[Federal Register Volume 60, Number 22 (Thursday, February 2, 1995)]
[Notices]
[Pages 6510-6512]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2615]
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DEPARTMENT OF COMMERCE
[A-201-817]
Preliminary Determination of Sales at Not Less Than Fair Value:
Oil Country Tubular Goods From Mexico
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: February 2, 1995.
FOR FURTHER INFORMATION CONTACT: Jennifer Stagner or John Beck, Office
of Antidumping Investigations, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
1673 and (202) 482-3464, respectively.
Preliminary Determination
The Department preliminarily determines that oil country tubular
goods (OCTG) from Mexico are not being 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). We have calculated a preliminary margin
of zero percent for Mexican OCTG sold in the United States during the
period of investigation.
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, based on statements from the petitioner and
information from Metal Bulletin Books, Ltd., Iron and Steel Works of
the World (10th ed. 1991), the Department issued a full antidumping
questionnaire to Tubos de Acero de Mexico, S.A. (TAMSA). Additionally,
the Department issued antidumping surveys to three other potential
respondents: Tubacero S.A. de C.V. and Hylsa, S.A. de C.V. on August
26, 1994; and, Villacero Tuberia Nacional, S.A. de C.V. on September 1,
1994.
On September 27, 1994, the Department determined that TAMSA would
be the sole mandatory respondent (see the September 27, 1994,
memorandum from David L. Binder to Richard W. Moreland). TAMSA accounts
for at least 60 percent of exports of OCTG from Mexico during the
period of investigation
The Department received initial questionnaire responses in
September, October, and November 1994, and deficiency responses in
November and December 1994.
On November 3, 1994, the Department determined that TAMSA'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 Saudi Arabia was the appropriate third
country market for this investigation (see the November 3, 1994,
memorandum from David L. Binder to Richard W. Moreland). This decision
was predicated on the 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, North Star Steel Ohio (the petitioner) 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 November 29, 1994, the petitioner submitted an allegation of
sales at prices below the cost of production (COP) based on TAMSA's
sales to Saudi Arabia. The Department initiated a COP investigation on
December 22, 1994 (see the December 22, 1994, memorandum from Gary
Taverman to Barbara R. Stafford). On December 28, 1994, the Department
sent a section D questionnaire to the respondent. However, due to time
constraints, we have not been able to use the section D questionnaire
response in our preliminary determination.
On December 16, 1994, in accordance with 19 CFR 353.20(b), TAMSA
requested that, in the event of an affirmative preliminary
determination by the Department, the Department postpone the final
determination. However, because this preliminary determination is
negative, the criteria for a postponement of the final determination
under 19 CFR 353.20(b)(1) have not been met. Accordingly, the final
determination has not been postponed.
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 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 are 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.
[[Page 6511]]
Although the HTSUS subheadings are provided for convenience and
customs purposes, our written description of the scope of these
investigations is dispositive.
Period of Investigation
The period of investigation (POI) is January 1, 1994, through June
30, 1994.
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.
Such or Similar Comparisons
We have determined for purposes of the preliminary determination
that 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: (1) Seamless or welded; (2) grade; (3) end
finish; (4) outside diameter; (5) length; (6) normalization; and (7)
wall thickness, as listed in Appendix V of the Department's antidumping
questionnaire. 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 TAMSA's sales of OCTG from Mexico 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 for some U.S. sales on purchase price, in accordance
with section 772(b) of the Act, because the subject merchandise was
sold to unrelated purchasers in the United States prior to importation
and there was no other indication that exporter's sales price (ESP)
methodology should be used. However, where certain sales to the first
unrelated purchaser took place after importation into the United
States, we based USP on ESP, in accordance with section 772(c) of the
Act.
We have preliminarily determined that the sales of further
manufactured merchandise classified by respondent as purchase price
sales were, instead, ESP sales because: (1) The further manufacturing
of the OCTG was performed by a related U.S. entity; and (2) the
merchandise was stored in TAMSA's related U.S. entity's stockyard prior
to further manufacturing. It is the Department's practice to treat
sales made prior to importation that undergo further manufacturing in
the United States as ESP sales when the sales are handled by a related
U.S. entity (see Final Determination of Sales at Less Than Fair Value:
New Minivans from Japan (57 FR 21937, May 26, 1992)).
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 TAMSA'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 costs. We deducted only the
profit attributable to the value added. In determining the costs
incurred to produce the finished merchandise, we included: (1)
Materials; (2) fabrication; and (3) general expenses including selling
(SG&A), and interest expense, in accordance with 19 CFR 353.41(e)(3).
We calculated purchase price and ESP based on FOB prices. For
purchase price and ESP sales, we made deductions from gross unit price,
where appropriate for foreign brokerage, foreign inland freight, marine
insurance, ocean freight, U.S. duty, U.S. inland freight, U.S.
brokerage, and load-in/load-out expenses, in accordance with section
772(d) of the Act.
For ESP sales only, we deducted credit expenses, quality inspection
costs, indirect selling expenses, inventory carrying costs, and product
liability premiums, in accordance with section 772(e) of the Act.
We made no adjustments for packing because the respondent reported
that the OCTG was not packed before shipment.
For certain sales, TAMSA 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 19 CFR 353.48(a). 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 Saudi Arabia is
the most appropriate third country market because: (1) The volume of
TAMSA's Saudi Arabian sales during the POI was the largest of any third
country; (2) the merchandise exported to Saudi Arabia is most similar
or identical to the merchandise exported to the United States; and (3)
the Saudi Arabian market, in terms of organization and development, is
similar to that of the U.S. market. However, the petitioner has
questioned the legitimacy of certain sales made by TAMSA to the Saudi
Arabian market. The Department intends to scrutinize these sales at
verification.
We calculated FMV based on C&F prices to unrelated customers in
Saudi Arabia. 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):
Post-sale foreign brokerage, foreign inland freight, and ocean freight
expenses.
For purchase price comparisons, pursuant to section 773(a)(4)(B) of
the Act and 19 CFR 353.56(a)(2), we made circumstance-of-sale
adjustments for direct selling expenses, which included credit and
commissions, in accordance with 19 CFR 353.56(a)(2). We deducted
commissions incurred on third country sales and added U.S. indirect
selling expenses, capped by the amount of third country commissions.
Total U.S. indirect selling expenses included U.S.
[[Page 6512]]
inventory carrying costs, indirect selling expenses incurred in Mexico
on U.S. sales and expenses incurred in the United States, quality
inspection costs, and product liability premiums.
For ESP comparisons, we made further deductions for credit expense
and commissions. We deducted third country indirect selling expenses,
capped by the amount of U.S. indirect selling expenses, in accordance
with 19 CFR 353.56(b).
We made no adjustments for packing because the respondent reported
that the OCTG was not packed before shipment.
For certain sales, TAMSA 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 Mexico were unavailable from
the Federal Reserve, we made currency conversions for expenses
denominated in Mexican 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.
Preliminary Margin Calculation
Based on the calculation methodology outlined above, we
preliminarily calculated the following margins:
------------------------------------------------------------------------
Margin
Manufacturer/producer/exporter Percentage
------------------------------------------------------------------------
Tubos de Acero de Mexico, S.A.............................. 00.00
All others................................................. 00.00
------------------------------------------------------------------------
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, a 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 March 6, 1995, and rebuttal briefs no later than March 13, 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 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 March
20, 1995, at 10:00 a.m. at the U.S. Department of Commerce, Room 1851,
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. 95-2615 Filed 2-1-95; 8:45 am]
BILLING CODE 3510-DS-P