[Federal Register Volume 61, Number 94 (Tuesday, May 14, 1996)]
[Notices]
[Pages 24274-24283]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11941]
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DEPARTMENT OF COMMERCE
[A-485-804]
Notice of Final Determination of Sales at Less Than Fair Value:
Circular Welded Non-Alloy Steel Pipe From Romania
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: May 14, 1996.
FOR FURTHER INFORMATION CONTACT: Magd Zalok 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)
482-4162 or (202) 482-3464, respectively.
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 Act by the Uruguay
Rounds Agreements Act (URAA). In addition, unless otherwise indicated,
all citations to the Department's regulations are to the current
regulations, as amended by the interim regulations published in the
Federal Register on May 11, 1995 (60 FR 25130).
Final Determination
As explained in the memoranda from the Assistant Secretary for
Import Administration dated November 22, 1995, and January 11, 1996,
the Department of Commerce (the Department) has exercised its
discretion to toll all deadlines for the duration of the partial
shutdowns of the Federal Government from November 15 through November
21, 1995, and December 16, 1995, through January 6, 1996. Thus, the
deadline for the final determination in this investigation has been
extended by 28 days, i.e., one day for each full or partial day the
Department was closed. As such, the deadline for this final
determination is no later than May 6, 1996.
We determine that circular welded non-alloy steel pipe (pipe) from
Romania is being sold in the United States at less than fair value
(LTFV), as provided in section 735 of the Act. The estimated margins
are shown in the ``Suspension of Liquidation'' section of this notice.
Case History
Since the preliminary determination of November 21, 1995 (60 FR
61529, November 30, 1995), the following events have occurred:
[[Page 24275]]
In February 23, 1996, the respondents, Tepro S.A. (Tepro) (the
producer of the subject merchandise), Metagrimex S.A. (Metagrimex),
Matalexportimport S.A. (Metalexportimport) and Metanef S.A. (Metanef)
submitted additional publicly available published information (PAPI)
pertaining to surrogate values. On March 1, 1996, the petitioners \1\
commented on the respondents' PAPI.
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\1\ Allied Tube & Conduit Corporation, Sawhill Tubular
Division--Armco, Inc., LTV Steel Tubular Products Company, Sharon
Tube Company, Laclede Steel Company, Wheatland Tube Company and
Century Tube Corporation.
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In March 1996, we verified the questionnaire responses to Tepro,
Metagrimex and Metalexportimport. The third exporter, Metanef, did not
permit the Department to verify its questionnaire responses.
The petitioners and respondents submitted case and rebuttal briefs
on April 12 and 17, 1996, respectively. Additional comments were
requested by the Department and submitted by the petitioners and
respondents on April 19 and 23, 1996, respectively.
Scope of Investigation
The following scope language reflects certain modifications from
the notice of the preliminary determination. We clarified the paragraph
beginning ``The scope specifically includes * * *'' for use and
presumed use language.
For purpose of this investigation, circular welded non-alloy steel
pipes (standard pipes) are all pipes and tubes, of circular cross-
section, not more than 406.4 mm (16 inches) in outside diameter,
regardless of wall thickness, surface finish (black, galvanized, or
painted), end finish (plain end, bevelled end, threaded, or threaded
and coupled), or industry specification (ASTM, proprietary, or other)
used in standard or structural pipe applications.
The scope specifically includes, but is not limited to, all pipe
produced to the ASTM A-53, ASTM A-120, ASTM A-135, ASTM A-795, and BS-
1387 specifications, regardless of use. It also includes any pipe
multiple-stencilled or multiple-certified to one of the above-listed
standard or structural pipe specifications and to any other
specification, if used in a standard or structural pipe application.
Pipe which meets the above physical parameters and which is produced to
proprietary specifications, the API-5L, the API-5L X-42, or to any
other non-listed specification is included within the scope of this
investigation if used in a standard or structural pipe applicaion,
regardless of the Harmonized Tariff Schedule of the United States
(HTSUS) category into which it was classified. If the pipe does not
meet any of the above identified ASTM or BS specifications (i.e., ASTM
A-53, ASTM A-120, ASTM A-135, ASTM A-795, and BS-1387) or is multiple-
Stencilled or multiple-certified to one of these specifications and to
any other specification, although it is within the identified physical
parameters described in the second paragraph of this section, our
presumption is that it is not used in a standard pipe application.
Standard pipe uses include the low-pressure conveyance of water,
steam, natural gas, air, and other liquids and gases in plumbing and
heating systems, air conditioning units, automatic sprinkler systems,
and other related uses. Standard pipe may carry liquids at elevated
temperatures but may not be subject to the application of external
heat. Standard pipe uses also include load-bearing applications in
construction and residential and industrial fence systems. Standard
pipe uses also include shells for the production of finished conduit
and pipe used for the production of scaffolding.
Specifically excluded from this investigation are mechanical
tubing, tube and pipe hollows for redrawing, the finished electrical
conduit if such products are not certified to ASTM A-53, ASTM A-120,
ASTM A-135, ASTM A-795, and BS-1387 specifications and are not used in
standard pipe applications. Additionally, pipe meeting the
specifications for oil country tubular goods is not covered by the
scope of this investigation, unless also certified to a listed standard
pipe specification or used in a standard pipe application.
The merchandise under investigation is currently classifiable under
items 7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 7306.30.50.40,
7306.30.50.55, 7306.30.50.85, and 7306.30.50.90 of the HTSUS. Although
the HTSUS subheadings are provided for convenience and customs
purposes, our written description of the scope of this investigation is
dispositive.
Regarding implementation of the use provision of the scope of this
investigation, and any order which may be issued in this investigation,
we are well aware of the difficulty and burden associated with such
certifications. Therefore, in order to maintain the effectiveness of
any order that may be issued in light of actual substitution in the
future (which the use criterion is meant to achieve), yet administer
certification procedures in the least problematic manner, we have
developed an approach which simplifies these procedures to the greatest
extent possible.
First, we will not require use certification until such time as
petitioner or other interested parties provide the Department with a
reasonable basis to believe or suspect that substitution is occurring.
Second, we will require use certification only for the product(s) (or
specification(s)) for which evidence is provided that substitution is
occurring. For example, if, based on evidence provided by petitioner,
the Department finds a reasonable basis to believe or suspect that pipe
produced to the API-5L specification is being used as standard pipe, we
will require use certifications for imports of API-5L specification
pipe. Third, normally we will require only the importer of record to
certify to the use of the imported merchandise. If it later proves
necessary for adequate implementation, we may also require producers
who export such products to the United States to provide such
certification on invoices accompanying shipments to the United States.
Period of Investigation
The period of investigation (POI) is October 1, 1994, through March
31, 1995.
Facts Available
Pursuant to section 776 of the Act, the Department shall use the
facts otherwise available if necessary information is not available on
the record, or if an interested party or any other person withholds
requested information, fails to provide such information by the
deadlines for submission of the information or in the form and manner
requested, significantly impedes a proceeding, or provides such
information but the information cannot be verified.
In addition, section 776(b) of the Act provides that, if the
Department finds that an interested party ``has failed to cooperate by
not acting to the best of its ability to comply with a request for
information,'' the Department may use information that is adverse to
the interests of that party as the facts otherwise available. The
statute also provides that such an adverse inference may be based on
secondary information, including information drawn from the petition.
In this case, Metanef refused the verification of its questionnaire
responses. Therefore, since reliable information is not on the record,
and Metanef has not acted to the best of its ability, the application
of section 776(b) is warranted. As a result, we are basing adverse
facts available for the Romania-wide rate, which covers Metanef, on the
rate calculated for Metagrimex, which is
[[Page 24276]]
highest margin calculated and is higher than the rate contained in the
petition.\2\
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\2\ Because Metanef refused to have its questionnaire response
verified, it is ineligible for consideration for a separate dumping
margin. Accordingly, because Metanef is the only other exporter, the
country-wide rate is being based on Metanef's rate (which is based
on adverse facts available).
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Separate Rates
As stated in our preliminary determination, Romania is a non-market
economy (NME) country. To establish whether a firm is sufficiently
independent from government control to be entitled to a separate rate,
the Department analyzes each exporting entity under a test articulated
in the Final Determination of Sales at Less Than Fair Value: Sparklers
from the People's Republic of China (56 FR 20588, May 6, 1991) and
amplified in the Final Determination of Sales at Less Than Fair Value:
Silicon Carbide from the People's Republic of China (59 FR 22585,
22586, May 2, 1994) (Silicon Carbide). Under the separate rates
criteria, the Department assigns separate cash deposit rates in
nonmarket economy cases only if a respondent demonstrates the absence
of both de jure and de facto governmental control over export
activities.
The Department typically considers three factors which support,
though do not require, a finding of de jure absence of central control.
These factors include: (1) An absence of restrictive stipulations
associated with an individual exporter's business and export licenses;
(2) any legislative enactments decentralizing control of companies; or
(3) any other formal measures by the government decentralizing control
of companies. The Department typically considers four factors in
evaluating whether each respondent is subject to de facto governmental
control of its export functions: (1) Whether the export prices are set
by or subject to the approval of a governmental authority; (2) whether
the respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses (see Silicon Carbide).
1. Absence of De Jure Control
The two cooperating exporters of the subject merchandise in this
investigation, Metagrimex and Metalexportimport, have provided their
business licenses issued by the Romanian Chamber of Commerce and
Industry. These exporters have stated that these licenses do not
require renewal, do not impose any limitations on or create any
entitlements for their operations, and can only be revoked by the
issuing authorities if the requirements of the license are not
fulfilled. The exporters also provided copies of several trade laws
which they claim provide for the elimination of the state monopoly in
the economy and foreign trade. During the verification of Metagrimex
and Metalexportimport, we examined these exporters' business licenses,
as well as the relevant trade laws. These documents supported the
absence of de jure control claimed by these two exporters.
2. Absence of De Facto Control
These two exporters also asserted absence of governmental control
based on all the de facto criteria. Specifically, they stated that: (1)
They establish their own export prices; (2) they negotiate contracts
without guidance from any governmental entities or organizations; and
(3) there are no restrictions on the use of their export revenues and
they make independent decisions regarding disposition of profits or
financing of losses. During our verification of these two companies, we
examined sales documentation, including correspondence and contracts
with the customer, as well as bank accounts and profit allocation.
These documents confirmed the accuracy of the above-referenced
statements.
Concerning the fourth criterion that the respondent in question has
autonomy from the government in making decisions regarding the
selection of management, both Metagrimex and Metalexportimport stated
that they had this autonomy. During our verification of Metagrimex, we
examined the membership of its Council of Administration, which selects
the management and is similar to a board of directors. Our examination
confirmed that this council was independent of the Romanian government
or agencies thereof, and therefore, Metagrimex was able to make its own
management personnel decisions.
During our verification of Metalexportimport, we also examined the
membership of its Council of Administration, which also selects the
management and is similar to a board of directors. We confirmed that
this council, which is made up of five members, only included one
member appointed by the state ownership fund (SOF) and one member
appointed by the private ownership fund (POF). The SOF and the POF were
created by the Romanian government to help privatize Romanian
companies. We thus confirmed that this council was independent of the
Romanian government or agencies thereof, and therefore,
Metalexportimport was able to make its own management personnel
decisions.
Consequently, we determine that the information provided by
Metalexportimport and Metagrimex supports our finding that there is de
jure and de facto absence of governmental control of export functions.
Therefore, these two companies have met the criteria for the
application of separate rates.
Respondent Metanef provided information regarding separate rates in
this investigation. However, because it refused verification, we could
not verify its separate rate claim.
Fair Value Comparisons
To determine whether sales of pipe from Romania to the United
States by Metagrimex and Metalexportimport were made at less than fair
value, we compared Export Price (EP) to the Normal Value (NV), as
specified in the ``Export Price'' and ``Normal Value'' sections of this
notice.
Export Price
For both exporters, we calculated EP in accordance with section
772(a) of the Act, because the subject merchandise was sold directly to
the first unaffiliated purchaser in the United States prior to
importation and because constructed export price under section 772(b)
is not otherwise warranted on the basis of the facts of this
investigation.
For Metagrimex and Metalexportimport, we calculated EP based on
packed, FOB Romania port prices to unaffiliated purchasers in the
United States, as appropriate, based on the same methodologies
described in the preliminary determination.
Normal Value
As stated in our preliminary determination, when the Department is
investigating imports from a NME, section 773(c)(1) of the Act directs
us to base NV on the NME producer's factors of production, valued in a
comparable market economy that is a significant producer of comparable
merchandise. Therefore, we calculated NV based on factors of production
reported by Tepro, the sole producer of the subject merchandise. We
made the following adjustments to the factors reported by Tepro based
on our findings at verification.
[[Page 24277]]
First, we used corrected wall thicknesses in matching steel coil to
its surrogate value (see comment #5 in the ``Interested Party
Comments'' section of this notice). Second, we adjusted lacquer,
electricity, and thread protector factors for corrections found at
verification. Third, since Tepro was unable to adequately support its
claimed labor figures for pipe produced on production line 220, we
disregarded the amount reported and used, as facts available, the
highest verified direct labor input for the size of pipe on another
verified line closest to the sizes produced on line 220 (as discussed
below, indirect labor is included in the value for overhead) (see
comment #9 in the ``Interested Party Comments'' section of this
notice).
Valuation of Factors
For the final determination, we have calculated NV using Colombian
and Thai prices to value Tepro's factors of production. We have
multiplied the reported factor quantities by these values. Where we had
information for Columbia, we used it as our primary surrogate. We have
used data from Columbia because Colombia is the closest country to
Romania in terms of economic development that is also a significant
producer of the subject merchandise. Where we had no information for
Colombia, we used Thailand as our secondary surrogate since Thailand is
within the same per-capita income band of countries as Romania and
Colombia and it is also a significant producer of the subject
merchandise (see Comment #1 in the ``Interested Party Comments''
section of this notice). All values were adjusted for inflation, where
appropriate.
To value hot rolled steel coil, the major material input, we again
used the steel price list for sheet and coil sold to industrial users
in Colombia published by Acerias Paz del Rio S.A., a Colombian producer
of steel sheet and coil. To value saleable steel scrap, because we
could find no Colombian PAPI, we used the percentage difference between
steel coil and steel scrap from the 1994 Thai import statistics,
contained in the Foreign Trade Statistics of Thailand, published by the
Thai Customs Department (1994 Thai Import Statistics). For lacquer and
marking paint, we used the basket category data for paints and
varnishes for both of these factors reported in the 1994 Colombian
import statistics, provided by the Instituto Colombiano de Comercia
Exterior (1994 Colombian Import Statistics). For zinc, hydrochloric
acid, zinc chloride and ammonium chloride, we used values in the 1994
Colombian Import Statistics. For saleable zinc scrap, because we could
find no Colombian PAPI, we used the values in the 1994 Thailand Import
Statistics.
To value unskilled and packing labor, we used the 1994 wage rate
for the manufacturing sector published in the Economic Guide for
Investors by the Colombian government. Since we cannot determine if the
labor values in this case were for skilled or unskilled workers, we are
following the method established in the Final Determination of Sales at
Less than Fair Value: Polyvinyl Alcohol from the PRC (61 FR 14057,
March 29, 1996). In that investigation, we found no basis to assume the
skill level of the surrogate value, nor did we have agreement among the
parties regarding the skill level. Thus, we applied a single wage rate
to all reported labor factors. Since we have the same situation here,
we applied a single wage rate to unskilled and packing labor factors.
Further, because this value was exclusive of benefits, we increased the
amount reported to include benefits. As explained above, the value for
overhead includes an amount for indirect labor. Thus, we did not value
the factor for indirect labor.
To value electricity, we used electricity rates for Colombian
industrial users published quarterly by the Latin America Energy
Organization (Organizacion Latinoamericana de Energia, or OLADE). For
methane, because we were unable to find a Colombian value, we used the
value of natural gas because, according to the petitioners, it has
substantially the same end use as methane. We based the surrogate value
for natural gas on 1992 Colombian prices shown in a 1993 OLADE
publication.
For the packing materials of cold rolled strip, PVC foil and thread
protectors, because we could find no Colombian PAPI, we used the values
in the 1994 Thailand Import Statistics.
We were unable to locate Colombian PAPI for overhead, selling,
general and administrative (SG&A) expenses, and profit. Therefore, we
used the values from the Final Results of the 1992-93 Antidumping Duty
Administrative Review of Certain Circular Welded Carbon Steel Pipes and
Tubes from Thailand (61 FR 1328, January 19, 1996) (1992-93
Administrative Review). The rate for overhead included an amount for
indirect labor. Overhead was calculated as a factor of direct labor.
SG&A expenses were calculated as a percentage of the sum of materials,
labor and overhead.
We were also unable to locate Colombian PAPI for rail freight and
foreign brokerage and handling. Thus, for rail freight, we used the
rate contained in the Final Determination of Sales at Less Than Fair
Value: Circular Welded Non-Alloy Steel Pipe from Romania (57 FR 42957,
September 17, 1992) (Steel Pipe I). This information was obtained from
The Investment Environment in Thailand for 1991. For foreign brokerage
and handling, we used the rate contained in the public version of a
questionnaire response submitted in the 1994 antidumping duty
investigation of Carbon Steel Butt Weld Pipe Fittings from Thailand (60
FR 10552, February 27, 1995). We used the rate contained in the 1994
investigation because this figure was more recent than the foreign
brokerage and handling rate contained in Steel Pipe I, which was based
on an earlier Carbon Steel Butt Weld Pipe Fittings from Thailand
investigation. For a complete analysis of surrogate values used in the
calculation of NV, see the May 3, 1996, memorandum from the Team to
Gary Taverman, Acting Director, Office of Antidumping Investigations.
Romania-Wide Rate
As in all NME cases, the Department implements a policy whereby
there is a rebuttable presumption that all exporters or producers
comprise a single exporter under common government control, the ``NME
entity.'' The Department assigns a single NME rate to the NME entity,
unless an exporter can demonstrate eligibility for a separate rate. As
stated previously, Metanef has not established entitlement to a
separate rate because of its refusal to have its questionnaire response
verified. Therefore, it becomes the Romania-wide rate (for a further
discussion of the NME rate, see the Final Determination of Sales at
Less than Fair Value: Bicycles from the People's Republic of China (61
FR 19026, April 30, 1996).
Verification
As provided in section 782(i) of the Act, we verified all
information submitted (except that of Metanef) used in our final
determination. We used standard verification procedures, including
examination of relevant accounting and production records and original
source documents.
Interested Party Comments
Comment 1: Selection of Surrogate Countries
The petitioners state that any surrogate country used in this
investigation should be a significant
[[Page 24278]]
producer of comparable merchandise. Since Colombia, Thailand and the
United States are the only countries on the record which have been
shown to be significant producers of the subject merchandise, the
petitioners state that only surrogate data from these countries can be
used in the final determination.
DOC Position
We agree with the petitioners. However, for the final
determination, we have only used values from Colombia and Thailand
because values were found for these two countries, making the use of
U.S. values unnecessary.
Comment 2: Proposed Use of the Acerias Price List to Value Steel Coil
The respondents argue that the Department should not use the price
list of Acerias Paz del Rio, S.A. (Acerias) to value steel in the final
determination. The petitioners argue that respondents' assertions on
this matter have, for the part, been rejected by the Department in its
preliminary determination and that the Department should continue to
use the price list to value steel in the final determination. The
arguments presented by both sides have been classified into five main
areas: (1) Whether the prices on the price list were aberrational; (2)
whether the price list represents actual prices; (3) whether the
Department's use of this list in the preliminary determination was
predictable and fair; (4) whether the problems of Acerias have an
impact on its prices; and (5) whether the Department's past practice
allows for the use of the price list.
Regarding whether the price list was aberrational, the respondents
argue that the Acerias prices are aberrational and conflict with the
other values on the record and are, therefore, not reliable. The
petitioners counter that the Acerias prices are not aberrational and
fall squarely in the range of the prices: (1) Provided by the
respondents when one increases these prices for the increase in world
steel prices; and (2) from 12 countries provided by the petitioners.
Both parties then argue about whether the price list represents
actual prices. The respondents argue that the Acerias price list does
not represent actual prices. They then contend the following. First,
the Department relied upon a vague affidavit provided by the
petitioners to establish steel prices in the preliminary determination.
In contract, the affidavit, provided by respondents shows that the
price list does not represents actual prices. Second, Colombia pipe
producers use imported steel. Therefore, the price list has no
probative value. Third the petitioners have previously argued that a
price list submitted by the respondents was inconsequential since ``it
is widely known that virtually all steel purchasers receive substantial
discounts from price lists.''
The petitioners counter that the Acerias price is publicly
available published information which represents actual prices paid for
steel coil in Colombia. The petitioners argue the following to support
this contention. First, petitioners' affidavit was properly sworn and
consularized and was not vague in any way. Second, the two affidavits
submitted by the respondents to discredit the price list rely on broad
generalizations and misdirection and are not proper affidavits. Third,
the petitioner' previous statements regarding the applicability of
steel price lists related to U.S. lists and therefore are of no
relevance to the Acerias price list.
Both parties then argue whether the Department's use of this list
in this investigation was predictable and fair. The respondents assert
that the use of this price list violates the Department's own precepts
that NME cases be accurate, fair and predictable. To support their
assertion, they argue the following. First, during the last four years,
the Department has developed a PAPI hierarchy that prefers import
statistics. Second, in this case, the Romanians could not have
anticipated that Colombia would be selected as the surrogate country.
However, even if they would have relied on Colombia import statistics
or world import statistics to help them predict probable surrogate
values and establish a price structure for the U.S. market, not a price
list dated seven months after the POI. Third, even the Departments
Notice of Proposed Rulemaking and Request for Public Comments (16 FR
7308, February 27, 1996) states that prices observed in international
markets may better serve the Department's goals of accuracy and
fairness.
The petitioners counter that the selection of Colombia as a
surrogate country was very predictable. First, the Department's policy
has never required that the surrogate be a major exporter in the
production of comparable merchandise. Second, the fact that the
surrogate countries for Romania have changed over time is attributable
to economic changes in Romania. Third, there is no fixed policy
preference for import statistics over all other sources in NME cases.
Fourth, the Department has been willing to use world prices only where
the surrogate value that would have been selected under the traditional
method is aberrational, which is not the case here.
Both parties then discussed whether the problems of Acerias have an
impact on its prices. The respondents argue the following. First,
Acerias is currently in bankruptcy and continues to suffer the effects
of strikes which took place in 1994. The Department in a previous case
refused to use the annual report of an Indian bearing producer for
overhead because it too, was in bankruptcy (Final Results of
Antidumping Duty Administrative Review: Tapered Roller Bearings and
Parts Thereof from the Peoples Republic of China (Tapered Roller
Bearings) (56 FR 67590, December 31, 1991)). Second, Acerias is not
comparable to other world steel producers because it is not
representative of modern steel companies.
The petitioners counter that the Acerias price list is not
unreliable. unrepresentative or distortive. To support their position,
the petitioners argue the following. First, respondents have failed to
demonstrate any connection between Acerias financial difficulties and
the notion that this caused Acerias to charge higher prices for its
products. If any connection between financial problems and prices has
been established, the record shows that Acerias had to charge lower
prices for its products than it normally would have. Second,
respondents' claim that Acerias' production is based on old technology
is inconsequential because it does not refer to whether the technology
relates to the production of hot-rolled coil and does not mention the
fact that Acerias has made improvements to its infrastructure in the
preceding years.
Finally, both parties discuss whether the Department's past
practice allows for the use of the price list. The respondents contend
that the Department's acceptance of an unverified price list
contravenes the Department's policy on price lists. They argue that to
use a price list, the Department requires that all sales be based on
the price list, an accounting firm must certify that the company
adheres to the price lists, and the price list must be contemporaneous,
none of which is present here. The respondents then argue that the
price list is not PAPI and should not be used.
The petitioners counter that respondent's characterization of the
Department's practice with respect to price lists is incorrect. The
further state that the documentation provided by the respondents
relates only to the use of price lists as substitute for sale-by-sale
reporting of actual transaction prices.
[[Page 24279]]
DOC Position
We agree with the petitioners, in part. We have used the Acerias
price list to value steel coil but have not made an adjustment to this
list for the price trend claimed by the petitioners (see also Comments
#3 below). In this case we have used the Acerias price list because we
feel that its is more appropriate to use actual prices of a producer of
a material input in the primary surrogate country rather than import
statistics. We believe that Acerias prices more closely represent
prices a pipe producer in a comparable market economy country would pay
for this input material. Furthermore, the use of the price list was
found to be reasonable when analyzing the points (discussed below)
raised by the interest parties. Therefore, it is our first choice for
valuation purposes.
Regarding the issue of whether the prices on the price list are
aberrational, we have compared the Acerias prices to (1) Colombian
import statistics provided by the respondents; (2) Thailand import
statistics; \3\ and (3) Latin American export prices published in the
Metal Bulletin. Where appropriate, prices were adjusted for inflation
to make them POI prices. The results of this analysis showed that the
prices on the Acerias price list were reasonably close in value to
those comparators (for a complete discussion of this analysis, see the
May 6, 1996, issues memorandum from the Team to Barbara R. Stafford,
Deputy Assistant Secretary for Investigations).
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\3\ Thai import statistics are used for comparison purposes
because: (1) Thailand is within the same per-capita income band of
countries as Romania and Columbia; (2) Thailand is a large producer
of the subject merchandise; and (3) steel import statistics were
available from Thailand.
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Regarding the issue of whether the price list represents actual
prices, we feel confident that the prices on Acerias' list are actual
prices. The affidavit provided by the petitioners states that the price
list (1) Is publicly available to any person who requests it; and (2)
contains actual prices charged by Acerias to industrial users in
Colombia. While these industrial users receive discounts for unfinished
edges, quantity purchases, and prompt payment, these discounts are
clearly identified on the price list and have been deducted from the
prices used in our calculations. Thus, we have utilized actual prices
paid by Acerias' customers in our margin calculations.
Regarding Tepro's affidavit, we believe that the price list
describes adequately the type of steel. We agree with the petitioners
that ``commercial quality'' adequately describes SAE 1010 grade or its
equivalent which is used by pipe producers. Furthermore, it does not
matter that Acerias may: (1) Not have sold the steel to Colombian pipe
producers; (2) not have sold exclusively from the price list; or (3)
have sold to large customers at discounts below those listed on the
price list. None of these arguments explicitly disproves that Acerias
sold steel coil using the prices on its price list to customers in
Colombia. We have found no evidence that the prices in the price list
are not actual prices; in contrast, we believe that petitioners'
affidavit demonstrates that the list prices are, indeed, actual prices.
Regarding the issue of whether the Department's use of the Acerias
list was predictable and fair, we note that Colombia was used in this
investigation due to its per-capita GNP similarity with Romania and the
fact that it is a significant producer of the subject merchandise.
While the surrogate countries have changed over time because of the
economic changes of Romania and other countries, the Department has
utilized the same criteria for selecting surrogate countries. The
Department selects surrogate countries based on the per-capita GNP
rankings of all countries listed in the World Development Report
published by the World Bank. Therefore, we believe the selection of
Colombia as the surrogate country in this investigation was both
predictable and fair. Furthermore, we disagree with the respondents
that the Department has developed a PAPI hierarchy in which import
statistics are preferred to surrogate values from a producer of the
material input in the primary surrogate country. The Department does
not have a hierarchy where import statistics are used. As explained
above, in this case, publicly available surrogate values from a
producer of the material input in the primary surrogate country have
been found to be preferable over import statistics. Finally, the
Department's Notice of Proposed Rulemaking and Request for Public
Comments stated that international markets should only be used when
data from a primary and/or secondary surrogate countries were not found
to be appropriate, and not as the first choice.
Regarding the issue of whether the problems of Acerias have an
impact on its prices, we do not believe that the respondents have
adequately demonstrated any relationship between Acerias' financial
difficulties and the steel coil prices charged by Acerias. There is
nothing on the record which states that Acerias charged its customers
higher prices than it normally would have due to its financial
difficulties. In fact, one could argue that a cause of Acerias'
negative financial state is a consequence of the lower than normal
prices it charged its domestic customers. Furthermore, in Tapered
Roller Bearings, the Department refused to use the Indian roller
bearing producer's data because the auditor's report for this producer
noted that the financial statements were not presented in accordance
with the generally accepted accounting principles of India. In
addition, there are conflicting arguments on the record regarding the
age of the technology used by Acerias and its resultant level of
efficiency. However, there is not information on the record which
proves that the technology used by Acerias has had a marked impact on
its prices.
Regarding the issue of whether the Department's past practice
allows for the use of the price list, we disagree with the respondents.
The conditions for using a price list described in the respondents'
argument only apply when the price list is used as a substitute for
sale-by-sale reporting of actual transaction prices in market economy
cases.
Although we have used the Acerias price list to value steel coil in
this investigation and have made an adjustment to the prices in this
list for inflation, we have not made the additional adjustment to the
prices for the price trend claimed by the petitioners. This additional
adjustment was made in the preliminary determination. However, we have
determined that, after a further review of the information on the
record, this adjustment is not appropriate, as the information supplied
by the petitioners to substantiate it was not specific to the Colombian
domestic market, but was for Latin American export prices. We have
determined that there is an insufficient link between domestic
Colombian prices and average Latin American export prices and,
therefore, we have denied this adjustment (for a further discussion of
the Department's discussion of this issue, see the May 6, 1996, issues
memorandum from the Team to Barbara R. Stafford, Deputy Assistant
Secretary for Investigations).
Comment 3: Proposed Use of Colombian Import Statistics To Value Steel
Coil
The respondents argue that the Colombian import statistics they
provided are PAPI that should be used in the final determination. They
also argue the following. First, the lowest import prices are the
prices paid by large industrial users and should be used by the
Department in this case to
[[Page 24280]]
value steel coil. Second, the rationale contained in the Department's
November 21, 1995, steel valuation memorandum (regarding thickness and
grade) is no longer relevant. Thus, the respondents argue that the
Department should use the Colombian import statistics to value steel.
The respondents than state that only limited adjustments need to be
made if the Colombian import prices are used.
The respondents also state that petitioners' evidence showing an
increase in the prices of steel during January 1994 to March 1995 is
largely anecdotal or based on Metal Bulletin spot prices. The
respondents argue that the U.S. import data shows no such increase in
the prices of steel during this time. Furthermore, if there was such an
increase, the petitioners should have been able to provide their own
invoices to substantiate this. Finally, since most companies keep
inventories of key raw materials, a monthly spike in prices will not
necessarily affect a large user as much as a user which buys
sporadically.
The petitioners counter respondents' arguments with the following.
First, respondents' claim that the lowest Columbian import prices
reflect the prices paid by large industrial users is sheer speculation.
Furthermore, the Department had many other reasons for rejecting
respondents' arguments in the steel valuation memorandum than just
thickness and grade. However, the petitioners argue that if the
Department chooses to use the Colombian import statistics submitted by
the respondents, certain adjustments need to be made.
Finally, the petitioners argue that the evidence of the steel price
surge is not anecdotal nor based on spot prices but information
contained in the Metal Bulletin. They contend that respondent's U.S.
import statistics are useless to the Department because they provide
country-specific information for only a handful of exporting countries
and the totals are skewed by the inclusion of cheap imports from non-
market economies such as Russia. They further contend that the
information on the record does not allow the Department to identify the
quantity or value of NME imports so that they may be excluded. Finally,
the petitioners argue that the limited information in these import
statistics seems to support petitioners' information regarding steel
price trends.
DOC Position
We disagree with the respondents and have not selected the
Colombian import statistics to value the steel coil. As stated above in
our response to Comment #2, in this case we believe that the Acerias
price list is preferable to the Colombian import statistics.
Accordingly, the issue about how to adjust the Colombian import
statistics is therefore moot.
Comment 4: Discount for Secondary Steel
Tepro argues that the Department's rejection of a discount for the
purchase of secondary steel in the preliminary determination was
unreasonable and should be corrected for the final determination. To
support its claim, Tepro argues the following. First, the information
Tepro provided for the preliminary determination should be sufficient
to warrant an adjustment. Second, the Department has now verified
Tepro's gross consumption and scrap rates. These rates do not support
rejection of the discount. Third, qualitative differences impact price
and Tepro's supplier sold its steel at a significant discount because
of qualitative differences. Fourth, the Department itself has
differentiated between ``first quality'' and ``second quality''
merchandise in the Steel Trigger Price Mechanism Procedures Manual.
Fifth, the reluctance of the Department to grant a discount for
secondary steel may be based on the fear that the precedent in this
case would make the Department vulnerable in other cases to similar
requests for discounts based on qualitative differences in merchandise.
The last argument notwithstanding, the Department has the obligation to
select surrogate values which are ``accurate and fair'' and thus, the
discount should be granted.
Tepro also states that the information gained at the verification
proved that it was entitled to this discount. This information
included: (1) The statement by an official of Tepro's supplier at
verification that the quality standards for sale of hot-rolled coil to
Romania in general and Tepro in particular are significantly lower than
those for export and the discount to Tepro was because of differences
in quality; and (2) invoices which show that Tepro bought steel during
the POI at prices lower than Romanian exports to the European Union
(EU). Tepro also stated that the reason the verifiers did not see
physical defects in the steel in Tepro's inventory is that this steel
was of Russian origin and Tepro does not purchase secondary steel from
its Russian supplier. Finally, Tepro argued that the only information
on the record that conflicted with Tepro's secondary steel claim is the
statement from an employee of one of the petitioners who, to Tepro's
knowledge, had never been to Romania, never visited Tepro or its
supplier, and had no knowledge of the production process employed by
Tepro. Thus, the Department's decision is not supported by evidence on
the record.
The petitioners counter that Tepro's claim that the secondary steel
discount should again be rejected for the final determination. To
support this contention, the petitioner argues first, that nothing has
been submitted to the Department since the preliminary determination to
warrant a different conclusion. In particular, Tepro's reported scrap
rates have not changed, nor has Tepro rebutted the results of the
metallurgical tests to which the Department referred. Second, no new
documents were produced at verification to substantiate the claim that
Tepro uses only secondary steel. The statement on the invoices observed
at verification was that the steel was ``not designated for exports to
the EU.'' Respondents' interpretation of this is not buttressed by any
evidence on the record. Petitioners proffer that the restriction
probably arises from export controls between the EU and eastern
European countries or the desire of Romanian producers to avoid
triggering an EU antidumping action. Furthermore, internal prices in an
NME country are irrelevant to the Department's analysis because such
prices are not established by market forces.
Third, respondents cannot state that the Department's reluctance to
grant a discount is based on fear of the precedent that would set since
they cannot speak for the Department, and the petitioners note that the
Department has previously been receptive to adjustments for qualitative
differences where they have been established by substantial evidence on
the record. Fourth, the petitioners had more than one piece of evidence
disputing respondents' claims; in fact, the metallurgical test not
mentioned by the respondents was the piece of evidence most damaging to
the respondents' argument. Finally, although the employee of one of the
petitioners did not visit Tepro's plant, the Department verifiers did
and found no evidence to support Tepro's claims.
DOC Position
We agree with the petitioners. Since the preliminary determination,
the only additional information on the record regarding this issue is
the discussion in the verification report and verification exhibits.
Regarding the statement by Tepro's supplier at verification that it
granted Tepro a discount because of differences in quality, we do not
believe
[[Page 24281]]
that it would be appropriate to grant a price adjustment based on
statements that were not supported by physical evidence. As explained
in the preliminary determination, Tepro did not provide adequate
documentation to support its claimed adjustment. The only new
documentation gained at the verification were invoices that state that
the merchandise is not designated for exports to the EU. As noted by
the petitioners, this could have been for a variety of reasons. No
evidence was provided which conclusively demonstrated that Tepro
received a discount for buying steel that was of a lower quality or
grade than standard steel.
Regarding Tepro's other points, we note the following. First, the
scrap rates of Tepro, although verified, have not changed since the
preliminary determination. Furthermore, although we agree with Tepro
that qualitative differences may affect price and that the Department
has discussed prime versus secondary quality merchandise in the past,
this is irrelevant since no such qualitative differences have been
established here. In addition, Tepro's claim that ``reluctance of the
Department to grant a discount for secondary steel may be based on the
fear that the precedent in this case would open up the Department in
other cases to similar requests for discounts based on qualitative
differences in merchandise'' is not accurate. As stated above, the
Department has rejected this adjustment to price because there has been
no evidence placed on the record which demonstrates that Tepro received
a discount for buying steel that was of a lower quality or grade than
standard steel. Finally, the metallurgical test submitted by the
petitioners showed that the grade of steel used by Tepro was identical
to the grade of steel used by U.S. and other world producers of the
subject merchandise. As noted by the petitioners, this test was not
rebutted by Tepro.
Comment 5: Prices for Different Steel Sizes Matched to Proper Pipe
Sizes
The petitioners contend that the Department in certain instances
incorrectly matched prices for different thicknesses of steel with the
wrong pipe sizes. They argue that the coil thicknesses reported by
Tepro are inconsistent with the steel thicknesses specified by ASTM A-
53 grade with which Tepro claims to comply. They also state that prices
for 3-4mm thick coil may be applied only to pipe that is 2'' diameter
or smaller.
DOC Position
We agree with the petitioners and have corrected the wall
thicknesses for those products that were incorrectly listed.
Furthermore, we have used the corrected wall thicknesses in the
matching to the surrogate value for steel coil.
Comment 6: Use of Steel Input Quantities Reported in the Questionnaire
Response
The petitioners argue that since Tepro reported its theoretical
steel weight figures instead of its actual steel weight figures, it
should be subject to adverse facts available. They also state that, at
a minimum, the Department should not adjust downward the reported
amounts by the amount of the difference noted in the verification
report.
DOC Position
Since the Department only had time at verification to examine the
theoretical/actual weight difference for one pipe size, we do not
believe that it would be appropriate to attempt to convert all weights
from theoretical to actual for all pipe sizes based on the one size
examined. Also, as noted in the verification report, the theoretical
weight was greater than the actual weight for the one size examined.
Therefore, we have made no adjustments to the theoretical weights
listed and have accepted them for purposes of the final determination.
Comment 7: Steel Scrap
The petitioners argue that the steel scrap surrogate used in the
preliminary determination is aberrational and must be reduced. To
support its argument, the petitioners make the following points: (1)
The tariff category used for scrap in 1991 was under- or over-
inclusive; (2) the 1991 scrap/coil ratio in Thailand was completely
unlike that of other markets; and (3) the scrap/coil ratio has changed
dramatically since 1991. The petitioners state that the scrap value to
coil value in other world markets was one-third to one-half the values
used in the preliminary determination and argue that the Thai scrap/
coil ratios are aberrational, as well as not being contemporaneous with
the POI. Thus, the Department should instead use the average of three
contemporaneous ratios calculated by the petitioners.
The respondents claim that if the Colombian import statistics are
used to value steel, then they do not object to the use of a lower
scrap price. The respondents state that, where possible,
contemporaneous prices should be used.
DOC Position
We have obtained updated Thai import values for steel coil and
steel scrap and are using these values to obtain a steel scrap ratio.
These values are specific to the steel used in the production of steel
pipe. These values are from the Thai Import Statistics, the same source
that was used in the preliminary determination, but are based on the
period from January to June, 1994, and thus, the resultant ratio from
these figures is more contemporaneous with the POI than the ratio used
in the preliminary determination. Therefore, any change in the scrap/
coil ratio since 1991 has been incorporated into this new ratio.
Regarding the argument that this ratio is aberrational, we found no
other information on scrap ratios for Colombia, the primary surrogate
country, or Thailand, the secondary surrogate country, which show that
this rate is aberrational in the surrogate countries. Furthermore, we
disagree with the petitioners that we should use an average of the
three scrap ratios calculated by the petitioners as these ratios are
from countries that are less appropriate surrogate countries than
Thailand.
Comment 8: Other Raw Materials
In addition to hot-rolled coil, the respondents contend that the
Department should use Colombian import statistics on the record to
value zinc, zinc chloride, ammonium chloride, hydrochloric acid and
paint.
DOC Position
We agree with the respondents that we should use Colombian import
statistics now on the record to value these raw materials. Colombia is
our first choice as a surrogate country and we have therefore used the
import statistics to value these raw materials.
Comment 9: Direct and Indirect Labor Inputs for Line 220
The petitioners state that since Tepro could not substantiate its
unit labor amounts reported for each size pipe produced on its
production line 220, the Department should use facts available for
direct and indirect labor inputs for all subject merchandise above
three inches diameter. They argue that the methodology suggested at
verification is untimely, unsubstantiated and unverified and that the
statute and the Department's policies forbid the use of such
information. They argue that the Department should use the higher of:
(1) the highest reported direct and indirect labor input reported for
pipe of other
[[Page 24282]]
sizes; or (2) the factor used in the petition for 4'' diameter pipe.
The respondents state that the Department should use the
alternative methodology suggested by Tepro at verification in order to
calculate labor factors for line 220.
DOC Position
We agree with the petitioners, in part. We do not believe that the
methodology suggested by the respondents at verification is appropriate
because it was calculated only for one month, and does not arrive at
the actual labor hours on line 220 for that month. Thus, we believe
that the use of facts available is appropriate. However, we do not
agree with the petitioners on the selection of adverse facts available.
Instead of using the highest reported labor input reported for pipe of
other sizes, we believe that it is more appropriate to use the highest
verified direct labor input for the size of pipe on another verified
line closest to the sizes produced on line 220 and have done so. An
amount for indirect labor was not added because indirect labor is
included in the overhead amount.
Comment 10: Factory Overhead, SG&A Expenses and Profit
For SC&A expenses, the respondents state that the figure used in
the preliminary determination is inappropriate because it is not
contemporaneous with the POI. The respondents argue that the Department
should use the SG&A figure from the 1994-95 Administrative Review of
Certain Circular Welded Carbon Steel Pipes and Tubes from Thailand
(1994-95 Administrative Review) rather than the SG&A figure from the
1987-88 Administrative Review of Certain Circular Welded Carbon Steel
Pipes and Tubes from Thailand (1987-88 Administrative Review), which
was used in the preliminary determination. The respondents also argued
that the petitioners' proposed new SG&A figure, when one makes the
proper adjustments, serves to underscore the unreasonableness of the
data used in the preliminary determination.
For profit, the respondents argue the following. First, since the
steel price selected by the Department is 30-40 percent higher than the
steel price paid by Thai pipe producer Saha Thai Steel Pipe Co., Ltd.
(Saha Thai) in the 1994-95 Administrative Review, the Department cannot
use such high raw material prices and then hypothesize that an eight
percent profit could be obtained in Thailand, since U.S. import
statistics confirm that Thai producers sell steel pipe at prices
similar to that paid for Romanian pipe. Second, there are questions
about how the profit was calculated in the 1992-93Administrative Review
and the profit amounts in the 1994-95 Administrative Review contradict
the profit figures proposed by the petitioners from the 1992-93
Administrative Review. Third, the Department should rely upon what is
knows about the Colombian steel industry to calculate profit.
Information on the record suggests that all sectors of the Colombian
steel industry are not profitable. Therefore, the Department should use
a zero profit margin or petitioner's own profit margins.
The petitioners state that the values used in the preliminary
determination for factory overhead, SG&A expenses and profit should
also be used for the final determination. The petitioners argue that
the information provided by respondents for these factors was submitted
for the 1994-95 Administrative Review which has not been completed.
These factors are therefore based on questionnaire responses that may
have been superseded by subsequent revisions and have not yet been
determined to be reliable for the case in which they were originally
filed. In addition,the excerpts themselves are also incomplete. The
information used in the preliminary determination does not have these
defects and should therefore be used in the final determination.
Alternatively, the petitioner argue that the Department should use
information from the 1992-93 Administrative Review, the most recently
completed administrative review. This record of this review contains
publicly-ranged figures for SG&A expenses and profit for Saha Thai. The
petitioners note that if the Department decides to use information from
the 1994-95 Administrative Review, it should use the most recent
amendments or revisions to such data.
Regarding profit, the petitioners contend that respondents'
suggestion that the Department use the Acerias profit should be
rejected because although no objectionable connection has been
established between Acerias' financial problems and its prices, there
is definitely a connection between those problems and its profit.
DOC Position
We agree with the petitioners that the best information to use for
overhead, SG&A expenses and profit for the final determination in this
case are the futures from the most recently completed administrative
review of Circular Welded Carbon Steel Pipes and Tubes from Thailand.
In this case, the most recently completed review is the 1992-93
Administrative Review. We believe that it is not appropriate to use
figures from an uncompleted review since they may be altered as the
case progresses. We are therefore using the public figures from the
1992-93 Administrative Review for overhead and SG&A expenses.
For profit, since we are using actual public overhead and SG&A
expense amounts, we believe that it is also appropriate to use the
actual public profit figure listed in the 1992-93 Administrative
Review, not the eight percent figure used in the preliminary
determination, and have done so.
Comment 11: Inland Freight
The petitioners argue that the Department should use in the final
determination the costs incurred by Tepro in non-convertible currency
for domestic inland freight. They state that where surrogate values are
not available, the Department should use facts available based on data
in the petition.
DOC Position
In asking that the Department use the costs incurred by Tepro in
non-convertible currency for foreign inland freight, the petitioners
failed to note that the Department applied a surrogate value for
domestic inland freight in the preliminary determination. We have
followed the same methodology for purposes of the final determination.
The inland freight distance between Tepro and the Romanian port was
reported by Tepro in its questionnaire response.
Comment 12: Brokerage
The respondents argue that the Department should use the brokerage
figure for Saha Thai contained in the 1994-95 Administrative Review of
Circular Welded Carbon Steel Pipes and Tubes from Thailand for purposes
of the final determination.
DOC Position
We disagree with the respondents. As mentioned above (see Issue
#12), we believe that it is appropriate not to use the figures from an
uncompleted review where possible since these figures may be altered as
the case progresses. We are therefore using the same public values we
used in the final determination from Carbon Steel Butt Weld Pipe
Fittings from Thailand to value foreign brokerage and handling.
Continuation of Suspension of Liquiation
In accordance with section 735(c)(1)(B) of the Act, we are
directing the Customs Service to continue to suspend liquidation of all
entries of
[[Page 24283]]
circular welded non-alloy steel pipe from Romania, 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 amount by which the normal value exceeds the export price as
shown below. In accordance with section 733(d) of the Act, the
suspension of liquidation based on the Department's preliminary
determination may not remain in effect for more than six months
(including the statutory permissible extension). In accordance with
this provision, these suspension of liquidation instructions will
remain in effect until May 28, 1996.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter percentage
margin
------------------------------------------------------------------------
Metagrimex S.A............................................. 85.12
Metalexportimport S.A...................................... 77.61
Romanian-Wide Rate......................................... 85.12
------------------------------------------------------------------------
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determination. As our final determination is affirmative,
the ITC will, within 45 days, determine whether these imports are
materially injuring, or threaten material injury to, the U.S. industry.
If the ITC determines that material injury, or threat of material
injury does not exist, the proceeding will be terminated and all
securities posted will be refunded or canceled. If the ITC determines
that such injury does exist, the Department will issue an antidumping
duty order directing Customs officials to assess antidumping duties on
all imports of the subject merchandise entered for consumption on or
after the effective date of the suspension of liquidation.
This determination is published pursuant to section 735(d) of the
Act.
Dated: May 6, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-11941 Filed 5-13-96; 8:45 am]
BILLING CODE 3510-DS-M