[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