[Federal Register Volume 60, Number 82 (Friday, April 28, 1995)]
[Notices]
[Pages 20963-20964]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10524]



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DEPARTMENT OF COMMERCE
[A-201-819]


Initiation of Antidumping Duty Investigation: Light-Walled 
Rectangular Pipe and Tube From Mexico

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

EFFECTIVE DATE: April 28, 1995.

FOR FURTHER INFORMATION CONTACT: Dorothy Tomaszewski or Erik Warga at 
(202) 482-0631 or (202) 482-0922, Office of Antidumping Investigations, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue NW., 
Washington, D.C. 20230.

INITIATION OF INVESTIGATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 1930 
(``the Act'') are references to the provisions effective January 1, 
1995, the effective date of the amendments made to the Statute by the 
Uruguay Round Agreements Act (URAA).

The Petition

    On March 31, 1995, the Department of Commerce (the Department) 
received a petition filed in proper form by Southwestern Pipe, Inc. 
(the petitioner), one of two regional producers of light-walled 
rectangular (``LWR'') pipe and tube in Texas. A supplement to the 
petition was filed on April 13, 1995.
    In accordance with section 732(b) of the Act, the petitioner 
alleges that imports of LWR pipe and tube from Mexico are being, or are 
likely to be, sold in the United States in the region of Texas at less 
than fair value within the meaning of section 731 of the Act, and that 
such imports are materially injuring, or threatening material injury 
to, the regional industry in Texas.
    Since petitioner is an interested party as defined under section 
771(9)(C) of the Act, petitioner has standing to file a petition for 
the imposition of antidumping duties.
    On April 17, 1995, a Mexican producer of subject merchandise named 
in the petition, Hylsa S.A. de C.V. (``HYLSA''), submitted a request 
that the Department poll all domestic producers of subject merchandise 
in the United States. According to HYLSA, the relevant industry for 
purposes of determining petitioner's standing should be defined as the 
national industry producing the subject merchandise (see following 
Section for details on this issue).

Determination of Industry Support for the Petition

    The petition contains an adequate allegation that Texas is a 
regional industry for the domestic like product; this allegation 
includes data on both factors required by section 771(4)(C) of the Act. 
Under section 732(c)(4)(C), if the petitioner properly alleges that the 
industry is a regional industry, the Department shall determine whether 
the petition has been filed by or on behalf of the industry by applying 
the requirements set forth in the Act on the basis of the production in 
the region. Therefore, the Department has evaluated industry support 
for the petition based upon production in the region.
    Section 732(c)(4)(A) of the Act requires that the Department's 
industry support determination, which is to be made before the 
initiation of the investigation, be based on whether a minimum 
percentage of the relevant industry supports the petition. A petition 
meets the minimum requirements if (1) domestic producers or workers who 
support the petition account for at least 25 percent of the total 
production of the domestic like product; and (2) those domestic 
producers or workers expressing support account for more than 50 
percent of the production of the domestic like product produced by that 
portion of the industry expressing support for, or opposition to, the 
petition.
    The petitioner, one of two known regional producers of the domestic 
like product, accounts for more than 50 percent of the total production 
of the domestic like product in the region as defined in the petition. 
The other known producer in the region has informed the Department that 
it supports this antidumping petition. Accordingly, the Department 
determines that this petition is supported by the regional industry in 
Texas.

Scope of the Investigation

    The merchandise subject to this investigation is certain light-
walled welded non-alloy steel pipes and tubes, of rectangular 
(including square) cross section, having a wall thickness of less than 
4mm (``LWR''), regardless of specification (ASTM, proprietary, or 
other). These LWR pipes and tubes are supplied with rectangular cross 
sections ranging from 0.375 x 0.625 inch to 2 x 6 inches or with square 
sections ranging from 0.375 to 4 inches.
    The LWR pipe and tube that are the subject of this petition are 
currently classifiable in the Harmonized Tariff Schedule of the United 
States (HTSUS) heading 7306.60.50.00. Although the HTSUS subheading is 
provided for convenience and customs purposes, our written description 
of the scope of this investigation is dispositive.

Export Price and Normal Value

    Export price was based on fourth quarter 1994 (1) average c.i.f. 
unit value of U.S. imports from Mexico, and (2) prices from a 
salesman's call sheets recording sales lost to Mexican competitors. The 
unit values based on U.S. imports from Mexico were reduced for foreign 
inland freight to derive ex-factory prices. The prices based on 
``lost'' sales were reduced for the following costs: exporter's mark-up 
costs, broker commissions, U.S. import [[Page 20964]] duties, foreign 
inland freight and U.S. freight.
    The home market price was based on tax-inclusive price quotations 
from Mexican producers to a home market customer in December 1994. The 
petitioner adjusted the FOB warehouse prices for Mexico's value added 
tax.
    The petitioner based the normal value on constructed value (``CV'') 
in accordance with section 773(a)(4) because it asserts that the 
Mexican home market price provided in the petition represented sales 
that were made below the cost of production (``COP'') and, therefore, 
was not an appropriate basis for calculating normal value.
    The components of COP are cost of manufacture (``COM'') and 
selling, general and administrative expenses (``SG&A''). The petitioner 
calculated COM based on its own production experience, adjusted for 
known differences between costs incurred to produce LWR pipe and tube 
in the United States and production costs incurred for the merchandise 
in Mexico. To calculate SG&A expenses, including interest expense, the 
petitioner relied on data from the 1993 financial statement of a 
Mexican pipe and tube producer not named as a respondent in the 
petition. Petitioner maintained in its allegation that Mexican 
producers named as respondents in the petition did not publish 
financial statements and that the financial statements used to 
calculate SG&A expense provided the only available data for this 
expense.
    The allegation that the Mexican producers are selling the foreign 
like product in their home market at prices below COP is based upon a 
comparison of the adjusted home market price with the calculated COP. 
Based on this information, we find reasonable grounds to believe or 
suspect that sales of the foreign like product were made at prices 
below COP in accordance with section 773(b)(2)(A)(i) of the Act. 
Accordingly, the Department will initiate a cost of production 
investigation.
    Therefore, for the purposes of this initiation, we are accepting 
the petitioner's estimate of CV, as adjusted by the Department for 
profit, as the appropriate basis for Mexican normal value. The 
petitioner based CV on its COP methodology, described above, adding an 
amount for profit to arrive at a total CV. Rather than use the Mexican 
pipe and tube producer's 1993 financial statements to compute profit, 
the petitioner calculated profit on the basis of public financial data 
for a Mexican steel producer. It did so because the Mexican pipe 
producer had incurred a loss in that year. Consistent with section 
773(e) of the Act, the Department revised the profit figure included in 
the CV to be zero, the actual profit for the one Mexican company whose 
operations were limited to the production of the foreign-like product.
    Based on comparisons of export prices to CV, the recalculated 
dumping margins range from 14.08 to 23.38 percent.

Fair Value Comparisons

    Based on the data provided by the petitioner, there is reason to 
believe that imports of LWR pipe and tube from Mexico are being, or 
likely to be, sold at less than fair value. If it becomes necessary at 
a later date to consider the petition as a source of facts available 
under section 776 of the Act, we may further review the calculations.

Initiation of Investigation

    We have examined the petition on LWR pipe and tube and have found 
that it meets the requirements of section 732 of the Act, including the 
requirements concerning allegations of material injury or threat of 
material injury to a regional industry in a domestic-like product by 
reason of the complained-of imports, allegedly sold at less than fair 
value. Therefore, we are initiating an antidumping duty investigation 
to determine whether imports of LWR pipe and tube from Mexico are 
being, or are likely to be, sold at less than fair value on a regional 
basis. Unless extended, we will make our preliminary determination by 
September 7, 1995.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, copies of the 
public version of the petition have been provided to the 
representatives of the government of Mexico. We will attempt to provide 
copies of the public version of the petition to all the exporters named 
in the petition.

ITC Notification

    We have notified the International Trade Commission (ITC) of our 
initiation, as required by section 732(d) of the Act.

Preliminary Determination by the ITC

    The ITC will determine by May 15, 1995, whether there is a 
reasonable indication that imports of LWR pipe and tube from Mexico are 
causing material injury, or threaten to cause material injury to the 
regional industry. A negative ITC determination will result in the 
investigation being terminated; otherwise, this investigation will 
proceed according to statutory and regulatory time limits.
    This notice is published pursuant to section 732(c)(2) of the Act.

    Dated: April 20, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-10524 Filed 4-27-95; 8:45 am]
BILLING CODE 3510-DS-M