[Federal Register Volume 60, Number 18 (Friday, January 27, 1995)]
[Notices]
[Pages 5355-5358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2105]



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DEPARTMENT OF COMMERCE
[A-428-820]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Small Diameter Circular Seamless Carbon and Alloy Steel, 
Standard, Line and Pressure Pipe From Germany

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

EFFECTIVE DATE: January 27, 1995.

FOR FURTHER INFORMATION CONTACT: Kate Johnson or Irene Darzenta, Office 
of Antidumping Investigations, Import Administration, U.S. Department 
of Commerce, 14th Street and Constitution Avenue, N.W., Washington, 
D.C. 20230; telephone (202) 482-4929 or 482-6320, respectively.

PRELIMINARY DETERMINATION: The Department of Commerce (the Department) 
preliminarily determines that small diameter circular seamless carbon 
and alloy steel, standard, line and pressure pipe from Germany 
(seamless pipe) is being, or is likely to be, 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 margins are shown in the 
``Suspension of Liquidation'' section of this notice.

Case History

    Since the notice of initiation published on July 20, 1994, (59 FR 
37025), the following events have occurred.
    On August 8, 1994, the U.S. International Trade Commission (ITC) 
issued an affirmative preliminary injury determination (USITC 
Publication 2734, August 1994).
    On August 19, 1994, we named Mannesmannrohren-Werke AG (MRW) as the 
sole respondent in this investigation, and on the same date issued an 
antidumping questionnaire to this company. MRW accounted for at least 
60 percent of the exports of the subject merchandise to the United 
States during the POI. Although it requested that it be allowed to 
respond voluntarily to the Department's questionnaire, on October 5, 
1994, we informed Benteler A.G., another German producer, that we would 
not be accepting voluntary responses in this investigation due to 
administrative resource constraints.
    On September 12, 1994, MRW submitted a response to Section A of the 
Department's questionnaire. Sections B and C were submitted on October 
14, 1994. On October 11 and November 2, 1994, we received petitioner's 
comments regarding MRW's questionnaire responses. We issued a 
supplemental questionnaire on November 18, 1994. MRW submitted its 
supplemental response on December 9, 1994.
    On October 21, 1994, we received comments on the issues of scope 
and class or kind of merchandise from interested parties, in response 
to the Department's invitation for such comments in its notice of 
initiation. On October 31 and November 17, 1994, we received rebuttal 
comments on this issue.
    On October 27, 1994, the Department received a request from 
petitioner to postpone the preliminary determination until January 19, 
1995. On November 18, 1994, we published in the Federal Register (59 FR 
59748), a notice announcing the postponement of the preliminary 
determination until not later than January 19, 1995, in accordance with 
19 C.F.R. 353.15(c) and (d).

Scope of Investigation

    For purposes of this investigation, seamless pipes are seamless 
carbon and alloy (other than stainless) steel pipes, of circular cross-
section, not more than 114.3mm (4.5 inches) in outside diameter, 
regardless of wall thickness, manufacturing process (hot-finished or 
cold-drawn), end finish (plain end, bevelled end, upset end, threaded, 
or threaded and coupled), or surface finish. These pipes are commonly 
known as standard pipe, line pipe or pressure pipe, depending upon the 
application. They may also be used in structural applications.
    The seamless pipes subject to these investigations are currently 
classifiable under subheadings 7304.10.10.20, 7304.10.50.20, 
7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 7304.39.00.24, 
7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 7304.51.50.60, 
7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 7304.59.80.20, and 
7304.59.80.25 of the Harmonized Tariff Schedule of the United States 
(HTSUS).
    The following information further defines the scope of this 
investigation, which covers pipes meeting the physical parameters 
described above:
    Specifications, Characteristics and Uses: Seamless pressure pipes 
are intended for the conveyance of water, steam, petrochemicals, 
chemicals, oil products, natural gas and other liquids and gasses in 
industrial piping systems. They may carry these substances at elevated 
pressures and temperatures and may be subject to the application of 
external heat. Seamless carbon steel pressure pipe meeting the American 
Society for Testing and Materials (ASTM) standard A-106 may be used in 
temperatures of up to 1000 degrees fahrenheit, at various American 
Society of Mechanical Engineers (ASME) code stress levels. Alloy pipes 
made to ASTM standard A-335 must be used if temperatures and stress 
levels exceed those allowed for A-106 and the ASME codes. Seamless 
pressure pipes sold in the United States are commonly produced to the 
ASTM A-106 standard.
    Seamless standard pipes are most commonly produced to the ASTM A-53 
specification and generally are not intended for high temperature 
service. They are intended for the low temperature and pressure 
conveyance of water, steam, natural gas, air and other liquids and 
gasses in plumbing and heating systems, air conditioning units, 
automatic sprinkler systems, and other related uses. Standard pipes 
(depending on type and code) may carry liquids at elevated temperatures 
but must not exceed relevant ASME code requirements.
    Seamless line pipes are intended for the conveyance of oil and 
natural gas or other fluids in pipe lines. Seamless line pipes are 
produced to the API 5L specification.
    Seamless pipes are commonly produced and certified to meet ASTM A-
106, ASTM A-53 and API 5L specifications. Such triple certification of 
pipes is common because all pipes meeting the stringent A-106 
specification necessarily meet the API 5L and ASTM A-53 specifications. 
Pipes meeting the API 5L specification necessarily meet the ASTM A-53 
specification. However, pipes meeting the A-53 or API 5L specifications 
do not necessarily meet the A-106 specification. To avoid maintaining 
separate production runs and separate inventories, manufacturers triple 
certify the pipes. Since distributors sell the vast majority of this 
product, they can thereby maintain a single inventory to service all 
customers.
    The primary application of ASTM A-106 pressure pipes and triple 
certified pipes is in pressure piping systems by refineries, 
petrochemical plants and chemical plants. Other applications are in 
power generation plants (electrical-fossil fuel or nuclear), and in 
some oil field uses (on shore and off shore) such as for separator 
lines, gathering lines and metering runs. A minor application 
[[Page 5356]] of this product is for use as oil and gas distribution 
lines for commercial applications. These applications constitute the 
majority of the market for the subject seamless pipes. However, A-106 
pipes may be used in some boiler applications.
    The scope of this investigation includes all multiple-stenciled 
seamless pipe meeting the physical parameters described above and 
produced to one of the specifications listed above, whether or not also 
certified to a non-covered specification. Standard, line and pressure 
applications are defining characteristics of the scope of this 
investigation. Therefore, seamless pipes meeting the physical 
description above, but not produced to the A-106, A-53, or API 5L 
standards shall be covered if used in an A-106, A-335, A-53, or API 5L 
application.
    For example, there are certain other ASTM specifications of pipe 
which, because of overlapping characteristics, could potentially be 
used in A-106 applications. These specifications include A-162, A-192, 
A-210, A-333, and A-524. When such pipes are used in a standard, line 
or pressure pipe application, such products are covered by the scope of 
this investigation.
    Specifically excluded from this investigation are boiler tubing, 
mechanical tubing and oil country tubular goods except when used in a 
standard, line or pressure pipe application. Also excluded from this 
investigation are redraw hollows for cold-drawing when used in the 
production of cold-drawn pipe or tube.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
investigation is dispositive.

Scope Issues

    In our notice of initiation we identified two issues which we 
intended to consider further. The first issue was whether to consider 
end-use a factor in defining the scope of these investigations.1 
The second issue was whether the seamless pipe subject to this 
investigation constitutes more than one class or kind of merchandise. 
In addition to these two issues, interested parties have raised a 
number of other issues regarding whether certain products should be 
excluded from the scope of this investigation. These issues are 
discussed below.

    \1\Various parties in this investigation, as well as in the 
concurrent investigations involving the same product from Argentina, 
Italy, and Germany have raised issues and made arguments. For 
purposes of simplicity and consistency across investigations, we 
will discuss all of these issues in this notice.
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    Regarding the end-use issue, interested parties have submitted 
arguments about whether end-use should be maintained as a scope 
criterion in this investigation. After carefully considering these 
arguments, we have determined that, for purposes of this preliminary 
determination, we will continue to include end-use as a scope 
criterion. We agree with petitioner that pipe products identified as 
potential substitutes used in the same applications as products meeting 
the requisite ASTM specifications may fall within the same class or 
kind, and within the scope of any order issued in this investigation. 
However, we are well aware of the difficulties involved with requiring 
end-use certifications, particularly the burdens placed on the 
Department, the U.S. Customs Service, and the parties. We will strive 
to simplify any procedures used in this regard. We will, therefore, 
carefully consider any comment on this issue for purposes of our final 
determination.
    Regarding the class or kind issue, although respondents propose 
dividing the scope of this investigation into two classes or kinds of 
merchandise, they do not agree on the merchandise characteristics that 
will define the two classes. The respondents in this investigation as 
well as the Brazilian investigation argue that the scope should be 
divided into two classes or kinds based on the material composition of 
the pipe--carbon versus alloy. The respondent in the Argentine 
investigation argues that the scope should be divided into two classes 
or kinds of merchandise based on size. Petitioner maintains that the 
subject merchandise constitutes a single class or kind.
    We have considered the class or kind comments of the interested 
parties and have analyzed this issue based on the criteria set forth by 
the Court of International Trade in Diversified Products v. United 
States, 6 CIT 155, 572 F. Supp. 883 (1983). These criteria are as 
follows: (1) the general physical characteristics of the merchandise; 
(2) the ultimate use of the merchandise; (3) the expectations of the 
ultimate purchasers; (4) the channels of trade; and (5) cost.
    We note that certain differences exist between the physical 
characteristics of the various products (e.g., size, composition). In 
addition, there appear to be cost differences between the various 
products. However, the information on record is not sufficient to 
justify dividing the class or kind of merchandise. The record on 
ultimate use of the merchandise and the expectations of the ultimate 
purchasers indicates that there is a strong possibility that there may 
be overlapping uses because any one of the various products in question 
may be used in different applications (e.g., line and pressure pipe). 
Also, based upon the evidence currently on the record, we determine 
that the similarities in the distribution channels used for each of the 
proposed classes of merchandise outweigh any differences in the 
distribution channels.
    In conclusion, while we recognize that certain differences exist 
between the products in the proposed class or kind of merchandise, we 
find that the similarities are more significant. Therefore, for 
purposes of this preliminary determination, we will continue to 
consider the scope as covering one class or kind of merchandise. This 
preliminary decision is consistent with past cases concerning steel 
pipe products. (See e.g., Final Determination of Sales at Less Than 
Fair Value: Circular Welded Non-Alloy Steel Pipe From Brazil et al., 57 
FR 42940, September 17, 1992). However, a number of issues with respect 
to class or kind remain to be clarified. We will provide the parties 
with another opportunity to submit additional information and argument 
for the final determination. For a complete discussion of the parties' 
comments, as well as the Department's analysis, see memorandum from 
Gary Taverman, Acting Director, Office of Antidumping Investigations to 
Barbara Stafford, Deputy Assistant Secretary for Investigations, dated 
January 19, 1995.
    Regarding the additional issues concerning exclusion of certain 
products, one party requests that the Department specify that multiple-
stencilled seamless pipe stencilled to non-subject standards is not 
covered. Furthermore, this party argues that the scope language should 
be clarified so that it specifically states that only standard, line, 
and pressure pipe stencilled to the ASTM A-106, ASTM A-53 or API-5L 
standards are included, and that we clarify the meaning of ``mechanical 
tubing.'' In addition, this party requests that the Department exclude 
unfinished oil country tubular goods, ASTM A-519 pipe (a type of 
mechanical tubing) and mechanical tube made to customer specifications 
from the scope of this investigation.
    Another party requests that the Department specifically exclude 
hollow seamless steel products produced in non-pipe sizes (known in the 
steel industry as tubes), from the scope of this investigation.
    Because we currently have insufficient evidence to make a 
[[Page 5357]] determination regarding these requests, we are not yet in 
a position to address these concerns. Therefore, for purposes of this 
preliminary determination, we will not exclude these products from the 
scope of this investigation. Once again, we will collect additional 
information and consider additional argument before the final 
determination.

Period of Investigation

    The period of investigation (POI) is January 1, 1994, to June 30, 
1994.

Such or Similar Comparisons

    We have determined that all the products covered by this 
investigation constitute a single category of such or similar 
merchandise. We made fair value comparisons on this basis. In 
accordance with the Department's standard methodology, we first 
compared identical merchandise. Where there were no sales of identical 
merchandise in the home market to compare to U.S. sales, we made 
similar merchandise comparisons on the basis of the criteria defined in 
Appendix V to the antidumping questionnaire, on file in Room B-099 of 
the main building of the Department.

Fair Value Comparisons

    To determine whether sales of seamless pipe from MRW 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. In accordance with 19 C.F.R. 353.58, we made comparisons at the 
same level of trade, where possible.

United States Price

    We based USP on purchase price (PP), in accordance with section 
772(b) of the Act, because the subject merchandise was sold to 
unrelated purchasers in the United States before importation and 
because exporter's sales price methodology was not otherwise indicated.
    We calculated PP based on packed prices to unrelated customers. In 
accordance with section 772(d)(2)(A) of the Act, we made deductions, 
where appropriate, foreign inland freight, inland insurance, ocean 
freight, U.S. brokerage, U.S. duty, wharfage, and U.S. inland freight. 
In the one instance where foreign inland freight had a missing value, 
we assigned the average foreign inland freight amount for all other 
reported transactions to the missing value. We also made an adjustment 
to USP for the value-added tax (VAT) paid on the comparison sales in 
Germany in accordance with our practice, pursuant to the Court of 
International Trade's (CIT) decision in Federal-Mogul Corp. and The 
Torrington Co. v. United States, Slip Op. 93-194 (CIT October 7, 1993). 
(See Final Determination of Sales at Less Than Fair Value: Calcium 
Aluminate Cement, Cement Clinker and Flux from France, 59 FR 14136, 
March 25, 1994). We recalculated VAT because respondent's calculation 
included discounts.

Foreign Market Value

    In order to determine whether there were sufficient sales of 
seamless pipe in the home market to serve as a viable basis for 
calculating FMV, we compared the volume of home market sales of 
seamless pipe to the volume of third country sales of seamless pipe in 
accordance with section 773(a)(1)(B) of the Act. Based on this 
comparison, we determined that MRW had a viable home market with 
respect to sales of seamless pipe during the POI.
    In accordance with 19 C.F.R. 353.46, we calculated FMV based on 
prices charged to both related (when appropriate) and unrelated 
customers in Germany. We compared related party prices to unrelated 
party prices using the test set forth in Appendix II to the Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina, 58 FR 37062 (July 9, 1994) 
and used in our FMV calculation those sales made to related parties 
that were at arm's length. We made deductions, where appropriate, for 
discounts and rebates. In instances where the reported quantity for 
certain sales was zero, we excluded these transactions from our 
analysis. In one instance where the reported rebate expense was 
negative, we set this expense for the particular transaction to zero.
    In light of the Court of Appeals for the Federal Circuit's (CAFC) 
decision in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland 
Cement v. United States, 13 F.3d 398 (Fed. Cir. 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 will adjust for those expenses under the circumstance-of-sale 
provision of 19 C.F.R. 353.56(a) and the exporter's sales price offset 
provision of 19 C.F.R. 353.56(b)(2), as appropriate. Accordingly, in 
the present case, we deducted post-sale home market movement charges 
from FMV under the circumstance-of-sale provision of 19 C.F.R. 
353.56(a). This adjustment included foreign inland freight.
    Pursuant to 19 C.F.R. 353.56(a)(2), we made further circumstance-
of-sale adjustments, where appropriate, for differences in credit 
expenses, warranties and inspection expenses between the U.S. and home 
markets. With regard to credit expenses in the home market, given that 
respondent only provided month and year for shipment and payment dates, 
we set shipment date equal to the first day of the reported month and 
payment date equal to the last day of the reported month and then 
calculated imputed credit in accordance with our normal methodology. 
For both markets, we calculated an average number of credit days when 
shipment and payment dates were missing and used the date of the 
preliminary determination, January 19, 1995, as payment date when only 
payment dates were missing. We deducted home market commissions and 
added U.S. indirect selling expenses capped by the amount of home 
market commissions.
    We also deducted home market packing and added U.S. packing costs, 
in accordance with section 773(a)(1) of the Act. We made adjustments, 
where appropriate, for differences in the physical characteristics of 
the merchandise, in accordance with section 773(a)(4)(C) of the Act.
    We adjusted for VAT in accordance with our practice. (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. See 19 C.F.R. 353.60(a).

Verification

    As provided in section 776(b) of the Act, we will verify the 
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 seamless 
pipe from Germany, as defined in the Scope of Investigation section of 
this notice, 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 estimated preliminary dumping margins 
are as follows:

                                                                        
[[Page 5358]]                                                           
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                                                                 Margin 
                Manufacturer/producer/exporter                  percent 
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Mannesmannrohren-Werke AG....................................      2.68%
All others...................................................      2.68%
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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 imports of the subject merchandise are 
materially injuring, or threaten material injury to, the U.S. industry 
before the later of 120 days after the date of the preliminary 
determination or 45 days after our final determination.

Public Comment

    In accordance with 19 C.F.R. 353.38, case briefs or other written 
comments in at least ten copies must be submitted to the Assistant 
Secretary for Import Administration no later than March 10, 1995, and 
rebuttal briefs no later than March 15, 1995. In accordance with 19 
C.F.R. 353.38(b), we will hold a public hearing, if requested, to give 
interested parties an opportunity to comment on arguments raised in 
case or rebuttal briefs. Tentatively, the hearing will be held on March 
17, 1995, at 2:00 p.m. at the U.S. Department of Commerce, Room 1414, 
14th Street and Constitution Avenue, N.W., Washington, D.C. 20230. 
Parties should confirm by telephone the time, date, and place of the 
hearing 48 hours before the scheduled time.
    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 in the Federal Register. Request 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 C.F.R. 353.38(b), oral presentation will be 
limited to issues raised in the briefs.
    This determination is published pursuant to section 733(f) of the 
Act (19 U.S.C. 1673b(f)) and 19 C.F.R. 353.15(a)(4).

    Dated: January 19, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-2105 Filed 1-26-95; 8:45 am]
BILLING CODE 3510-DS-P