted in the “Calculation of COP” section of this notice, we made adjustments to the reported COMs of the POSCO Group. We also made adjustments, where appropriate, for home-market indirect selling expenses to offset U.S. commissions in CEP comparisons.

Currency Conversion

For purposes of the preliminary results, we made currency conversions based on the exchange rates in effect on the dates of the U.S. sales as published by the Federal Reserve Bank of New York. Section 773A(a) of the Act directs the Department to use a daily exchange rate in effect on the date of sale of subject merchandise 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, e.g., Certain Stainless Steel Wire Rods from France: Preliminary Results of Antidumping Duty Administrative Review, 61 FR 8915, 8918 (March 6, 1996) and Policy Bulletin 96-1: Currency Conversions, 61 FR 9434, (March 8, 1996). The benchmark is defined as the rolling average of rates for the past 40 business days. When we determined a fluctuation existed, we substituted the benchmark for the daily rate.

Preliminary Results of the Reviews

As a result of these reviews, we preliminarily determine that the following weighted-average dumping margins exist:

Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within five days after the publication of this notice. Pursuant to 19 CFR 351.309, interested parties may submit written comments in response to these preliminary results. Case briefs must be submitted within 30 days after the date of publication of this notice, and rebuttal briefs, limited to arguments raised in case briefs, must be submitted no later than five days after the time limit for filing case briefs. Parties who submit argument in this proceeding are requested to submit with the argument: (1) a statement of the issue, and (2) a brief summary of the argument. Case and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310, within 30 days of the date of publication of this notice, interested parties may request a public hearing on arguments to be raised in the case and rebuttal briefs. Unless the Secretary specifies otherwise, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs, that is, thirty-seven days after the date of publication of these preliminary results. The Department will publish the final results of this administrative review, including the results of its analysis of issues raised in any case or rebuttal brief or at a hearing not later than 120 days after the date of publication of these preliminary results.

Upon issuance of the final results of this review, the Department shall determine, and the U.S. Customs Service shall assess, antidumping duties on all appropriate entries. Exporter/importer-specific assessment rates shall be calculated in accordance with 19 CFR 351.212(b). This is done by dividing the total dumping margins for the reviewed sales by the total entered value of those reviewed sales for each importer. The U.S. Customs Service shall be directed, at the issuance of the final results of this review, to assess the resulting percentage margin against the entered customs values for the subject merchandise on each of that importer's entries under the relevant order during the review period.

Cash Deposit

The following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(1) of the Act: (1) the cash deposit rate for each respondent will be the rate established in the final results of these administrative reviews (except that no deposit will be required for firms with zero or de minimis margins, i.e., margins lower than 0.5 percent); (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 period; (3) if the exporter is not a firm covered in these reviews, a prior review, or the original LTFV investigations, 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) if neither the exporter nor the manufacturer is a firm covered in these or any prior reviews, the cash deposit rate will be 14.44 percent (for certain cold-rolled carbon steel flat products) and 17.70 percent (for certain corrosion-resistant carbon steel flat products), the “all others” rate established in the LTFV investigations See Final Determination: Antidumping Duty Orders on Certain Cold-Rolled Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel Flat Products From Korea 58 FR 44159, August 19, 1993. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative reviews.

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

These administrative reviews and notice are in accordance with sections 751(a)(1) and 777(i)(1) of the Act.