[Federal Register Volume 62, Number 131 (Wednesday, July 9, 1997)]
[Notices]
[Pages 36761-36764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17953]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-580-809]


Preliminary Results of Antidumping Duty Administrative Review: 
Circular Welded Non-Alloy Steel Pipe From the Republic of Korea

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

ACTION: Preliminary results of antidumping duty administrative review: 
circular welded non-alloy steel pipe from the Republic of Korea.

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SUMMARY: In response to requests from interested parties, the 
Department of Commerce (the Department) is conducting an administrative 
review of the antidumping duty order on circular welded non-alloy steel 
pipe from the Republic of Korea. The review covers five manufacturers/
exporters: Dongbu Steel Co., Ltd. (Dongbu), Korea Iron Steel Company 
(KISCO), Korea Steel Pipe Co., Ltd. (KSP), Pusan Steel Pipe Co., Ltd. 
(PSP), and Union Steel Co., Ltd. (Union). The period of review (the 
POR) is April 28, 1992, through October 31, 1993.
    We have preliminarily determined that sales have been made below 
foreign market value (FMV) by various companies subject to this review. 
If these preliminary results are adopted in our final results of this 
administrative review, we will instruct U.S. Customs to assess 
antidumping duties equal to the difference between the purchase price 
(PP) or exporter's sales price (ESP) and the FMV.
    We invite interested parties to comment on these preliminary 
results. Parties who submit comments in this proceeding are requested 
to submit with each argument (1) a statement of the issue and (2) a 
brief summary of the argument.

EFFECTIVE DATE: July 9, 1997.

FOR FURTHER INFORMATION CONTACT: Michael Panfeld, Mark Ross, Thomas 
Schauer, or Richard Rimlinger, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-4733; facsimile: (202) 482-1290.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions in effect 
as of December 31, 1994. In addition, unless otherwise indicated, all 
citations to the Department's regulations are to the current 
regulations, as codified at 19 CFR part 353 (April 1, 1996).

Background

    On November 2, 1992, the Department published in the Federal 
Register (57 FR 49,453) the antidumping duty order on circular welded 
non-alloy steel pipe from the Republic of Korea. On December 17, 1993, 
in accordance with 19 CFR 353.22(c), we initiated an administrative 
review of this order for the period April 28, 1992, through October 31, 
1993 (58 FR 65,964). The Department is now conducting this 
administrative review in accordance with section 751 of the Act.

Scope of Review

    The merchandise subject to this review is circular welded non-alloy 
steel pipes and tubes, of circular cross-section, not more than 406.4mm 
(16 inches) in outside diameter, regardless of wall thickness, surface 
finish (black, galvanized, or painted), or end finish (plain end, 
bevelled end, threaded, or threaded and coupled). These pipes and tubes 
are generally known as standard pipe, though they may also be called 
structural or mechanical tubing in certain applications. Standard pipes 
and tubes are intended for 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 also be used for light load-bearing and 
mechanical applications, such as for fence tubing, and for protection 
of electrical wiring, such as conduit shells.
    The scope is not limited to standard pipe and fence tubing or those 
types of mechanical and structural pipe that are used in standard pipe 
applications. All carbon steel pipes and tubes within the physical 
description outlined above are included within the scope of this 
review, except line pipe, oil-country tubular goods, boiler tubing, 
cold-drawn or cold-rolled mechanical tubing, pipe and tube hollows for 
redraws, finished scaffolding, and finished rigid conduit. Standard 
pipe that is dual or triple certified/stenciled that enters the United 
States as line pipe of a kind used for oil or gas pipelines is also not 
included in this review.
    Imports of these products are currently classifiable under the 
following Harmonized Tariff Schedule (HTS) subheadings: 7306.30.1000, 
7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055, 7306.30.5085, 
and 7306.30.5090. Although the HTS subheadings are provided for 
convenience and customs purposes, our written description of the scope 
of this proceeding is dispositive.

Product Comparisons

    We calculated transaction-specific U.S. prices (USPs) for 
comparison to either weighted-average FMVs or constructed values. The 
USPs and FMVs were calculated and compared by product characteristics. 
For price-to-price comparisons, we compared identical merchandise, 
where possible. Where there were no sales of identical merchandise in 
the home market to compare to U.S. sales, we made similar comparisons 
based on the characteristics listed in our memorandum to file dated 
June 24, 1994. If there were no sales of identical or similar 
merchandise in the home market to compare to U.S. sales, we compared 
USP to constructed value.

United States Price

    For all respondents, we based USP on purchase price, in accordance 
with section 772(b) of the Act, when the subject merchandise was sold 
to

[[Page 36762]]

unrelated purchasers in the United States prior to importation and 
because exporter's sale price (ESP) methodology, in those instances, 
was not otherwise indicated.
    In addition, for KSP and PSP, where certain sales to the first 
unrelated purchaser took place after importation into the United 
States, we based USP on ESP, in accordance with section 772(c) of the 
Act.
    USP was based on the packed f.o.b., c.i.f., or delivered prices to 
unrelated purchasers in, or for exportation to, the United States. We 
made adjustments, as appropriate, to PP and ESP for movement expenses, 
discounts, rebates, and duty drawback.
    We made additional deductions from ESP for direct selling expenses 
and indirect selling expenses.
    For all respondents, we have adjusted for VAT in accordance with 
the tax-neutral methodology approved by the Court of Appeals for the 
Federal Circuit in Federal-Mogul Corp. v. United States, 63 F.3d 1572 
(CAFC 1995). The approved tax-neutral adjustment methodology is based 
on the amounts of foreign taxes, rather than the tax rates. We have 
thus returned to the Zenith Electronics Corp. v. United States, 900 
F.2d 1573 (CAFC 1993) footnote-4 methodology of adding the absolute 
amount of the consumption taxes on home market sales to the USP. 
Consistent with this methodology, when merchandise exported to the 
United States is exempt from the VAT, we have added to USP the absolute 
amount of such taxes charged on the comparison sales in the home 
market.
    With respect to subject merchandise to which value was added in the 
United States prior to sale to unrelated U.S. customers, e.g., pipe 
that was imported and further processed by U.S. affiliates, we deducted 
any increased value in accordance with section 772(e)(3) of the Tariff 
Act.

Foreign Market Value

    In order to determine whether there were sufficient sales of 
standard pipe in the home market to serve as a viable basis for 
calculating FMV, we compared the volume of home market sales of 
standard pipe to the volume of third-country sales of the same product 
in accordance with section 773(a)(1)(B) of the Act. We found that the 
home market was viable for sales of standard pipe by all respondents.
    Home market prices were based on the packed, ex-factory or 
delivered prices to related or unrelated purchasers in the home market. 
Where applicable, we made adjustments for movement expenses, 
differences in cost attributable to differences in physical 
characteristics of the merchandise, and differences in packing. We also 
made adjustments for differences in circumstances of sale in accordance 
with 19 CFR 353.56. For comparisons to PP sales, we deducted home 
market direct selling expenses and added U.S. direct selling expenses. 
For comparisons to ESP sales, we deducted home market direct selling 
expenses. We also made adjustments, where applicable, for home market 
indirect selling expenses to offset U.S. commissions in PP and ESP 
calculations and to offset U.S. indirect selling expenses deducted in 
ESP calculations, but not exceeding the amount of U.S. indirect 
expenses. For comparisons to both ESP and PP sales, we adjusted for VAT 
using the methodology detailed in the ``United States Price'' section 
of this notice.
    We used sales to related customers only where we determined such 
sales were made at arm's length (i.e., at prices comparable to prices 
at which respondents sold identical merchandise to unrelated 
customers). See 19 CFR 353.45(a). To test whether these sales were made 
at arm's length, we compared the gross unit prices of sales to 
affiliated and unaffiliated customers net of all movement charges, 
direct and indirect selling expenses, and packing. See Final 
Determination of Sales at Less Than Fair Value; Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9, 
1993).
    PSP and Dongbu reported sales in the home market of ``overrun'' 
merchandise (i.e., sales of a greater quantity of pipe than the 
customer ordered due to overproduction). Respondents claimed that we 
should disregard ``overrun'' sales in the home market as outside the 
ordinary course of trade. Section 773(a)(1)(A) of the Act and 19 CFR 
353.46(a) provide that FMV shall be based on the price at which such or 
similar merchandise is sold in the exporting country in the ordinary 
course of trade for home consumption. Section 771(15) of the Act 
defines ``ordinary course of trade'' as ``the conditions and practices 
which, for a reasonable time prior to the exportation of the 
merchandise which is the subject of an investigation, have been normal 
in the trade under consideration with respect to merchandise of the 
same class or kind.'' See also 19 CFR 353.46(b).
    We analyzed the following criteria to determine whether ``overrun'' 
sales differ from other sales of commercial pipe: (1) Ratio of overrun 
sales to total home market sales; (2) number of overrun customers 
compared to total number of home market customers; (3) average price of 
an overrun sale compared to average price of a commercial sale; (4) 
profitability of overrun sales compared to profitability of commercial 
sales; and (5) average quantity of an overrun sale compared to the 
average quantity of a commercial sale. Based on our analysis of these 
criteria and on an analysis of the terms of sales, we found certain 
overrun sales to be outside the ordinary course of trade. This analysis 
is consistent with the analysis sustained by the Court of International 
Trade in Laclede Steel Co. v. United States, Slip. Op. 94-144 (1995). 
For a more detailed description of our analysis, see the preliminary 
results analysis memoranda which are on file in the Central Records 
Unit (room B-099 of the Main Commerce Building).
    Petitioners have contended that political contributions or other 
monetary payments (known as ttuk kap) are a normal part of doing 
business in Korea and can account for large sums. Petitioners have 
urged that the Department determine whether respondents or their 
affiliates made such payments and how such payments were treated in the 
companies' accounting systems.
    We have completed a limited number of verifications and have found 
that none of the firms we verified maintained accounts identified 
specifically for either so-called ttuk kap payments or for political 
contributions. Moreover, based on the accounting and financial records 
that we examined, we found no evidence of incomplete expense reporting 
from the firms in question.

Cost of Production

    Because we found home market sales below the cost of production by 
KSP and PSP in the less-than-fair-value (LTFV) investigation, we 
concluded that reasonable grounds exist to believe or suspect that 
these companies made home market sales during the POR at prices below 
the cost of production, and we therefore initiated cost investigations. 
See Import Administration Policy Bulletin Number 94.1 dated March 25, 
1994. In addition, based on allegations submitted by petitioners in 
connection with this administrative review, we have decided to 
investigate whether sales of subject merchandise made by Dongbu and 
Union were made at prices below the cost of production. See Memorandum 
to Marie Parker dated April 22, 1994, and Memorandum to Marie Parker 
dated April 25, 1994.

[[Page 36763]]

A. Calculation of COP

    We calculated the COP based on the sum of the costs of materials 
and fabrication employed in producing the subject merchandise, plus 
amounts for selling, general and administrative expenses and packing 
costs in accordance with section 773(b) of the Act. We relied on the 
home market sales and COP information provided by respondents in their 
questionnaire and supplemental responses.
    As in the LTFV investigation of this case, we requested that all 
sales and cost data be reported on a weight basis. In the LTFV segment 
of this proceeding, respondents reported various per-unit prices and 
costs on several bases: actual weight, theoretical weight, and standard 
actual weight. In this review, we requested that respondents report all 
costs, prices, and adjustments on a theoretical-weight basis because 
that is the basis on which U.S. sales were made. We did this in order 
to ensure that we calculated costs and expenses in a consistent manner. 
The petitioners have contended that information used by the respondents 
to derive all three weight bases is inaccurate and systematically 
understates the cost of production of subject merchandise.
    In response to the petitioners' arguments, we requested sale and 
cost data on a length basis rather than a weight basis for each 1'', 
2'', and 4'' diameter pipe. These sizes represent the largest-volume 
U.S. sales made by the respondents during the POR. Respondents did not 
report actual length for these items but simply calculated length by 
applying a factor based on the reported weight, contending that they do 
not maintain records on an actual-length basis. Petitioners continue to 
object to respondents' methodology.
    For these preliminary results, we have used the weight figures 
supplied by respondents for our dumping comparisons because we have no 
evidence that the weight figures respondents supplied result in 
understated cost figures. Furthermore, through the cost verification we 
have conducted thus far, we have not found understated costs. See Union 
Steel Co., Ltd., cost verification report dated June 2, 1997. This 
issue will also be examined at the cost verifications of KSP and PSP 
which, as discussed below, will be conducted after publication of these 
preliminary results.

B. Test of Home Market Prices

    To determine if sales below cost had been made over an extended 
period of time, we compared the number of months in which sales below 
cost had occurred for a particular model to the number of months in 
which the model was sold. If the model was sold in three or fewer 
months, we did not find that below-cost sales were made over an 
extended period of time unless there were sales below cost of that 
model in each month. If a model was sold in more than three months, we 
did not find that below-cost sales were made over an extended period of 
time unless there were sales below cost in at least three of the months 
in which the models were sold.
    Since none of the respondents has submitted information indicating 
that any of its sales below cost were at prices which would have 
permitted ``recovery of all costs within a reasonable period of time in 
the normal course of trade,'' within the meaning of section 773(b)(2) 
of the Act, we cannot reasonably conclude that the costs of production 
of such sales were recovered within a reasonable period.

C. Results of COP Test

    In accordance with section 773(b) of the Act, in determining 
whether to disregard home market sales made at prices below the cost of 
production, we examined whether such sales were made in substantial 
quantities over an extended period of time. When less than 10 percent 
of the home market sales of a particular model were at prices below the 
cost of production, we found that substantial quantities of such sales 
were not made and did not disregard any sales of that model. When 10 
percent or more, but not more than 90 percent, of the home market sales 
of a particular model were determined to be below cost, we determined 
that substantial quantities of such sales were made and excluded the 
below-cost home market sales from our calculation of FMV, provided that 
these below-cost sales were made over an extended period of time. When 
more than 90 percent of the home market sales of a particular model 
were made below cost over an extended period of time, we disregarded 
all home market sales of that model from our calculation of FMV and 
used CV. As a result, we disregarded below-cost sales when the 
conditions described above were met.
    We found that KSP, PSP, Dongbu, and Union all made sales below cost 
in substantial quantities over an extended period of time. We therefore 
excluded these sales from our analysis and used the remaining sales as 
the basis for determining FMV in accordance with section 773(b) of the 
Act.

Constructed Value

    We calculated CV in accordance with section 773(e) of the Act. We 
included the cost of materials, fabrication, general expenses, profit, 
and packing. To calculate CV we used: (1) Actual general expenses, or 
the statutory minimum of ten percent of the cost of materials and 
fabrication, whichever was greater; (2) actual profit or the statutory 
minimum of eight percent of the cost of materials, fabrication, and 
general expenses, whichever was greater; and (3) packing costs for 
merchandise exported to the United States. Where appropriate, we made 
adjustments to CV, in accordance with 19 CFR 353.56, for differences in 
circumstances of sale. For comparisons to PP sales, we deducted home 
market direct selling expenses and added U.S. direct selling expenses. 
For comparisons to ESP sales, we deducted home market direct selling 
expenses. We also made adjustments, where applicable, for home market 
indirect selling expenses to offset U.S. commissions in PP and ESP 
calculations. For comparisons involving ESP transactions, we made 
further deductions for CV for indirect selling expenses in the home 
market, capped by the indirect selling expenses incurred on ESP sales 
in accordance with 19 CFR 353.56(b)(2).

Currency Conversion

    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 verified information 
provided by certain respondents using standard verification procedures, 
including on-site inspection of the manufacturer's facilities, the 
examination of relevant sales and financial records, and selection of 
original documentation containing relevant information. Our 
verification results are outlined in the public versions of the 
verification reports. Though we have not yet verified the sales data 
reported by KSP nor the cost data reported by either KSP or PSP we will 
verify this data prior to completion of the final results. Because we 
will not verify this information until after the preliminary results 
are issued, we have extended the comment period for KSP-specific and 
PSP-specific comments from interested parties to July 25, 1997. 
Rebuttals to these comments will be due on August 1, 1997. We are doing 
this so that all parties will have the opportunity to comment on these 
verifications.

[[Page 36764]]

Preliminary Results of Review

    As a result of our review, we preliminarily determine the weighted-
average dumping margins (in percent) for the period April 28, 1992, 
through October 31, 1993 to be as follows:

------------------------------------------------------------------------
                                                                Margin  
                           Company                             (percent)
------------------------------------------------------------------------
Dongbu Steel Co., Ltd.......................................        3.37
Korea Iron Steel Company....................................        8.20
Korea Steel Pipe Co., Ltd...................................       14.13
Pusan Steel Pipe Co., Ltd...................................       11.21
Union Steel Co., Ltd........................................        0.76
------------------------------------------------------------------------

    Parties to this proceeding may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of the date of publication of this 
notice. A hearing, if requested, will be held at 10 AM on August 4, 
1997 in room 1412 in the main Commerce Department building.
    Issues raised in the hearing will be limited to those raised in the 
respective briefs and rebuttal briefs. Briefs from interested parties 
regarding Dongbu, KISCO, Union, and general comments may be submitted 
not later than 30 days from the date of publication of these 
preliminary results, and rebuttal briefs, limited to the issues raised 
in the respective case briefs, may be submitted not later than 37 days 
from the date of publication of these preliminary results. As noted 
above, KSP-specific and PSP-specific comments and rebuttals are due on 
July 25, 1997 and August 1, 1997, respectively. Parties who submit 
briefs or rebuttal briefs in this proceeding are requested to submit 
with each argument (1) a statement of the issue and (2) a brief summary 
of the argument. The Department will subsequently publish the final 
results of this administrative review, including the results of its 
analysis of issues raised in any written briefs or hearings.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of review for all shipments of 
subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the date of publication, as provided by section 
751(a)(1) of the Tariff Act: (1) The cash deposit rates for the 
reviewed companies will be the rates determined in the final results of 
review; (2) for previously investigated companies not listed above, the 
cash deposit rate will continue to be the company-specific rate 
published for the most recent period; (3) if the exporter is not a firm 
covered in this review or the original LTFV investigation, but the 
manufacturer is, the cash deposit rate will be the rate established for 
the most recent period for the manufacturer of the merchandise; and (4) 
the cash deposit rate for all other manufacturers or exporters will 
continue to be 4.80 percent, the ``All Others'' rate made effective by 
the amended final determination of the LTFV investigation published on 
November 3, 1995 (see Circular Welded Non-Alloy Steel Pipe from Korea: 
Notice of Final Court Decision and Amended Final Determination, 60 FR 
55833 (November 3, 1995)).
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Because the 
inability to link sales with specific entries prevents entry-by-entry 
assessments, we will calculate wherever possible an exporter/importer-
specific assessment rate.
    With respect to PP sales for these preliminary results, we divided 
the total dumping margins for the reviewed sales (calculated as the 
difference between FMV and USP) for each importer by the total volume 
sold to that importer during the POR. We will direct Customs to assess 
the resulting per-ton dollar amount against each ton of merchandise in 
each of that importer's entries during the review period. Although this 
will result in assessing different percentage margins for individual 
entries, the total antidumping duties collected for each importer for 
the review period will approximately equal the total dumping margins.
    For ESP sales, we divided the total dumping margins for the 
reviewed sales by the total entered value of those reviewed sales for 
each importer. We will direct Customs to assess the resulting 
percentage margin against the entered Customs values for the subject 
merchandise on each of that importer's entries during the review 
period. While the Department is aware that the entered value of sales 
during the POR is not necessarily equal to the entered value of entries 
during the POR, use of entered value of sales as the basis of the 
assessment rate permits the Department to collect a reasonable 
approximation of the antidumping duties which would have been 
determined if the Department had reviewed those sales of merchandise 
actually entered during the POR. See Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, 
Japan, Singapore, Sweden, and the United Kingdom; Final Results of 
Antidumping Duty Administrative Reviews and Partial Termination of 
Administrative Reviews, 61 FR 66,472 (December 17, 1996).
    This notice also serves as a reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and this notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: June 16, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-17953 Filed 7-8-97; 8:45 am]
BILLING CODE 3510-DS-P