[Federal Register Volume 60, Number 22 (Thursday, February 2, 1995)]
[Notices]
[Pages 6512-6515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2616]



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DEPARTMENT OF COMMERCE
[A-433-805]


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

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

EFFECTIVE DATE: February 2, 1995.

FOR FURTHER INFORMATION CONTACT: William Crow or Lisa Girardi, Office 
of Antidumping Investigations, Import Administration, U.S. Department 
of Commerce, 14th Street and Constitution Avenue, N.W., Washington, 
D.C. 20230; telephone (202) 482-0116 or (202) 482-4105, respectively.

Preliminary Determination

    We preliminarily determine that oil country tubular goods (OCTG) 
from Austria are 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). The estimated margins are shown in the ``Suspension 
of Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation on July 27, 1994 (59 FR 
37962, July 20, 1994), the following events have occurred.
    On August 15, 1994, the U.S. International Trade Commission (ITC) 
issued an affirmative preliminary injury determination in this 
proceeding (see ITC Investigation No. 701-TA-363).
    On August 26, 1994, the Department of Commerce (the Department) 
selected Voest-Alpine Stahlrohr Kindberg GmbH (Kindberg) as the sole 
mandatory respondent in the investigation, within the meaning of 19 CFR 
353.42(b)(1), since this respondent accounts for at least 60 percent of 
exports of OCTG from Austria during the period of investigation (see 
the August 26, 1994, memorandum from David L. Binder to Richard W. 
Moreland, for more detailed information). Also that day, the Department 
issued an antidumping questionnaire to Kindberg.
    On October 5, 1994, the Department determined that Kindberg's home 
market was not viable and determined that Russia was the appropriate 
third country market for this investigation (see the October 5, 1994, 
memorandum from David L. Binder to Richard W. Moreland). In their June 
30, 1994, petition, the petitioners alleged that Kindberg's sales to 
Russia are at prices below the cost of production (COP). In our notice 
of initiation the Department stated that, based on the allegation in 
the petition, if there were not a viable home market for Kindberg, the 
Department would commence an investigation of sales below the cost of 
production with respect to third country sales. In the above-referenced 
October 5, 1994, decision memorandum, the Department determined that 
since Russian sales were the proper basis for FMV, the Department would 
investigate whether such sales were made below COP.
    The Department received initial questionnaire responses in 
September and October 1994 and deficiency responses in November and 
December 1994. The Department issued additional deficiency letters on 
January 9 and January 23, 1995. The responses to these 

[[Page 6513]]
letters are due on January 27, 1995, after the preliminary 
determination.
    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 January 25, 1995, Kindberg requested that, in the event of an 
affirmative preliminary determination, the Department postpone the 
final determination in accordance with 19 CFR 353.20(b)(1).

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 scope 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 (HTS) 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.

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 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.
    The respondent reported sales of both identical and similar 
merchandise in Russia during the POI. 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. However, we modified the matching hierarchy in Appendix 
V so that, whenever possible, U.S. sales of OCTG tubing would be 
matched to Russian sales of OCTG tubing and U.S. sales of OCTG casing 
would be matched to Russian sales of OCTG casing, by making that the 
primary matching criterion. We also took into account Kindberg's sales 
of proprietary finishing grades, by including minimum/maximum yield 
strengths and tensile strengths as a criterion in the matching 
hierarchy. 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) the minimum/maximum yield 
strength and tensile strength, (5) end finish; (6) outside diameter, 
(7) OCTG length, (8) full-body normalization; and (9) wall thickness 
(see the January 20, 1995, memorandum from William Crow to David Binder 
for detailed discussion of the product analysis). Kindberg had 
incorrectly reported multiple costs instead of one POI cost for unique 
products. After weight-averaging the multiple costs reported for unique 
products to derive single POI costs specific to each product model, we 
made adjustments, where appropriate, for differences in the physical 
characteristics of the merchandise, in accordance with 773(a)(4)(C) of 
the Act.

Fair Value Comparisons

    To determine whether Kindberg's sales of OCTG from Austria 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 purchase price, in accordance with section 772(b) 
of the Act, because the subject merchandise was sold to an unrelated 
purchaser before importation into the United States and because 
exporter's sales price methodology was not otherwise indicated. We 
calculated USP on the basis of packed CIF Houston, duty paid prices to 
unrelated customers. In accordance with section 772(d)(2)(A) of the 
Act, we made deductions from U.S. price, where appropriate, for foreign 
brokerage charges, foreign inland freight, ocean freight, foreign 
inland and marine insurance, and U.S. duty.

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 Russia is the 
most appropriate third country market because: (1) The merchandise 
exported to Russia is most similar or identical to the merchandise 
exported to the United States; (2) the volume of Kindberg's Russian 
sales during the POI was the largest of any third country; and (3) 
Kindberg's sales to Russia were to an OCTG market whose organization 
and developement were similar to that of the U.S. market, based on our 
analysis of the sales and distribution process for those sales.
Cost of Production Analysis

    As stated above, based on the petitioners' allegation that Kindberg 
was selling OCTG in Russia at prices below its COP, the Department 
initiated a COP investigation for the Russian sales of Kindberg. In 
order to determine whether 

[[Page 6514]]
the third country prices were above Kindberg's COP, we calculated the 
COP based on the sum of Kindberg's cost of materials, fabrication, 
general expenses, and packing. Given the effect which they would have 
on Kindberg's reported COP, we did not adjust the reported standard 
costs for reported variances because Kindberg failed to explain and 
document these variances. In addition, information on the record 
contradicted the reported variances. A detailed and proprietary 
analysis of the nature of Kindberg's reporting discrepancies is 
contained in the Department's January 25, 1995, preliminary concurrence 
memorandum.

Results of COP Analysis

    Under our standard practice, where we find that less than 10 
percent of a company's sales of a given product were at prices below 
the COP, we do not disregard any below-cost sales because we determine 
that the company's below-cost sales were not made in substantial 
quantities. Where we find between 10 and 90 percent of the company's 
sales of a given product 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 of a given product 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 had been 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, for U.S. sales of certain 
products, there were adequate Russian sales made above the cost of 
production to serve as FMV. For U.S. sales of other products, there 
were not. In such cases, we matched U.S. sales to CV.

Constructed Value Comparisons

    We calculated CV based on the sum of Kindberg's cost of materials, 
fabrication, general expenses, profit and U.S. packing; we did not use 
the reported variances from standard costs reported because Kindberg 
failed to fully explain and document these variances. For general 
expenses, which includes selling and financial expenses (SG&A), we used 
the greater of the reported general expenses or the statutory minimum 
of ten percent of the cost of materials and fabrication. For profit, we 
used the greater of the weighted-average third country profit during 
the POI or the statutory minimum of eight percent of the cost of 
materials, fabrication and general expenses, in accordance with section 
773(e)(B) of the Act.
Third-Country Sales Comparisons

    Where appropriate, we calculated FMV based on delivered prices to 
unrelated customers in Russia and to unrelated international trading 
companies whose customers in Russia were known to Kindberg at the time 
of Kindberg's sale to the trading company.
    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 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 post-sale third-country 
market inland freight, inland insurance and foreign inland insurance 
from FMV as direct selling expenses under the circumstance-of-sale 
provision of 19 CFR 353.56(a).
    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 
circumstance-of-sale adjustments for direct selling expenses, which 
included credit, warranties, guarantees and commissions, in accordance 
with 19 CFR 353.56(a)(2). We deducted commissions incurred on third-
country sales and added total U.S. indirect selling expenses, capped by 
the amount of home market commissions; those total U.S. indirect 
selling expenses included U.S. inventory carrying costs, indirect 
selling expenses incurred in Austria on U.S. sales and indirect selling 
expenses incurred in the United States.

Currency Conversion

    Pursuant to 19 CFR 353.60, 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.

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 (19 U.S.C. 
1673(d)(1)), we are directing the Customs Service to suspend 
liquidation of all entries of OCTG from Austria, 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
------------------------------------------------------------------------
Voest-Alpine Stahlrohr Kindberg GmbH.......................        36.73
All others.................................................        36.73
------------------------------------------------------------------------

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.

Postponement of Final Determination

    January 25, 1995, in accordance with 19 CFR 353.20(b), Kindberg 
timely 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. 

[[Page 6515]]


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 8, 1995, and rebuttal briefs no later than March 15, 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 
22, 1995, at 1 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 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. 95-2616 Filed 2-1-95; 8:45 am]
BILLING CODE 3510-DS-P