[Federal Register Volume 59, Number 76 (Wednesday, April 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9552]


[[Page Unknown]]

[Federal Register: April 20, 1994]


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DEPARTMENT OF COMMERCE
[A-122-506]

 

Oil Country Tubular Goods From Canada Preliminary Results of 
Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: In response to a request from the respondent, IPSCO Inc. 
(IPSCO), the Department of Commerce (the Department) has conducted an 
administrative review of the antidumping duty order on oil country 
tubular goods (OCTG) from Canada. The review covers one manufacturer/
exporter, IPSCO, and exports of the subject merchandise to the United 
States during the period June 1, 1992, through May 31, 1993.
    We preliminarily determine the dumping margins for IPSCO to be zero 
during this period. Interested parties are invited to comment on these 
preliminary results.

EFFECTIVE DATE: April 20, 1994.

FOR FURTHER INFORMATION CONTACT: David Genovese or Michael Heaney, 
Office of Antidumping Compliance, International Trade Administration, 
U.S. Department of Commerce, Washington, DC 20230; telephone (202)482-
5254.

SUPPLEMENTARY INFORMATION:

Background

    On June 7, 1993, the Department published a notice of ``Opportunity 
to Request an Administrative Review'' (58 FR 31941) of the antidumping 
duty order on OCTG from Canada (51 FR 21782; June 16, 1986). On June 
25, 1993, IPSCO requested an administrative review. The Department 
initiated the review on July 21, 1993 (58 FR 39007), covering the 
period June 1, 1992, through May 31, 1993. The Department is conducting 
this review in accordance with section 751 of the Tariff Act of 1930, 
as amended (the Act).

Scope of the Review

    The products covered by this review include shipments of OCTG from 
Canada. This includes American Petroleum Institute (API) specification 
OCTG and all other pipe with the following characteristics except 
entries which the Department determined through its end use 
certification procedure were not used in OCTG applications: Length of 
at least 16 feet; outside diameter of standard sizes published in the 
API or proprietary specifications for OCTG with tolerances of plus \1/
8\ inch for diameters less than or equal to 8\5/8\ inches and plus \1/
4\ inch for diameters greater than 8\5/8\ inches, minimum wall 
thickness as identified for a given outer diameter as published in the 
API or proprietary specifications for OCTG; a minimum of 40,000 PSI 
yield strength and a minimum 60,000 PSI tensile strength; and if with 
seams, must be electric resistance welded. Furthermore, imports covered 
by this review include OCTG with non-standard size wall thickness 
greater than the minimum identified for a given outer diameter as 
published in the API or proprietary specifications for OCTG, with 
surface scabs or slivers, irregularly cut ends, ID or OD weld flash, or 
open seams; OCTG may be bent, flattened or oval, and may lack 
certification because the pipe has not been mechanically tested or has 
failed those tests.
    This merchandise is currently classifiable under the Harmonized 
Tariff Schedules (HTS) item numbers 7304.20, 7305.20, and 7306.20. The 
HTS item numbers are provided for convenience and Customs purposes. The 
written description remains dispositive.

United States Price

    In calculating United States Price (USP), the Department used 
purchase price, as defined in section 772(b) of the Act, because the 
merchandise was sold to an unrelated purchaser in the United States 
prior to its importation. The Department based USP on the packed, 
delivered price to those unrelated purchasers.
    The Department made deductions, where appropriate, for foreign 
inland freight, U.S. duties, and U.S. brokerage fees.
    On October 7, 1993, the United States Court of International Trade 
(CIT), in Federal-Mogul Corporation and The Torrington Company v. 
United States, Slip Op. 93-194 (CIT, October 7, 1993), rejected the 
Department's methodology for calculating an addition to USP under 
section 772(d)(1)(C) of the Act to account for taxes that the exporting 
country would have assessed on the merchandise had it been sold in the 
home market. The CIT held that the addition to USP under section 
772(d)(1)(C) of the Act should be the result of applying the foreign 
market tax rate to the price of the United States merchandise at the 
same point in the chain of commerce that the foreign market tax was 
applied to the foreign market sales. Federal-Mogul, Slip Op. 93-194 at 
12.
    The Department has changed its methodology in accordance with the 
Federal-Mogul decision. The Department has added to USP the result of 
multiplying the foreign market tax rate by the price of the merchandise 
sold in the United States at the same point in the chain of commerce 
that the foreign market tax was applied to foreign market sales. The 
Department has also adjusted the USP tax adjustments and the amount of 
tax included in FMV. These adjustments deduct the portions of the 
foreign market tax and the USP tax adjustment that are the result of 
expenses that are included in the foreign market price used to 
calculate foreign market tax and are included in the United States 
merchandise price used to calculate the USP tax adjustment and that are 
later deducted to calculate FMV and USP. These adjustments to the 
amount of the foreign market tax and the USP tax adjustment are 
necessary to prevent our new methodology for calculating the USP tax 
adjustment from creating antidumping duty margins where no margins 
would exist if no taxes were levied upon foreign market sales.
    This margin creation effect is due to the fact that the bases for 
calculating both the amount of tax included in the price of the foreign 
market merchandise and the amount of the USP tax adjustment include 
many expenses that are later deducted when calculating USP and FMV. 
After these deductions are made, the amount of tax included in FMV and 
the USP tax adjustment still reflects the amounts of these expenses. 
Thus, a margin may be created that is not dependent upon a difference 
between USP and FMV, but is the result of the price of the United 
States merchandise containing more expenses than the price of the 
foreign market merchandise. The Department's policy to avoid the margin 
creation effect is in accordance with the United States Court of 
Appeals' holding that the application of the USP tax adjustment under 
section 772(d)(1)(C) of the Act should not create an antidumping duty 
margin if pre-tax FMV does not exceed USP. Zenith Electronics Corp. v. 
United States, 988 F.2d 1573, 1581 (Fed. Cir. 1993). In addition, the 
CIT has specifically held that an adjustment should be made to mitigate 
the impact of expenses that are deducted from FMV and USP upon the USP 
tax adjustment and the amount of tax included in FMV. Daewoo 
Electronics Co., Ltd. v. United States, 760 F. Supp. 200, 208 (CIT, 
1991). However, the mechanics of the Department's adjustments to the 
USP tax adjustment and the foreign market tax amount as described above 
are not identical to those suggested in Daewoo.
    There were no other adjustments claimed or allowed.

Foreign Market Value

    In calculating foreign market value (FMV), we used home market 
price, as defined in section 773(a) of the Act, since sufficient 
quantities of merchandise were sold in the home market to provide a 
reasonable basis for comparison. Home market price was based on the FOB 
stockyard or FOB mill price to unrelated purchasers in the home market.
    Due to the existence of sales below the cost of production (COP) in 
the original investigation, which is the last segment of the proceeding 
on OCTG with which IPSCO has been involved, the Department had 
reasonable grounds to believe or suspect that sales below the COP may 
have occurred during this review. Accordingly, the Department initiated 
a COP investigation for this review in accordance with section 773(b) 
of the act. Because IPSCO had home market sales of models which were 
identical to models it sold in the United States, we conducted our cost 
test only on those identical models. We calculated COP based on IPSCO's 
cost of materials, fabrications, and general expenses. The results of 
our cost test showed that no sales of merchandise were made below the 
COP during the period of review. Therefore, we have based FMV on sales 
of merchandise in the home market.
    The Department made adjustments, where applicable, for discounts, 
rebates, warranty and servicing expenses, royalty fees, fees for 
outside inspectors, and for differences in packing material and credit. 
In addition, in accordance with the United States Court of Appeals for 
the Federal Circuit's ruling in The Ad Hoc Committee of AZ-NM-TX-FL 
Producers of Gray Portland Cement v. United States, Slip Op. 93-1239 
(CAFC, January 5, 1994), the Department did not deduct pre-sale 
transportation costs. The Department also made an adjustment to FMV for 
imputed consumption taxes in accordance with the aforementioned 
Federal-Mogul decision.
    There were no other adjustments claimed or allowed.

Preliminary Results of Review

    As a result of our comparison of USP to FMV, the Department 
preliminarily determines that a margin of zero percent exists for IPSCO 
for the period June 1, 1992, through May 31, 1993.
    Interested parties may request disclosure within 5 days of the date 
of publication of this notice and may request a hearing within 10 days 
of publication. Any hearing, if requested, will be held 44 days after 
the date of publication of this notice, or the first workday 
thereafter. Case briefs and/or written comments from interested parties 
may be submitted not later than 30 days after the date of publication. 
Rebuttal briefs and rebuttals to written comments, limited to the 
issues raised in the case briefs and comments, may be filed not later 
than 37 days after the date of publication. The Department will publish 
the final results of this administrative review, including the results 
of its analysis of any such written comments or hearing.
    The Department shall determine, and U.S. Customs shall assess, 
antidumping duties on all appropriate entries. Individual differences 
between USP and FMV may vary from the percentage stated above. The 
Department will issue appraisement instructions directly to Customs.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise, entered or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed 
company will be that rate established in the final results of this 
administrative review; (2) for merchandise exported by manufacturers or 
exporters not covered in this review but covered in a previous review 
or the original less-than-fair-value (LTFV) investigation, the cash 
deposit rate will continue to be the rate published in the most recent 
final results or determination for which the manufacturer or exporter 
received a company-specific rate; (3) if the exporter is not a firm 
covered in this review, earlier reviews, or the original investigation, 
but the manufacturer is, the cash deposit rate will be that established 
for the manufacturer of the merchandise in these final results of 
review, earlier reviews, or the original investigation, whichever is 
the most recent; and (4) the ``all others'' rate will be 16.65 percent, 
as explained below.
    On May 25, 1993, the CIT, in Floral Trade Council v. United States, 
Slip Op. 93-79, and Federal-Mogul Corporation v. United States, Slip 
Op. 93-83, decided that once an ``all others'' rate is established for 
a company it can only be changed through an administrative review. The 
Department has determined that in order to implement these decisions, 
it is appropriate to reinstate the original ``all others'' rate from 
the LTFV investigation (or that rate as amended for correction of 
clerical errors or as a result of litigation) in proceedings governed 
by antidumping duty orders. Accordingly, the cash deposit rate for any 
future entries from all other manufacturers or exporters, who are not 
covered in this or prior administrative reviews and who are unrelated 
to the reviewed firm or any previously reviewed firm, will be the ``all 
others'' rate established in the original LTFV investigation which is 
16.65 percent.
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 353.26 to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: April 14, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-9552 Filed 4-19-94; 8:45 am]
BILLING CODE 3510-DS-P