[Federal Register Volume 64, Number 70 (Tuesday, April 13, 1999)]
[Notices]
[Pages 17998-18001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9193]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-549-502]


Certain Welded Carbon Steel Pipes and Tubes From Thailand: 
Preliminary Results of Antidumping Duty Administrative Review

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

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review: Certain Welded Carbon Steel Pipes and Tubes From 
Thailand.

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SUMMARY: In response to requests by two importers, Ferro Union Inc. 
(``Ferro Union''), and ASOMA Corp. (``ASOMA''), and four domestic 
producers, Allied Tube and Conduit Corporation, Sawhill Tubular 
Division--Armco, Inc., Wheatland Tube Company, and Laclede Steel 
Company (collectively, the ``domestic producers'' or ``petitioners''), 
the Department of Commerce (``the Department'') is conducting an 
administrative review of the antidumping duty order on certain welded 
carbon steel pipes and tubes from Thailand. This review covers Saha 
Thai Steel Pipe Co., Ltd. (``Saha Thai''), a Thai manufacturer and its 
affiliated exporter of the subject merchandise to the United States. 
The period of review (POR) is March 1, 1997 through February 28, 1998.
    We have preliminarily determined that the respondent sold subject 
merchandise at less than normal value (``NV'') during the POR. If these 
preliminary results are adopted in our final results, we will instruct 
U.S. Customs to assess antidumping duties based on the differences 
between the export price and NV.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit argument in this proceeding should also 
submit with the argument (1) a statement of the issue, and (2) a brief 
summary of the argument.

EFFECTIVE DATE: April 13, 1999.

FOR FURTHER INFORMATION CONTACT: John Totaro, AD/CVD Enforcement Group 
III, Office VII, Room 7866, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
1374.

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995,

[[Page 17999]]

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's 
regulations are to those codified at 19 CFR Part 351 (1998).

SUPPLEMENTARY INFORMATION:

Background

    On March 11, 1986, the Department published in the Federal Register 
an antidumping duty order on welded carbon steel pipes and tubes from 
Thailand (51 FR 8341). On March 11, 1998, the Department published a 
notice of opportunity to request an administrative review of this order 
covering the period March 1, 1997 through February 28, 1998 (63 FR 
11868).
    Timely requests for an administrative review of the antidumping 
order with respect to sales by Saha Thai during the POR were filed by 
Ferro Union and ASOMA, and by domestic producers. The Department 
published a notice of initiation of this antidumping duty 
administrative review on April 24, 1998 (63 FR 20378).
    Because the Department determined that it was not practicable to 
complete this review within statutory time limits, on November 27, 
1998, we published in the Federal Register our notice of extension of 
time limits for this review (63 FR 65573). As a result, we extended the 
deadline for these preliminary results. The deadline for the final 
results will continue to be 120 days after publication of these 
preliminary results.

Scope of the Review

    The products covered by this administrative review are certain 
welded carbon steel pipes and tubes from Thailand. The subject 
merchandise has an outside diameter of 0.375 inches or more, but not 
exceeding 16 inches. These products, which are commonly referred to in 
the industry as ``standard pipe'' or ``structural tubing,'' are 
hereinafter designated as ``pipe and tube.'' The merchandise is 
classifiable under the Harmonized Tariff Schedule (HTS) item numbers 
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 the order is dispositive. This review covers sales by 
Saha Thai during the period March 1, 1997 through February 28, 1998.

Verification

    As provided in section 782(i) of the Act, we verified sales 
information provided by the respondent Saha Thai from January 25 
through January 29, 1999, using standard verification procedures, 
including examination of relevant financial records and analysis of 
original documentation used by Saha Thai to prepare responses to 
requests for information from the Department. Our verification results 
are outlined in the public version of the verification report 
(Memorandum to the File from Steve Bezirganian and Marlene Hewitt, 
February 24, 1999) (``Saha Thai Verification Report'').

Tolling Operations

    Saha Thai claimed that, during the POR, it converted coil into pipe 
pursuant to a tolling arrangement with a home market trading company. 
However, sales of the alleged tolled merchandise are not subject to 
this review because entries did not occur during the POR. See 
Memorandum to the File from John Totaro, March 31, 1999.

Date of Sale

    As in previous segments of this proceeding, Saha Thai reported 
invoice date as the date of sale. We examined whether invoice date was 
the appropriate date of sale, i.e., whether the material terms of sale 
were established on an earlier date. During verification, Saha Thai 
officials reported that in fact price and quantity were established at 
the date of the purchase order. We examined the record evidence and 
found that Saha Thai's statement at verification is not entirely 
supported by the record. Given the inconclusive record evidence and the 
potential problems associated with changing date of sale at this 
juncture in the proceeding, we find that invoice date is the 
appropriate date of sale. See Preamble to the Final Regulations, 62 FR 
27296, 27348-50 (May 19, 1997).

Affiliation and Collapsing Determinations

    In the 1996-1997 administrative review, we found Saha Thai 
affiliated under section 771(33)(F) of the Act with Thai Tube Co., Ltd. 
(``Thai Tube''), Thai Hong Steel Pipe Import Export Co., Ltd (``Thai 
Hong'') and the Siam Steel Group, a member of which, Siam Matsushita 
Steel Co., Ltd., is a producer of PVC lined and coated steel pipes. We 
examined whether it was appropriate to collapse each of these 
affiliated producers with Saha Thai for margin calculation purposes, in 
accordance with 19 CFR 351.401(f). We found insufficient evidence to 
collapse Saha Thai with any of these affiliated producers. No new 
factual information has been presented to warrant changing these 
previous findings for the instant review. Saha Thai did present certain 
new factual information regarding Thai Tube and Thai Hong, but it had 
no impact on our findings. See Memorandum to the File from John Totaro, 
(March 31, 1999) (``Thai Tube/Thai Hong Memorandum'').
    Also in the previous administrative review, the Department found 
that Saha Thai was affiliated under section 771(33)(F) of the Act with 
three resellers of the foreign like product. The facts on the record in 
the instant review relating to this affiliation determination are 
unchanged from those on the record of the previous review, and support 
our finding of affiliation under section 771(33)(F) of the Act between 
Saha Thai and these three resellers. However, because Saha Thai's sales 
to these resellers accounted for less than five percent of Saha Thai's 
total home market sales, the Department did not require Saha Thai to 
report the downstream sales by these resellers. See Memorandum to the 
File, March 31, 1999 (``Downstream Sales Memorandum'').

Fair Value Comparisons

    To determine whether sales of steel pipes and tubes from Thailand 
to the United States were made at less than normal value (NV), we 
compared the export price (EP) to the NV for Saha Thai as specified in 
the ``Export Price'' and ``Normal Value'' sections of this notice. In 
accordance with section 777A(d)(2), we calculated monthly weighted-
average prices for NV and compared these to individual U.S. 
transactions.

Export Price

    We classified all Saha Thai sales to United States customers as EP 
sales because Saha Thai is not affiliated with its U.S. distributors, 
which are the first purchasers in the United States. Certain Welded 
Carbon Steel Pipes and Tubes From Thailand: Final Results of 
Antidumping Duty Administrative Review, 61 FR 56515, 56517 (November 1, 
1996). In this review, the record evidence presents no factual 
circumstances warranting a change from this prior analysis. 
Accordingly, we calculated the EP based on the price from Saha Thai to 
the first unaffiliated purchaser in the United States in accordance 
with section 772(a) of the Act. Where appropriate, in accordance with 
section 772(c)(2) of the Act, we made deductions from the starting 
price

[[Page 18000]]

for ocean freight to the U.S. port, foreign inland freight, foreign 
brokerage and handling, foreign inland insurance, and bill of lading 
charge. We denied Saha Thai's request for a duty drawback adjustment 
because we were unable to verify that the claimed adjustment accurately 
reflects the actual amount of duty drawback received.

Normal Value

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV, we 
compared the volume of Saha Thai's home market sales of the foreign 
like product to the volume of U.S. sales of subject merchandise, in 
accordance with section 773(a)(1) of the Act. Based on this comparison, 
we determined that the aggregate volume of Saha Thai's home market 
sales of the foreign like product is greater than five percent of the 
aggregate volume of Saha Thai's U.S. sales. Thus, we determined that 
Saha Thai had a viable home market during the POR. Consequently, we 
based NV on home market sales.
    As discussed above, we found Saha Thai and its three home market 
resellers affiliated under section 771(33)(F) of the Act. Based on this 
finding, we applied the standard arm's length test to Saha Thai's sales 
to these affiliated resellers. However, as stated above, we did not 
require Saha Thai to report the resellers' downstream sales. Therefore, 
where Saha Thai's sales to these resellers were not made at arm's 
length prices, we excluded these sales from our home market normal 
value calculation. See Memorandum to File from Marlene Hewitt, March 
31, 1999 (``Downstream Sales Memorandum'').
    Pursuant to section 773(b)(2)(A)(ii) of the Act, there were 
reasonable grounds to believe or suspect that Saha Thai had made home 
market sales at prices below its cost of production (``COP'') in this 
review because the Department had disregarded sales below the COP in 
the 1996-1997 administrative review (i.e., the most recently completed 
review at the time we issued our antidumping questionnaire). As a 
result, the Department initiated an investigation to determine whether 
Saha Thai made home market sales during the POR at prices below its 
COP. We calculated the COP based on the sum of respondent's cost of 
materials and fabrication for the foreign like product, plus amounts 
for SG&A and packing costs, in accordance with section 773(b)(3) of the 
Act.
    We used respondent's reported COP amounts with certain adjustments 
to compute weighted-average COPs during the POR. Specifically, we did 
not allow Saha Thai's request to amortize certain portions of its POR 
exchange rate losses over five years because these losses were incurred 
on short-term foreign currency debt for terms shorter than five years 
and Saha Thai booked the entire amount of these losses on its financial 
statements. To incorporate this change we recalculated Saha Thai's net 
interest expense rate, general and administrative expenses rate, and 
materials cost calculation. In addition, we recalculated Saha Thai's 
hot-rolled coil cost calculation to correct an error identified at 
verification.
    We compared the COP figures to home market sales of the foreign 
like product as required under section 773(b) of the Act, in order to 
determine whether these sales had been made at prices below the COP. On 
a product-specific basis, we compared the COP to home market prices, 
less any applicable movement charges, discounts and credit notes.
    In determining whether to disregard home market sales made at 
prices below the COP, we examined (1) whether, within an extended 
period of time, such sales were made in substantial quantities, and (2) 
whether such sales were made at prices which permitted the recovery of 
all costs within a reasonable period of time in the normal course of 
trade.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of the respondent'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 we determined that the below-cost sales were not made 
in ``substantial quantities.'' Where 20 percent or more of the 
respondent's sales of a given product during the POR were at prices 
less than the COP, we determined such sales to have been made in 
substantial quantities within an extended period of time in accordance 
with section 773(b)(1)(A) of the Act. In such cases, we also determined 
that such sales were not made at prices which would permit recovery of 
all costs within a reasonable period of time, in accordance with 
section 773(b)(1)(B) of the Act. Therefore, we disregarded the below-
cost sales.
    Where appropriate, we adjusted Saha Thai's home market sales for 
discounts, credit expenses, inland freight, inland insurance, and 
warehousing. We also adjusted the home market sales made by reseller 
Company B for credit notes. In addition, in accordance with section 
773(a)(6), we deducted home market packing costs and added U.S. packing 
costs.
    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of Saha Thai's cost of materials, fabrication, SG&A, 
profit, and U.S. packing costs. We made certain adjustments to CV which 
are detailed in the COP section, above. In accordance with section 
773(e)(2)(A) of the Act, we based SG&A expenses and profit on the 
amounts incurred and realized by Saha Thai 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 average of the selling expenses reported for home market 
sales that passed the cost test, weighted by the total quantity of 
those sales. For actual profit, we first calculated the difference 
between the home market sales value and home market COP, and divided 
the difference by the home market COP. We then multiplied this 
percentage by the COP for each U.S. model to derive an actual profit.

Level of Trade

    As set forth in section 773(a)(1)(B)(i) of the Act and in the SAA, 
to the extent practicable, we determine NV based on sales in the 
comparison market at the same level of trade as the EP or the CEP. 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 selling, general and administrative expenses and profit. For EP, 
the U.S. level of trade is the level of the starting-price sale, which 
is usually from exporter to importer.
    To determine whether NV sales are at a different level of trade 
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 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).
    For the U.S. market, Saha Thai reported only one level of trade for 
its EP sales. This single level of trade represents large volume sales 
to unaffiliated trading companies/distributors in the U.S. In the home 
market as well, Saha Thai claimed that it made sales at one level of 
trade. These sales were made to unaffiliated trading

[[Page 18001]]

companies and distributors (made at the same level of trade as U.S. 
sales). There are no differences in the selling functions Saha Thai 
performs for these customers in the home market or in the U.S. 
Therefore, we conclude that EP and NV sales are made at the same LOT 
and no adjustment is warranted.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A of the Act, based on exchange rates in effect on the dates 
of the U.S. sales as certified by the Federal Reserve Bank. 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. It is the Department's practice to 
find that a fluctuation exists when the daily exchange rate differs 
from the benchmark rate by 2.25 percent. The benchmark is defined as 
the moving average of rates for the past 40 business days. When we 
determine a fluctuation to have existed, we substitute the benchmark 
rate for the daily rate, in accordance with established practice. See 
Change in Policy Regarding Currency Conversions, 61 FR 9434 (March 8, 
1996).
    Our preliminary analysis of Federal Reserve dollar-baht exchange 
rate data shows that the value of the Thai baht in relation to the U.S. 
dollar fell on July 2, 1997 by more than 18 percent from the previous 
day and did not rebound significantly in a short time. This decline was 
many times more severe than any single-day decline during several years 
prior to that date. Had the baht rebounded quickly enough to recover 
all or almost all of the loss, the Department might have been inclined 
to view this decline as nothing more than a momentary drop, despite the 
magnitude of that drop. However, there was no significant rebound. 
Therefore, we have preliminarily determined that the decline in the 
baht from July 1, 1997 to July 2, 1997 was of such a magnitude that the 
dollar-baht exchange rate cannot reasonably be viewed as having simply 
fluctuated at this time, i.e., as having experienced only a momentary 
drop in value, relative to the normal benchmark. Therefore, for 
exchange rates between July 2 and August 27, 1997, the Department 
relied on the standard exchange rate model, but used as the benchmark 
rate a (stationary) average of the daily rates over this period. In 
this manner we used a post-precipitous drop benchmark, but at the same 
time avoided undue daily fluctuations in exchange rates. For the period 
after August 27, 1997, we used the standard (rolling 40-day average) 
benchmark.

Preliminary Results of the Review

    We preliminarily determine that the following weighted-average 
dumping margins exist:

------------------------------------------------------------------------
                                                                Margin
          Manufacturer/exporter                  Period        (percent)
------------------------------------------------------------------------
Saha Thai................................     3/1/97-2/28/98       12.83
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five days 
of the date of publication of this notice. Any interested party may 
request a hearing within 30 days of publication. Any hearing, if 
requested, will be held 37 days after the date of publication or the 
first business day thereafter. Case briefs and/or other written 
comments from interested parties may be submitted not later than 30 
days after the date of publication. Rebuttal briefs and rebuttals to 
written comments, limited to issues raised in those comments, may be 
filed not later than 35 days after the date of publication of this 
notice. The Department will publish the final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such comments, within 120 days from the date of 
publication of these preliminary results.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with 19 CFR 351.212(b), we calculated importer-specific ad valorem duty 
assessment rates for the class or kind of merchandise based on the 
ratio of the total amount of antidumping duties calculated for the 
examined sales made during the POR to the total customs value of the 
sales used to calculate those duties. This rate will be assessed 
uniformly on all entries that particular importer made during the POR. 
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 the 
publication of the final results of these administrative reviews for 
all shipments of circular welded carbon steel pipes and tubes from 
Thailand entered, or withdrawn from warehouse, for consumption on or 
after the publication date, as provided for by Section 751(a)(2)(c) of 
the Act: (1) the cash deposit rate for the reviewed company will be 
that established in the final results of this review; (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, 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; (4) the 
cash deposit rate for all other manufacturers or exporters will 
continue to be 15.67 percent, the ``All Others'' rate made effective by 
the LTFV investigation. These 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 351.402(f) 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.
    These preliminary results of review are issued and published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: March 31, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-9193 Filed 4-12-99; 8:45 am]
BILLING CODE 3510-DS-P