[Federal Register Volume 60, Number 22 (Thursday, February 2, 1995)]
[Notices]
[Pages 6503-6506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2610]



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DEPARTMENT OF COMMERCE

International Trade Administration
[A-357-810]


Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Oil Country Tubular Goods From 
Argentina

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

EFFECTIVE DATE: February 2, 1995.

FOR FURTHER INFORMATION CONTACT: John Beck or Stuart Schaag, Office of 
Antidumping Investigations, Import Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, D.C. 
20230; telephone (202) 482-3464 or (202) 482-0192, respectively.

Preliminary Determination

    We preliminarily determine that oil country tubular goods (OCTG) 
from Argentina are being, or are likely to be, sold in the United 
States at less than fair value, as provided in section 733(b) 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 initiation of this investigation on July 20, 1994 (59 FR 
37962, July 26, 1994), the following events have occurred.
    On August 15, 1994, the U.S. International Trade Commission (ITC) 
issued an affirmative preliminary determination.
    On August 26, 1994, the Department determined that Siderca S.A.I.C. 
(Siderca), an Argentine exporter of the subject merchandise, should be 
the sole recipient of the antidumping questionnaire. This company 
accounted for at least 60 percent of exports of OCTG from Argentina 
during the period of investigation (POI).
    On August 26, 1994, the Department sent an antidumping duty 
questionnaire to Siderca. The Department received initial questionnaire 
responses in September, October and November 1994. The Department 
received deficiency questionnaire responses in December 1994, and 
January 1995.
    On November 1, 1994, the Department determined that Siderca's home 
market was not viable within the meaning of section 773(a)(1)(B) of the 
Act and 19 CFR 353.48, and that the People's Republic of China (PRC) 
was the appropriate third-country market for this investigation (see 
the November 1, 1994, memorandum from David L. Binder to Richard W. 
Moreland). This decision was consistent with our decision not to expand 
the period of investigation to include home market sales made pursuant 
to long-term contracts (see the November 3, 1994, memorandum from 
Richard W. Moreland to Barbara R. Stafford).
    On November 10, 1994, Koppel Steel Corporation, U.S. Steel Group (a 
unit of USX Corporation) and USS/Kobe Steel Company, (the petitioners), 
timely requested that the Department postpone the preliminary 
determination in accordance with section 733(c)(1) of the Act (19 
U.S.C. 1673b(c)(1)), and 19 CFR 353.15(c). We did so on November 15, 
1994 (59 FR 60130, November 22, 1994).
    On December 12, 1994, the petitioners submitted an allegation of 
sales at prices below the cost of production (COP) based on Siderca's 
sales to the PRC. The Department initiated a COP investigation on 
January 13, 1995 (see the January 13, 1995, memorandum from Gary 
Taverman to Barbara R. Stafford).
    On December 16, 1994, Siderca timely requested that the final 
determination be postponed in accordance with 19 CFR 353.20(b) in the 
event of an affirmative preliminary determination.

Scope of Investigation

    For purposes of this investigation, OCTG are hollow steel products 
of circular cross-section, including oil well casing, tubing, and drill 
pipe, of iron (other than cast iron) or steel (both 

[[Page 6504]]
carbon and alloy), whether seamless or welded, whether or not 
conforming to American Petroleum Institute (API) or non-API 
specifications, whether finished or unfinished (including green tubes 
and limited service OCTG products). This investigation does not cover 
casing, tubing, or drill pipe containing 10.5 percent or more of 
chromium. The OCTG subject to this investigation is currently 
classified in the Harmonized Tariff Schedule of the United States 
(HTSUS) under item numbers: 7304.20.10.00, 7304.20.10.10, 
7304.20.10.20, 7304.20.10.30, 7304.20.10.40, 7304.20.10.50, 
7304.20.10.60, 7304.20.10.80, 7304.20.20.00, 7304.20.20.10, 
7304.20.20.20, 7304.20.20.30, 7304.20.20.40, 7304.20.20.50, 
7304.20.20.60, 7304.20.20.80, 7304.20.30.00, 7304.20.30.10, 
7304.20.30.20, 7304.20.30.30, 7304.20.30.40, 7304.20.30.50, 
7304.20.30.60, 7304.20.30.80, 7304.20.40.00, 7304.20.40.10, 
7304.20.40.20, 7304.20.40.30, 7304.20.40.40, 7304.20.40.50, 
7304.20.40.60, 7304.20.40.80, 7304.20.50.10, 7304.20.50.15, 
7304.20.50.30, 7304.20.50.45, 7304.20.50.50, 7304.20.50.60, 
7304.20.50.75, 7304.20.60.10, 7304.20.60.15, 7304.20.60.30, 
7304.20.60.45, 7304.20.60.50, 7304.20.60.60, 7304.20.60.75, 
7304.20.70.00, 7304.20.80.00, 7304.20.80.30, 7304.20.80.45, 
7304.20.80.60, 7305.20.20.00, 7305.20.40.00, 7305.20.60.00, 
7305.20.80.00, 7306.20.10.30, 7306.20.10.90, 7306.20.20.00, 
7306.20.30.00, 7306.20.40.00, 7306.20.60.10, 7306.20.60.50, 
7306.20.80.10, and 7306.20.80.50.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
investigation is dispositive.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Statute and to the 
Department's regulations are in reference to the provisions as they 
existed on December 31, 1994.

Period of Investigation

    The POI is January 1, 1994, through June 30, 1994.
Such or Similar Comparisons

    We have determined for purposes of the preliminary determination 
that the OCTG covered by this investigation comprises a single category 
of ``such or similar'' merchandise within the meaning of section 
771(16) of the Act. Where there were no sales of identical merchandise 
in the third country to compare to U.S. sales, we made similar 
merchandise comparisons on the basis of the characteristics listed in 
Appendix V of the Department's antidumping questionnaire.
    The Appendix V criteria were intended to avoid matching casing and 
tubing products. However, in using the product matches supplied by 
Siderca, a casing product was matched to a tubing product in two 
instances. Therefore, we modified the Appendix V criteria to match, 
whenever possible, U.S. sales of tubing with PRC sales of tubing and 
U.S. sales of casing with PRC sales of casing, by making that the 
primary matching criterion.
    Thus, we made similar merchandise comparisons on the basis of: (1) 
Whether OCTG is casing or tubing; (2) whether OCTG is seamless or 
welded; (3) the grade of OCTG finish; (4) end finish; (5) outside 
diameter; (6) OCTG length; (7) full-body normalization; and 8) wall 
thickness (see the January 24, 1995, memorandum from John Beck to David 
L. Binder for a detailed discussion).
    In certain other instances, Siderca did not follow correctly the 
Department's matching hierarchy instructions. We have corrected the 
product concordance for these problems (see the January 24, 1995, 
memorandum from John Beck to David L. Binder for a detailed 
discussion).
    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.

Fair Value Comparisons

    To determine whether Siderca's sales of OCTG from Argentina 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
    We based USP on exporter's sales price (ESP), in accordance with 
section 772(c) of the Act, because the subject merchandise was sold to 
the first unrelated purchaser after importation into the United States.
    For OCTG that was further manufactured in the United States, we 
deducted all value added in the United States, pursuant to section 
772(e)(3) of the Act. The value added consists of the costs of the 
materials, fabrication, and general expenses associated with the 
portion of the merchandise further manufactured in the United States, 
as well as a proportional amount of profit attributable to the value 
added. We accepted Siderca's cost data without making any adjustments 
for purposes of the preliminary determination. We calculated profit by 
deducting from the sales price of the finished product all production 
and selling costs incurred by the company. We then allocated the total 
profit proportionately to all components of cost. We deducted only the 
profit attributable to the value added. In determining the costs 
incurred to produce the finished merchandise, we included: (1) 
Materials; (02) fabrication; and (3) general expenses including selling 
(SG&A), and interest expenses.
    We calculated ESP based on packed, delivered and ex-U.S. warehouse 
prices to unrelated customers in the United States. We made deductions 
from gross unit price, where appropriate, for foreign loading charges, 
foreign inland freight, ocean freight, marine insurance, U.S. duty, 
U.S. inland freight, U.S. handling, U.S. brokerage, credit expense and 
U.S. and Argentine indirect selling expenses, including technical 
services, inventory carrying costs, and other U.S. and Argentine 
indirect selling expenses. Finally, we added duty drawback and duties 
uncollected by reason of exportation.
    For certain sales, Siderca had not yet shipped or received payment 
for the sale. In order to calculate credit expenses, we assigned the 
average number of credit days when shipment and payment dates were 
missing, and used the date of the preliminary determination, January 
26, 1995, as the assumed payment date when only payment dates were 
missing (see the January 26, 1995, concurrence memorandum).

Foreign Market Value

    We compared the volume of home market sales of subject merchandise 
to the volume of third-country sales to determine whether there was a 
sufficient volume of sales in the home market to serve as a viable 
basis for calculating FMV, in accordance with section 773(a)(1)(B) of 
the Act. Pursuant to 19 CFR 353.48, we found that the home market was 
not viable because it represented less than five percent of the amount 
sold to third countries. We therefore based FMV on third-country sales.
    We determined, pursuant to 19 CFR 353.49(b), that the PRC is the 
most appropriate third-country market because: (1) The volume of 
Siderca's PRC sales during the POI was the largest of any third 
country; (2) the merchandise exported to the PRC is 

[[Page 6505]]
most similar or identical to the merchandise exported to the United 
States; and (3) Siderca's sales to the PRC were to an OCTG market whose 
organization and development were similar to that of the U.S. market 
based on our analysis of the sales and distribution process for those 
sales. However, petitioner has questioned the legitimacy of certain 
sales made by Siderca to the Chinese market. The Department intends to 
scrutinize these sales at verification.

Cost of Production Analysis

    Based on the petitioners' allegation that Siderca is selling OCTG 
in the PRC at prices below its COP, the Department initiated a COP 
investigation for the PRC sales of Siderca. Although this COP 
investigation was not initiated until January 13, 1995, Siderca 
submitted its cost information before this date. The Department was, 
therefore, able to use this information for purposes of the preliminary 
determination.
    In order to determine whether the third-country prices were above 
the COP, we calculated the COP based on the sum of Siderca's reported 
cost of materials, fabrication, general expenses, and packing. We 
accepted Siderca's cost data without making any adjustments for 
purposes of the preliminary determination.

Results of COP Analysis

    Under our standard practice, where we find that less than 10 
percent of a company's sales are at prices below the COP, we disregard 
any below-cost sales because that company's below-cost sales were not 
made in substantial quantities. Where we find between 10 and 90 percent 
of the company's sales were at prices below the COP, and the below-cost 
sales were made over an extended period of time, we disregard only the 
below-cost sales. Where we find that more than 90 percent of the 
company's sales were at prices below the COP, and the sales were made 
over an extended period of time, we disregard all sales for that 
product and calculate FMV based on constructed value (CV).
    In accordance with section 773(b)(1) of the Act, in order to 
determine whether below-cost sales were made over an extended period of 
time, we compare 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 three or more months of 
the POI, we do not exclude below-cost sales unless there were below-
cost sales in at least three months during the POI. When we find that 
sales of a product only occurred in one or two months, the number of 
months in which the sales occurred constituted the extended period of 
time; i.e., where sales of a product were made in only two months, the 
extended period of time was two months, where sales of a product were 
made in only one month, the extended period of time was one month (see 
the Preliminary Results and Partial Termination of Antidumping Duty 
Administrative Review: Tapered Roller Bearings, Four Inches or Less in 
Outside Diameter, and Components Thereof, From Japan (58 FR 69336, 
69338, December 10, 1993).
    Based on this preliminary analysis, none of Siderca's PRC sales 
were found to be below cost. Accordingly, we calculated FMV based on 
packed, FOB and C&F prices to unrelated customers in the PRC. 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, Slip. Op. 93-1239 (Fed. Cir., January 4, 1994), the 
Department no longer can deduct third country 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 CFR 353.56(a), as appropriate. 
Accordingly, in the present case, we deducted from FMV the following 
direct selling expenses pursuant to 19 CFR 353.56(a): foreign loading 
charges, foreign inland freight and ocean freight.
    We also made deductions from gross unit price, where appropriate, 
for credit expense, commissions and warranties. We deducted indirect 
selling expenses, including, where appropriate, technical services, 
inventory carrying costs and other indirect selling expenses, up to the 
amount of indirect selling expenses incurred on U.S. sales, in 
accordance with 19 CFR 353.56(b)(2). We deducted third-country packing 
costs and added U.S. packing costs. Finally, we added duty drawback and 
duties uncollected by reason of exportation.
    For certain sales, Siderca had not yet shipped or received payment 
for the sale. In order to calculate credit expenses, we applied the 
same methodology described above for USP.

Currency Conversion
    Because certified exchange rates for Argentina were unavailable 
from the Federal Reserve, we made currency conversions for expenses 
denominated in Argentine pesos based on the official monthly exchange 
rates in effect on the dates of the U.S. sales as published by the 
International Monetary Fund.

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) (19 U.S.C. 1673b(d)(1)) of the 
Act, we are directing the Customs Service to suspend liquidation of all 
entries of OCTG from Argentina, 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 posting of a 
bond equal to the estimated preliminary dumping margin, as shown below. 
The suspension of liquidation will remain in effect until further 
notice.

------------------------------------------------------------------------
                                                                Margin  
               Producer/manufacturer/exporter                 percentage
------------------------------------------------------------------------
Siderca S.A.I.C.............................................       0.61 
All others..................................................       0.61 
------------------------------------------------------------------------

Postponement of Final Determination

    On December 16, 1994, in accordance with 19 CFR 353.20(b), Siderca 
requested that, in the event of an affirmative determination, the 
Department postpone the final determination. We find no compelling 
reason to deny the request. Accordingly, we are postponing the date of 
the final determination until not later than 135 days after the date of 
publication of this notice.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our preliminary 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 before the later of 120 days after the 
date of this preliminary determination or 45 days after our final 
determination.

Public Comment

    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies may be submitted by any interested 
party to the Assistant Secretary for Import Administration no later 
than April 21, 1995, and rebuttal briefs no later than April 28, 1995. 
We request that parties in this case provide an executive summary of no 
more than two pages in conjunction with case briefs on the major issues 
to be addressed. Further, briefs should 

[[Page 6506]]
contain a table of authorities. Citations to Commerce determinations 
and court decisions should include the page number where cited 
information appears. In preparing the briefs, please begin each issue 
on a separate page. In accordance with 19 CFR 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 May 2, 1995, at 10:00 a.m. at the U.S. 
Department of Commerce, Room 1414, 14th Street and Constitution Avenue, 
N.W., Washington, D.C. 20230. Parties should confirm 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. Requests should 
contain: (1) The party's name, address, telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
In accordance with 19 CFR 353.38(b), oral presentations will be limited 
to the 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 CFR 353.15(a)(4).

    Dated: January 26, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-2610 Filed 2-1-95; 8:45 am]
BILLING CODE 3510-DS-P