Coated Free Sheet Paper from the Republic of Korea: Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 30766-30771 [E7-10706]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 106 (Monday, June 4, 2007)]
[Notices]
[Pages 30766-30771]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-10706]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-856]


Coated Free Sheet Paper from the Republic of Korea: Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The U.S. Department of Commerce (``the Department'') 
preliminarily determines that coated free sheet paper (``CFS paper'') 
from the Republic of Korea (``Korea'') is being, or is 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''). The estimated margins of sales at LTFV are listed in the 
``Suspension of Liquidation'' section of this notice. Interested 
parties are invited to comment on this preliminary determination. 
Pursuant to requests from interested parties, we are postponing for 60 
days the final determination and extending the provisional measure from 
a four-month period to not more than six months. Accordingly, we will 
make our final determination not later than 135 days after publication 
of the preliminary determination.

EFFECTIVE DATE: June 4, 2007.

FOR FURTHER INFORMATION CONTACT: Brian Ledgerwood (Kyesung Paper Co., 
Ltd.), Dennis McClure (EN Paper Mfg. Co., Ltd.), Stephanie Moore 
(Moorim Paper Co., Ltd. and Moorim SP Co., Ltd.), or Joy Zhang (Hankuk 
Paper Mfg. Co., Ltd. and Hansol Paper Co., Ltd.), AD/CVD Operations, 
Office 3, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone (202) 482-3836, (202) 482-5973, (202) 
482-3692, or (202) 482-1168, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On November 27, 2006, the Department initiated an antidumping duty 
investigation of CFS from Korea. See Initiation of Antidumping Duty 
Investigations: Coated Free Sheet Paper From Indonesia, the People's 
Republic of China, and the Republic of Korea, 71 FR 68537 (November 27, 
2006) (``Initiation Notice''). The petitioner in this investigation is 
NewPage Corporation.
    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 Initiation 
Notice. See Initiation Notice, 71 FR at 68538; see also Antidumping 
Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 
1997). On January 12, 2007, the Indonesian Respondents submitted scope 
comments. See Scope Comments section, below.
    On December 11, 2006, the petitioner submitted comments on model-
matching criteria. On December 18, 2006, respondents Hansol Paper Co., 
Ltd. (``Hansol''), Moorim Paper Co., Ltd. and Moorim SP Co., Ltd. 
(``Moorim'') (formerly Shinmoorim Paper Mfg. Co., Ltd.), and EN Paper 
Mfg. Co., Ltd. (``EN Paper'') (formerly Shinho Paper Co., Ltd.) 
submitted comments on model-matching criteria. On February 15, 2007, 
Hansol submitted additional comments on model-matching criteria. See 
Model Match section, below.
    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 identified a large number of 
producers and exporters of CFS paper in Korea and determined that it 
was not practicable to examine each known exporter/producer of the 
subject merchandise, as provided in section 777A(c)(1) of the Act. 
Thus, we selected to investigate EN Paper, Moorim, and Hansol. These 
three exporters/producers accounted for the largest volume of subject 
merchandise exported to the United States during the period of 
investigation (``POI''). See section 777A(c)(2)(i)(B) of the Act; See 
Memorandum from the Team, through Office Director Melissa Skinner, to 
Deputy Assistant Secretary Stephen J. Claeys, entitled ``Regarding 
Selection of Respondents,'' dated December 21, 2006. We subsequently 
issued the antidumping questionnaire\1\ to these companies on December 
22, 2006.
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    \1\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under investigation that it sells, and the manner in 
which it sells that merchandise in all of its markets. Section B 
requests a complete listing of all home market sales or, if the home 
market is not viable, of sales in the most appropriate third-country 
market. Section C requests a complete listing of U.S. sales. Section 
D requests information on the cost of production of the foreign like 
product and the constructed value of the merchandise under 
investigation. Section E requests information on further 
manufacturing.
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    On December 22, 2006, the United States International Trade 
Commission (``ITC'') preliminarily determined that there is a 
reasonable indication that imports of CFS paper from China, Indonesia 
and Korea are materially injuring the U.S. industry and the ITC 
notified the Department of its findings. See Coated Free Sheet Paper 
from China, Indonesia, and Korea, Investigation Nos. 701-TA-444-446 
(Preliminary) and 731-TA-1107-1109 (Preliminary), 71 FR 78464 (December 
29, 2006).
    On December 28, 2006, counsel to petitioner met with the Department 
to discuss the Department's December 21, 2006, respondent selection 
memorandum and petitioner's December 22, 2006, submission requesting 
the Department to select an

[[Page 30767]]

additional respondent. See Memorandum from Joy Zhang to The File, 
entitled ``Ex Parte Meeting with Counsel to Petitioner,'' dated 
December 28, 2006.
    On January 5, 2007, the Department reexamined the availability of 
its resources and determined it was practicable to investigate one 
additional mandatory respondent, Kyesung Paper Co., Ltd. (``Kyesung''). 
See Memorandum from Program Manager James Terpstra, through Office 
Director Melissa Skinner, to Deputy Assistant Secretary Stephen J. 
Claeys, entitled ``Response to Comments from Interested Parties 
Regarding Respondent Selection,'' dated January 5, 2007. We 
subsequently issued the antidumping questionnaire to Kyesung.
    On February 15, 2007, David Spooner, the Assistant Secretary for 
Import Administration, met with officials from the Korean Embassy to 
discuss the Department's selection of respondents. See Memorandum from 
Katja Kravetsky to The File, entitled ``Ex Parte Meeting,'' dated 
February 15, 2007.
    On March 15, 2007, the Department selected Hankuk as a mandatory 
respondent. See Memorandum from James Terpstra, Program Manager to The 
File, dated March 15, 2007. On March 20, 2007, petitioner provided 
comments on the Department's decision to calculate a dumping margin for 
Hankuk as a mandatory respondent in this investigation.
    On January 10, 2007, the petitioner filed a country-wide allegation 
of sales of CFS paper at prices below the cost of production (``COP''). 
We found that the petitioner had provided a reasonable basis to believe 
or suspect that Korean producers were selling CFS paper in Korea at 
prices below the COP. See section 773(b)(2)(A)(i) of the Act. We 
initiated a country-wide sales-below-cost investigation on January 26, 
2007, and requested that all Korean respondents respond to section D of 
the Department's questionnaire. See Memorandum from the Team, through 
James Terpstra, Program Manager to Office Director Melissa Skinner, 
entitled ``Regarding Petitioner's Allegation of Country-Wide Sales 
Below the Cost of Production,'' dated January 26, 2007 (``Cost 
Allegation Memorandum'').\2\
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    \2\ A public version of this memorandum is available in the 
Central Records Unit (``CRU''), located in room B-099 of the main 
Department building.
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    On January 26, 2007, the Department received the Section A 
responses from EN Paper, Moorim, and Hansol. On February 9, 2007, the 
Department received a Section A voluntary response from Hankuk Paper 
Mfg. Co., Ltd. (``Hankuk''). On February 13, 2007, the Department 
received the Section A response from Kyesung. We received the Sections 
B and C responses from Hansol and Moorim on February 15, 2007. On 
February 16, 2007, we received the Sections B and C response from EN 
Paper. On March 2, 2007, we received a Sections B and C voluntary 
response from Hankuk. On March 5, 2007, we also received Kyesung's 
Sections B and C response and Section D responses from all respondents 
as well as Hankuk.
    On February 27, 2007, the Department received comments from the 
petitioner on Sections A through C responses for EN Paper and Hansol. 
On March 6, 2007, the petitioner commented on Moorim's Sections A 
through C response. On March 12, 2007, the petitioner commented on 
Kyesung's Sections A through C response. On March 15, 2007, Kyesung 
replied to the petitioner's March 12, 2007, comments.
    After reviewing the Sections A through D responses from each 
respondent, the Department issued supplemental questionnaires to the 
above companies. The petitioner submitted additional comments on each 
of the supplemental questionnaire responses. The Department issued 
additional supplemental questions, after reviewing each supplemental 
response.
    The Department received requests from Hansol and Moorim to exclude 
certain sales, on January 26 and February 2, 2007, respectively. The 
petitioner submitted letters objecting to any exclusion of home market 
sales on January 29 and February 5, 2007. On February 2, 2007, the 
Department requested additional information in order to thoroughly 
evaluate Hansol's request to exclude certain sales. On February 8, 
2007, the Department requested additional information from Moorim. On 
February 9 and 14, 2007, respectively, Hansol and Moorim submitted 
responses to the Department's request for additional information. On 
February 14, 2007, the petitioner submitted additional comments 
concerning Hansol's request to exclude certain sales. On March 2, 2007, 
the Department sent letters to Hansol and Moorim denying the request to 
exclude certain sales.
    On February 23, 2007, the petitioner requested the Department 
extend the deadline for filing targeted dumping allegations. On March 
2, 2007, the petitioner requested the Department postpone the 
preliminary determination by 50 days. On March 2, 2007, the Department 
explained to the petitioner that the deadline to file a targeted 
dumping allegation would be 30 days from any revised deadline for the 
preliminary determination. See Memorandum from James Terpstra to The 
File, entitled ``Extension of the Deadline to File a Targeted Dumping 
Allegation in the Antidumping Duty Investigation on Coated Free Sheet 
Paper from Korea,'' dated March 2, 2007. On March 12, 2007, the 
Department postponed the preliminary determination by 50 days. See 
Postponement of Preliminary Determinations in the Antidumping Duty 
Investigations of Coated Free Sheet Paper from the People's Republic of 
China, Indonesia, and the Republic of Korea, 72 FR 12757 (March 19, 
2007).
    The petitioner filed targeted dumping allegations against Moorim, 
Hankuk, and Hansol, on April 26, 2007. See section 777A(d)(1)(B) of the 
Act. On May 14 and 15, 2007, respectively, the Department received 
comments from Hansol and Moorim objecting to the targeted dumping 
allegations. On May 18, 2007, the petitioner filed rebuttal comments. 
Although petitioner's allegations were timely, the Department did not 
have sufficient time to fully analyze them for purposes of this 
preliminary determination. In addition, the Department has requested 
more information from petitioner with respect to its targeted dumping 
allegations. See Letter from Melissa Skinner to Petitioner, dated May 
22, 2007. We intend to fully consider this issue for purposes of our 
final determination.
    On May 9, 2007, EN Paper and the Korea Paper Manufacturers' 
Association requested the Department postpone the final determination 
and extend the provisional measures. See Postponement of Final 
Determination and Extension of Provisional Measures section, below.
    On May 11, 2007, the petitioner submitted pre-preliminary comments 
on Hankuk, Hansol, and Moorim.

Period of Investigation

    The POI is October 1, 2005, to September 30, 2006. This period 
corresponds to the four most recent fiscal quarters prior to the month 
of the filing of the petition.

Scope of Investigation

    The merchandise covered by this investigation includes coated free 
sheet paper and paperboard of a kind used for writing, printing or 
other graphic purposes. Coated free sheet paper is produced from not-
more-than 10 percent by weight mechanical or combined chemical/
mechanical fibers. Coated free sheet paper is coated with kaolin (China 
clay) or other inorganic substances, with or without a binder,

[[Page 30768]]

and with no other coating. Coated free sheet paper may be surface-
colored, surface-decorated, printed (except as described below), 
embossed, or perforated. The subject merchandise includes single- and 
double-side-coated free sheet paper; coated free sheet paper in both 
sheet or roll form; and is inclusive of all weights, brightness levels, 
and finishes. The terms ``wood free'' or ``art'' paper may also be used 
to describe the imported product.
    Excluded from the scope are: (1) coated free sheet paper that is 
imported printed with final content printed text or graphics; (2) base 
paper to be sensitized for use in photography; and (3) paper containing 
by weight 25 percent or more cotton fiber.
    Coated free sheet paper is classifiable under subheadings 
4810.13.1900, 4810.13.2010, 4810.13.2090, 4810.13.5000, 4810.13.7040, 
4810.14.1900, 4810.14.2010, 4810.14.2090, 4810.14.5000, 4810.14.7040, 
4810.19.1900, 4810.19.2010, and 4810.19.2090 of the Harmonized Tariff 
Schedule of the United States (``HTSUS''). While HTSUS subheadings are 
provided for convenience and customs purposes, our written description 
of the scope of this investigation is dispositive.

Scope Comments

    In our Initiation Notice, we 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 
Initiation Notice.
    On December 18, 2006, PT. Pabrik Kertas Tjiwi Kimia Tbk. and PT. 
Pindo Deli Pulp and Paper Mills (``PD/TK'') submitted timely scope 
comments in the companion antidumping (``AD'') and countervailing duty 
(``CVD'') investigations on CFS paper from Indonesia. On January 12, 
2007, the Department requested that PD/TK also file these comments on 
the administrative records of the companion AD and CVD investigations 
of CFS paper from the People's Republic of China and the Republic of 
Korea. See Memorandum from Alice Gibbons to The File, dated January 12, 
2007. PD/TK did so on the same date. On January 19, 2007, the 
petitioner responded to these comments.
    In its comments, PD/TK requested that the Department exclude from 
its investigations cast-coated free sheet paper. The Department 
analyzed this request, together with the comments from the petitioner, 
and determined that it is not appropriate to exclude cast-coated free 
sheet paper from the scope of these investigations. The Department's 
analysis is set forth in a memorandum dated March 22, 2007. See the 
Memorandum from Barbara Tillman, Director, AD/CVD Operations, Office 6, 
to Stephen J. Claeys, Deputy Assistant Secretary for Import 
Administration, entitled, ``Request to Exclude Cast-Coated Free Sheet 
Paper from the Antidumping Duty and Countervailing Duty Investigations 
on Coated Free Sheet Paper.''

Model Match

    In accordance with section 771(16) of the Act, all products 
produced by the respondents covered by the description in the Scope of 
Investigation section, above, and sold in Korea during the POI are 
considered to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We have relied on seven 
criteria to match U.S. sales of subject merchandise to comparison 
market sales of the foreign like product: coating, form, basis weight, 
brightness, finish, opacity, and sheet size. Where there were no sales 
of identical merchandise in the home 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.
    On December 11, 2006, the petitioner filed proposed model-matching 
criteria to use in the Department's questionnaire. On December 18, 
2006, EN Paper, Hansol, and Moorim, separately filed proposed model-
matching criteria for use in the questionnaire. On December 22, 2006, 
the Department issued the questionnaire containing the criteria 
identified above.
    On February 15, 2007, Hansol requested that the Department modify 
the order of its matching criteria. Hansol suggested that the revised 
hierarchy should be: coating, form, brightness, finish, basis weight, 
opacity, and sheet size. We reviewed the responses of each respondent, 
including the product brochures. We do not find that Hansol's suggested 
product match is any more reflective of the industry than the hierarchy 
of physical characteristics in the Department's questionnaire. 
Therefore, we have not modified the order of the Department's matching 
criteria. See Memorandum from the Team, Office 3, AD/CVD Operations, 
through James Terpstra, Program Manager, AD/CVD Operations, to Melissa 
Skinner, Office Director, AD/CVD Operations, entitled, ``Discussion of 
Model Match Criteria/Hierarchy,'' dated May 29, 2007.

Date of Sale

    Section 351.401(i) of the Department's regulations states that 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. The Department has 
a long-standing practice of finding that, where shipment date precedes 
invoice date, shipment date better reflects the date on which the 
material terms of sale are established. See 19 CFR 351.401(i); see also 
Notice of Final Determination of Sales at Less Than Fair Value and 
Negative Final Determination of Critical Circumstances: Certain Frozen 
and Canned Warmwater Shrimp from Thailand, 69 FR 76918 (December 23, 
2004), and accompanying Issues and Decision Memorandum at Comment 10; 
and Notice of Final Determination of Sales at Less Than Fair Value: 
Structural Steel Beams from Germany, 67 FR 35497 (May 20, 2002), and 
accompanying Issues and Decision Memorandum at Comment 2. Therefore, we 
used the earlier of shipment date or invoice date as the date of sale 
in accordance with our practice.

Fair Value Comparisons

    To determine whether sales of CFS paper from Korea were made in the 
United States at less than normal value (``NV''), we compared the 
export price (``EP'') or constructed export price (``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)(1) of 
the Act, we calculated the weighted-average prices for NV and compared 
these to the weighted-average of EP (and CEP).

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

[[Page 30769]]

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. When appropriate, we adjusted 
prices to reflect billing adjustments and increased prices to reflect 
duty drawback.
    In accordance with section 772(c)(2) of the Act, we made 
deductions, where appropriate, for movement expenses including inland 
freight, brokerage, international freight, marine insurance, U.S. 
customs duties, U.S. warehouse expense and various U.S. movement 
expenses from arrival to delivery.
    For CEP, in accordance with section 772(d)(1) of the Act, when 
appropriate, we deducted from the starting price those selling expenses 
that were incurred in selling the subject merchandise in the United 
States, including direct selling expenses (cost of credit, commissions, 
warranty, and other direct selling expenses). These expenses include 
certain indirect selling expenses incurred by affiliated U.S. 
distributors. Furthermore, we have included a portion of EN Paper's and 
Hansol's indirect selling expenses incurred in Korea on behalf of sales 
to unaffiliated customers in the United States. See ``Preliminary 
Calculation Memoranda'' for each company, dated May 29, 2007 
(``Preliminary Calculation Memoranda'') on file in the CRU. We also 
deducted from CEP an amount for profit in accordance with sections 
772(d)(3) and (f) 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 
the respondents' 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 each respondent 
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 was viable.

B. Arm's-Length Test

    Hankuk, Hansol, Kyesung, and Moorim reported sales of the foreign 
like product to affiliated customers. The Department calculates NV 
based on a sale to an affiliated party only if it is satisfied that the 
price to the affiliated party is comparable to the price at which sales 
are made to parties not affiliated with the producer or exporter, i.e., 
sales at ``arm's length.'' See 19 CFR 351.403(c). To test whether these 
sales were made at arm's length, we compared the starting prices of 
sales to affiliated and unaffiliated customers net of all movement 
charges, direct selling expenses, discounts and packing. We included an 
amount for warehouse revenue for Moorim. In accordance with the 
Department's current practice, if the prices charged to an affiliated 
party were, on average, between 98 and 102 percent of the prices 
charged to unaffiliated parties for merchandise identical or most 
similar to that sold to the affiliated party, we considered the sales 
to be at arm's-length prices and included such sales in the calculation 
of NV. See 19 CFR 351.403(c). Conversely, where sales to the affiliated 
party did not pass the arm's-length test, all sales to that affiliated 
party were excluded from the NV calculation. See Antidumping 
Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 
FR 69186 (November 15, 2002), and company-specific ``Preliminary 
Calculation Memoranda.''

C. Cost of Production Analysis

    Based on our analysis of the petitioner's allegation, we found that 
there were reasonable grounds to believe or suspect that EN Paper's, 
Kyesung's, Moorim's, Hansol's and Hankuk's sales of CFS paper in the 
home market were made at prices below their COP. Accordingly, pursuant 
to section 773(b) of the Act, we initiated a sales-below-cost 
investigation to determine whether these companies had sales that were 
made at prices below their respective COPs. See ``Cost Allegation 
Memorandum.''

1. Calculation of Cost of Production

    In accordance with section 773(b)(3) of the Act, we calculated the 
respondents' COP based on the sum of its costs of materials and 
conversion for the foreign like product, plus amounts for general and 
administrative (``G&A'') expenses and interest expenses (see the Test 
of Comparison Market Sales Prices section below for the treatment of 
home market selling expenses).
    The Department relied on the COP data submitted by EN Paper, 
Kyesung, Moorim, Hansol and Hankuk, in their respective supplemental 
section D questionnaire responses for the COP calculation, except for 
the following instances where the information was not appropriately 
quantified or valued:
    a. We revised the general and administrative (G&A) expense ratio to 
exclude the credit balance for bad debt allowance. EN Paper did not 
fully explain what the gain represents or provide supporting 
documentation, therefore we have disallowed the offset for the 
preliminary determination. Our revisions to EN Paper's COP data are 
discussed in the Memorandum from James Balog, Senior Accountant, to 
Neal Halper, Director, Office of Accounting, entitled ``Cost of 
Production and Constructed Value Calculation Adjustments for the 
Preliminary Determination - EN Paper Mfg. Co., Ltd.,'' dated May 29, 
2007.
    b. For Moorim, we revised the G&A expense rate calculations for 
both Moorim Paper Co., Ltd. and Moorim SP Co., Ltd. to exclude certain 
income offsets associated with selling activities and include expense 
and income items related to administrative rental transactions. Our 
revisions to Moorim 's COP data are discussed in the Memorandum from 
Angela Strom, Accountant, to Neal Halper, Director, Office of 
Accounting, entitled ``Cost of Production and Constructed Value 
Calculation Adjustments for the Preliminary Determination - Moorim 
Paper Co., Ltd and Moorim SP Co., Ltd. (collectively ``Moorim''),'' 
dated May 29, 2007.
    c. We revised Hansol's G&A expense rate calculation to include in 
G&A expenses a loss on the write down of an intangible asset held by 
the company. Our revisions to Hansol's COP data are discussed in the 
Memorandum from Heidi K. Schriefer, Senior Accountant, to Neal Halper, 
Director, Office of Accounting, entitled ``Cost of Production and 
Constructed Value Calculation Adjustments for the Preliminary 
Determination - Hansol Paper Co., Ltd.'' dated May 29, 2007.
    d. For products sold during the POI but produced prior to the POI 
Kyesung used the cost for the most similar control number that was 
produced during the POI. We noted that the method used to identify the 
most similar control number did not use the model-match hierarchy laid 
out by the Department. However, none of the control numbers in question 
were sold in the United States or used as a

[[Page 30770]]

similar match to products sold in the United States.
    e. We did not make any adjustments to Hankuk's reported costs for 
the preliminary determination.

2. Test of Comparison Market Sales Prices

    On a product-specific basis, we compared the adjusted weighted-
average COP to the home 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. In addition, we included an 
amount for warehouse revenue for Moorim.

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 specific products, more than 20 percent 
of EN Paper's, Kyesung's, Moorim's, Hansol's, and Hankuk'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.

D. Calculation of Normal Value Based on Comparison Market Prices

    We based home market prices on packed prices to unaffiliated 
purchasers in Korea. We adjusted the starting price for inland freight, 
warehouse expense, and warehouse revenue, where appropriate, pursuant 
to section 773(a)(6)(B)(ii) of the Act. In addition, for comparisons 
made to EP sales, we made adjustments for differences in circumstances 
of sale (``COS'') pursuant to section 773(a)(6)(C)(iii) of the Act. We 
made COS adjustments by deducting direct selling expenses incurred for 
home market sales (credit expense) and adding U.S. direct selling 
expenses (credit, commissions, warranty directly linked to sales 
transactions, and other direct selling expenses), where appropriate. 
See 19 CFR 351.410.
    We also made adjustments, in accordance with 19 CFR 351.410(e), for 
indirect selling expenses incurred in the home market or United States 
where commissions were granted on sales in one market but not in the 
other, i.e., the ``commission offset.'' Specifically, where commissions 
are incurred in one market, but not in the other, we will limit the 
amount of such adjustment to the amount of either the selling expenses 
incurred in the one market or the commissions allowed in the other 
market, whichever is less.
    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. 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).

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. In identifying LOTs for EP and comparison market sales 
(i.e., NV based on home market), we consider the starting prices before 
any adjustments. For CEP sales, we consider only the selling activities 
reflected in the price after the deduction of expenses and profit under 
section 772(d) of the Act. See Micron Technology, Inc. v. United 
States, 243 F.3d 1301, 1314 (Fed. Cir. 2001).
    To determine whether NV sales are at a different LOT than EP or CEP 
transactions, we examine stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make an LOT adjustment under section 
773(a)(7)(A) of the Act. For CEP sales, if the NV level is more remote 
from the factory than the CEP level and there is no basis for 
determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP-offset provision).
    Hansol and Moorim reported sales made through one LOT corresponding 
to one channel of distribution in the home market. In the U.S. market, 
Hansol and Moorim reported one LOT corresponding to three or two 
channels of distribution for sales through U.S. affiliates (i.e., CEP 
sales), respectively. In our analysis, we determined that there is one 
LOT in the home market and one LOT in the U.S. market. We have found 
that home market sales are at a more advanced LOT. Accordingly, we have 
made CEP offsets to NV. See 773(a)(7)(B) of the Act.
    Hankuk and Kyesung reported sales through one LOT corresponding to 
two or three channels of distribution in the home market, respectively. 
In the U.S. market, Hankuk and Kyesung reported one LOT corresponding 
to one or two channels of distribution for sales made directly to the 
unaffiliated U.S. customers (i.e., EP sales), respectively. In our 
analysis, we determined that there is one LOT in the home market and 
one LOT in the U.S. market. We have found that sales to the U.S. and 
home markets were made at the same LOT, and as a result, no LOT 
adjustment was warranted.
    EN Paper reported sales made through one LOT corresponding to one 
channel of distribution in the home market. In the U.S. market, EN 
Paper reported one LOT corresponding to three channels of distribution. 
EN Paper made sales through its U.S. affiliate (i.e., CEP sales) and 
directly to the U.S. customer (i.e., EP sales). In our analysis, we 
determined that there is one LOT in the home market and two LOTs in the 
U.S. market. We have found that home market sales are at a more 
advanced LOT than the CEP sales made through its U.S. affiliate. 
Accordingly, we have made CEP offsets to NV. We have found that sales 
made directly to the U.S. customer were made at the same LOT, and as a 
result, no LOT adjustment was warranted.
    For a detailed description of our LOT methodology and a summary of 
company-specific LOT findings for these preliminary results, see our

[[Page 30771]]

analysis contained in the ``Preliminary Calculation Memoranda.''

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act based on exchange rates in effect on the 
dates of the U.S. sales, as certified by the Federal Reserve Bank.

All Others Rate

    Pursuant to section 735(c)(5)(A) of the Act, the ``all others'' 
rate is equal to the weighted average of the estimated weighted-average 
dumping margins of all respondents investigated, excluding zero or de 
minimis margins. EN Paper and Kyesung are the only respondents in this 
investigation for which the Department has calculated a company-
specific rate that is not zero or de minimis. Therefore, for purposes 
of determining the ``all others'' rate and pursuant to section 
735(c)(5)(A) of the Act, we are using the weighted-average dumping 
margin calculated for EN Paper and Kyesung for the ``all others'' rate, 
as referenced in the Suspension of Liquidation section, below.

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.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
U.S. Customs and Border Protection (``CBP'') to suspend liquidation of 
all entries of CFS paper from Korea, with the exception of those 
exported by Hankuk, Hansol, or Moorim, that are entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
this notice in the Federal Register. We are also instructing CBP to 
require a cash deposit or the posting of a bond equal to the weighted-
average dumping margin, as indicated in the chart below. These 
suspension-of-liquidation instructions will remain in effect until 
further notice.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                       Weighted-Average
                Manufacturer/Exporter                  Margin (percent)
------------------------------------------------------------------------
EN Paper Mfg. Co., Ltd..............................               12.31
Hankuk Paper Mfg. Co., Ltd..........................                0.00
Hansol Paper Co., Ltd...............................                0.00
Kyesung Paper Co., Ltd..............................               30.86
Moorim Paper Co. Ltd. and Moorim SP Co., Ltd........                0.00
All Others..........................................               18.45
------------------------------------------------------------------------

Disclosure

    We will disclose the calculations used in our analysis to parties 
in this proceeding in accordance with 19 CFR 351.224(b).

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of the Department's preliminary affirmative 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 CFS paper from Korea are materially injuring, or threaten material 
injury to, the U.S. industry. Because we have postponed the deadline 
for our final determination to 135 days from the date of the 
publication of this preliminary determination, the ITC will make its 
final determination within 45 days of our final determination.

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 
from 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, 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, 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 
Assistant Secretary for Import Administration, U.S. Department of 
Commerce, 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 briefs.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on May 9, 2007, EN Paper 
and the Korea Paper Manufacturers' Association, which accounts for a 
significant proportion of exports of CFS paper, requested that in the 
event of an affirmative preliminary determination in this 
investigation, the Department postpone its final determination by 60 
days. At the same time, the Korean Paper Manufacturers' Association 
requested that the Department extend by 60 days the application of the 
provisional measures. See 735(a)(2) of the Act and 19 CFR 
351.210(e)(2). In accordance with section 733(d) of the Act and 19 CFR 
351.210(b)(2)(ii), because (1) our preliminary determination is 
affirmative, (2) the requesting exporter accounts for a significant 
proportion of exports of the subject merchandise, and (3) no compelling 
reasons for denial exist, we are granting their request and are 
postponing the final determination until no later than 135 days after 
the publication of this notice in the Federal Register. Suspension of 
liquidation will be extended accordingly.
    This determination is issued and published pursuant to sections 
733(f) and 777(i)(1) of the Act.

    Dated: May 29, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E7-10706 Filed 6-1-07; 8:45 am]
BILLING CODE 3510-DS-S