[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