[Federal Register: May 5, 2008 (Volume 73, Number 87)]
[Notices]
[Page 24565-24572]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05my08-444]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
(A-549-825)
Notice of Preliminary Determination of Sales at Not Less Than
Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip from
Thailand
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: May 5, 2008.
SUMMARY: The U.S. Department of Commerce (the Department) preliminarily
determines that polyethylene terephthalate film, sheet, and strip (PET
Film) from Thailand is not being, nor likely to be, sold in the United
States at less than fair value (LTFV), as provided in section 733(b) of
the Tariff Act of 1930, as amended (the Act). Interested parties are
invited to comment on this preliminary determination.
FOR FURTHER INFORMATION CONTACT: Stephen Bailey or Angelica Mendoza,
AD/CVD Operations, Office 7, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0193, or (202) 482-3019, respectively.
SUPPLEMENTARY INFORMATION:
Background
On July 17, 2007, the Department initiated the antidumping duty
investigation of PET Film from Thailand. See Polyethylene Terephthalate
Film, Sheet, and Strip (PET Film) from Brazil, the People's Republic of
China, Thailand, and the United Arab Emirates: Initiation of
Antidumping Duty Investigations, 72 FR 60801 (October 26, 2007) (Notice
of Initiation).
The Department set aside a period of time for parties to raise
issues regarding product coverage and encouraged all parties to submit
comments within 20 calendar days of publication of the Notice of
Initiation. See Notice of Initiation. On November 15, 2007, Avery
Dennison Fasson Roll North America (Avery Dennison) requested that the
Department find ``release liner,'' a PET film product treated on one or
both sides with a specially-cured silicon coating, is outside the scope
of these investigations. Petitioners (DuPont Teijin Films, Mitsubishi
Polyester Film of America, Inc., SKC, Inc. and Toray Plastics
(America), Inc. (collectively, petitioners)) objected to Avery
Dennison's request on November 29, 2007; petitioners re-submitted their
objections with amended bracketing on December 14, 2007, and the
document was accepted for the record on that date.
On August 28, 2007, the United States International Trade
Commission (ITC) preliminarily determined that there is a reasonable
indication that imports of PET Film from Brazil, China, Thailand, and
the United Arab Emirates (UAE) are materially injuring the U.S.
industry and the ITC notified the Department of its findings. See
Polyethylene Terephthalate Film, Sheet, and Strip From Brazil, China,
Thailand, and the United Arab Emirates Case Number: 731-TA-1131-1134,
72 FR 67756, (November 30, 2007) (Preliminary ITC Determination).
Polyplex (Thailand) Public Company Ltd. (Polyplex Thailand) and
Polyplex (Americas) Inc. (PA) (collectively Polyplex) was issued an
antidumping duty questionnaire on November 29, 2007. The Department
received the Section A response from Polyplex on January 4, 2008 (AQR),
and received the Sections B and C responses from Polyplex on January
18, 2008 (BCQR).
On January 23, 2008, petitioners requested that the Department
postpone the preliminary determination by 50 days. The Department
published an extension notice on February 11, 2008, which set the new
deadline for the preliminary determination at April 25, 2008. See
Polyethylene Terephthalate Film, Sheet, and Strip from Brazil, the
People's Republic of China, Thailand, and the United Arab Emirates:
Postponement of Preliminary Determinations of Antidumping Duty
Investigations, 73 FR 7710 (February 11, 2008).
Petitioners filed comments on Polyplex's Sections A, B and C
responses on February 13, 2008. The Department issued a supplemental
questionnaire regarding Polyplex's Sections A, B and C responses on
February 19, 2008. Also on February 19, 2008, based on a timely
allegation filed by petitioners on February 6, 2008, the Department
initiated a sales-below-cost investigation for Polyplex, finding
reasonable grounds to believe that Polyplex made comparison market
sales of PET Film at prices below its cost of production (COP). See
``Sales Below Cost of Production'' section below for further
information. Consequently, the Department requested that Polyplex
respond to Section D of the Department's antidumping duty
questionnaire. We received Polyplex's Section D response on March 11,
2008.
On March 12, 2008, Polyplex filed its response to the Department's
supplemental questionnaire regarding Sections A-C (SABCQR).
Additionally on March 12, 2008, a U.S. customer of Polyplex filed a
response to Department questions regarding this U.S. customer's
relationship with Polyplex Thailand.
On March 14, 2008, the Department requested a SAS version of
Polyplex's comparison market, United States market, and cost datasets
submitted with its SABCQR, which Polyplex did on March 17, 2008. See
the Department's March 17, 2008, Memorandum to the File.
On March 21, 2008, petitioners filed a targeted dumping allegation
on sales made by Polyplex in the U.S., and also filed section D
comments. On March 24, 2008, the Department issued a section D
supplemental questionnaire to Polyplex. On March 31, 2008, Polyplex
filed comments on petitioners' targeted dumping allegation.
The Department issued a second supplemental questionnaire to
Polyplex concerning the company's Sections A, B, C, and D responses and
information regarding the value added to PET Film by one U.S. customer
on April 1, 2008.
On April 7, 2008, the Department issued a memorandum in which it
determined that Polyplex Thailand was affiliated with one of Polyplex
Thailand's U.S. customers that produces non-subject merchandise using
PET Film. See Affiliation section below. Because the name of this
customer is proprietary we will refer to it here as ``Company A.''
In light of our finding of affiliation, on April 7, 2008, the
Department requested that Polyplex Thailand and Company A respond to
Section E (Cost of Further Manufacture or Assembly Performed in the
United States) of the Department's November 29, 2007, antidumping
questionnaire in regard to the PET Film
[[Page 24566]]
further processed by the U.S. customer after importation.
On April 8, 2008, Polyplex submitted its section D supplemental
questionnaire response.
Upon review of petitioners' targeted dumping allegation, we
determined that further information was needed in order to adequately
analyze petitioners' allegation, and issued a targeted dumping
supplemental questionnaire to petitioners on April 8, 2008.
On April 9, 2008, Polyplex submitted a letter requesting that the
Department not collect section E information because the value added by
Company A substantially exceeds the value of the PET Film input.
Because the application of the Department's standard further
manufacture methodology pursuant to section 772(d)(2) of the Act would
be particularly burdensome based on the special facts of this case,
Polyplex requested that the Department apply section 772(e) of the Act
(the ``special rule'') and base the margin for Company A sales on
prices of other subject merchandise sold by Polyplex Thailand and PA to
companies other than Company A pursuant to the special rule.
On April 11, 2008, Polyplex filed its second supplemental
questionnaire response regarding Sections A, B, C, and D. Petitioners
filed their targeted dumping supplemental questionnaire response on
April 16, 2008. Also on April 16, 2008, petitioners submitted comments
regarding the Department's methodology for calculating the margin for
sales made to Company A in light of the Department's affiliation
determination. Because there was a need for supplemental information
regarding this allegation, we did not have sufficient time to analyze
the targeted dumping allegation prior to the April 25, 2008, deadline
for issuance of the preliminary determination. We intend to address
this allegation in full upon receipt of a satisfactory response by
petitioners to our request for additional information. Similarly, we
will address in full petitioner's April 16, 2008, comments regarding
the Department's methodology for calculating the margin for sales made
to Company A in light of the Department's affiliation determination for
the final determination.
April 17, 2008, the Department telephoned counsel to Polyplex and
requested that Polyplex resubmit its April 11, 2008, section D
supplemental cost dataset to correct certain errors identified by the
Department. Polyplex resubmitted its cost database on April 18, 2008,
correcting the errors in question. See the Department's April 17, 2008,
Memorandum to the File.
Also on April 17, 2008, Polyplex submitted a request for extension
in filing its response to Section E (Cost of Further Manufacture or
Assembly Performed in the United States) of the Department's November
29, 2007, antidumping questionnaire from April 21, 20008, until May 2,
2008. The Department granted this request on April 21, 2008. See the
Department's April 18, 2008, Memorandum to the File.
On April 23, 2008, the Department requested a SAS version of the
cost dataset Polyplex originally submitted with its April 18, 2008,
section D supplemental questionnaire response. Polyplex submitted a SAS
version of its cost dataset on April 24, 2008. See the Department's
April 23, 2008, Memorandum to the File.
Period of Investigation
The period of period of investigation (POI) is July 1, 2006, to
June 30, 2007.
Scope of Investigation
The products covered by this investigation are all gauges of raw,
pre-treated, or primed PET Film, whether extruded or co-extruded.
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. Also excluded is Roller transport cleaning film which has
at least one of its surfaces modified by application of 0.5 micrometers
of SBR latex. Tracing and drafting film is also excluded. PET Film is
classifiable under subheading 3920.62.00.90 of the Harmonized Tariff
Schedule of the United States (HTSUS). While HTSUS subheadings are
provided for convenience and purposes of Customs and Border Protection
(CBP), our written description of the scope of this investigation is
dispositive.
Party Comments on Scope and Model Matching
On October 30, 2007, the Department asked all parties in this
investigation and in the concurrent antidumping duty investigations of
PET Film from Brazil, the People's Republic of China (PRC), and the
United Arab Emirates (UAE), for comments on the appropriate product
characteristics for defining individual products. In addition, the
Department requested that all parties in this investigation and in the
concurrent antidumping duty investigations of PET Film Brazil, the PRC,
and the UAE submit comments on the appropriate model matching
methodology. See Letter from Robert James, Program Manager, AD/CVD
Enforcement 7, dated October 7, 2007.
We received comments from petitioners on November 6, 2008,
requesting that the Department include the grade of PET Film in the
model match criteria. Additionally, petitioners requested that the
Department include a field identifying whether PET Film has been
coextruded. In its November 29, 2007, questionnaire, the Department
requested that Polyplex report the grade of the PET Film, but did not
request a field identifying whether the PET Film is coextruded. For
purposes of this preliminary determination, the Department has
determined that it is unnecessary to change the proposed product
characteristics and model matching methodology with regard to
coextrusion. For purposes of distinguishing subject merchandise, the
Department will take into account the grade of the PET Film, as
advocated by petitioners in their submission.
On November 15, 2007, Avery Dennison requested that the Department
find that ``release liner,'' a PET Film product treated on one or both
sides with a specially-cured silicon coating, is outside the scope of
these investigations. Petitioners filed a submission objecting to Avery
Dennison's request on November 29, 2007; petitioners re-submitted their
objections with amended bracketing on December 14, 2007, and the
document was accepted for the record on that date. Petitioners argue
that release liner is ``PET film that clearly falls within the scope of
these investigations.'' See Petitioners' December 14, 2007, submission
at 1 and 2. Avery Dennison responded to petitioners' comments on
February 1, 2008.
In accordance with section 731(i) of the Act, we have determined
that the descriptions of the merchandise contained in the petition and
in our Notice of Initiation support the conclusion that release film is
of the same class or kind of merchandise covered by the scope of the
proposed antidumping duty order. See also generally 19 CFR
351.225(k)(1). The product descriptions in the petition and in the
Department's Notice of Initiation specifically exclude finished films
with a ``performance enhancing resinous or inorganic layer of more than
0.00001 inches thick.'' There is nothing in the proposed scope language
of either the petition or our Notice of Initiation that excludes
products bearing a performance enhancing resinous or inorganic layer of
less than 0.00001 inches from the scope of the order. Moreover, there
is no language in either the proposed scope language of the
[[Page 24567]]
petition or our Notice of Initiation that limits the scope of the
investigation to ``PET base film,'' (i.e., PET film prior to the
application of in-line coatings), as Avery Dennison suggests. In
addition, release liner shares the chemical composition of PET film
described in the proposed scope of the petition and Notice of
Initiation.
One of the purposes of a less than fair value investigation is to
decide the merchandise specifically covered by the scope of the
ultimate antidumping duty order. Based upon the foregoing, we have
preliminarily determined that release film is of the same class or kind
of merchandise as that described in the Petition and in the
Department's Notice of Initiation. Thus, we have determined that
release film is covered by the scope of the antidumping investigation
of PET film from Thailand. For a full discussion of this issue, see the
memorandum titled ``Antidumping Duty Investigations on Polyethylene
Terephthalate Film, Sheet, and Strip (PET film) from Brazil, the
People's Republic of China, Thailand, and the United Arab Emirates,''
from Micheal J. Heaney, Senior Case Analyst, to Stephen J. Claeys,
Deputy Assistant Secretary for Import Administration, dated April 25,
2008, issued concurrently with this notice.
We have relied on four criteria to match U.S. sales of subject
merchandise to comparison market sales of the foreign like product:
grade, specification, thickness, and surface treatment. Where there
were no sales of identical merchandise in the comparison market made in
the ordinary course of trade 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.
Respondent Selection
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. The Department determined that there were six Thai
producers/exporters of PET Film that made shipments to the United
States during the POI. In the Department's Respondent Selection
Memorandum, we determined that, in light of resource constraints, it
would not be practicable in this investigation for us to examine all
known producers or exporters of subject merchandise. See the November
28, 2007, Memorandum to Deputy Assistant Secretary Stephen J. Claeys,
titled ``Antidumping Duty Investigation on Polyethylene Terephthalate
Film, Sheet, and Strip from Thailand (A-549-825): Respondent
Selection'' (Respondent Selection Memorandum). Further, no party to
this case argued for the examination of all companies. Accordingly,
pursuant to section 777A(c)(2) of the Act, the Department determined
that it would investigate only a limited number of exporters or
producers. Section 77A(c)(2) allows the Department to select
respondents either through a sample of exporters, producers, or types
of products that is statistically valid based on the information
available at the time of selection, or by using the exporters and
producers accounting for the largest volume of the subject merchandise
that can reasonably be examined.
In selecting the respondents in this investigation, we determined
that it is most appropriate to choose the largest producers/exporters
in order to cover the greatest possible export volume, pursuant to
section 777A(c)(2)(1)(B) of the Act. The petition and the Department
identified a single producer and exporter of PET Film from Thailand,
Polyplex, who accounted for the overwhelming majority of subject
merchandise exported to the United States during the POI. Therefore, we
concluded that we would review only Polyplex's exports for purposes of
this investigation. See Respondent Selection Memorandum.
Date of Sale
Section 351.401(i) of the Department's regulations states the
Department normally will use the date of invoice, as recorded in the
producer's or exporter's records kept in the ordinary course of
business, as the date of sale. The regulations further provide that the
Department may use a date other than the date of the invoice if the
Secretary is satisfied that a different date better reflects the date
on which the material terms of sale are established. See 19 CFR
351.401(i).
Polyplex reported the sales invoice date as the date of sale for
all sales in the comparison market and the U.S. market, except for
export price (EP) sales, in which case Polyplex reported the bill of
lading date as the date of sale. See BCQR at B-17 and C-16,
respectively.
In the comparison market, Polyplex stated on pages 27-29 of its AQR
that changes in price and quantity sometimes occur after the production
order is issued up until the time of shipment, and that changes did
occur during the POI. See page 10 of Polyplex's April 11, 2008,
submission. Additionally, Polyplex stated that for accounting purposes
it recognizes a sale based on date of invoice.
For EP sales, Polyplex stated on page 6 of its April 11, 2008,
submission that changes occur between the order date and invoice.
Additionally, on page 29 of its AQR, Polyplex stated that it issues a
commercial invoice to the Thai Customs Department for export approval
and to obtain an export entry number. Polyplex stated that it does not
book the sale in its accounting system until the goods are cleared by
Thai customs (i.e., Polyplex's receipt of the bill of lading from Thai
customs).
For constructed export price (CEP) sales, Polyplex provided invoice
date as the sale date based on the invoice from its U.S. affiliate to
the first unaffiliated U.S. customer or to Company A discussed below in
the section U.S. Sales of Further-Manufactured PET Film. See page C-16
of Polyplex's sections BCQR. Similar to the explanation for EP sales,
Polyplex stated on page 6 of its April 11, 2008, submission that
changes occur between the order date and invoice.
Based on the responses of Polyplex, and having no record evidence
that would indicate otherwise, we preliminarily determine that the
sales invoice date is the appropriate date of sale for the comparison
market and for CEP sales in the U.S. market, while bill of lading date
is the appropriate date of sale for Polyplex's EP sales. For a further
discussion of this issue, see Polyplex Preliminary Analysis Memo.
Affiliation
On April 7, 2008, the Department determined that Polyplex Thailand
and PA are affiliated with Company A pursuant to section 771(33)(F) of
the Act and 19 CFR 351.102(b). Due to the proprietary nature of this
issue, see the Department's Memorandum to the File, from Stephen
Bailey, Case Analyst, and Angelica Mendoza, Program Manager, through
Richard Weible, Director Office 7, dated April 7, 2008 (``Affiliation
Memo'').
Due to this affiliation, as noted above, on April 7, 2008, the
Department requested that Polyplex Thailand and Company A respond to
Section E (Cost of Further Manufacture or Assembly Performed in the
United States) of the Department's November 29, 2007, questionnaire for
purchases of PET Film from Polyplex Thailand and PA.
U.S. Sales of Further-Manufactured PET Film
During the POI, Polyplex Thailand and its U.S. affiliate, PA, sold
PET Film to Company A, which further manufactured the PET Film into
non-subject merchandise. Company A did not sell PET Film directly
acquired from
[[Page 24568]]
Polyplex Thailand or PA in the United States during the POI, but rather
further processed the material and resold it as non-subject
merchandise. After examining the various relationships between Polyplex
Thailand, PA, and Company A, the Department, as noted above, has
preliminarily determined that Company A is affiliated with both
Polyplex Thailand and PA. As noted above, on April 9, 2008, Polyplex
requested that the Department not collect section E information because
the value added by Company A substantially exceeds the value of the PET
Film input. Polyplex requested that the Department instead apply the
special rule found at section 772(e) of the Act and base the margin for
Company A's sales of further-manufactured goods on prices of other
subject merchandise sold by Polyplex Thailand and PA to companies other
than Company A.
Polyplex's Argument For Use of the Special Rule
Polyplex notes that the special rule, as discussed in section
772(e) of the Act, provides that where the subject merchandise is
imported by a person affiliated with the exporter or producer and the
value added in the United States by the affiliated person is likely to
exceed substantially the value of the subject merchandise, the
Department shall determine the CEP for such merchandise using either 1)
the price of identical subject merchandise sold by the exporter or
producer to an unaffiliated person, or 2) the price of other subject
merchandise sold by the exporter or producer to an unaffiliated person.
If there is not a sufficient quantity of sales to provide a reasonable
basis for comparison under subsets 1 or 2, or the Department determines
that neither of the prices described is appropriate, then the CEP may
be determined on any other reasonable basis.\1\
---------------------------------------------------------------------------
\1\With respect to the specified alternative methods the
Department may use after invoking the special rule, the Statement of
Administrative Action notes:
The alternative methods for establishing export price are: (1)
the price of identical subject merchandise sold by the exporter or
producer to an unaffiliated person; or (2) the price of other
subject merchandise sold by the exporter or producer to an
unaffiliated person. There is no hierarchy between these alternative
methods of establishing the export price. If there is not a
sufficient quantity of sales under either of these alternatives to
provide a reasonable basis for comparison, or if the Department
determines that neither of these alternatives is appropriate, it may
use any other reasonable method to determine constructed export
price, provided that it provides to interested parties a description
of the method chosen and an explanation of the basis for its
selection. Such a method may be based upon the price paid to the
exporter or producer by the affiliated person for the subject
merchandise, if the Department determines that such a price is
appropriate.
See URAA, Statement of Administrative Action, H. Doc 316, Vol.
1, 103d Cong., (1994) (SAA) at 826.
---------------------------------------------------------------------------
In arguing for application of the special rule, Polyplex notes the
following: 1) Company A's value-added substantially exceeds the value
of the PET Film input, 2) Company A made a ``very substantial'' number
of further manufactured products that contained PET Film (both subject
and non-subject merchandise) during the POI, 3) Company A sold further
manufactured products containing PET Film in a very high number of
invoices and line items during the POI, 4) Company A manufactured the
further manufactured product at many plants in the United States, and
5) Company A purchased PET Film from many producers during the POI, and
cannot identify the producer of the PET Film used in the further
manufactured product based on its books and records. See page 4 of
Polyplex's April 9, 2008, submission. Polyplex maintains that all of
the above-mentioned facts were present in the Indian investigation of
PET Film, of which Polyplex Corporation, Ltd. (India) (Polyplex India),
was the respondent. See Notice of Final Determination of Sales at Less
Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip From
India, 67 FR 34899 (May 16, 2002) and accompanying Issues and Decision
Memorandum at Comment 13 (PET Film from India Decision Memo).
Polyplex contends that the facts in the instant investigation are
similar to the facts in Silicon Metal from Brazil, where the Department
also applied the special rule. See Silicon Metal From Brazil:
Preliminary Results of Antidumping Duty Administrative Review and
Notice of Intent Not To Revoke Order in Part, 66 FR 40980 (August 6,
2001) (Silicon Metal from Brazil). In Silicon Metal from Brazil: 1) the
U.S. affiliate of the respondent also further manufactured the subject
merchandise it purchased from respondent into numerous products; 2) the
respondent was unable to trace the subject merchandise purchased by the
affiliate to the manufactured product since the subject merchandise was
purchased from different producers and commingled in the production
process; and 3) products containing subject merchandise were processed
at a variety of plants both in the United States and overseas, making
it difficult to assess the value added solely in the united States.
Polyplex notes that in Silicon Metal from Brazil, the Department
applied the special rule due to the burden placed on the Department in
calculating a dumping margin for the subject merchandise imported by
the U.S. affiliate.
Polyplex argues that the Department has also applied the special
rule in Lemon Juice from Mexico. See Notice of Preliminary
Determinations of Sales at Less Than Fair Value and of Critical
Circumstances in Part: Lemon Juice from Mexico, 72 FR 20830 (April 26,
2007). In Lemon Juice from Mexico, Polyplex maintains that the
Department applied the special rule because ``the value added in the
United States is likely to exceed substantially the value of the
subject merchandise and that is a sufficient quantity of U.S. sales of
non-further-processed merchandise to provide a reasonable basis for
comparison to normal value.'' See Lemon Juice from Mexico, 72 FR 20833.
Polyplex contends that similar to Lemon Juice from Mexico, the
Department should apply the special rule for Company A's purchases of
subject merchandise from Polyplex Thailand and PA.
Polyplex proposes two alternate special rule methodologies. First,
Polyplex suggests that the Department base the margin for further
manufactured sales on the price of other subject merchandise sold to
unaffiliated U.S. customers, i.e., all other sales excluding sales to
Company A. Polyplex contends that this methodology was used by the
Department in other special rule decisions in the past. Alternatively,
Polyplex suggests that Department rely on the ``arm's length prices''
from Polyplex and PA (Polyplex's U.S. sales affiliate) to Company A.
Petitioner's Comments on Use of the Special Rule
In its April 16, 2008, comments, petitioners argue that the
Department should asses the dumping margin on sales to Company A using
the margin calculated on sales of the identical grade of merchandise
sold to customers in the targeted group of customers. Because of the
timing of petitioner's comments so close to the preliminary
determination date, we did not have sufficient time to analyze
petitioner's comments prior to the April 25, 2008, deadline for
issuance of the preliminary determination. We intend to address this
allegation in full for purposes of the final determination.
Department's Analysis For Use of the Special Rule
The information on the record indicates that the value added in the
United States substantially exceeds the value of the subject
merchandise and that any potential accuracy gained by applying the
standard methodology is likely outweighed by the burden of its
application. Specifically, the significant
[[Page 24569]]
number of models of further manufactured products produced and sold by
Company A during the POI and the inability of Company A to identify the
source of the PET film used in a particular further manufactured
product greatly complicates the analysis required to apply the standard
methodology. Furthermore, the fact that Company A is unable to identify
the source of the PET film used in a particular further manufactured
product, and both Polyplex Thailand and PA sold PET film to Company A,
further complicates the analysis by requiring the Department to develop
assumptions about the adjustments that need to be made in order to
calculate net U.S. price.
Given the forgoing, and the fact that there is a sufficient
quantity of non-further processed subject merchandise sales to
unaffiliated parties in the United States to provide a reasonable basis
for comparison under the special rule, we have determined that it is
appropriate to apply the special rule of section 772(e) of the Act in
this case.
In this proceeding, we have determined that it is appropriate to
base the dumping margins for Polyplex's further manufactured sales on
the weighted-average dumping margins calculated on sales of other
subject merchandise sold to unaffiliated U.S. customers.
Fair Value Comparisons
To determine whether sales of PET Film from Thailand were made in
the United States at less than normal value (NV), we compared the EP or
CEP to the NV, as described in the ``Export Price and Constructed
Export Price'' and ``Normal Value'' sections below. In accordance with
section 777A(d)(i) of the Act, we calculated the weighted-average
prices for NV and compared these to the weighted-average of EP (and
CEP), when appropriate.
Export Price and Constructed Export Price
For the price to the United States, we used, as appropriate, EP or
CEP, in accordance with sections 772(a) and (b) of the Act. Pursuant to
section 772(a) of the Act, we used the EP methodology when the
merchandise was sold by the producer or exporter outside the United
States directly to the first unaffiliated purchaser in the United
States prior to importation and when CEP was not otherwise warranted
based on the facts on the record. We calculated CEP for those sales
where a person in the United States, affiliated with the foreign
exporter or acting for the account of the exporter, made the sale to
the first unaffiliated purchaser in the United States of the subject
merchandise. See section 772(b) of the Act. We based EP and CEP on the
packed prices charged to the first unaffiliated customer in the United
States and the applicable terms of sale, where appropriate.
We calculated EP based on prices charged to the first unaffiliated
U.S. customer. We used the bill of lading date as the date of sale.\2\
We based EP on the packed free on board (FOB) prices to the first
unaffiliated purchasers outside Thailand. We made deductions for
movement expenses in accordance with section 772(c)(2)(A) of the Act,
including foreign inland freight, foreign inland insurance, and foreign
brokerage and handling.
---------------------------------------------------------------------------
\2\ See the Department's Sales Analysis Memorandum for a further
discussion of this issue.
---------------------------------------------------------------------------
We calculated CEP based on prices charged to the first unaffiliated
U.S. customer after importation, where appropriate. We used the sale
invoice date as the date of sale. We based CEP on the gross unit price
from PA to its unaffiliated U.S. customers, making adjustments where
necessary for billing adjustments, pursuant to section 772(c)(1) of the
Act. Where applicable, the Department made deductions for movement
expenses (foreign inland freight, foreign inland insurance, foreign
brokerage and handling, international freight, U.S. movement from
warehouse to customer, U.S. customs duty and brokerage, marine
insurance and warehousing), in accordance with section 772(c)(2) of the
Act and section 351.401(e) of the Department's regulations. In
accordance with sections 772(d)(1) and (2) of the Act, we also
deducted, where applicable, U.S. direct selling expenses, including
credit expenses, U.S. indirect selling expenses, and U.S. inventory
carrying costs incurred in the United States and Thailand associated
with economic activities in the United States. We also deducted CEP
profit in accordance with section 772(d)(3) of the Act.
Normal Value
A. Home Market Viability and Comparison Market Selection
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
respondent's volume of home market sales of the foreign like product to
the volume of its U.S. sales of the subject merchandise. Pursuant to
section 773(a)(1)(B)(i) of the Act, because Polyplex Thailand had an
aggregate volume of home market sales of the foreign like product that
was greater than five percent of its aggregate volume of U.S. sales of
the subject merchandise, we determined that the home market is viable
for comparison purposes. Accordingly, we calculated NV for Polyplex
based on sales prices to Thai customers.
B. Cost of Production Analysis
Based on our analysis of the petitioners' allegation, we found that
there were reasonable grounds to believe or suspect that Polyplex
Thailand's sales of PET Film in the home market were made at prices
below its COP. Accordingly, pursuant to section 773(b) of the Act, we
initiated a sales-below-cost investigation to determine whether
Polyplex Thailand's sales were made at prices below its COP. See
Memorandum to Richard Weible, Director, Office 7, AD/CVD Operations,
from The Team entitled ``The Petitioners' Allegation of Sales Below the
Cost of Production for Polyplex Public Company Ltd. and Polyplex
Americas, Inc.'' dated February 19, 2008.
1. Calculation of Cost of Production
In accordance with section 773(b)(3) of the Act, we calculated the
respondent's COP based on the sum of its costs of materials and
conversion for the foreign like product, plus an amount for general and
administrative (G&A) expenses and financial expenses. See the ``Test of
Comparison Market Sales Prices'' section below for the treatment of
comparison market selling expenses.
The Department relied on the COP data submitted by Polyplex in its
section D questionnaire and supplemental questionnaire responses for
the COP calculation with the exception of the financial expense ratio.
We have recalculated the financial expense ratio to include the net
amount of the foreign exchange gains and losses recognized by
Polyplex's parent company in its 2006-2007 consolidated financial
statements and exclude the interest income offset related to interest
charges collected from customers for late payment.
For a complete discussion of the changes made to the cost
information submitted by Polyplex, see Memorandum to Neal M. Halper,
Director, Office of Accounting, titled ``Cost of Production and
Constructed Value Calculation Adjustments for the Preliminary
Determination - Polyplex (Thailand) Public Company Ltd. and Polyplex
(Americas) Inc.,'' dated April 25, 2008 (Polyplex Cost Calculation
Memo).
2. Test of Comparison Market Sales Prices
[[Page 24570]]
On a product-specific basis, we compared the adjusted weighted-
average COP to the comparison market sales of the foreign like product,
as required under section 773(b) of the Act, in order to determine
whether the sale prices were below the COP. For purposes of this
comparison, we used the COP exclusive of selling and packing expenses.
The prices were exclusive of any applicable movement charges, direct
and indirect selling expenses, and packing expenses.
3. Results of the COP Test
Pursuant to section 773(b)(2)(C)(i) 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 COP,
we determined that such sales have been made in ``substantial
quantities.'' See section 773(b)(2)(C) of the Act. Further, the sales
were made within an extended period of time, in accordance with section
773(b)(2)(B) of the Act, because we examined below-cost sales occurring
during the entire POI. In such cases, because we compared prices to
POI-average costs, 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 products, more than 20 percent of
Polyplex's sales were at prices less than the COP and, in addition,
such sales did not provide for the recovery of costs within a
reasonable period of time. We therefore excluded these sales and used
the remaining sales as the basis for determining NV, in accordance with
section 773(b)(1) of the Act.
C. Calculation of Normal Value Based on Comparison Market Prices
We calculated NV based on packed prices to unaffiliated customers
in Thailand and matched U.S. sales to NV. We made deductions, where
appropriate, for discounts, rebates, movement expenses, and packing
pursuant to section 773(a)(6)(B) of the Act. When comparing U.S. sales
with comparison market sales of similar, but not identical,
merchandise, we also made adjustments for physical differences in the
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and
19 CFR 351.411(a) and (b). We based this adjustment on the difference
in the variable cost of manufacturing for the foreign like product and
subject merchandise. See 19 CFR 351.411(b). We also made adjustments
for differences in circumstances of sale (COS) as appropriate (i.e.,
commissions and credit), in accordance with section 773(a)(6)(C)(iii)
of the Act and 19 CFR 351.410.
In addition, for comparisons made to CEP sales, we only deducted
Thai credit expenses from comparison market prices, because U.S. credit
expenses were deducted from U.S. price, as noted above and in
accordance with section 772(c)(2) of the Act.
D. Calculation of Normal Value Based on Constructed Value
Section 773(a)(4) of the Act provides that where NV cannot be based
on comparison-market sales, NV may be based on constructed value (CV).
Accordingly, for PET Film for which we could not determine the NV based
on comparison-market sales, either because there were no useable sales
of a comparable product or all sales of the comparable products failed
the COP test, we based NV on the CV.
Section 773(e) of the Act provides that the CV shall be based on
the sum of the cost of materials and fabrication for the imported
merchandise, plus amounts for SG&A expenses, profit, and U.S. packing
costs. We calculated the cost of materials and fabrication, selling and
administrative (SG&A), and interest based on the methodology described
in the ``Cost of Production Analysis'' section, above.
We based profit on the actual amounts incurred and realized by
Polyplex 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.
We made adjustments to CV for differences in COS in accordance with
section 773(a)(8) of the Act and 19 CFR 351.410. For comparisons to EP,
we made COS adjustments by deducting direct selling expenses incurred
on home market sales from, and adding U.S. direct selling expenses to,
CV.
E. 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 level of trade (LOT) as the EP or CEP transaction.
The LOT in the comparison market is the LOT of the starting-price sales
in the comparison market or, when NV is based on CV, the LOT of the
sales from which we derive SG&A expenses and profit. With respect to
U.S. prices for EP transactions, the LOT is also that of the starting-
price sale, which is usually from the exporter to the first
unaffiliated importer. See section 351.412(c)(i) of the Department's
regulations. For CEP, the LOT is that of the constructed sale from the
exporter to the affiliated importer. See section 351.412(c)(ii) of the
Department's regulations. See also Micron Technology, Inc. v. United
States, 243 F.3d 1301, 1314 (Fed. Cir. 2001) (Micron Technology).
To determine whether comparison market sales were at a different
LOT from U.S. sales, we examined stages in the marketing process and
selling functions along the chain of distribution between the producer
and the unaffiliated customer. Under the Department's LOT practice, if
the comparison market sales are at different LOTs, 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, the Department makes
an LOT adjustment in accordance with section 773(a)(7)(A) of the Act.
For CEP sales, we examine stages in the marketing process and selling
functions along the chain of distribution between the producer and the
customer. We also analyze whether different selling activities are
performed, and whether any price differences (other than those for
which other allowances are made under the Act) are shown to be wholly
or partly due to a difference in LOT between the CEP and NV. Under
section 773(a)(7)(A) of the Act, we further make an upward or downward
adjustment to NV for LOT if the difference in LOT involves the
performance of different selling activities and is demonstrated to
affect price comparability, based on a pattern of consistent price
differences between sales at different LOTs in the country in which NV
is determined. Finally, if the NV LOT is at a more advanced stage of
distribution than the LOT of the CEP, but the data available do not
provide an appropriate basis to determine a LOT adjustment, we reduce
NV by the amount of indirect selling expenses incurred in the foreign
comparison market on sales of the foreign like product, but by no more
than the amount of the indirect selling expenses incurred for CEP
sales. See section 773(a)(7)(B) of the Act (the CEP offset provision).
In analyzing differences in selling functions, we determine whether
the
[[Page 24571]]
LOTs identified by the respondent are meaningful. See Antidumping
Duties; Countervailing Duties, Final Rule, 62 FR 27296, 27371 (May 19,
1997). If the claimed LOTs are the same, we expect that 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. See
Porcelain-on-Steel Cookware from Mexico: Final Results of
Administrative Review, 65 FR 30068 (May 10, 2000) and accompanying
Issues and Decision Memorandum at Comment 6.
In the present investigation, Polyplex did not request a LOT
adjustment. See BCQR at B-28. In order to determine whether the
comparison market sales were at different stages in the marketing
process than the U.S. sales, we reviewed the distribution system in
each market (i.e., the ``channel of distribution''), including selling
functions, class of customer (customer category), and the level of
selling expenses for each type of sale.
Polyplex reported two channels of distribution in the comparison
market (i.e., Thailand), distributors and end-users. Polyplex reported
its selling functions to both distributors and end-users in the
comparison market as: technical services/support, customer interaction,
sales calls, marketing research, order processing, price negotiation,
credit/payment collection, delivery/freight, inventory maintenance
(non-consignment sales), inventory maintenance (consignment sales),
sales forecasting, sales promotion, and warranty. We examined the
selling activities reported for each channel of distribution and found
that Polyplex's level of selling functions to its comparison market
customers did not vary significantly by channel of distribution.
Specifically, Polyplex performed the same selling functions at a
similar level of performance for sales in both comparison market
channels of distribution (e.g., price negotiation, credit/payment
collection, delivery/freight, inventory maintenance (non-consignment
sales), sales forecasting, sales promotion, and warranty). See AQR at
Exhibit 8 (i.e., selling functions chart) and Exhibit S1 of the SABCQR.
We find that the only meaningful difference between the two channels in
terms of the services provided in the stages of marketing (and the
degree of performance of those services) is that Polyplex provides
customer interaction, sales calls, and order processing services at a
higher degree for its end-use customers than distributors. Id. We do
not find these differences alone to be sufficient for finding more than
one LOT. Therefore, we preliminarily find that the selling functions
for the reported channels of distribution constitute one LOT in the
comparison market.
Polyplex reported that its EP and CEP sales to the United States
were made through four channels of distribution: 1) CEP PA direct to
customer drop ship sales (no warehousing) (channel 1); 2) CEP PA
warehousing in customer's warehouse (consignment sales) (channel 2); 3)
CEP PA warehousing in PA's warehouse (from inventory) (channel 3); and
4) EP direct sales on an FOB basis (channel 4). For EP and CEP sales,
we examined the selling activities related to each of the selling
functions between Polyplex and its U.S. customers. Polyplex reported
its selling functions to distributors (i.e., PA) and end-users in the
United States as: technical services/support, customer interaction,
sales calls, marketing research, order processing, price negotiation,
credit/payment collection, delivery/freight, inventory maintenance
(non-consignment sales), inventory maintenance (consignment sales),
sales forecasting, sales promotion, and warranty. We examined
Polyplex's selling functions for its U.S. sales and found that channels
1, 2, and 3 (i.e., CEP sales to PA) are essentially the same channel
with the same selling functions performed.\3\
---------------------------------------------------------------------------
\3\ The Department notes that Polyplex's U.S. sales to Company A
are being excluded from our analysis pursuant to the Department's
Analysis For Use of the Special Rule section above. As such,
Polyplex Thailand's EP sales, and certain CEP sales to Company A,
will not be used in the margin analysis. The Department has
conducted an LOT analysis for this preliminary determination because
removing the sales in question is a preliminary decision and
removing the sales in question does not affect the ultimate
conclusion reached by the LOT analysis.
---------------------------------------------------------------------------
For CEP sales, we consider only the selling activities reflected in
the price after the deduction of expenses and CEP profit under section
772(d) of the Act. See Micron Technology, 243 F.3d at 1314-1315. We
reviewed the selling functions and services performed by Polyplex on
CEP sales for the three channels of distribution relating to the CEP
LOT, as described by Polyplex in its questionnaire response, after
these deductions. Exhibit 8 of the AQR and Exhibit S1 of the SABCQR
detail the selling functions performed for sales from Polyplex to PA
and, then to distributors and end use customers. All three channels are
included in the same selling function columns. Therefore, the
Department finds that there are two channels of distribution in the
United States, consisting of Polyplex's EP sales (i.e., channel 4) and
Polyplex's CEP sales (i.e., channels 1, 2, and 3). We then compared the
selling functions between Polyplex's CEP sales and Polyplex's EP direct
U.S. sales.
The Department finds that the two channels of distribution in the
U.S. vary significantly. For instance, the selling functions provided
by Polyplex to unaffiliated customers in the U.S. (i.e., EP direct
sales to end-users) were usually at a medium level, while providing a
high level of technical support. Polyplex provided a minimum level of
sales calls, marketing research, inventory maintenance (non-consignment
sales), while providing no sales promotion and warranty services.
However, Polyplex usually provided no selling functions for sales to
PA; only providing a minimum of technical services, order processing,
delivery services, and moderate sales forecasting. See Exhibit A1 of
Polyplex's March 12, 2008, supplemental questionnaire response.
Therefore, we preliminary determine that Polyplex's U.S. sales are made
at two LOTs (i.e., CEP and EP).
We then compared the selling functions Polyplex provided in the
comparison market LOT with the selling functions provided for the two
U.S. LOTs. On this basis, we determined that the comparison market LOT
is similar to Polyplex's U.S. LOT for EP sales. We made this
determination based upon the minor differences that exist between
Polyplex's comparison and U.S. EP sales, specifically the minimum level
of sales calls and market research provided in the U.S. compared to
medium to high level provided in the comparison market. See Exhibit A1
of Polyplex's March 12, 2008, supplemental questionnaire response.
Moreover, we find that the degree to which Polyplex provides these
identical selling functions for its customers in both markets to be the
same or similar (i.e., technical services, customer interaction, order
processing, price negotiation, credit/payment collection, delivery/
freight, inventory maintenance (non-consignment sales), sales
forecasting, and warranty). Therefore, we preliminarily determine that
Polyplex is not entitled to a LOT adjustment with respect to these
sales.
According to section 773(a)(7)(B) of the Act, a CEP offset is
appropriate when the LOT in the comparison market is at a more advanced
stage than the LOT of the CEP sales and there are no data available to
determine the existence of a pattern of price difference. Polyplex
reported that it provided minimal selling functions and services for
the one (CEP) LOT in the United States and that, therefore, the
[[Page 24572]]
comparison market LOT is more advanced than the CEP LOT. Based on our
analysis of the channels of distribution and selling functions
performed by Polyplex for sales in the comparison market and CEP sales
in the U.S. market, we preliminarily find that the comparison market
LOT is at a more advanced stage of distribution when compared to CEP
sales because Polyplex provides many more selling functions in the
comparison market at a higher level of service as compared to selling
functions performed for its CEP sales (i.e., technical services/
support, customer interaction, sales calls, marketing research, order
processing, price negotiation, credit/payment collection, delivery/
freight, inventory maintenance (non-consignment sales), inventory
maintenance (consignment sales), and sales promotion). See Exhibit S1
of Polyplex's SABCQR. Thus, we find that Polyplex's comparison market
sales are at a more advanced LOT than its CEP sales. There is one LOT
in the comparison market, and there are no data available to determine
the existence of a pattern of price difference, and we do not have any
other information that provides an appropriate basis for determining a
LOT adjustment. Therefore, consistent with section 773(a)(7)(B) of the
Act, we applied a CEP offset to NV for CEP comparisons.
To calculate the CEP offset, we deducted from NV the comparison
market indirect selling expenses from NV for comparison market sales
that were compared to U.S. CEP sales. As such, we limited the
comparison market indirect selling expense deduction by the amount of
the indirect selling expenses deducted in calculating the CEP as
required under section 772(d)(1)(D) of the Act.
Currency Conversion
We made currency conversions into U.S. dollars in accordance with
section 773A of the Act and 19 CFR 351.415 based on the exchange rates
in effect on the dates of the U.S. sales as certified by the Federal
Reserve Bank.
Verification
As provided in section 782(i) of the Act, we intend to verify all
information upon which we will rely in making our final determination.
Preliminary Determination
The weighted-average dumping margin in the preliminary
determination is as follows:
------------------------------------------------------------------------
Weighted-Average
Producer/Exporter Margin
(Percentage)
------------------------------------------------------------------------
Polyplex (Thailand) Public Company Ltd.............. 0.00
------------------------------------------------------------------------
Suspension of Liquidation
In accordance with section 733(b)(3) of the Act, the Department
will disregard any weighted-average dumping margin that is zero or de
minimis, i.e. less than 2 percent ad valorem. Based on our preliminary
margin calculation, we will not direct the U.S. CBP to suspend
liquidation of any entries of PET Film from Thailand as described in
the ``Scope of Investigation'' section that are entered, or withdrawn
from warehouse, for consumption on or after the date of publication of
this notice in the Federal Register. The Department does not require
any cash deposit or posting of a bond for this preliminary
determination.
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of the Department's preliminary determination. If the Department's
final determination is affirmative, the ITC will determine before the
later of 120 days after the date of this preliminary determination or
45 days after our final determination whether imports of PET Film from
Thailand are materially injuring, or threaten material injury to, the
U.S. industry. We will disclose the calculations used in our analysis
to parties in this proceeding in accordance with 19 CFR 351.224(b).
Public Comment
Interested parties are invited to comment on the preliminary
determination. Interested parties may submit case briefs to the
Department no later than seven days after the date of the issuance of
the final verification report in this proceeding. See 19 CFR
351.309(c)(1)(i). Rebuttal briefs, the content of which is limited to
the issues raised in the case briefs, must be filed within five days of
the deadline date for the submission of case briefs. See 19 CFR
351.309(d)(1) and (2). 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. Further, we request that parties
submitting briefs and rebuttal briefs provide the Department with a
copy of the public version of such briefs on diskette. In accordance
with section 774 of the Act, and 19 CFR 351.310, the Department will
hold a public hearing, if requested, to afford interested parties an
opportunity to comment on arguments raised in case or rebuttal briefs,
provided that such a hearing is requested by an interested party. If a
request for a hearing is made in this investigation, pursuant to 19 CFR
351.310(c) the hearing will tentatively be held two days after the
rebuttal brief deadline date at the U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW, Washington, DC 20230, at a time and
in a room to be determined.
Parties should confirm by telephone, the date, time, and location
of the hearing 48 hours before the scheduled date.
Interested parties, who wish to request a hearing, or to
participate in a hearing if one is requested, must submit a written
request to the Secretary of Commerce, Attention Assistant Secretary for
Import Administration, U.S. Department of Commerce, APO/Dockets Unit
Room 1870, within 30 days of the publication of this notice. Requests
should contain: (1) the party's name, address, and telephone number;
(2) the number of participants; and (3) a list of the issues to be
discussed. See 19 CFR 351.310(c). At the hearing, oral presentations
will be limited to issues raised in the case and rebuttal briefs.
This determination is issued and published pursuant to sections
733(f) and 777(i)(1) of the Act and 19 CFR 351.205(c).
Dated: April 25, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-9840 Filed 5-2-08; 8:45 am]
BILLING CODE 3510-DS-S