[Federal Register Volume 62, Number 235 (Monday, December 8, 1997)]
[Notices]
[Pages 64564-64568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32064]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-201-805]
Circular Welded Non-Alloy Steel Pipe and Tube From Mexico:
Preliminary Results of Antidumping Duty Administrative Review and
Partial Termination of Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review and partial termination of review.
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SUMMARY: In response to requests from two respondents, the Department
of Commerce (``the Department'') is conducting an administrative review
of the antidumping duty order on circular welded non-alloy steel pipe
and tube from Mexico. This review covers two manufacturers and
exporters of the subject merchandise. The period of review (``POR'') is
November 1, 1995, through October 31, 1996.
With respect to Tuberia Nacional, S.A. de C.V. (``TUNA''), this
review has now been terminated as a result of the withdrawal request
for administrative review by TUNA, the interested party that requested
review of TUNA. We preliminarily determine the dumping margin for Hylsa
S.A. de C.V. (``Hylsa'') to be 7.90 percent during the POR. Interested
parties are invited to comment on these preliminary results. Parties
who submit arguments in this proceeding should also submit with their
arguments (1) A statement of the issues, and (2) a brief summary of the
arguments.
EFFECTIVE DATE: December 8, 1997.
FOR FURTHER INFORMATION CONTACT: Ilissa Kabak or Linda Ludwig,
Enforcement Group III--Office 8, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Room 7866, Washington, D.C. 20230; telephone
(202) 482-0182 (Kabak), or (202) 482-3833 (Ludwig).
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 effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (URAA). In addition, unless
otherwise indicated, all references to the Department's regulations are
to 19 C.F.R. Part 353 (April 1, 1997). Where appropriate, we have cited
the Department's new regulations, codified at 19 C.F.R. Part 351 (62
Fed. Reg. 27296, May 19, 1997). While not binding on this review, the
new regulations serve as a restatement of the Department's policies.
Background
The Department published an antidumping duty order on circular
welded non-alloy steel pipe and tube from Mexico on November 2, 1992
(57 FR 49453). The Department published a notice of ``Opportunity to
Request an Administrative Review'' of the antidumping duty order for
the 1995/96 review period on November 4, 1996 (61 FR 56663). On
November 27, 1996, respondents Hylsa and TUNA requested that the
Department conduct an administrative review of the antidumping duty
order on circular welded non-alloy steel pipe and tube from Mexico. We
initiated this review on December 16, 1996. See 61 FR 66017 (December
16, 1996). On February 4, 1997, TUNA requested a withdrawal from the
proceeding.
Pursuant to 19 CFR 353.22(a)(5) of the Department's regulations,
the Department may allow a party that requests an administrative review
to withdraw such request not later than 90 days after the date of
publication of the notice of initiation of the administrative review.
TUNA's request for withdrawal was timely and there were no requests for
review from other interested parties. Therefore, the Department is
terminating this review with respect to TUNA. This notice is in
accordance with section 353.22(a)(5) of the Department's regulations
(19 CFR 353.22(a)(5)).
Under section 751(a)(3)(A) of the Act, the Department may extend
the deadline for issuing a preliminary determination in an
administrative review if it determines that it is not practicable to
complete the preliminary review within the statutory time limit of 245
days. On June 16, 1997, the Department published a notice of extension
of the time limit for the preliminary results in this case to December
2, 1997. See Extension of Time Limit for Antidumping Duty
Administrative Reviews, 62 FR 36488 (July 8, 1997).
The Department is conducting this review in accordance with section
751(a) of the Act.
Scope of the Review
The products covered by these orders are circular welded non-alloy
steel pipes and tubes, of circular cross-section, not more than 406.4
millimeters (16 inches) in outside diameter, regardless of wall
thickness, surface finish (black, galvanized, or painted), or end
finish (plain end, beveled end, threaded, or threaded and coupled).
These pipes and tubes are generally known as standard pipes and tubes
and are intended for the low pressure conveyance of water, steam,
natural gas, and other liquids and gases in plumbing and heating
systems, air conditioning units, automatic sprinkler systems, and other
related uses, and generally meet ASTM A-53 specifications. Standard
pipe may also be used for light load-bearing applications, such as for
fence tubing, and as structural pipe tubing used for framing and
support members for reconstruction or load-bearing purposes in the
construction, shipbuilding, trucking, farm equipment, and related
industries. Unfinished conduit pipe is also included in these orders.
All carbon steel pipes and tubes within the physical description
outlined above are included within the scope of these orders, except
line pipe, oil country tubular goods, boiler tubing,
[[Page 64565]]
mechanical tubing, pipe and tube hollows for redraws, finished
scaffolding, and finished conduit. Standard pipe that is dual or triple
certified/stenciled that enters the U.S. as line pipe of a kind used
for oil or gas pipelines is also not included in these orders.
Imports of the products covered by these orders are currently
classifiable under the following Harmonized Tariff Schedule (HTS)
subheadings: 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.
Although the HTS subheadings are provided for convenience and
customs purposes, our written description of the scope of these
proceedings is dispositive.
The POR is November 1, 1995 through October 31, 1996. This review
covers sales of circular welded non-alloy steel pipe and tube by Hylsa.
Verification
As provided in section 782(i) of the Act, we verified information
provided by the respondent by using standard verification procedures,
including on-site inspection of the manufacturing facilities of Hylsa,
the examination of relevant sales and financial records, and selection
of original documentation containing relevant information. Our
verification results are outlined in the verification reports, the
public versions of which are available at the Department of Commerce,
in the Central Records Unit (CRU), Room B099.
Product Comparisons
In accordance with section 771(16) of the Act, we considered each
circular welded non-alloy steel pipe and tube product produced by the
respondents, covered by the descriptions in the ``Scope of the Review''
section of this notice, supra, and sold in the home market during the
POR, to be a foreign like product for purposes of determining
appropriate product comparisons to U.S. sales of circular welded non-
alloy steel pipe and tube. Where there were no sales of identical
merchandise in the home market to compare to U.S. sales, we compared
U.S. sales to the next most similar foreign like product on the basis
of the characteristics listed in Appendix VI of the Department's
December 23, 1996, antidumping questionnaire. In making the product
comparisons, we matched each foreign like product based on the physical
characteristics reported by the respondent and verified by the
Department.
The Department's practice is to use a methodology which avoids
distortions due to high inflation in instances where high inflation
existed during the period of review. See, e.g., Notice of Final Results
of Antidumping Duty Administrative Review, Certain Welded Carbon Steel
Pipe and Tube from Turkey 62 Fed. Feg. 61629 (October 2, 1997). In this
case, consistent with our prior practice, we determined that high
inflation existed during the period of review. See Letter to Shearman &
Sterling from the Department (May 7, 1997). In order to take into
account the rate of inflation in Mexico during the POR, we compared
each U.S. sale to sales of the foreign like product in the same month.
Where there were no sales of identical merchandise in the home market
to compare to U.S. sales within the same month, we compared U.S. sales
to the next most similar foreign like product which was sold in the
same month. See Circular Welded Non-Alloy Steel Pipe and Tube from
Mexico: Preliminary Results of Antidumping Duty Administrative Review
61 FR 68708 (December 30, 1996). See also Circular Welded Non-Alloy
Steel Pipe and Tube from Mexico: Final Results of Antidumping Duty
Administrative Review 62 FR 32014 (July 10, 1997) (in which the
Department continued to compare foreign like products and subject
merchandise in this manner).
Fair-Value Comparisons
To determine whether sales of circular welded non-alloy steel pipe
by Hylsa to the United States were made at less than fair value, we
compared the EP to the NV, as described in the ``Export Price'' and
``Normal Value'' sections of this notice. In accordance with section
777A (d)(2) of the Act, we calculated monthly weighted-average prices
for NV and compared these to individual U.S. transactions.
Date of Sale
Hylsa reported the date of the invoice as the date of sale for all
home market and U.S. sales. For the home market co-export rebate sales
with two reported invoice dates (original invoice issue date and
revised invoice issue date), Hylsa reported the revised invoice date as
the date of sale.
Export Price
We used EP as defined in section 772(a) of the Act. We calculated
EP based on prices to unaffiliated customers in the United States.
Where appropriate, we made deductions from the starting price for
foreign inland freight, foreign brokerage and handling, U.S. brokerage
and handling and U.S. customs duties.
Section 776 (a) (2) of the Act provides that ``if an interested
party or any other person--(A) withholds information that has been
requested by the administering authority; (B) fails to provide such
information by the deadlines for the submission of the information or
in the form and manner requested, subject to subsections (c) (1) and
(e) of section 782; (C) significantly impedes a proceeding under this
title; or (D) provides such information but the information cannot be
verified as provided in section 782 (i), the administering authority *
* * shall, subject to section 782 (d), use the facts otherwise
available in reaching the applicable determination under this title.''
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 the 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, the Department has applied partial facts available
for various expenses and adjustments. Based on our verification of
Hylsa's sales responses, we rejected as unverifiable additional foreign
inland freight, additional foreign brokerage fees and additional U.S.
brokerage fees. Although information was provided to the Department,
and the Department attempted to verify this information at the
verification of Hylsa (see Sales Verification Report), the information
could not be verified as provided in section 782(i) of the Act. By not
providing verifiable information for foreign inland freight, foreign
brokerage and U.S. brokerage expenses when such information was
available to Hylsa, we have determined that Hylsa failed to cooperate
by not acting to the best of its ability to comply with a request for
information. Consequently, the use of adverse partial facts available
under section 776(b) of the Act is warranted. We deducted the reported
foreign inland freight, which was paid by the customer and included in
the reported gross unit price. Rather than use reported additional
foreign inland freight, as facts available we further deducted the
highest calculated differential between reported and actual foreign
inland freight charges incurred for five sales reviewed at
verification, (see Analysis Memo). We deducted the reported foreign and
U.S. brokerage charges, which were paid by the
[[Page 64566]]
customer and included in the reported gross unit price. Rather than use
reported additional foreign and U.S. brokerage charges, as facts
available we further deducted the highest calculated differential
between reported and actual foreign and U.S. brokerage charges incurred
for five sales reviewed at verification (see Analysis Memo).
Hylsa acts as importer of record on its U.S. sales and thereby pays
all antidumping duty deposits. During the course of this proceeding,
petitioners requested that the Department examine the issue of
reimbursement where the producer/exporter is the importer of record.
Section 353.26 of the Department's regulations states that ``[i]n
calculating the United States price, the Secretary will deduct the
amount of any antidumping duty which the producer or reseller: (i)
[p]aid directly on behalf of the importer; or (ii) [r]eimbursed to the
importer.'' 19 CFR 353.26(a)(1). It has been our practice that separate
corporate entities must exist as producer/reseller and importer in
order to invoke the regulation. In the present case, the U.S. importer
of record, Hylsa, is also the same corporate entity that produces and
exports the subject merchandise. In such a case, there is no separate
company or separate U.S. subsidiary, wholly owned or otherwise, that
acts as the importer of record. Rather, the importer and exporter are
one and the same corporate entity. In this case, there can be no
payment made to, or on behalf of, the importer within the meaning of
the regulation. In accordance with our practice, the Department
interprets its reimbursement regulation as inapplicable in this case.
However, we will consider this issue further for the final results, and
we invite comments on this issue.
Normal Value
Based on a comparison of the aggregate quantity of home-market and
U.S. sales, we determined that the quantity of the foreign like product
sold in the exporting country was sufficient to permit a proper
comparison with the sales of the subject merchandise to the United
States, pursuant to section 773(a) of the Act. Therefore, in accordance
with section 773(a)(1)(B)(i) of the Act, we based NV on the price at
which the foreign like product was first sold for consumption in the
home market, in the usual commercial quantities and in the ordinary
course of trade, including sales that benefitted from co-export rebates
and short-length discounts.
Sales to affiliated customers in the home market which were
determined not to be at arm's-length were excluded from our analysis.
To test whether these sales were made at arm's-length, we compared the
starting prices of sales of comparison products to affiliated and
unaffiliated customers, net of all movement charges, direct selling
expenses, discounts, and packing. Pursuant to 19 CFR 353.45(a) and in
accordance with our practice, where the prices to the affiliated party
were on average less than 99.5 percent of the prices to unaffiliated
parties, we determined that the sales made to the affiliated party were
not at arm's-length. See Notice of Final Results and Partial Recission
of Antidumping Duty Administrative Review: Roller Chain, Other Than
Bicycle, From Japan 62 FR 60472 (November 10, 1997). We included those
sales that passed the arm's length test in our analysis (see 19 CFR
353.45(a)).
Where appropriate, in accordance with 773(a)(6)(A) of the Act, we
deducted credit expenses, warranties, advertising, insurance, packing,
and certain discounts, and we added interest revenue. The Department
discovered certain discrepancies and inconsistencies with Hylsa's
freight data which rendered the data unverifiable or unreliable within
the meaning of section 782(e) of the Act. At verification, the
Department examined additional inland freight reported by Hylsa.
Despite the Department's efforts, the data provided by Hylsa could not
be verified. In accordance with section 782(e) of the Act, we rejected
as unverifiable additional inland freight (see Sales Verification
Report). Therefore, we denied adjustment for reported additional inland
freight. Furthermore, due to discrepancies found as a result of
verification and in accordance with section 782(e) of the Act, we
disallowed deduction of inland freight expenses reported for co-export
rebate sales made during 1996. The Department also found
inconsistencies concerning the allocation of both early payment
discounts and interest revenue for late payments (see Sales
Verification Report). Therefore, consistent with section 782 (e) of the
Act, we denied deductions from the reported price for early payment
discounts allocated to sales to which interest revenue was also
allocated.
We increased NV by U.S. packing costs in accordance with section
773(a)(6)(A) of the Act and decreased NV by home market packing costs
in accordance with section 773(a)(6)(B) of the Act. We made adjustments
to NV for differences in cost attributable to differences in physical
characteristics of the merchandise, pursuant to section
773(a)(6)(C)(ii) of the Act.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (``LOT'') as the EP or CEP transaction. The NV
LOT is that of the starting-price sales in the comparison market or,
when NV is based on constructed value (``CV''), that of the sales from
which we derive selling, general and administrative (``SG&A'') expenses
and profit. For EP, the U.S. LOT is also the level of the starting-
price sale, which is usually from exporter to importer. For CEP, it is
the level of the constructed sale from the exporter to the importer.
To determine whether NV sales are at a different LOT than EP or
CEP, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the
unaffiliated customer. If the comparison-market sales are at a
different LOT, and the difference affects price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison-market sales at the LOT of
the export transaction, we make an LOT adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is
more remote from the factory than the CEP level and there is no basis
for determining whether the difference in the levels between NV and CEP
affects price comparability, we adjust NV under section 773(a)(7)(B) of
the Act (the CEP offset provision). See Notice of Final Determination
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel
Plate from South Africa, 62 FR 61731 (November 19, 1997).
In its questionnaire responses, Hylsa stated that there were no
differences in its selling activities by customer categories within
each market. In order to confirm independently the absence of separate
levels of trade within or between the U.S. and home markets, we
examined Hylsa's questionnaire responses for indications that Hylsa's
functions as a seller differed qualitatively or quantitatively among
customer categories. Where possible, we further examined whether each
selling function was performed on a substantial portion of sales.
Hylsa sold to end-users in the U.S. market. In the home market,
Hylsa sold to local distributors and end-users. Hylsa performed
essentially the same selling functions for sales to all its home-market
customers, as well as to U.S. customers. Thus, our analysis of the
questionnaire response leads us to
[[Page 64567]]
conclude that sales within or between each market are not made at
different levels of trade. Accordingly, we preliminarily find that all
sales in the home market and the U.S. market were made at the same
level of trade. Therefore, we have not made a level of trade adjustment
because all price comparisons are at the same level of trade and an
adjustment pursuant to section 773(a)(7)(A) is not appropriate.
Cost-of-Production Analysis
Petitioners alleged, on April 4, 1997, that Hylsa sold circular
welded non-alloy steel pipes and tubes in the home market at prices
below COP. Based on these allegations, in accordance with 773(b) of the
Act, the Department determined, on May 6, 1997, that it had reasonable
grounds to believe or suspect that Hylsa had sold the subject
merchandise in the home market at prices below the COP. See Letter to
Shearman and Sterling (May 7, 1997) and Decision Memorandum (May 6,
1997). We therefore initiated a cost investigation with regard to Hylsa
in order to determine whether the respondent made home-market sales
during the POR at prices below their COP within the meaning of section
773(b) of the Act. Before making any fair-value comparisons, we
conducted the COP analysis described below.
A. Calculation of COP
We calculated the COP based on the sum of Hylsa's cost of materials
and fabrication for the foreign like product, plus amounts for home-
market selling, general, and administrative expenses (``SG&A''), and
packing costs in accordance with section 773(b)(3) of the Act. Based on
our verification of the cost response submitted by Hylsa, we adjusted
the reported COP to reflect certain adjustments to the cost of
manufacturing and general and administrative expenses (see Analysis
Memo).
B. Test of Home-Market Prices
We used the respondent's weighted-average COP, as adjusted (see
above), for the period August 1, 1995, through November 30, 1996. We
compared the weighted-average COP figures to home-market sales of the
foreign like product as required under section 773(b) of the Act. In
determining whether to disregard home-market sales made at prices below
the COP, we examined whether (1) within an extended period of time,
such sales were made in substantial quantities, and (2) such sales were
made at prices which permitted the recovery of all costs within a
reasonable period of time. On a product-specific basis, we compared the
COP to the home-market prices (not including VAT), less any applicable
movement charges, discounts, and rebates.
C. Results of COP Test
In accordance with section 773(b)(2)(C), where less than 20 percent
of Hylsa's sales of a given product were at prices less than the COP,
we do not disregard any below-cost sales of that product because we
determine that the below-cost sales were not made in ``substantial
quantities.'' Where 20 percent or more of a Hylsa's sales during the
POR were at prices less than the COP, we determine such sales to have
been made in ``substantial quantities'' within an extended period of
time in accordance with section 773(b)(2)(B) of the Act, and not at
prices which would permit recovery of all costs within a reasonable
period of time, in accordance with section 773(b)(2)(D) of the Act.
Therefore, we disregarded such below-cost sales of Hylsa. Where all
contemporaneous sales of a comparison product were disregarded, we
calculated NV based on CV.
D. Calculation of CV
In accordance with section 773(e) of the Act, we calculated CV
based on the sum of Hylsa's cost of materials, fabrication, SG&A, U.S.
packing costs, interest expenses as reported in the U.S. sales database
and profit. As noted above, we recalculated Hylsa's COM and general and
administrative expenses based on our verification results. In
accordance with section 773(e)(2)(A) of the Act, we based SG&A and
profit on the amounts incurred and realized by the respondent in
connection with the production and sale of the foreign like product in
the ordinary course of trade, for consumption in the foreign country.
For selling expenses, we used the weighted-average home market selling
expenses. Where we compared CV to EP, we added the lesser of home
market commissions or U.S. indirect selling expenses to CV.
Currency Conversion
For purposes of the preliminary results, 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 of New York.
Section 773A(a) of the Act directs the Department to use a daily
exchange rate in order to convert foreign currencies into U.S. dollars,
unless the daily rate involves a ``fluctuation.'' In accordance with
the Department's practice, we have determined as a general matter that
a fluctuation exists when the daily exchange rate differs from a
benchmark by 2.25 percent. See Cut-to-Length Steel Plate from Belgium:
Preliminary Results of Antidumping Duty Administrative Review, 62 FR
48213 (citing Certain Stainless Steel Wire Rods from France:
Preliminary Results of Antidumping Duty Administrative Review, 61 FR
8915 (March 6, 1996)). The benchmark is defined as the rolling average
of rates for the past 40 business days. When we determine a fluctuation
exists, we substitute the benchmark for the daily rate.
Preliminary Results of the Review
As a result of this review, we preliminarily determine that the
following weighted-average dumping margin exists:
Circular welded non-alloy steel pipes and tubes
Producer/Manufacturer/Exporter................................ Hylsa
Weighted-Average Margin....................................... 7.90%
Parties to this proceeding may request disclosure within five days
of publication of this notice. Any interested party may request a
hearing within 10 days of publication. Any hearing, if requested, will
be held 44 days after the date of publication, or the first working day
thereafter. Interested parties may submit case briefs and/or written
comments no later than 30 days after the date of publication. Rebuttal
briefs and rebuttals to written comments, limited to issues raised in
such briefs or comments, may be filed no later than 37 days after the
date of publication of this notice. The Department will publish a
notice of the final results of the administrative review, including its
analysis of issues raised in any written comments or at a hearing, not
later than 120 days after the date of publication of this notice.
The following deposit requirements will be effective upon
publication of the final results of this antidumping duty review for
all shipments of circular welded non-alloy steel pipe from Mexico,
entered, or withdrawn from warehouse, for consumption on or after the
publication date, as provided by section 751(a) of the Tariff Act: (1)
The cash deposit rate for the reviewed company will be that established
in the final results of review; (2) for exporters not covered in this
review, but covered in the LTFV investigation or previous review, the
cash deposit rate will continue to be the company-specific rate from
the LTFV investigation or the most recent previous review; (3) if the
exporter is not a firm covered in this review, a previous review, or
the
[[Page 64568]]
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; (4) the cash deposit rate for all
other manufacturers or exporters will continue to be 36.62 percent, the
``All Others'' rate in the LTFV investigation. These requirements, when
imposed, shall remain in effect until publication of the final results
of the next administrative review.
We will calculate importer-specific duty assessment rates as a per
ton unit value for EP sales. To calculate the per ton unit value for
assessment, we summed the margins on U.S. sales with positive margins,
and then divided this sum by the total entered tonnage of all U.S.
sales.
This notice serves as a preliminary 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 notice are published in accordance
with section 751(a)(1) of the Act and 19 CFR 353.22.
Dated: December 2, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-32064 Filed 12-5-97; 8:45 am]
BILLING CODE 3510-DS-P