[Federal Register Volume 64, Number 144 (Wednesday, July 28, 1999)]
[Notices]
[Pages 40825-40831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19307]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-851-802, A-588-850, A-588-851, A-201-827, A-791-808, A-485-805]


Initiation of Antidumping Duty Investigations: Certain Large 
Diameter Carbon and Alloy Seamless Standard, Line and Pressure Pipe 
From Japan and Mexico; and Certain Small Diameter Carbon and Alloy 
Seamless Standard, Line and Pressure Pipe From the Czech Republic, 
Japan, the Republic of South Africa and Romania

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

EFFECTIVE DATE: July 28, 1999.

FOR FURTHER INFORMATION CONTACT: Steven Presing or Kris Campbell at 
(202) 482-0194 and (202) 482-3813, respectively; Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230.

Initiation of Investigations

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to 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's regulations are 
references to the provisions codified at 19 CFR part 351 (1998).

The Petitions

    On June 30, 1999, the Department of Commerce (``the Department'') 
received petitions on large diameter carbon and alloy seamless 
standard, line and pressure pipe (``large diameter pipe'') filed in 
proper form by U.S. Steel Group, (a unit of USX Corp.-Fairfield 
Seamless Pipe Mill), USS/Kobe Steel Company. Also that day, the 
Department received petitions on small diameter carbon and alloy 
seamless standard, line and pressure pipe (``small diameter pipe'') 
filed in proper form from Koppel Steel Corporation, Sharon Tube 
company, U.S. Steel Group, USS/Kobe Steel Company and Vision Metals, 
Inc.(Gulf States Tube Division). On June 30, 1999, the United Steel 
Workers of America joined as co-petitioners in all of the cases. The 
Department received supplemental information to the petitions 
throughout the 20-day initiation period.
    In accordance with section 732(b) of the Act, the petitioners 
allege that imports of certain large and small diameter pipe from the 
above-mentioned countries are being, or are likely to be, sold in the 
United States at less than fair value within the meaning of section 731 
of the Act, and that such imports are materially injuring an industry 
in the United States.
    The Department finds that the petitioners filed these petitions on 
behalf of the domestic industry because they are interested parties as 
defined in sections 771(9)(C) and (D) of the Act and they have 
demonstrated sufficient industry support with respect to each of the 
antidumping investigations they are requesting the Department to 
initiate (see Determination of Industry Support for the Petitions 
below).

Scopes of Investigations

Scope of Large Diameter Investigations
    The scope of these investigations includes large diameter seamless 
carbon and alloy (other than stainless) steel standard, line, and 
pressure pipes produced, or equivalent, to the American Society for 
Testing and Materials (``ASTM'') A-53, ASTM A-106, ASTM A-333, ASTM A-
334, ASTM A-335, ASTM A-589, ASTM A-795, and the American Petroleum 
Institute (``API'') 5L specifications and meeting the physical 
parameters described below, regardless of application. The scope of 
these investigations also includes all products used in standard, line, 
or pressure pipe applications and meeting the physical parameters 
described below, regardless of specification. Specifically included 
within the scope of these investigations are seamless pipes greater 
than 4.5 inches (114.3 mm) up to and including 16 inches (406.4 mm) in 
outside diameter, regardless of wall-thickness, manufacturing process 
(hot finished or cold-drawn), end finish (plain end, beveled end, upset 
end, threaded, or threaded and coupled), or surface finish.
    The seamless pipes subject to these investigations are currently 
classifiable under the subheadings 7304.10.10.30, 7304.10.10.45, 
7304.10.10.60, 7304.10.50.50, 7304.31.60.50, 7304.39.00.36, 
7304.39.00.40, 7304.39.00.44, 7304.39.00.48, 7304.39.00.52, 
7304.39.00.56, 7304.39.00.62, 7304.39.00.68, 7304.39.00.72, 
7304.51.50.60, 7304.59.60.00, 7304.59.80.30, 7304.59.80.35, 
7304.59.80.40, 7304.59.80.45, 7304.59.80.50, 7304.59.80.55, 
7304.59.80.60, 7304.59.80.65, and 7304.59.80.70 of the Harmonized 
Tariff Schedule of the United States (``HTSUS'').
    Specifications, Characteristics, and Uses: Large diameter seamless 
pipe is used primarily for line applications such as oil, gas, or water 
pipeline, or utility distribution systems. Seamless pressure pipes are 
intended for the conveyance of water, steam, petrochemicals, chemicals, 
oil products, natural gas and other liquids and gasses in industrial 
piping systems. They may carry these substances at elevated pressures 
and temperatures and may be subject to the application of external 
heat. Seamless carbon steel pressure pipe meeting the ASTM A-106 
standard may be used in temperatures of up to 1000 degrees Fahrenheit, 
at various American Society of Mechanical Engineers (``ASME'') code 
stress levels. Alloy pipes made to ASTM A-335 standard must be used if 
temperatures and stress levels exceed those allowed for ASTM A-106. 
Seamless pressure pipes sold in the United States are commonly produced 
to the ASTM A-106 standard.
    Seamless standard pipes are most commonly produced to the ASTM A-53 
specification and generally are not intended for high temperature 
service. They are intended for the low temperature and pressure 
conveyance of water, steam, natural gas, air and other liquids and 
gasses in plumbing and heating systems, air conditioning units, 
automatic sprinkler systems, and other related uses. Standard pipes 
(depending on type and code) may carry liquids at

[[Page 40826]]

elevated temperatures but must not exceed relevant ASME code 
requirements. If exceptionally low temperature uses or conditions are 
anticipated, standard pipe may be manufactured to ASTM A-333 or ASTM A-
334 specifications.
    Seamless line pipes are intended for the conveyance of oil and 
natural gas or other fluids in pipe lines. Seamless line pipes are 
produced to the API 5L specification.
    Seamless water well pipe (ASTM A-589) and seamless galvanized pipe 
for fire protection uses (ASTM A-795) are used for the conveyance of 
water.
    Seamless pipes are commonly produced and certified to meet ASTM A-
106, ASTM A-53, API 5L-B, and API 5L-X42 specifications. To avoid 
maintaining separate production runs and separate inventories, 
manufacturers typically triple or quadruple certify the pipes by 
meeting the metallurgical requirements and performing the required 
tests pursuant to the respective specifications. Since distributors 
sell the vast majority of this product, they can thereby maintain a 
single inventory to service all customers.
    The primary application of ASTM A-106 pressure pipes and triple or 
quadruple certified pipes in large diameters is for use as oil and gas 
distribution lines for commercial applications. A more minor 
application for large diameter seamless pipes is for use in pressure 
piping systems by refineries, petrochemical plants, and chemical 
plants, as well as in power generation plants and in some oil field 
uses (on shore and off shore) such as for separator lines, gathering 
lines and metering runs. These applications constitute the majority of 
the market for the subject seamless pipes. However, ASTM A-106 pipes 
may be used in some boiler applications.
    The scope of these investigations includes all seamless pipe 
meeting the physical parameters described above and produced to one of 
the specifications listed above, regardless of application, and whether 
or not also certified to a non-covered specification. Standard, line, 
and pressure applications and the above-listed specifications are 
defining characteristics of the scope of these investigations. 
Therefore, seamless pipes meeting the physical description above, but 
not produced to the ASTM A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM 
A-335, ASTM A-589, ASTM A-795, and API 5L specifications shall be 
covered if used in a standard, line, or pressure application.
    For example, there are certain other ASTM specifications of pipe 
which, because of overlapping characteristics, could potentially be 
used in ASTM A-106 applications. These specifications generally include 
ASTM A-161, ASTM A-192, ASTM A-210, ASTM A-252, ASTM A-501, ASTM A-523, 
ASTM A-524, and ASTM A-618. When such pipes are used in a standard, 
line, or pressure pipe application, such products are covered by the 
scope of these investigations.
    Specifically excluded from the scope of these investigations are 
boiler tubing and mechanical tubing, if such products are not produced 
to ASTM A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-335, ASTM A-
589, ASTM A-795, and API 5L specifications and are not used in 
standard, line, or pressure pipe applications. In addition, finished 
and unfinished oil country tubular goods (``OCTG'') are excluded from 
the scope of these investigations, if covered by the scope of another 
antidumping duty order from the same country. If not covered by such an 
OCTG order, finished and unfinished OCTG are included in this scope 
when used in standard, line or pressure applications.
Scope of Small Diameter Investigations
    The scope of these investigations includes small diameter seamless 
carbon and alloy (other than stainless) steel standard, line, and 
pressure pipes and redraw hollows produced, or equivalent, to the 
American Society for Testing and Materials (``ASTM'') A-53, ASTM A-106, 
ASTM A-333, ASTM A-334, ASTM A-335, ASTM A-589, ASTM A-795, and the 
American Petroleum Institute (``API'') 5L specifications and meeting 
the physical parameters described below, regardless of application. The 
scope of these investigations also include all products used in 
standard, line, or pressure pipe applications and meeting the physical 
parameters described below, regardless of specification. Specifically 
included within the scope of these investigations are seamless pipes 
and redraw hollows, less than or equal to 4.5 inches (114.3 mm) in 
outside diameter, regardless of wall-thickness, manufacturing process 
(hot finished or cold-drawn), end finish (plain end, beveled end, upset 
end, threaded, or threaded and coupled), or surface finish.
    The seamless pipes subject to these investigations are currently 
classifiable under the subheadings 7304.10.10.20, 7304.10.50.20, 
7304.31.30.00, 7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 
7304.39.00.24, 7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 
7304.51.50.60, 7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 
7304.59.80.20, and 7304.59.80.25 of the HTSUS.
    Specifications, Characteristics, and Uses: Seamless pressure pipes 
are intended for the conveyance of water, steam, petrochemicals, 
chemicals, oil products, natural gas and other liquids and gasses in 
industrial piping systems. They may carry these substances at elevated 
pressures and temperatures and may be subject to the application of 
external heat. Seamless carbon steel pressure pipe meeting the ASTM A-
106 standard may be used in temperatures of up to 1000 degrees 
Fahrenheit, at various American Society of Mechanical Engineers 
(``ASME'') code stress levels. Alloy pipes made to ASTM A-335 standard 
must be used if temperatures and stress levels exceed those allowed for 
ASTM A-106. Seamless pressure pipes sold in the United States are 
commonly produced to the ASTM A-106 standard.
    Seamless standard pipes are most commonly produced to the ASTM A-53 
specification and generally are not intended for high temperature 
service. They are intended for the low temperature and pressure 
conveyance of water, steam, natural gas, air and other liquids and 
gasses in plumbing and heating systems, air conditioning units, 
automatic sprinkler systems, and other related uses. Standard pipes 
(depending on type and code) may carry liquids at elevated temperatures 
but must not exceed relevant ASME code requirements. If exceptionally 
low temperature uses or conditions are anticipated, standard pipe may 
be manufactured to ASTM A-333 or ASTM A-334 specifications.
    Seamless line pipes are intended for the conveyance of oil and 
natural gas or other fluids in pipe lines. Seamless line pipes are 
produced to the API 5L specification.
    Seamless water well pipe (ASTM A-589) and seamless galvanized pipe 
for fire protection uses (ASTM A-795) are used for the conveyance of 
water.
    Seamless pipes are commonly produced and certified to meet ASTM A-
106, ASTM A-53, API 5L-B, and API 5L-X42 specifications. To avoid 
maintaining separate production runs and separate inventories, 
manufacturers typically triple or quadruple certify the pipes by 
meeting the metallurgical requirements and performing the required 
tests pursuant to the respective specifications. Since distributors 
sell the vast majority of this product, they can thereby maintain a 
single inventory to service all customers.
    The primary application of ASTM A-106 pressure pipes and triple or 
quadruple certified pipes is in pressure

[[Page 40827]]

piping systems by refineries, petrochemical plants, and chemical 
plants. Other applications are in power generation plants (electrical-
fossil fuel or nuclear), and in some oil field uses (on shore and off 
shore) such as for separator lines, gathering lines and metering runs. 
A minor application of this product is for use as oil and gas 
distribution lines for commercial applications. These applications 
constitute the majority of the market for the subject seamless pipes. 
However, ASTM A-106 pipes may be used in some boiler applications.
    Redraw hollows are any unfinished pipe or ``hollow profiles'' of 
carbon or alloy steel transformed by hot rolling or cold drawing/
hydrostatic testing or other methods to enable the material to be sold 
under ASTM A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-335, ASTM 
A-589, ASTM A-795, and API 5L specifications.
    The scope of these investigations includes all seamless pipe 
meeting the physical parameters described above and produced to one of 
the specifications listed above, regardless of application, and whether 
or not also certified to a non-covered specification. Standard, line, 
and pressure applications and the above-listed specifications are 
defining characteristics of the scope of these investigations. 
Therefore, seamless pipes meeting the physical description above, but 
not produced to the ASTM A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM 
A-335, ASTM A-589, ASTM A-795, and API 5L specifications shall be 
covered if used in a standard, line, or pressure application.
    For example, there are certain other ASTM specifications of pipe 
which, because of overlapping characteristics, could potentially be 
used in ASTM A-106 applications. These specifications generally include 
ASTM A-161, ASTM A-192, ASTM A-210, ASTM A-252, ASTM A-501, ASTM A-523, 
ASTM A-524, and ASTM A-618. When such pipes are used in a standard, 
line, or pressure pipe application, such products are covered by the 
scope of these investigations.
    Specifically excluded from the scope of these investigations are 
boiler tubing and mechanical tubing, if such products are not produced 
to ASTM A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-335, ASTM A-
589, ASTM A-795, and API 5L specifications and are not used in 
standard, line, or pressure pipe applications. In addition, finished 
and unfinished OCTG are excluded from the scope of these 
investigations, if covered by the scope of another antidumping duty 
order from the same country. If not covered by such an OCTG order, 
finished and unfinished OCTG are included in this scope when used in 
standard, line or pressure applications.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the merchandise under 
investigation is dispositive.
    During our review of the petitions, we discussed the scope with the 
petitioners to ensure that the scope in the petitions accurately 
reflects the product for which the domestic industry is seeking relief. 
Moreover, as discussed in the preamble to the Department's regulations 
(62 FR 27323), we are setting aside a period for parties to raise 
issues regarding product coverage. The Department encourages all 
parties to submit such comments by August 10, 1999. Comments should be 
addressed to Import Administration's Central Records Unit at Room 1870, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230. The period of scope consultations is intended to 
provide the Department with ample opportunity to consider all comments 
and consult with parties prior to the issuance of the preliminary 
determinations.

Determination of Industry Support for the Petitions

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) At least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The International Trade Commission (``ITC''), which is 
responsible for determining whether ``the domestic industry'' has been 
injured, must also determine what constitutes a domestic like product 
in order to define the industry. While both the Department and the ITC 
must apply the same statutory definition regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to separate and distinct authority. In addition, the 
Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
like product, such differences do not render the decision of either 
agency contrary to the law.\1\
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    \1\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass from Japan: Final Determination; Rescission of 
Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-
81 (July 16, 1991).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product that is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    There are two domestic like products, one for small diameter pipe 
and one for large diameter pipe. These domestic like products, as 
referred to in the petitions, are the domestic like products defined in 
the ``Scopes of Investigation'' section, above. The Department has no 
basis on the record to find the petitioners' definition of the domestic 
like product to be inaccurate. The Department, therefore, has adopted 
the domestic like product definition set forth in the petitions.
    Moreover, the Department has determined that the petitions (and 
subsequent amendments) and supplemental information obtained through 
the Department's research contain adequate evidence of industry 
support; therefore, polling is unnecessary (see Attachment to the 
Initiation Checklist, Re: Industry Support, July 20, 1999). For both 
large and small diameter, the petitioners established industry support 
representing over 50 percent of total production of the domestic like 
product. Accordingly, the Department determines that these petitions 
are filed on behalf of the domestic industry within the meaning of 
section 732(b)(1) of the Act.

Export Price and Normal Value

    The following are descriptions of the allegations of sales at less 
than fair value upon which the Department's decision to initiate these 
investigations is based.
    The petitioners, in determining normal value (``NV'') for Japan, 
Mexico and South Africa relied upon price data contained in 
confidential market research reports filed with the

[[Page 40828]]

Department. At our request, the petitioners arranged for the Department 
to contact the authors of the reports to verify the accuracy of the 
data, the methodology used to collect the data, and the credentials of 
those gathering the market research. The Department's discussions with 
the authors of the market research reports are summarized in Memorandum 
to the File: Re--Foreign Market Research Reports, dated July 20, 1999. 
For a more detailed discussion of the deductions and adjustments 
relating to home market price, U.S. price and factors of production and 
sources of data for each country named in the petition, see Initiation 
Checklist, dated July 20, 1999. Should the need arise to use as facts 
available under section 776 of the Act any of this information in our 
preliminary or final determinations, we may re-examine the information 
and revise the margin calculations, if appropriate.

Czech Republic

    The petitioners based EP on a U.S. price for a sale to an 
unaffiliated purchaser, and calculated net U.S. price by subtracting 
from gross price unloading and wharfage charges, international shipping 
charges, U.S. customs duties, and an industry standard U.S. trading 
company mark-up.
    The petitioners noted that the Department has never had occasion to 
determine whether the Czech Republic is a non-market economy (NME) 
country to the extent that sales or offers for sale of the foreign like 
product in the Czech Republic do not permit calculation of NV under 19 
CFR 351.404. In previous investigations, however, the Department has 
determined that Czechoslovakia, the predecessor of both the Slovak 
Republic and the Czech Republic, was an NME. See e.g., Carbon Steel 
Wire Rod from Czechoslovakia; Preliminary Negative Countervailing Duty 
Determination, 49 FR 6773 (February 23, 1984). In accordance with 
section 771(18)(C)(i) of the Act, the presumption of NME status remains 
in effect until revoked by the Department. The presumption of NME 
status for the Czech Republic has not been revoked by the Department 
and, therefore, remains in effect for purposes of the initiation of 
this investigation. Accordingly, pursuant to section 773(c) of the Act, 
the petitioners constructed NV of the product based on factors of 
production valued in a surrogate market economy country. In the course 
of this investigation, all parties will have the opportunity to provide 
relevant information related to the issues of the Czech Republic's NME 
status and the granting of separate rates to individual exporters. See 
e.g., Final Determination of Sales at Less Than Fair Value: Silicon 
Carbide from the PRC, 59 FR 22585 (May 2, 1994).
    The petitioners selected Brazil as the most appropriate surrogate 
market economy. The petitioners stated that: (1) Brazil is ranked third 
in proximity to the Czech Republic with respect to a similar per capita 
GNP; (2) Brazil is a significant producer of the subject merchandise; 
and (3) the petitioners have been able to secure detailed financial 
statements for Brazil's major seamless pipe producer. The petitioners 
believe Brazil is the most appropriate surrogate market economy because 
it is a significant producer of comparable merchandise (in accordance 
with section 773(c)(4) of the Act). Based on the information provided 
by the petitioners, we believe their use of Brazil as a surrogate 
country is appropriate for purposes of initiation of this 
investigation.
    For the NV calculation, the petitioners based the factors of 
production, as defined by section 773(c)(3) of the Act (raw materials, 
labor, and energy), for small diameter pipe on the same basic billet 
round input used by the petitioners, adjusted to reflect unit factor 
costs in the surrogate. The petitioners asserted that detailed 
information is not available regarding the Czech producers' actual 
usage rates. Thus, the petitioners have assumed, for purposes of the 
petition, that Czech producers of subject merchandise use the same 
basic billet round input as the petitioners. Specifically, the 
petitioners have used one U.S. producer's factors of production through 
the heating, piercing, rolling, and finishing of a billet round into 
finished pipe.
    In accordance with section 773(c)(4) of the Act, the petitioners 
valued factors of production, where possible, on reasonably available, 
public surrogate country data. The petitioners estimate Czech 
producers' unit factor cost for billet rounds by utilizing Brazilian 
import/export statistics as published in the 1997 reports of the United 
Nations Statistical Division. Labor was valued using a regression-based 
wage rate for the Czech Republic provided by the Department in 
accordance with 19 CFR 351.408(c)(3). This value was multiplied by the 
usage rate of the U.S. steel company to calculate total cost of labor. 
Electricity rates were taken from Energy, Prices and Taxes, Fourth 
Quarter 1998. The petitioners determine depreciation for Czech 
producers by drawing from the 1997 annual report of a major Brazilian 
producer of seamless pipe. In addition, petitioners have calculated 
selling, general and administrative expenses as well as a net financial 
expense based on expenses reported in the 1998 financial statements of 
Brazil's major pipe producer. The necessary financial information to 
determine factory overhead (including all indirect labor, materials, 
and utilities) was not available for the major pipe producer in Brazil. 
The Brazilian producer's financial statements group all direct and 
indirect costs into cost of goods sold, and provide no means by which 
to segregate these items. Therefore, the petitioners instead utilized 
the financial statements of a South African pipe producer and relied 
upon the factory overhead incurred by this producer as a surrogate for 
the Czech Republic. (South Africa, like Brazil, is at a level of 
economic development comparable to that of the Czech Republic.) In 
determining an amount of profit for constructed value, the petitioners 
could not use Brazil's major pipe producer as a surrogate because this 
producer reported a net loss in 1998. Therefore, the petitioners have 
used the financial statements of two Brazilian steel companies, neither 
of which produce pipe, to estimate a profit percentage to be used as 
surrogate for the Czech producer. However, given that the petitioners 
did not capture correctly the Brazilian producers' profit, we 
recalculated the profit rate and the overall estimated dumping margins 
accordingly. See Memorandum to the File: Re--Recalculation of Brazilian 
Surrogate Profit Rate, dated July 20, 1999.
    Based on the information provided by the petitioners, we believe 
that their surrogate values represent information reasonably available 
to the petitioners and are acceptable for purposes of initiation of 
this investigation.
    Based on comparisons of EP to NV, calculated in accordance with 
section 773(c) of the Act, the estimated dumping margins for small 
diameter pipe from the Czech Republic range from 161.18 to 167.42 
percent.

Japan (Both Large and Small Diameter Pipe)

    For both small and large diameter pipe, the petitioners based EP on 
a price quote from a Japanese trading company to an unaffiliated 
customer.
    The petitioners calculated a net U.S. price by subtracting 
estimated costs for the trading company mark-up, foreign inland 
freight, brokerage and port charges, international freight, unloading 
and wharfage, U.S. movement, U.S. discount and U.S. customs duties.
    NV is based upon prices for products which are identical to the 
products used

[[Page 40829]]

as the basis for the U.S. price. The petitioners calculated the net ex-
factory price by deducting foreign movement charges. In addition, the 
petitioners deducted domestic packing expenses, added U.S. packing 
expenses and adjusted for differences in credit expenses between the 
U.S. and Japanese market.
    In addition, the petitioners provided information demonstrating 
reasonable grounds to believe or suspect that large and small diameter 
pipe sold in the home market were made at prices below the fully 
absorbed cost of production (``COP''), within the meaning of section 
773(b) of the Act, and requested that the Department conduct a country-
wide sales-below-cost investigation.
    Pursuant to section 773(b)(3) of the Act, COP consists of the cost 
of manufacturing (``COM''), selling, general, and administrative 
expenses (``SG&A'') and packing. To calculate COP, petitioners based 
COM on their own production experience, adjusted for known differences 
between costs incurred to produce certain seamless pipe products in the 
United States and in Japan using market research and publicly available 
data.
    To calculate SG&A and financial expenses, petitioners relied upon 
the fiscal year 1998 audited financial statements of a Japanese steel 
producer. Based upon the comparison of the adjusted prices of the 
foreign like product in the home market to the calculated COP of the 
product, we find reasonable grounds to believe or suspect that sales of 
the foreign like product were made below the COP within the meaning of 
section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is 
initiating a country-wide cost investigation.
    Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, 
petitioners also based NV for sales in Japan on constructed value 
(``CV''). For this initiation, we are accepting CV as the appropriate 
basis for NV. The petitioners calculated CV using the same COM, SG&A 
and financial expense figures used to compute Japanese home market 
costs. Consistent with section 773(e)(2) of the Act, the petitioners 
also added to CV an amount for profit. Profit was based upon a Japanese 
producer's fiscal year 1998 financial statements. We adjusted the CV 
for differences in circumstances of sales by subtracting home market 
credit expenses and adding U.S. credit and packing expenses.
    The margin calculations based on price to CV, as revised, indicate 
dumping margins ranging from 74.17-106.07 percent for small diameter 
pipe and 64.00-107.80 percent for large diameter pipe. The estimated 
dumping margins, based on price-to-price comparisons range from 50.42-
51.07 percent for small diameter pipe and 50.21-53.52 percent for large 
diameter pipe.

Mexico

    The petitioners based EP on an offer for sale of a range of 
products from a distributor which is affiliated with the one known 
Mexican producer.
    The petitioners calculated a net U.S. price by deducting estimated 
values for U.S. inland freight, U.S. port charges, customs duty, ocean 
freight, insurance, foreign inland freight, loading and warehousing 
charges.
    With respect to NV the petitioners obtained gross unit prices for 
products offered for sale in Mexico which are identical to those sold 
in the United States. The petitioners deducted from the gross price 
foreign inland freight charges and domestic packing expenses, added 
export packing expenses and adjusted for differences in U.S. and 
Mexican credit expenses.
    The estimated dumping margins in the petition based on a comparison 
of TAMSA's U.S. and home market prices range from 26.07-27.42 percent.

Romania

    The petitioners based EP on U.S. price offers for sale to an 
unaffiliated purchaser. Because the offers were from trading companies 
to unrelated purchasers in the United States prior to importation of 
the merchandise, the petitioners treated the sales as export price (EP) 
sales.
    To determine net U.S. price, the petitioners deducted from gross 
price U.S. port charges including unloading and wharfage, international 
shipping charges, U.S. Customs duties, and a trading company mark-up.
    With respect to NV, the petitioners assert that Romania is an NME 
country and pursuant to 19 U.S.C. 1677(18)(C)(i) (section 771(18)(C)(i) 
of the act), ``any determination that a foreign country is a nonmarket 
economy country shall remain in effect until revoked by the 
administering authority.'' Because Romania's status as an NME has not 
been revoked, the petitioners' allocation is based upon a nonmarket 
economy analysis. In previous investigations, the Department has 
determined that Romania is an NME. See e.g., Antifriction Bearings 
(Other than Tapered Roller Bearings) and Parts Thereof from France, 
Germany, Italy, Japan, Romania, Singapore, Sweden, and United Kingdom, 
64 FR 8790, 8796 (February 23, 1999) (Preliminary Results) and Tapered 
Roller Bearings and Parts Thereof From Romania, 63 FR 36390 (July 6, 
1998) (Final Results). In accordance with section 771(18)(C)(i) of the 
Act, the presumption of NME status remains in effect until revoked by 
the Department. The presumption of NME status for Romania has not been 
revoked by the Department and, therefore, remains in effect for 
purposes of the initiation of this investigation. Accordingly, the NV 
of the product is based on factors of production valued in a surrogate 
market economy country in accordance with section 773(c) of the Act. In 
the course of this investigation, all parties will have the opportunity 
to provide relevant information related to the issues of Romania's NME 
status and the granting of separate rates to individual exporters. See 
e.g., Final Determination of Sales at Less Than Fair Value: Silicon 
Carbide from the PRC, 59 FR 22585 (May 2, 1994).
    For the NV calculation, the petitioners assert that Indonesia is 
the most suitable among the potential surrogates, because: (1) It is 
the most significant producer of comparable merchandise among those 
countries economically similar to Romania; and (2) the financial 
statements of the leading Indonesian steel producer are available (in 
contrast, the petitioners state that financial statements are not 
reasonably available with respect to steel producers in Egypt, Algeria, 
and the Philippines, other countries economically comparable to 
Romania). Egypt, Algeria, and the Philippines have a higher 
comparability ranking by per capita GNP than Indonesia as calculated 
from data from the World Bank, World Development Report 1998/99. 
However, the petitioners assert that none of those potential surrogates 
(including Indonesia) is a significant producer of the subject 
merchandise. The petitioners point to Antifriction Bearings from 
Romania, in which the Department made clear that the surrogate need not 
be a significant producer of the identical merchandise. The petitioners 
further assert that the Department has used surrogate countries which 
did not produce merchandise identical to the subject merchandise. They 
cite Sebacic Acid from the PRC, in which the Department chose India as 
the surrogate for China despite the fact that India did not produce the 
subject merchandise. Accordingly, the petitioners submit that for the 
purpose of identifying a surrogate, steel in general may be considered 
``comparable'' to seamless pipe. Indonesia is the most significant 
steel manufacturer, producing over 3.8 million MT of crude steel. Based 
on the

[[Page 40830]]

information on the record, we believe that the petitioners' use of 
Indonesia as a surrogate country is appropriate for the purposes of 
initiation.
    For the NV calculation, the petitioners based the factors of 
production, as defined by section 773(c)(3) of the Act (raw materials, 
labor, and energy), for small diameter carbon and alloy seamless 
standard, line, and pressure pipe on Indonesian import statistics. 
Since none of the principal Romanian producers are integrated steel 
producers (i.e., they do not make their own steel from raw materials, 
rather they purchase billet rounds from other countries), the 
petitioners have used the factors of production of a U.S. steel 
producer for the heating, piercing, rolling, and finishing of a billet 
round into finished pipe.
    In accordance with section 773(c)(4) of the Act, the petitioners 
valued factors of production, where possible, on reasonably available, 
public surrogate country data. For the purposes of determining 
Indonesian unit factor costs, the petitioners utilize the most recent 
information reasonably available and substitute such costs for those of 
the U.S. producer. The petitioners use company specific data in the 
form of financial statements from an Indonesian steel producer to 
calculate depreciation, factory overhead, SG&A, financial expense, and 
profit. Labor was valued using a regression-based wage rate for Romania 
provided by the Department in accordance with 19 CFR 351.408(c)(3). 
This value was multiplied by the usage rate of the U.S. steel company 
to calculate total cost of labor. For electricity, the usage rate of 
the U.S. steel company was used. Petitioners valued electricity using 
the rates for Indonesia as published in a news article. For natural 
gas, petitioners applied the usage rate of the U.S. steel company in 
conjunction with the Indonesian unit factor cost for natural gas, as 
determined from the financial statement of YPF, a large Indonesian 
provider of natural gas.
    The estimated dumping margins in the petition are based on a 
comparison of U.S. price and constructed value. These comparisons 
reveal estimated dumping margins ranging from 30.83--42.36 percent.

South Africa

    The petitioners used prices from two sources as the basis for EP. 
For two sizes of pipe, they used prices from a price list for South 
African products obtained from a trading company. For a third size of 
pipe, petitioners provided a price quote for South African pipe from an 
international trading company to an unaffiliated U.S. customer.
    The petitioners calculated a net U.S. price by subtracting 
estimated costs for domestic inland freight, international freight, 
loading and wharfage and U.S. customs duty.
    NV is based upon prices for products offered for sale in South 
Africa which are identical to the products used as the basis for the 
U.S. price. The petitioners calculated NV by subtracting estimated 
costs for inland freight. Additionally, the petitioners made 
adjustments for differences in credit and packing.
    The estimated dumping margins in the petition range from 36.82-
43.51 percent.

Initiation of Cost Investigations

    As noted above, pursuant to section 773(b) of the Act, the 
petitioners provided information demonstrating reasonable grounds to 
believe or suspect that sales in the Japanese home market were made at 
prices below the fully absorbed COP and, accordingly, requested that 
the Department conduct country-wide sales-below-COP investigations in 
connection with the requested antidumping investigations for Japan. The 
Statement of Administrative Action (``SAA''), of the URAA, states that 
an allegation of sales below COP need not be specific to individual 
exporters or producers. SAA at 833 (1994). The SAA at 833 states that 
``Commerce will consider allegations of below-cost sales in the 
aggregate for a foreign country, just as Commerce currently considers 
allegations of sales at less than fair value on a country-wide basis 
for purposes of initiating an antidumping investigation.''
    Further, the SAA provides that ``new section 773(b)(2)(A) retains 
the current requirement that Commerce have `reasonable grounds to 
believe or suspect' that below cost sales have occurred before 
initiating such an investigation. `Reasonable grounds' * * * exist when 
an interested party provides specific factual information on costs and 
prices, observed or constructed, indicating that sales in the foreign 
market in question are at below-cost prices.'' Id. Based upon the 
comparison of the adjusted prices from the petition for the 
representative foreign like products to their costs of production, we 
find the existence of ``reasonable grounds to believe or suspect'' that 
sales of these foreign like products in Japan were made below the COP 
within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, 
the Department is initiating the requested country-wide cost 
investigations.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of small and large diameter pipe from the above-
referenced countries are being, or are likely to be, sold at less than 
fair value.

Allegations and Evidence of Material Injury and Causation

    The petitions allege that the U.S. industry producing the domestic 
like products are being materially injured, and is threatened with 
material injury, by reason of the individual and cumulated imports of 
the subject merchandise sold at less than NV. The petitioners explained 
that the industry's injured condition is evident in the declining 
trends in (1) U.S. market share, (2) average unit sales values, (3) 
share of domestic consumption, (4) operating profits, (5) employment, 
(6) output, (7) sales, (8) return on investment, (9) capacity 
utilization, (10) hours worked, and (11) wages paid.
    The allegations of injury and causation are supported by relevant 
evidence including U.S. Customs import data, lost sales, and pricing 
information. The Department assessed the allegations and supporting 
evidence regarding material injury and causation and determined that 
these allegations are supported by accurate and adequate evidence and 
meet the statutory requirements for initiation (see Attachments to 
Initiation Checklist, Re: Material Injury, July 20, 1999).

Initiation of Antidumping Investigations

    Based upon our examination of the petitions on large and small 
diameter pipe, we find that the petitions meet the requirements of 
section 732 of the Act. Therefore, we are initiating antidumping duty 
investigations to determine whether imports of certain small diameter 
carbon and alloy seamless standard, line and pressure pipe from the 
Czech Republic, Japan, the Republic of South Africa and Romania, and 
certain large diameter carbon and alloy seamless standard, line and 
pressure pipe from Japan and Mexico are being, or are likely to be, 
sold in the United States at less than fair value. Unless this deadline 
is extended, we will make our preliminary determinations no later than 
140 days after the date of this initiation.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of each petition has been provided to the 
representatives of the Czech Republic, Japan, Mexico, Romania and the 
Republic of South

[[Page 40831]]

Africa. We will attempt to provide a copy of the public versions of 
each petition to each exporter named in the petition, as appropriate.

International Trade Commission Notification

    We have notified the ITC of our initiations, as required by section 
732(d) of the Act.

Preliminary Determinations by the ITC

    The ITC will determine, by no later than September 3, 1999, whether 
there is a reasonable indication that imports of certain small diameter 
carbon and alloy seamless standard, line and pressure pipe from the 
Czech Republic, Japan, the Republic of South Africa and Romania, and 
certain large diameter carbon and alloy seamless standard, line and 
pressure pipe from Japan and Mexico are causing material injury, or 
threatening to cause material injury, to a U.S. industry. A negative 
ITC determination for any country will result in the investigation 
being terminated with respect to that country; otherwise, these 
investigations will proceed according to statutory and regulatory time 
limits.
    This notice is published pursuant to section 777(i) of the Act.

    Dated: July 20, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-19307 Filed 7-27-99; 8:45 am]
BILLING CODE 3510-DS-P