[Federal Register Volume 63, Number 25 (Friday, February 6, 1998)]
[Notices]
[Pages 6155-6159]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3078]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-489-501]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review: Certain Welded Carbon Steel Pipe and Tube From Turkey

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

SUMMARY: In response to a request by Allied Tube & Conduit and 
Wheatland Tube Company, the petitioners in this case, the Department of 
Commerce is conducting an administrative review of the antidumping duty 
order on certain welded carbon steel pipe and tube from Turkey. This 
review covers one manufacturer/exporter.\1\ The period of review is May 
1, 1996, through April 30, 1997.
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    \1\ As noted below, we initiated a review of three companies. 
However, two of these companies did not have shipments during the 
period of review. Accordingly, we have not reviewed any shipments by 
these companies.
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    We preliminarily determine that, for the one company that had 
shipments during the review period, sales have not been made below 
normal value. If these preliminary results are adopted in the final 
results, we will instruct the Customs Service not to assess antidumping 
duties on the subject merchandise exported by this company.
    Interested parties are invited to comment on the preliminary 
results. Parties that submit arguments are requested to submit with 
each argument: (1) A statement of the issue; and (2) a brief summary of 
the argument.

EFFECTIVE DATE: February 6, 1998.

FOR FURTHER INFORMATION CONTACT: Charles Riggle or Kris Campbell, AD/
CVD Enforcement Group I, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-0650 or (202) 482-3813, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to

[[Page 6156]]

the provisions effective January 1, 1995, the effective date of the 
amendments made to the Tariff Act of 1930 (the Act) by the Uruguay 
Round Agreements Act (URAA). In addition, unless otherwise indicated, 
all citations to the Department of Commerce's (the Department's) 
regulations are to the regulations last codified at 19 CFR Part 353 
(April 1, 1997).

Background

    On May 15, 1986, the Department published in the Federal Register 
the antidumping duty order on certain welded carbon steel pipe and tube 
from Turkey (51 FR 17784). On May 2, 1997 (62 FR 24081), we published 
in the Federal Register the notice of ``Opportunity to Request an 
Administrative Review'' of this order for the period May 1, 1996, 
through April 30, 1997. In accordance with 19 CFR 353.22(a)(1), on May 
30, 1997, the petitioners requested a review of the following producers 
and exporters of certain welded carbon steel pipe and tube: (1) The 
Borusan Group \2\ (Borusan); (2) Yucelboru Ihracat, Ithalat ve 
Pazarlama A.S./Cayirova Boru Sanayii ve Ticaret A.S. (Yucelboru); and 
(3) Erbosan Erviyas Boru Sanayii ve Ticaret A.S. (Erbosan). On June 30, 
1997, we published the notice of initiation of this antidumping duty 
administrative review (62 FR 35154).
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    \2\ Borusan Birlesik Boru Fabrikalavi A.S., Kartal Boru Sanayii 
ve Ticaret A.S., Bosas Boru Sanayii ve Ticaret A.S., and Borusan 
Ihracat Ithalat ve Dagitim A.S.
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No Shipments

    Yucelboru and Erbosan notified us that they had no shipments of 
subject merchandise during the period of review (POR). We have 
confirmed this with the Customs Service.

Scope of the Review

    Imports covered by this review are shipments of certain welded 
carbon steel pipe and tube products with an outside diameter of 0.375 
inch or more but not over 16 inches, of any wall thickness. Imports of 
subject merchandise are currently classifiable under the following 
Harmonized Tariff Schedule of the United States (HTSUS) 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, 7306.30.50.90. These products, commonly 
referred to in the industry as standard pipe and tube, are produced to 
various American Society for Testing and Materials (ASTM) 
specifications, most notably A-120, A-53 or A-135. Although the HTSUS 
subheadings are provided for convenience and customs purposes, our 
written description of the scope of this proceeding is dispositive.

Fair Value Comparisons

    We compared the export price (EP) to the normal value (NV), as 
described in the Export Price and Normal Value sections of this notice. 
Because Turkey's economy experienced high inflation during the POR 
(over 70 percent), we limited our comparisons to home market sales made 
during the same month in which the U.S. sale occurred. This methodology 
minimizes the extent to which calculated dumping margins are overstated 
or understated due solely to price inflation that occurred in the 
intervening time period between the U.S. and home market sales. We 
first attempted to compare products sold in the U.S. and home markets 
that were identical with respect to the following characteristics: 
grade, diameter, wall thickness, finish, and end finish. We did not 
find any appropriate home market sales of merchandise that was 
identical in these respects to the merchandise sold in the United 
States. Accordingly, we compared U.S. products with the most similar 
merchandise sold in the home market based on the characteristics listed 
above, in that order of priority. Where there were no appropriate home 
market sales of comparable merchandise, we compared the merchandise 
sold in the United States to constructed value (CV).

Export Price

    Because Borusan sold subject merchandise directly to the first 
unaffiliated purchaser in the United States prior to importation, and a 
constructed export price (CEP) methodology was not otherwise warranted 
based on the facts of this review, we used an EP analysis for all of 
Borusan's U.S. sales, in accordance with section 772(a) of the Act.
    We calculated EP based on the packed, delivered price to 
unaffiliated purchasers in the United States. In accordance with 
section 772(c)(2)(A) of the Act, we deducted post-sale price 
adjustments, domestic inland freight, domestic brokerage and handling, 
and international freight. In accordance with sections 772(c)(1)(B) and 
(C) of the Act, respectively, we added countervailing duties imposed on 
the subject merchandise to offset export subsidies, and we added duty 
drawback.

Normal Value

A. Selection of Comparison Market

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared Borusan's volume of home market sales of the foreign like 
product to the volume of its U.S. sales of the subject merchandise. 
Pursuant to sections 773(a)(1)(B) and (C) of the Act, because Borusan's 
aggregate volume of home market sales of the foreign like product was 
greater than five percent of its aggregate volume of U.S. sales of the 
subject merchandise, we determined that the home market was viable.

B. Cost of Production Analysis

    Because the Department disregarded sales below the cost of 
production (COP) in the last completed review of Borusan (1993-94 POR), 
we had reasonable grounds to believe or suspect that sales of the 
foreign like product under consideration for the determination of NV in 
this review may have been made at prices below the COP, as provided at 
section 773(b)(2)(A)(ii) of the Act. See Notice of Final Results of 
Antidumping Duty Administrative Review: Certain Welded Carbon Steel 
Pipe and Tube From Turkey, 62 FR 51629 (October 2, 1997). Therefore, we 
considered whether any home market sales by Borusan should be 
disregarded from our analysis as below-cost sales within the meaning of 
section 773(b) of the Act.
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated the 
COP based on the sum of Borusan's costs of materials and fabrication 
employed in producing the foreign like product, plus general and 
administrative expenses (G&A) and finance expenses.
    As noted above, we determined that the Turkish economy experienced 
high inflation during the POR. Therefore, in order to avoid the 
distortive effect of inflation on our comparison of prices and costs, 
we requested that Borusan submit the product-specific cost of 
manufacturing (COM) incurred during each month of the POR. We 
calculated a POR-average COM for each product after indexing the 
reported monthly costs during the POR to an equivalent currency level 
using the Turkish wholesale price index from International Financial 
Statistics published by the International Monetary Fund (IMF). We then 
restated the POR-average COM in the currency value of each respective 
month. We multiplied Borusan's G&A and finance rates by the monthly 
COMs and added these amounts to derive product-specific monthly COPs.

[[Page 6157]]

2. Test of Home Market Prices
    We compared the product-specific monthly COPs to home market sales 
of the foreign like product in order to determine whether these sales 
had been made at prices below the COP. We determined the net home 
market prices for the below-cost test by subtracting from the gross 
unit price any applicable movement charges, discounts, rebates, direct 
and indirect selling expenses, and packing expenses.
3. Results of COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of Borusan's sales of a given product were at prices less than 
the COP, we did not disregard any below-cost sales of that product 
because the below-cost sales were not made in ``substantial 
quantities.'' Pursuant to sections 773(b)(2)(B)-(D) of the Act, where 
20 percent or more of Borusan's sales of a given product were at prices 
less than the COP, we disregarded the below-cost sales from our 
analysis because they (1) were made over an extended period of time in 
substantial quantities, and (2) were at prices which would not permit 
the recovery of all costs within a reasonable period of time, based on 
comparisons of prices to POR-average COPs.3 We used the 
remaining sales in our margin analysis, in accordance with section 
773(b)(1).
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    \3\ As noted in Calculation of COP, above, although we used 
monthly COPs in our analysis, these were based on POR-average costs, 
as adjusted for inflation.
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C. Arm's-Length Test

    Borusan made home-market sales to affiliated resellers during the 
POR. In accordance with our questionnaire, Borusan reported these sales 
to affiliated parties because the merchandise was not resold. We 
included in our analysis Borusan's home market sales to affiliated 
customers only where we determined that such sales were made at arm's-
length prices, i.e., at prices comparable to prices at which Borusan 
sold identical merchandise to unaffiliated customers. See section 
773(a)(1)(B) of the Act and 19 CFR 353.45. In order to determine the 
arm's-length nature of Borusan's home market sales to affiliated 
customers, we compared the prices, on a product-specific basis, of 
sales to affiliated and unaffiliated customers net of all movement 
charges, discounts, rebates, direct expenses, and packing. We added 
interest revenue for late payments. See Certain Hot-Rolled Lead and 
Bismuth Carbon Steel Products from the United Kingdom; Preliminary 
Results of Antidumping Administrative Review, 62 FR 64803, 64804 
(December 9, 1997).

D. Calculation of NV Based on Home Market Prices

    For those comparison products for which there were above-cost sales 
in the same month as the U.S. sale, we based NV on home market prices. 
We calculated NV based on FOB mill/warehouse or delivered prices. We 
made deductions from the starting price, where appropriate, for inland 
freight, pre-sale warehouse expenses, discounts, and rebates. We added 
interest revenue for late payments. In accordance with section 
773(a)(6) of the Act, we deducted home market packing costs and added 
U.S. packing costs.
    In accordance with section 773(a)(6)(C)(iii) of the Act, we 
adjusted for differences in the circumstances of sale. These 
circumstances included differences in imputed credit expenses, 
advertising, warranty, and bank charges. We recalculated credit 
expenses to correct for missing payment dates on sales for which 
Borusan had not received payment as of the date of its supplemental 
response.
    We also made adjustments, when comparing U.S. sales with home 
market sales of similar, but not identical, merchandise, for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act. We based this adjustment on the difference 
in the variable costs of manufacturing the foreign like product and 
subject merchandise, using POR-average costs as adjusted for inflation 
for each month of the POR, as described in Calculation of COP, above. 
We used a 20-percent difference-in-merchandise (difmer) cost deviation 
cap, which we calculated as the absolute value of the difference 
between the U.S. and the home market monthly variable costs of 
manufacturing divided by the U.S. total cost of manufacturing, as the 
maximum difference in cost allowable for similar merchandise. We note 
that Borusan reported its home market and U.S. variable costs of 
manufacturing based on the month of the date of shipment. For certain 
U.S. sales, the shipment date occurred in the month following the sale 
date. For these observations, we have adjusted the U.S. variable cost 
of manufacturing by deflating it to the month of the U.S. date of sale. 
This did not occur for any home market observations.

E. Calculation of NV Based on CV

    For those comparison products for which there were no sales in the 
same month as the U.S. sale, made in the ordinary course of trade at 
prices above the COP, we based NV on CV. On January 8, 1998, the Court 
of Appeals of the Federal Circuit issued a decision in Cemex v. United 
States, 1998 WL 3626 (Fed. Cir.). In that case, based on the pre-URAA 
version of the Act, the Court discussed the appropriateness of using CV 
as the basis for foreign market value (normal value) when the 
Department finds home market sales to be outside the ordinary course of 
trade. This issue was not raised by any party in this review. However, 
the URAA amended the definition of sales outside the ``ordinary course 
of trade'' to include sales below cost. See Section 771(15) of the Act. 
Because the Court's decision was issued so close to the deadline for 
completing these preliminary results, we have not had sufficient time 
to evaluate and apply (if appropriate and if there are adequate facts 
on the record) the decision to the facts of this ``post-URAA'' case. 
For these reasons, we have determined to continue to apply our policy 
regarding the use of CV when we have disregarded below-cost sales from 
the calculation of normal value; however, we invite interested parties 
to comment, in their case briefs, on the applicability of the Cemex 
decision to this review.
    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of Borusan's costs of materials, fabrication, SG&A, 
finance expenses, profit and U.S. packing costs. In accordance with 
section 773(e)(2)(A), we based SG&A and profit on the actual amounts 
incurred and realized by Borusan in connection with the production and 
sale of the foreign like product in the ordinary course of trade, for 
consumption in Turkey. For selling expenses, we used the weighted-
average home market selling expenses. We calculated monthly CVs based 
on the indexing methodology described in Calculation of COP, above.
    In comparing CV to export price, we deducted from CV the weighted-
average home market direct selling expenses and added the U.S. product-
specific direct selling expenses. See section 773(a)(8) of the Act.

Level of Trade

    As set forth in section 773(a)(1)(B)(i) of the Act, to the extent 
practicable, we calculate NV based on sales in the comparison market at 
the same level of trade as the U.S. sale. The NV level of trade is that 
of the starting-price sales in the comparison market or, when NV is 
based on CV, that of the sales from which we derive SG&A expenses and 
profit. For EP sales, such as those made by Borusan in this review, the 
U.S. level of trade is also the level of the starting-

[[Page 6158]]

price sale, i.e., the price from Borusan to the unaffiliated U.S. 
importer.
    To determine whether NV sales are at a different level of trade 
than that of the U.S. sale, 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 level of trade, 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 level of trade of the export transaction, we make a 
level-of-trade adjustment under section 773(a)(7)(A) of the Act. 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 implementing these principles in this review, we obtained 
information from Borusan about the marketing stage involved in the 
reported U.S. and home market sales, including a description of the 
selling activities performed by Borusan for each channel of 
distribution. In identifying levels of trade for EP and home market 
sales, we considered the selling functions reflected in the starting 
price before any adjustments. We expect that, if claimed levels of 
trade are the same, the functions and activities of the seller should 
be similar. Conversely, if a party claims that levels of trade are 
different for different groups of sales, the functions and activities 
of the seller should be dissimilar.
    We determined that for Borusan there were two home market levels of 
trade and one U.S. level of trade (i.e., the EP level of trade). We 
also determined that Borusan's EP level of trade was equivalent to one 
of its levels of trade in the home market. See Memorandum from Analyst 
to File: Preliminary Results of 1996-97 Administrative Review of Pipe 
and Tube from Turkey (February 2, 1998). We first attempted to compare 
sales at the U.S. level of trade to sales at the identical home market 
level of trade. If no match was available at the same level of trade, 
we attempted to compare sales at the U.S. level of trade to sales at 
the second home market level of trade. We examined whether a level of 
trade adjustment was appropriate for Borusan when comparing sales at 
its U.S. level of trade to sales at the second, non-identical, home 
market level of trade.
    To determine whether a level-of-trade adjustment was warranted, we 
examined, on a monthly and product-specific basis, the prices, net of 
all adjustments, between sales at the two home market levels of trade. 
We found that the monthly average prices were higher at one level of 
trade for virtually all models and months as well as for virtually all 
sales based on quantities sold. We determined that this demonstrated a 
pattern of consistent price differences. Therefore, when comparing U.S. 
sales to home market sales at the non-identical level-of-trade, we 
adjusted NV for the difference in level of trade.
    With respect to the level of trade for comparisons involving CV, it 
is the Department's practice to calculate, to the extent possible, a CV 
by level of trade, using the selling expenses and profit determined for 
each level of trade in the comparison market. See Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof From France, 
Germany, Italy, Japan, Romania, Singapore, Thailand and the United 
Kingdom; Final Results of Antidumping Duty Administrative Reviews, 
Termination of Administrative Reviews, and Partial Termination of 
Administrative Reviews, 62 FR 54043, 54055 (October 17, 1997). 
Accordingly, we have calculated CV using the level-of-trade specific 
selling expenses and profit at the home market level of trade that is 
identical to the single U.S. level of trade.

Currency Conversion

    Because this proceeding involves a high-inflation economy, we 
limited our comparison of U.S. and home market sales to those occurring 
in the same month (as described above) and only used daily exchange 
rates. See Certain Porcelain on Steel Cookware from Mexico: Final 
Results of Antidumping Duty Administrative Review, 62 FR 42496, 42503-
03 (August 7, 1997) and Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Pasta from Turkey, 61 FR 30309 (June 14, 
1996).
    The Department's preferred source for daily exchange rates is the 
Federal Reserve Bank. However, the Federal Reserve Bank does not track 
or publish exchange rates for the Turkish Lira. Therefore, we made 
currency conversions based on the daily exchange rates from the Dow 
Jones Service, as published in the Wall Street Journal.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following margin exists for the period May 1, 1996 through April 30, 
1997:

------------------------------------------------------------------------
                                                                Margin  
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Borusan.....................................................        0.04
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five days 
of publication of this notice. Any interested party may request a 
hearing within 10 days of the date of publication. Any hearing, if 
requested, will be held 44 days after the date of publication, or the 
first workday thereafter. Interested parties may submit case briefs 
within 30 days of the date of publication. Rebuttal briefs, limited to 
issues raised in the case briefs, may be filed not later than 37 days 
after the date of publication. The Department will publish a notice of 
the final results of this administrative review, which will include the 
results of its analysis of issues raised in any such written comments.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. If these 
preliminary results are adopted in our final results, we will instruct 
the Customs Service not to assess antidumping duties on the merchandise 
subject to review. Upon completion of this review, the Department will 
issue appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of pipe and tube from Turkey entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a)(2)(c) of the Act: (1) The cash deposit rate 
for Borusan will be the rate established in the final results of this 
review, except if the rate is less than 0.5 percent and, therefore, de 
minimis, the cash deposit will be zero; (2) for previously reviewed or 
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, a 
prior review, or the original less-than-fair-value (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) if neither the exporter nor the manufacturer 
is a firm covered in this or any previous review conducted by the 
Department, the cash deposit rate will be 14.74 percent, the ``All 
Others'' rate established in the LTFV investigation.

[[Page 6159]]

    These cash deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    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 in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: February 2, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-3078 Filed 2-5-98; 8:45 am]
BILLING CODE 3510-DS-P