[Federal Register Volume 59, Number 9 (Thursday, January 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-889]


[[Page Unknown]]

[Federal Register: January 13, 1994]


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DEPARTMENT OF COMMERCE
[A-201-805, A-580-809, A-351-809, A-307-805]

 

Preliminary Affirmative Determination of Scope Inquiry on 
Antidumping Duty Orders on Certain Circular Welded Non-Alloy Steel Pipe 
From Brazil, the Republic of Korea, Mexico and Venezuela

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of preliminary affirmative determination of scope 
inquiry.

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SUMMARY: We preliminarily determine that (1) pipe certified to American 
Petroleum Institute (API) 5L line pipe specifications (API 5L line pipe 
or line pipe) and (2) pipe certified to both the API 5L line pipe 
specifications and the less stringent American Standard Testing and 
Materials (ASTM) A-53 standard pipe specifications (dual-certified 
pipe), when actually used as certain circular welded non-alloy steel 
pipe (standard pipe), and falling within the physical parameters 
outlined in the scope of the orders, are within the scope of the 
antidumping duty orders on standard pipe from Brazil, the Republic of 
Korea, Mexico and Venezuela. We will direct the U.S. Customs Service to 
suspend liquidation of these products as follows: (1) All dual-
certified pipe and API 5L line pipe falling within the physical 
parameters outlined in the scope of the orders that enter without an 
end-use certificate and (2) all dual-certified pipe and API 5L line 
pipe falling within the physical parameters outlined in the scope of 
the orders that enter with an end-use certificate certifying end use in 
a standard pipe application. No suspension of liquidation is required 
for dual-certified pipe and API 5L line pipe that enters with an end-
use certificate certifying end use in a line pipe application. 
Interested parties are invited to comment on this preliminary 
determination.

EFFECTIVE DATE: January 13, 1994.

FOR FURTHER INFORMATION CONTACT:Kimberley Huffman at (202) 482-0780 or 
Wendy Frankel at (202) 482-5253, Office of Antidumping Compliance, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230.

SUPPLEMENTARY INFORMATION: 

Background

    On April 23, 1993, the petitioners in the original less-than-fair-
value investigations (Allied Tube & Conduit Corporation, Sawhill 
Tubular Division, Tex-Tube Division American Tube Company, Century Tube 
Corporation, Laclede Steel Company, LTV Tubular Products Company, 
Sharon Tube Company, Western Tube & Conduit Corp., Wheatland Tube 
Company, and CSI Tubular Products, Inc.) filed anticircumvention 
petitions with the Department of Commerce (the Department) arguing, 
pursuant to section 781(c) of the Tariff Act of 1930, as amended (the 
Act) and 19 CFR 353.29(g) (1992), that exports from Korea, Mexico and 
Brazil of API 5L line pipe and dual-certified pipe are circumventing 
the antidumping duty orders on standard pipe when they are actually 
used in standard pipe applications. The Department determined that a 
scope inquiry pursuant to 19 CFR 353.29(i) was the appropriate approach 
to address the issues raised by petitioners.
    Exports of standard pipe from Venezuela were the subject of a 
concurrent antidumping investigation. The scope of the resulting 
affirmative order is exactly the same as that of Mexico, Korea and 
Brazil. For this reason, even though in their original petition for an 
anticircumvention investigation petitioners did not request that 
imports from Venezuela be examined, we determined in our October 25, 
1993, recommendation memorandum, on file at the Central Records Unit, 
room B099, of the Department of Commerce Main Building, that it is 
appropriate in the context of the present scope inquiry to clarify 
whether imports of line pipe and dual-certified pipe, when actually 
used as standard pipe and fall within the physical parameters outlined 
in the scope of the orders, are within the scope of the antidumping 
duty order on standard pipe from Venezuela.
    The scope of the order on standard pipe from Taiwan, another 
concurrent investigation, differs from that of the remaining orders. 
See 57 FR 49454 (1992). Therefore, this scope determination does not 
apply to the scope of the Taiwanese order.
    The Department initiated its scope inquiry on June 7, 1993, and 
granted interested parties the formal opportunity to comment on whether 
API 5L line pipe and dual-certified pipe, when used in standard pipe 
applications and falling within the physical parameters outlined in the 
scope of the orders, are within the class or kind of merchandise 
subject to the orders. We received comments on July 6, 1993, from 
petitioners and six respondents, and rebuttal comments on July 19, 
1993. In addition, the Department later provided interested parties the 
opportunity to meet individually with the Acting Assistant Secretary 
for Import Administration to further discuss how the Department should 
properly resolve this inquiry. Petitioners and five respondents 
participated in the meetings. Due to the significant difficulty 
presented by this scope inquiry, we have determined that it is 
appropriate to issue a preliminary determination.
    Under 19 CFR 353.29(i), the Department first examines the 
descriptions of the subject merchandise contained in the petition, the 
initial investigations, and the Department's and ITC's determinations. 
The regulations provide that if it determines these descriptions are 
not dispositive, the Department will consider the factors provided for 
under 19 CFR 353.29(i)(2), known commonly as the Diversified Products 
criteria. See Diversified Products Corp. versus United States, 572 F. 
Supp. 883 (CIT 1983).
    In our recommendation memorandum, of October 25, 1993, we found 
that the specifications of API 5L line pipe and dual-certified pipe 
encompass the less demanding specifications for standard pipe. We 
determined that it was unclear as to whether the orders ``included API 
5L line pipe and dual-certified pipe within the scope whenever those 
categories of pipe are actually used in a standard pipe application'' 
based upon the following: the overlap in physical parameters, the 
Department's conclusion that both dual-certified pipe and line pipe can 
be and sometimes are actually used in standard pipe applications, and 
the ambiguity in the orders and descriptions of the subject merchandise 
from the original investigations. See the Department's Recommendation 
Memorandum dated October 25, 1993. Therefore, on October 27, 1993, the 
Department requested that the interested parties comment on the 
Diversified Products criteria provided for under 19 CFR 353.29(i)(2). 
These criteria include: (i) The physical characteristics of the 
product; (ii) the expectations of the ultimate purchasers; (iii) the 
ultimate use of the product; and (iv) the channels of trade. See 19 CFR 
353.29(i)(2). The following interested parties filed comments and 
rebuttals on November 22, 1993, and December 3, 1993, respectively: 
Allied Tube & Conduit Corporation, Sawhill Tubular Division, Tex-Tube 
Division American Tube Company, Century Tube Corporation, Laclede Steel 
Company, LTV Tubular Products Company, Sharon Tube Company, Western 
Tube & Conduit Corp., Wheatland Tube Company, and CSI Tubular Products, 
Inc., collectively referred to as petitioners; Mannesmann Pipe & Steel 
Corporation; Korea Iron and Steel Association, Dongbu Steel Co., Ltd., 
Hyundai Steel Pipe Co., Ltd., Korea Steel Pipe Co., Ltd., Pusan Steel 
Pipe Co., Ltd. and Union Steel Manufacturing Co., Ltd. (Korea), 
collectively referred to as the Korean respondents; and HYLSA, S.A. de 
C.V., referred to as HYLSA.

Analysis

    General Issues: The purpose of the Department's scope inquiry is to 
determine whether dual-certified pipe and API 5L line pipe, when used 
in a standard pipe application and which fall within the physical 
parameters outlined in the scope of the orders, are within the scope of 
the orders. See the Department's October 25, 1993, Recommendation 
Memorandum.
    In this regard, respondents argue initially that the Department has 
improperly read into the scope a possible use requirement and that to 
determine that line and dual-certified pipe are covered on this basis 
would amount to an impermissible expansion of the scope of the orders. 
In support of this position, the Korean respondents distinguish between 
what they refer to as a pipe product's ``chief end use'' and the 
``actual use'' to which the pipe is put. They argue that within the 
pipe industry it is recognized that line and dual-certified pipe (as 
well as standard pipe) are intended for use in certain applications--
their ``chief end uses''--a fact which is made explicit by their 
industry labeling. The Korean respondents argue that the orders exclude 
these categories of pipe based upon an assumption that these chief end 
uses differ from those of standard pipe, without reference to the 
question of how they are actually used. They cite Ipsco, Inc. versus 
United States, 715 F. Supp. 1104 (CIT 1989), to argue that absent such 
an explicit reference to actual use, the Department may not concern 
itself now with actual use. Therefore, the Korean respondents argue 
that there is no basis for the Department to resort to the Diversified 
Products criteria under 19 CFR 353.29(i)(2).
    We disagree. Besides providing a physical description of standard 
pipe, the orders state that ``[s]tandard pipes and tubes are intended 
for the low pressure conveyance of water, steam, natural gas,'' and 
other related uses, as well as light load bearing and mechanical 
applications. Antidumping Orders, 57 FR 49452, 49453 (1992) (emphasis 
added). The issue raised by respondents, which the Department's 
recommendation memorandum did not directly address, concerns the proper 
interpretation to be given the phrase ``are intended for'' certain 
uses. Respondents are correct that, in using this phrase in the orders, 
the Department did not expressly refer to actual use (nor did we refer 
to actual use in the orders wherein we appeared to exclude line pipe 
and certain dual or triple certified pipe). At the same time, however, 
as indicated in our recommendation memorandum, neither did the 
Department expressly limit the phrase ``are intended for'' to ``chief 
end uses'' nor stenciling indicative of standard pipe. Thus, as a 
threshold matter, the orders and the descriptions from the underlying 
investigations do not preclude the Department from considering the 
actual end use to which a particular type of pipe product (regardless 
of stenciling) is put in determining whether that type of product is 
``intended for use'' as standard pipe and, therefore, covered by the 
orders on standard pipe.
    The issue herein closely resembles the issue addressed in Ipsco, a 
case arising from a scope inquiry concerning oil country tubular goods 
(OCTG) from Canada. The Department had defined the subject merchandise 
as, ```hollow steel products of circular cross-section intended for use 
in drilling for oil and gas.''' Ipsco, 715 F. Supp. at 1105 (quoting 
OCTG from Canada, 51 FR 21,782, 21,1783 (1986)) (emphasis added by 
Court). At issue was whether, later, the Department had reasonably 
clarified the scope of the orders, and in particular the phrase 
``intended for use in drilling for oil and gas,'' as covering not only 
API specification OCTG pipe but ```all other pipe with [certain 
specified] characteristics used in OCTG applications. . . .''' Ipsco at 
1105 (quoting the Department's unpublished scope ruling). In reaching 
this determination, the Department also provided an additional 
description of the covered merchandise, and instituted an end-use 
certification procedure. See Ipsco.
    The Court of International Trade (Court) upheld the Department's 
determination, disagreeing with ``plaintiffs' contention that a pipe's 
stencil or marking should be regarded as conclusive evidence of the 
pipe's intended use * * * when such pipe possesses all of the physical 
characteristics which would enable it to be used as OCTG.'' Id. at 
1108. The Court added:

    Although stencilling or marking may be strong evidence of what 
the manufacturer considers to be the product's intended use, such 
labelling does not necessarily reflect an importer or end-user's 
view of the product's intended use, nor does it prevent the pipe 
from actually being used as OCTG. As indicated in the record, a 
knowledgeable engineer may use for drilling purposes any pipe that 
meets the minimum requirements for OCTG.

Id.
    The Court went so far as to hold that the Department ``acted 
reasonably in rejecting plaintiffs' suggested approach which would 
allow manufacturers and importers to evade the imposition of duties by 
simply labelling OCTG pipe as non-OCTG pipe sharing the same physical 
characteristics.'' Id. The Court's decision endorsed the Department's 
argument that ``the stencilling or marking of pipe is a voluntary 
practice which is not required by the API or any other governmental or 
private authority, [and] . . . the labelling and marking of pipe as 
standard or line pipe is meaningless within the context of these 
orders.'' Id. at 1107-08.
    Thus, a central issue in Ipsco, as here, concerned the meaning of 
the phrase ``intended for use'' in certain specified applications. 
There, the Department interpreted the phrase as permitting an inquiry 
into how the pipe at issue was actually used. Here, the Department 
determines that the phrase, when read in conjunction with the remainder 
of the scope descriptions in the orders, does not clearly include or 
exclude line pipe or dual-certified pipe falling within the physical 
parameters outlined in the scope of the orders which is actually used 
in standard pipe applications. Thus, we must resort to a Diversified 
Products analysis.
    Physical Characteristics: Respondents argue that the physical 
differences between standard pipe and line pipe/dual-certified pipe are 
significant enough to warrant a determination that standard pipe and 
line pipe/dual-certified pipe constitute separate classes or kinds of 
merchandise, especially due to such factors as (1) chemical 
composition, (2) end finish and couplings and (3) weight and 
dimensional tolerances. We note that, although certain respondents 
discuss dual-certified pipe separately from line pipe, respondents 
argue generally that dual-certified pipe falls within the class or kind 
of merchandise of line pipe, which they claim is separate from standard 
pipe (regardless of the actual use of a particular pipe).
    According to respondents, with regard to chemical composition, the 
allowable chemical tolerances for carbon, manganese, phosphorus and 
sulfur are different for line pipe and standard pipe. Respondents 
assert that the requirements for end finish and couplings also differ 
significantly between the two kinds of pipe. For example, the coupling 
diameter under API 5L specifications is, on average, 17.09 percent 
greater than the coupling diameter required under ASTM A-53 
specifications. Similarly, the specified end taper finish for ASTM A-53 
standard pipe (0.750'' per foot) is more than ten times that mandated 
for API 5L specifications (0.0625'' per foot). With regard to weight 
and dimensional tolerances, respondents point out that ASTM A-53 
specifications permit a larger variance in diameter than API 5L 
specifications. The API 5L specifications impose an upper limit on 
variance in wall thickness, while ASTM A-53 does not. For weight 
tolerances, ASTM A-53 specifications permit a lower limit variance of 
up to 10 percent, while API 5L specifications permit a lower limit 
variance in weight of no more than 3.5 percent (a 65 percent difference 
between the two standards). Finally, with regard to length, the minimum 
allowable length of ASTM A-53 standard pipe is 12 feet, while the 
minimum permissible length under API 5L specifications is 9 feet.
    All the respondents agree that physical characteristics constitute 
a very important factor in this analysis. The Korean producers conclude 
that ``[p]hysical characteristics * * * are the bedrock on which the 
Department--and petitioners--originally excluded line and dual-stencil 
pipe from the scope of the investigation.''
    Petitioners argue that pipe made to either the API 5L line pipe 
specifications or the dual-certified specifications meets the physical 
characteristic requirements set forth in the scope of the orders. 
Petitioners argue that respondents are misdirected in emphasizing the 
differences between pipe meeting API specifications and ASTM 
specifications with regard to chemical composition, end finish and 
weight and thickness tolerances. First, the physical description of 
standard pipe set forth in the scope language of the orders cover 
standard pipe that ``generally'' (not exclusively) meets the ASTM A-53 
specifications. Thus, the physical description is not limited to A-53 
standard pipe. Second, the scope language expressly includes pipe 
meeting the physical description expressed therein, regardless of wall 
thickness, surface finish and end finish. Therefore, according to 
petitioners, the differences in these characteristics are irrelevant to 
the scope inquiry. Because dual-certified pipe meets both the A-53 
specifications and the API 5L specifications, petitioners assert, it 
meets the physical description of the pipe described in the scope of 
the orders. Further, pipe which meets the API 5L specifications also 
meets the physical description of the pipe described in the scope 
because the higher specifications of API 5L encompass the A-53 
specifications.
    The Department determines that line pipe and dual-certified pipe 
(within the physical parameters outlined in the scope of the orders), 
when used in standard pipe applications, have the same primary physical 
characteristics as standard pipe. As stressed above, we are only 
concerned with clarifying whether line and dual-certified pipe which is 
actually used in standard pipe applications and fall within the 
physical parameters outlined in the scope of the orders is within the 
scope of the orders on standard pipe. Nevertheless, as the scope of the 
orders indicates and as the Department discussed in its recommendation 
memorandum, it is important to note that the overlap between the 
physical characteristics of line and dual-certified pipe and standard 
pipe exists both for line and dual-certified pipe which is actually 
used as standard pipe and for other line and dual-certified pipe as 
well. The physical description of standard pipe contained in the orders 
read, in part, as follows:

    The merchandise subject to this investigation is circular welded 
non-alloy steel pipes and tubes of circular cross-section, not more 
than 406.4mm (16 inches) in outside diameter, regardless of wall 
thickness, surface finish (black, galvanized, or painted), or end 
finish (plain end, bevelled end, threaded, or threaded and coupled). 
These pipes and tubes are generally known as standard pipe, though 
they may also be called structural or mechanical tubing in certain 
applications.

    Clearly, virtually all line and dual-certified pipe possess these 
physical characteristics. To the extent a particular shipment or piece 
of line pipe does not possess different characteristics which would 
impede its use in a standard pipe application (a condition which does 
not apply to most line pipe), these physical characteristics would 
enable any line or dual-certified pipe to be used in a standard pipe 
application.
    Having said the above, respondents are correct that chemical 
composition, end finish and couplings and weight and dimensional 
tolerances can be somewhat different between ASTM A-53 specifications 
and API 5L specifications. However, the significance of these 
observations is undermined by the above-noted overlap in primary 
physical characteristics among the various types of pipe and by 
specific language in the orders relating to these characteristics.
    Regarding the latter point, the scope of the orders covers standard 
pipe regardless of wall thickness, surface finish or end finish. Thus, 
unique tolerances with respect to these characteristics cannot affect 
our determination of whether a product is standard pipe (as that term 
is understood in the orders). Moreover, even with respect to 
acknowledged physical characteristics of standard pipe, uniquely 
stringent tolerances that exceed ASTM A-53 specifications should not 
prevent a product which is being used in standard pipe applications 
from being considered standard pipe, provided that the product meets 
all of the standard pipe specifications as expressed in the orders.
    Therefore, the Department preliminarily determines that line pipe 
and dual-certified pipe which fall within the physical parameters 
outlined in the scope of the orders, when used in standard pipe 
applications, have the same primary physical characteristics as 
standard pipe; such pipe generally meets the physical description 
listed in the scope of the orders, a fact which supports inclusion 
within the class or kind of merchandise for standard pipe.
    Expectations of the Ultimate Purchasers: The Korean producers argue 
that line pipe and dual-stenciled pipe are manufactured to more 
exacting standards than standard pipe. The API specifications governing 
the chemistry, weight, outside diameter, marking and so forth of line 
pipe were established by the American Petroleum Institute for the 
peculiar needs of the oil, gas, pipeline and utility industries. Thus, 
purchasers of these line pipe products expect such products to be fit 
for use in these industries. Dual-stenciled API 5L/ASTM A-53 pipe is 
manufactured to conform to the more stringent API specifications, which 
automatically qualify it for the lower ASTM specifications applicable 
to standard pipe. Thus, purchasers of dual-stenciled pipe expect it to 
meet the API standards but also to have added flexibility because it is 
additionally marked with the ASTM certification. Finally, the Korean 
producers assert that imported dual-certified pipe is not being sold 
exclusively or predominantly to customers for standard pipe uses.
    HYLSA argues that the differing expectations of ultimate purchasers 
of dual-stenciled API-5L line pipe, as compared with ASTM A-53 standard 
pipe, may be inferred, in part, from (a) the fact that some users only 
use dual-stenciled pipe, and (b) the physical differences between the 
two products. Pipe is produced to meet API-5L specifications at home 
and abroad because there is a market demand for the physical 
characteristics of API-5L line pipe. Unless there were distinct 
expectations on the part of the ultimate purchasers with regard to 
dual-stanciled line pipe, manufacturers would just produce the less 
costly ASTM A-53 standard pipe.
    Petitioners state that the ultimate purchasers of dual-certified 
pipe and API-5L line pipe have a critical expectation when they 
purchase such pipe from one of the countries involved in this scope 
proceeding. That critical expectation is that they are purchasing a 
pipe that will perform a standard pipe application at the lowest cost. 
More specifically, the purchasers of dual-certified pipe and API-5L 
line pipe simply want a product that meets the A-53 specification for 
use in a standard pipe application. Therefore, petitioners assert that 
the line pipe and dual-certified products being sold to standard pipe 
customers are intended for, and in fact are now being used for, the 
same standard pipe applications that were previously met by A-53 pipe.
    The Department recognizes that the ultimate purchaser of line or 
dual-certified pipe receives a product that is certified to perform a 
more demanding application, i.e., a line pipe application. At the same 
time, some purchasers of line and dual-certified pipe expect to use it 
and actually do use it in a standard pipe application. (Neither the 
Korean respondents nor HYLSA attempt to contravene petitioners' 
evidence that imported dual-certified pipe and imported line pipe are 
being sold to customers for standard pipe uses.) Bearing in mind that 
this scope inquiry is only concerned with purchasers who actually use 
line pipe or dual-certified pipe in a standard pipe application and 
which fall within the physical parameters outlined in the scope of the 
orders, we find that the expectations of these purchasers with respect 
to such purchases are that the higher specification product will be put 
to the same use as standard pipe which is manufactured to the lower 
ASTM specifications. This type of purchase can occur when prices in the 
pipe market permit the substitution, in standard pipe applications, of 
line pipe or dual-certified pipe for standard pipe.
    Our focus here is not on the consumer expectations the manufacturer 
anticipates at the time of production, but rather on the actual 
expectations of the ultimate purchaser of the merchandise at issue 
here, i.e., line pipe and dual-certified pipe when actually used in a 
standard pipe application. Cf. IPSCO, 715 F. Supp. at 1108. Thus, 
HYLSA's analysis of why a producer would produce to the more demanding 
specifications is irrelevant. Similarly, the Korean producers' 
assumption that the purchaser is using the pipe in a line pipe 
application makes their argument inapposite. Finally, we do not need to 
address here the Korean producers' assertion that imported dual-
certified pipe is not being sold exclusively or predominantly to 
customers for standard pipe uses. It is sufficient to note that the 
parties do not dispute that some such sales are occurring.
    Ultimate Use of the Product: Respondents' main argument regarding 
ultimate use is that the Department's analysis should be ``directed at 
the product generally, not at the disposition or end use of any 
particular entries.'' As support, the Korean respondents cite the 
Department's Final Determination of Sales at Less Than Fair Value: 
Uranium from the Ukraine and Tajikistan, 58 FR 36,640, 36,644 (1994), 
which states:

    Every product has alternative uses or the potential for 
alternative uses. For purposes of a class or kind analysis, it is 
the Department's responsibility to determine not the number of 
alternative uses but rather the significance of any or all of those 
alternatives.

    According to the Korean respondents, the primary or ``significant'' 
use of line and dual-certified pipe has always been and is now in the 
oil, gas and utility industries, i.e., it is a line pipe use. The 
Korean respondents argue that it is this use, as under Customs law, 
that determines the products' proper class or kind, not the specific 
uses of an isolated minority of entries.
    Respondents also contest petitioners' claims that all or most line 
pipe or dual-stenciled pipe is being used for standard pipe 
applications. HYLSA adds that petitioners' argument is premised 
fundamentally on the unsubstantiated claim that dual-certified pipe is 
only used as standard pipe. HYLSA acknowledges that by virtue of its 
physical characteristics, dual-certified pipe is suitable for and may 
be used in standard pipe applications. However, that possibility does 
not alter the fact that it is still line pipe.
    Petitioners assert that the petition provides a description of the 
uses of standard pipe that is consistent with the one published in the 
antidumping duty orders. Although no specific exclusions were listed in 
the petition, petitioners argue that the scope includes and excludes 
specific ``classes or kinds'' of pipes based on end use, and therefore 
end use is the determining factor of the scope. According to 
petitioners, the term ``standard pipe,'' as used, covers a group of 
piper products used for a particular group of purposes. The orders 
include pipe used for other purposes such as line pipe, oil country 
tubular goods, boiler tubing, mechanical tubing, pipe and tube hollows 
for redraws, finished scaffolding, and finished conduit. Petitioners 
assert that each of these categories of pipe describes a particular use 
of pipe that is different from a standard pipe application. Therefore, 
they assert that pipe used in one of the excluded uses, such as in a 
line pipe application, is not covered. However, pipe that is capable of 
being used for line pipe, but which is actually used as standard pipe, 
is specifically covered by the orders. This includes dual-certified 
pipe and API 5L pipe.
    The Department preliminarily determines that when dual-certified 
and line pipe are actually used in standard pipe applications and fall 
within the physical parameters outlined in the scope of the orders, the 
ultimate use of these products is the same as that of standard pipe. 
This Diversified Products criterion therefore supports inclusion of 
such products in the scope of the orders on standard pipe.
    We agree with respondents that it is important to isolate the 
primary or most significant use of a product in determining whether its 
ultimate use is the same or similar to that of the subject merchandise. 
However, we are not here attempting to determine the ultimate use of 
all line pipe and dual-certified pipe. We are only concerned with line 
and dual-certified pipe which fall within the physical parameters 
outlined in the scope of the orders and is actually used in a standard 
pipe application. Thus, in order to properly analyze the ultimate use 
of line and dual-certified pipe when used in a standard pipe 
application, we must compare that use to the ultimate use of standard 
pipe.
    As identified in the scope, standard pipe is ``intended for the low 
pressure conveyance of water, steam, natural gas, and other liquids and 
gases in plumbing and heating systems, and other related uses,'' as 
well as certain structural and mechanical uses. These uses are 
essentially the same as those for the products at issue, i.e., for line 
pipe and dual-certified pipe which is actually used in standard pipe 
applications. Thus, when properly viewed, respondents' line of argument 
does not point toward a determination that line and dual-certified 
pipe, when actually used as standard pipe, represent a different class 
or kind of merchandise than standard pipe. See, e.g., Smith Corona 
Corp. versus United States, 915 F.2d 683, 687 (Fed. Cir. 1990); Final 
Scope Ruling; Portable Electric Typewriters From Japan, 55 FR 47,358 
(1990), aff'd, Matsushita Elec. Indus. Co. versus United States, 787 F. 
Supp. 1461 (CIT 1992).
    Moreover, the fact that line pipe and dual-certified pipe--When 
actually used as standard pipe--otherwise could have been used to 
perform the more demanding line pipe applications is irrelevant. The 
primary use--indeed the only use--of the products at issue is in 
standard pipe applications.
    Channels of Trade: Respondents concede that the channels of trade 
overlap in distributors for standard pipe, dual-certified pipe and API 
5L line pipe. However, they argue that this fact alone does not support 
a determination that line pipe, dual-certified pipe and standard pipe 
are a single class or kind of merchandise within the scope of the 
orders covering standard pipe.
    Petitioners assert that the channels of trade for standard pipe, 
API 5L line pipe and dual-certified pipe have traditionally been 
similar, though not identical.
    The Department agrees that the channels of trade overlap for 
standard pipe, dual-certified pipe and line pipe. The Department also 
acknowledges in response to respondents' argument that this criterion 
alone is not dispositive as to whether API 5L line pipe and dual-
certified pipe fall within the scope of the orders at issue.

Conclusion

    Based upon our analysis of the comments provided by all of the 
interested parties on the physical characteristics, expectations of the 
ultimate purchasers, ultimate use of the product, and the channels of 
trade, in accordance with 19 CFR 353.29(i), we preliminary determine 
that when API 5L pipe and dual-certified pipe are used in a standard 
pipe application and fall within the physical parameters outlined in 
the scope of the orders, they are the same class or kind of merchandise 
as standard pipe and are therefore included within the scope of the 
orders on circular welded non-alloy steel pipe from Mexico, Korea, 
Brazil, and Venezuela (case numbers A-201-805, A-580-809, A-351-809 and 
A-307-805).
    We invite interested parties to comment on this preliminary 
determination, and to address the end-use certification process within 
30 days of publication of this preliminary determination. Rebuttal 
comments are due within 37 days of publication of this preliminary 
determination. See 19 CFR 353.29(d)(3). The Department will consider 
such comments in reaching its final determination.
    This preliminary scope ruling is in accordance with 19 CFR 
353.29(d)(3).

    Dated: January 6, 1994.
Joseph A. Spetrini,
Deputy Assistant Secretary for Compliance.
[FR Doc. 94-889 Filed 1-12-94; 8:45 am]
BILLING CODE 3510-DS-M