[Federal Register Volume 59, Number 191 (Tuesday, October 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24539]


[[Page Unknown]]

[Federal Register: October 4, 1994]


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DEPARTMENT OF COMMERCE
[A-549-809]

 

Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Certain Carbon Steel Butt-Weld Pipe Fittings From Thailand

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

EFFECTIVE DATE: October 4, 1994.

FOR FURTHER INFORMATION CONTACT:
Vincent Kane or Julie Anne Osgood, Office of Countervailing 
Investigations, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC. 20230; telephone (202) 482-
2815 or 482-0167, respectively.
    Preliminary Determination: We have preliminary determined that 
certain carbon steel butt-Weld pipe fittings from Thailand are being 
sold in the United States at less than fair value, as provided in 
section 733 of the Tariff Act of 1930, as amended (the ``Act''). The 
estimated margin is shown in the ``Suspension of Liquidation'' section 
of this notice.

Case History

    Since the initiation of this investigation on March 21, 1994 (59 FR 
14148, March 25, 1994), the following events have occurred:
    On April 11, 1994, the United States International Trade Commission 
(``ITC'') issued an affirmative preliminary injury determination (see, 
ITC Investigation No. 731-TA-689, 59 FR 18825 (April 20, 1994)).
    The Department issued its antidumping duty questionnaire to Asahi 
Sangyo (Thailand) Co., Ltd. (AST), on April 29, 1994. AST was the only 
Thai producer and exporter to be excluded from the antidumping duty 
order on butt-weld pipe fittings from Thailand published on July 6, 
1992 (57 FR 29702). All other producers and exporters of the subject 
merchandise to the United States are subject to the antidumping duty 
order currently in effect. AST was excluded from the original order 
because we found its margin of sales at less than fair value at that 
time to be de minimis.
    On June 18, 1994, petitioner alleged that AST was selling the 
subject merchandise in Thailand at less than its cost of production.
    On August 12, 1994, we found, in accordance with section 773(b), 
that reasonable grounds exist to believe or suspect that sales in the 
home market were being made at less than the cost of production based 
on information contained in the record, including petitioner's 
allegation. On August 15, 1994, we issued a cost of production and 
constructed value questionnaire to AST. We received a response from AST 
on September 9, 1994.

Scope of the Investigation

    The products covered by this investigation are certain carbon steel 
butt-weld pipe fittings having an inside diameter of less than fourteen 
inches (355 millimeters), imported in either finished or unfinished 
condition. Pipe fittings are formed or forged steel products used to 
join pipe sections in piping systems where conditions require permanent 
welded connections, as distinguished from fittings based on other 
methods of fastening (e.g., threaded, grooved, or bolted fittings). 
Butt-weld fittings come in a variety of shapes which include 
``elbows,'' ``tees,'' ``caps,'' and ``reducers.'' The edges of finished 
pipe fittings are beveled, so that when a fitting is placed against the 
end of a pipe (the ends of which have also been beveled), a shallow 
channel is created to accommodate the ``bead'' of the weld which joins 
the fitting to the pipe. These pipe fittings are currently classifiable 
under subheading 7307.93.3000 of the Harmonized Tariff Schedule of the 
United States (HTSUS''). Although the HTSUS subheading is provided for 
convenience and customs purposes, our written description of the scope 
of this investigation is dispositive.

Period of Investigation

    The period of investigation (``POI'') is September 1, 1993, through 
February 28, 1994.

Such or Similar Comparisons

    In making our fair value comparisons, in accordance with the 
Department's standard methodology, we first compared sales of 
merchandise identical in all respects. If no identical merchandise was 
sold, we compared sales of the most similar merchandise, as determined 
by the model-matching criteria contained in Appendix V of the 
questionnaire (``Appendix V'') (on file in room B-099 of the main 
building of the Department of Commerce (``Public File'')).
    Regarding level of trade, AST reported that it sells to an 
importer/distributor in the United States and directly to distributors, 
end users, and a commissionaire agent in Thailand. AST negotiates 
prices on a sale-by-sale basis and states that it is unable to discern 
any correlation between selling prices and customer categories. 
Further, AST states that its selling expenses do not vary by customer 
category. Therefore, in keeping with past practice (see, e.g., Final 
Results of Administrative Review: Antifriction Bearings and Parts 
Thereof from the Federal Republic of Germany, et al. (56 FR 31692, 
31709-11; July 11, 1991) and Import Administration Policy Bulletin 92/
1, Matching at Levels of Trade, issued on July 29, 1992)), and in 
accordance with 19 CFR 353.58, we have compared AST's U.S. sales to its 
home market sales to all customers.

Fair Value Comparisons

    To determine whether AST's sales for export to the United States 
were made at less than fair value, we compared the United States price 
(``USP'') to the foreign market value (``FMV''), as specified in the 
``United States Price'' and ``Foreign Market Value'' sections of this 
notice.

United States Price

    Because AST's U.S. sales of certain carbon steel butt-weld pipe 
fittings were made to an unrelated distributor in the United States 
prior to importation, and the exporter's sales price methodology was 
not indicated by other circumstances, we based USP on the purchase 
price (``PP'') sales methodology in accordance with section 772(b) of 
the Act.
    We calculated PP based on packed, c.i.f. port of import prices to 
an unrelated customer in the United States. We made deductions to the 
U.S. price for foreign brokerage, foreign inland freight, ocean freight 
and marine insurance.
    We made an adjustment to U.S. price for the consumption tax paid on 
the comparison sales in Thailand, in accordance with our practice, 
pursuant to the Court of International Trade (CIT) decision in Federal-
Mogul, et al v. United States, 834 F. Supp. 1291. See Preliminary 
Antidumping Duty Determination and Postponement of Final Determination; 
Color Negative Photographic Paper and Chemical Components Thereof from 
Japan, 59 FR 16177, 16179, April 6, 1994, for an explanation of this 
tax methodology.

Foreign Market Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating 
FMV, we compared the volume of home market sales of subject merchandise 
to the volume of third country sales of subject merchandise, in 
accordance with section 773(a)(1)(B) of the Act. On this basis, we 
determined that the home market was viable. For purposes of calculating 
FMV, we used AST's sales to its home market customers and CV, as 
described below.

Cost of Production

    In order to determine whether home market prices were below the COP 
within the meaning of section 773(b) of the Act, we calculated COP 
based on the sum of AST's cost of materials, fabrication, general 
expenses and home market packing costs. We compared individual home 
market prices net of inland freight and commission with model-specific 
COPs.
    We performed a product-specific COP test, in which we examined 
whether each home market sale was priced below that product's COP. The 
Department defines COP as the sum of direct material, direct labor, 
variable and fixed factory overhead, general expenses, and packing. For 
each product, we compared this sum to the home market unit price, net 
of movement expenses and commission. In accordance with section 733(b) 
of the Act, we also examined whether the home market sales of each 
product were made at prices below their COP in substantial quantities 
over an extended period of time, and whether such sales were made at 
prices that would permit recovery of all costs within a reasonable 
period of time in the normal course of trade.
    For each product where less than ten percent, by quantity, of the 
home market sales during the POI were made at prices below the COP, we 
included all sales of that model for the computation of FMV. For each 
product where ten percent of more, but less than 90 percent, of the 
home market sales during the POI were prices below the COP, we excluded 
from the calculation of FMV those home market sales which were prices 
below the COP, provided that the below-cost sales of that product were 
made over an extended period of time. Where we found that more than 90 
percent of respondent's sales were at prices below the COP, and such 
sales were over an extended period of time, we disregarded all sales of 
that product and calculated FMV based on CV, in accordance with section 
773(b) of the Act.
    In order to determine whether below-cost sales had been made over 
an extended period of time, we compared the number of months in which 
below-cost sales occurred for each product to the number of months in 
the POI in which that product was sold. If a product was sold in fewer 
than three months during the POI, we did not exclude sales unless there 
were below cost sales in each month of sale. If a product was sold in 
three or more months, we did not exclude the below-cost sales unless 
there were below-cost sales in at least three months during the POI.
    If sales below cost occurred in three or more months of the POI, 
they are considered to be made over an extended period of time. When 
items are sold in just two or three months of the POI, we would 
consider below cost sales of these items to be over an extended period 
of time, if they occurred in at least two months of the three months. 
When items are sold in just one month of the POI, we would consider any 
below cost sales of these items to be over an extended period of time.
    AST provided no indication that the disregarded sales were at 
prices that would permit recovery of all costs within a reasonable 
period of time and in the normal course of trade. (See, Section 
773(b)(2); 19 U.S.C. 1677b(b)(2)).

Constructed Value

    We calculated CV based on the sum of the cost of materials, 
fabrication, general expenses, U.S. packing costs and profit. In 
accordance with section 773(e)(1)(B) (i) and (ii) of the Act we: 1) 
included the greater of AST's reported general expenses or the 
statutory minimum of ten percent of the cost of manufacture (COM), as 
appropriate and; 2) for profit, we used the statutory minimum of eight 
percent of the sum of COM and general expenses.

Price-to-Price Comparisons

    For price-to-price comparisons, we calculated FMV based on ex-
factory or delivered prices, inclusive of packing to home market 
customers. From these prices, we deducted commission, where 
appropriate. We deducted home market packing costs and added U.S. 
packing costs in accordance with section 773(a)(1) of the Act. We also 
made adjustments, where appropriate, for differences in the physical 
characteristics of the merchandise in accordance with section 773(a)(1) 
of the Act.
    In light of the Court of Appeals for the Federal Circuit's decision 
in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. 
United States, 13 F. 3d 398 (Fed. Cir., January 5, 1994), the 
Department no longer can deduct home market movement charges from FMV 
pursuant to its inherent power to fill in gaps in the antidumping 
statute. Instead, we adjust for those expenses under the circumstance-
of-sale provision of 19 CFR 353.56(a) and the exporter's sales price 
offset provision of 19 CFR 353.56(b)(2), as appropriate. Accordingly, 
in the present case, we deducted post-sale home market movement charges 
from the FMV under the circumstance-of-sale provision of 19 CFR 
353.56(a). This adjustment included home market inland freight.
    For both price-to-price comparisons and comparisons to CV, we also 
made circumstance-of-sale adjustments, where appropriate, for 
differences in credit expenses, pursuant to 19 CFR 353.56(a)(2). For 
U.S. sales with unreported payment dates, we based AST's credit expense 
on the average number of days outstanding between shipment and payment 
for AST's U.S. sales with reported payment dates. For a discussion of 
the Department's treatment of credit in this investigation, please see 
Memorandum from Barbara R. Stafford to Susan G. Esserman (September 26, 
1994) on file in room B-099 of the U.S. Department of Commerce. In 
accordance with 19 CFR 353.56(b)(1), we added U.S. indirect selling 
expenses as an offset to the home market commission, but capped this 
addition by the amount of the home market commission.
    We adjusted for a consumption tax collected in the Thai home 
market. (See, the United States Price section of this notice, above.)

Currency Conversion

    We made currency conversions based on the official exchange rates 
in effect on the dates of the U.S. sales as certified by the Federal 
Reserve Bank of New York.

Verification

    As provided in section 776(b) of the Act, we will verify 
information used in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(1) of the Act, we are directing 
the Customs Service to suspend liquidation of all entries of butt-weld 
pipe fittings from Thailand, as defined in the ``Scope of 
Investigation'' section of this notice, that are produced and sold by 
AST and that are entered, or withdrawn from warehouse, for consumption 
on or after the date of publication of this notice in the Federal 
Register.
    The Customs Service shall require a cash deposit or the posting of 
a bond equal to the estimated preliminary dumping margins, as shown 
below. The suspension of liquidation will remain in effect until 
further notice. The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                                 Margin 
                Manufacturer/Producer/Exporter                  percent 
------------------------------------------------------------------------
Asahi Sangyo (Thailand) Co., Ltd.............................      10.37
------------------------------------------------------------------------

Adjustment of Deposit Rate for Countervailing Duties

    Article VI, paragraph 5 of the General Agreement on Tariffs and 
Trade provides that ``[no] product . . . shall be subject to both 
antidumping and countervailing duties to compensate for the same 
situation for dumping or export subsidization.'' This provision is 
implemented by section 772(d)(1)(D) of the Act. Since antidumping 
duties cannot be assessed on the portion of the margin attributable to 
export subsidies, there is no basis to require a cash deposit or bond 
for that amount.
    Accordingly, the level of export subsidies as determined in the 
most recent administrative review of the countervailing duty order, 
Carbon Steel Butt-Weld Pipe Fittings From Thailand; Final Results of 
Countervailing Duty Administrative Review, (57 FR 5248, February 13, 
1992), which was 0.74 percent, will be subtracted from the margin for 
cash deposit or bonding purposes. This results in a deposit rate of 
9.63 percent for AST. We did not determine an ``all others'' rate in 
this investigation, because all other producers and exporters of butt-
weld pipe fittings from Thailand are already subject to an antidumpting 
duty order on this merchandise, which was published in the Federal 
Register on July 6, 1992 (57 FR 29702).

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine whether these imports are materially injuring, 
or threaten material injury to, the U.S. industry within 75 days after 
our final determination.

Public Comment

    Interested parties who wish to request a hearing must submit a 
written request to the Assistant Secretary for Import Administration, 
U.S. Department of Commerce, Room B-099, within ten 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.
    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies must be submitted to the Assistant 
Secretary no later than November 16, 1994, and rebuttal briefs no later 
than November 23, 1994. A hearing, if requested, will be held on 
November 28, 1994, at the U.S. Department of Commerce in Room 1414. 
Parties should confirm by telephone the time, date, and place of the 
hearing 48 hours prior to the scheduled day. In accordance with 19 CFR 
353.38(b), oral presentations will be limited to issues raised in the 
briefs.
    We will make our final determination not later than 75 days after 
this preliminary determination.
    This determination is published pursuant to section 733(f) of the 
Act and 19 CFR 353.15(a)(4).

    Dated: September 26, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-24539 Filed 10-3-94; 8:45 am]
BILLING CODE 3510-DS-M