[Federal Register Volume 64, Number 172 (Tuesday, September 7, 1999)]
[Notices]
[Pages 48589-48594]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23212]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-835]


Oil Country Tubular Goods From Japan: Preliminary Results and 
Recission in Part of Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results and recission in part of the 
antidumping duty administrative review: Oil Country Tubular Goods From 
Japan.

-----------------------------------------------------------------------

SUMMARY: In response to requests from interested parties, the 
Department of Commerce (the Department) is conducting an administrative 
review of the antidumping duty order on Oil Country Tubular Goods From 
Japan (OCTG). This review covers the period August 1, 1997 through July 
31, 1998.
    We have preliminarily determined that sales have not been made 
below normal value (NV). If these preliminary results are adopted in 
our final results, we will instruct the U.S. Customs Service to 
liquidate appropriate entries without regard to antidumping duties. 
Interested parties are invited to comment on these preliminary results. 
Parties who submit comments are requested to submit with each comment a 
statement of the issue and a brief summary of the comment.

EFFECTIVE DATE: September 7, 1999.

FOR FURTHER INFORMATION CONTACT: Thomas Gilgunn or Maureen Flannery, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-0648 and (202) 482-3020, 
respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act) are to the provisions effective January 1, 
1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to 19 CFR 
part 351 (April 1998).

Background

    On June 28, 1995, the Department published in the Federal Register 
(60 FR 33560) the antidumping duty order on OCTG from Japan. On August 
31, 1998, U.S. Steel Group, a unit of USX Corporation (the petitioner) 
requested that the Department conduct a review of Sumitomo Metal 
Industries, Ltd. (SMI). On August 31, 1998, Okura and Company (Okura) 
requested that the Department conduct a review of its exports of OCTG. 
The Department initiated this antidumping administrative review for SMI 
on September 23, 1998 (63 FR 51893, September 29, 1998) and for Okura 
on October 26, 1998 (63 FR 58009, October 29, 1998).
    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for completion of an administrative review if it 
determines that it is not practicable to complete the review within the 
statutory time limit of 365 days. On March 10, 1999, the Department 
published a notice of extension of the time limit for the preliminary 
results of review to August 15, 1999. See Oil Country Tubular Goods 
From Japan: Notice of Extension of Preliminary Results of Antidumping 
Duty Administrative Review, 64 FR 11837. On July 27, 1999, the 
Department published a second notice of extension of the time limit for 
the preliminary results of review to August 31, 1999. See Oil Country 
Tubular Goods From Japan: Notice of Extension of Preliminary Results of 
Antidumping Duty Administrative Review, 64 FR 40554. The Department is 
conducting this review in accordance with section 751(a) of the Act.

Scope of Review

    The products covered by this order are oil country tubular goods 
(OCTG), hollow steel products of circular cross-section, including oil 
well casing, tubing, and drill pipe, of iron (other than cast iron) or 
steel (both carbon and alloy), whether seamless or welded, whether or 
not conforming to American Petroleum Institute (API) or non-API 
specifications, whether finished or unfinished (including green tubes 
and limited service OCTG products). This scope does not cover casing, 
tubing, or drill pipe containing 10.5 percent or more of chromium. The 
products subject to this order are currently classified in the 
Harmonized Tariff Schedule of the United States (HTSUS) under item 
numbers: 7304.21.30.00, 7304.21.60.30, 7304.21.60.45,

[[Page 48590]]

7304.21.60.60, 7304.29.10.10, 7304.29.10.20, 7304.29.10.30, 
7304.29.10.40, 7304.29.10.50, 7304.29.10.60, 7304.29.10.80, 
7304.29.20.10, 7304.29.20.20, 7304.29.20.30, 7304.29.20.40, 
7304.29.20.50, 7304.29.20.60, 7304.29.20.80, 7304.29.30.10, 
7304.29.30.20, 7304.29.30.30, 7304.29.30.40, 7304.29.30.50, 
7304.29.30.60, 7304.29.30.80, 7304.29.40.10, 7304.29.40.20, 
7304.29.40.30, 7304.29.40.40, 7304.29.40.50, 7304.29.40.60, 
7304.29.40.80, 7304.29.50.15, 7304.29.50.30, 7304.29.50.45, 
7304.29.50.60, 7304.29.50.75, 7304.29.60.15, 7304.29.60.30, 
7304.29.60.45, 7304.29.60.60, 7304.29.60.75, 7305.20.20.00, 
7305.20.40.00, 7305.20.60.00, 7305.20.80.00, 7306.20.10.30, 
7306.20.10.90, 7306.20.20.00, 7306.20.30.00, 7306.20.40.00, 
7306.20.60.10, 7306.20.60.50, 7306.20.80.10, and 7306.20.80.50. 
Although the HTSUS subheadings are provided for convenience and customs 
purposes, our written description of the scope of this review is 
dispositive.

Okura

    Okura & Company (America) Inc. (Okura America) imported subject 
merchandise from its affiliate, Okura & Co. Ltd. (Okura Japan). The 
OCTG entered the United States under temporary import bond (TIB) for 
further processing (threading and coupling) by Okura America. There 
were no sales of subject merchandise in any form (i.e., as imported or 
as further processed) to unaffiliated parties in the United States 
during the period of review (POR). All of the subject merchandise Okura 
America entered under TIB was re-exported to Okura & Company (Canada) 
Ltd. (Okura Canada) for sale to Canadian customers. Upon re-export, 
pursuant to the North American Free Trade Agreement (NAFTA) rules and 
section 181.53(a)(1) (A)-(C) of U.S. Customs regulations, U.S. Customs 
treated the merchandise as if it had entered the United States for 
consumption and compelled Okura (America) to pay antidumping duty cash 
deposits at the rate of 44.2 percent.
    Okura maintains that ``because the merchandise at issue was 
exported without sale to an unaffiliated U.S. customer, the statute, 
and fairness, prohibit the imposition of antidumping duties on these 
entries,'' and cites 19 U.S.C. 1677a (a) and (b) (section 772 (a) and 
(b) of the Act); Torrington Company v. United States, 82 F.3d 1039, 
1044-47 (Fed. Cir. 1996); Extruded Rubber Thread From Malaysia, Final 
Results of Antidumping Duty Administrative Review, 62 FR 33588 (June 
20, 1997). Okura asserts that it only requested this review in order to 
confirm that ``(1) no antidumping duties should be assessed on Okura's 
consumption entries during the POR because all the merchandise in 
question was re-exported, and (2) that Okura is entitled to a refund of 
the cash deposits that were collected on those entries.''
    The petitioner asserts that the imposition of antidumping duties on 
Okura's TIB entries is required pursuant to Article 303 of the NAFTA, 
Section 203 of the NAFTA Implementation Act (19 U.S.C. 3333), and U.S. 
Customs regulations implementing NAFTA duty deferral/drawback 
provisions (19 CFR 181.53). The petitioner asserts that ``under Article 
303(3) of the NAFTA, if a non-NAFTA origin good is imported into the 
territory of a NAFTA Party pursuant to a TIB or other duty deferral 
program, and is subsequently exported to the territory of another NAFTA 
Party, the Party from whose territory the good is exported must treat 
the entry as an entry for domestic consumption and assess customs 
duties on such merchandise.'' The petitioner maintains that ``while 
such duties may be waived or reduced to the extent permitted under 
Article 303(1), Article 303(2) specifically prohibits NAFTA parties 
from refunding, waiving or reducing certain specified duties, including 
antidumping and countervailing duties, on such exported goods.''
    Dumping is defined as the sale of merchandise in the United States 
at less than its NV. Thus, when the Department finds dumping, section 
731 of the Act directs the agency to impose upon imports of the subject 
merchandise an antidumping duty in the amount by which the NV exceeds 
the export price (EP) or constructed export price (CEP). Section 772 of 
the Act defines EP and CEP as a price to an unaffiliated purchaser in 
the United States or to an unaffiliated purchaser for export to the 
United States.
    Once an antidumping order is in place, section 751(a) of the Act 
directs the Department to conduct an administrative review, upon 
request, to determine the NV, EP and/or CEP and dumping margin for each 
entry of the subject merchandise under review. Thus, the Department's 
ability to conduct an administrative review of an antidumping duty 
order depends on the existence of entries and sales to unaffiliated 
U.S. purchasers or unaffiliated purchasers for export to the United 
States.
    Without consumption entries, there is nothing upon which the 
Department may assess duties that could be determined during the course 
of a review. Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al., 62 FR 54043, 54049 (Oct. 17, 
1997). Therefore, merchandise that does not enter the United States for 
consumption is not subject to antidumping duties. Subject merchandise 
imported under TIB is not entered for consumption in the United States. 
Accordingly, the Department has determined that merchandise entered 
under TIB, even when purchased by an unaffiliated party, is not subject 
to antidumping duties. See Remand Determination: Titanium Metals Corp. 
v. United States, 94-04-00236 (April 17, 1995)(Titanium Sponge Remand) 
(``because TIB entries are not consumption entries, we determine that 
TIB entries are not subject to antidumping duties and the estimated 
duty deposit requirement of the antidumping law''). The Department's 
decision was affirmed by the United States Court of International Trade 
(CIT) in Titanium Metals Corp. v. United States, 901 F. Supp. 362 (CIT 
1995).
    Moreover, subject merchandise that is entered for consumption but 
is not sold in any form (either in the form as entered or as further 
manufactured) to an unaffiliated customer in the United States is not 
subject to antidumping duties because there is no U.S. sale and, 
therefore, no margin could be calculated. See Torrington Co. v. United 
States, 82 F.3d 1039 (Fed. Cir. 1996). Therefore, when an affiliate of 
the exporter enters subject merchandise for consumption, but re-exports 
the merchandise (in the form as entered or as further manufactured), 
i.e., the merchandise is never sold in any form to an unaffiliated U.S. 
customer, the Department does not include those entries in its dumping 
analysis. See Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof From the Federal Republic of Germany; Final 
Results of Antidumping Duty Administrative Review, 56 FR 31692, 31743 
(July 11, 1991). The Department's practice in this context was affirmed 
by the Federal Circuit in Torrington Co. v. United States, 82 F.3d 1039 
(Fed. Cir. 1996).
    In this review, we considered whether NAFTA rules require the 
Department to deviate from the principles described above. Article 
1901.3 of the NAFTA states that ``no provision of any other Chapter of 
this Agreement shall be construed as imposing obligations on a Party 
with respect to the Party's antidumping law or countervailing duty 
law.'' Thus, the parties made clear that NAFTA did not require any 
changes in

[[Page 48591]]

antidumping duty law or practice. Therefore, if it is possible to read 
the NAFTA rules in a manner consistent with the law and practice 
discussed above, the entries in question should not be subject to 
antidumping duties.
    Article 303 of NAFTA addresses duty drawback and duty deferral 
programs, including TIB. Specifically, Article 303(3) provides that 
merchandise entered under TIB in the United States and subsequently 
reexported to another NAFTA party shall be considered to be entered for 
consumption and shall be subject to all relevant customs duties. Thus, 
the TIB status of such entries does not necessarily insulate these 
entries from the assessment of antidumping duties. Paragraph 2 of 
Article 303 further provides that ``no party may, on condition of 
export, refund, waive or reduce an antidumping or countervailing duty 
that is applied pursuant to a Party's domestic law and that is not 
applied inconsistently with Chapter Nineteen.'' Nevertheless, Article 
303.3(a) does not compel the assessment of antidumping or 
countervailing duties that would not otherwise be applied under a 
party's domestic law.
    With respect to Okura, as there are no sales to unaffiliated 
customers in the United States nor sales to unaffiliated customers for 
exportation to the United States, antidumping duties would not be 
applied under current law and practice. Therefore, liquidating these 
entries without regard to antidumping duties would not constitute a 
waiver, refund or reduction of antidumping duties under NAFTA. The 
NAFTA rules do not change the requirement that there be a U.S. sale to 
calculate a dumping margin. Since there is no U.S. sale, we are 
rescinding this review with regard to Okura, and will order Customs to 
liquidate the entries at issue without regard to antidumping duties.

SMI/Sumitomo Corporation (SC)

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by SMI (sales and difference in merchandise (DIFFMER)) from 
July 9, 1999 through July 17, 1999, using standard verification 
procedures, including on-site inspection of SMI's manufacturing 
facilities and the examination of relevant sales and financial records. 
We also verified information provided by SC (sales) from July 19, 1999 
through July 21, 1999, using standard verification procedures including 
examination of relevant sales and financial records. Our verification 
results are outlined in public versions of the verification reports on 
file with the Central Records Unit, in Room B-099 of the Herbert C. 
Hoover Building.

Affiliation

    SMI is a diversified manufacturer of high quality steel products, 
including OCTG, and a supplier of construction, plant, and system 
engineering services. SC is a major trading company with interests in 
business sectors ranging from metals and motor vehicles to fertilizer 
and fashion.
    The petitioner contends that SMI and SC should be considered 
``affiliated parties'' as defined by the Department's regulations. In 
its May 20, 1999 submission, the petitioner specifically cites SC's and 
SMI's joint ownership interests, corporate interrelationships, and 
close customer/supplier relationship as ``overwhelming evidence'' of 
the two parties' affiliation.
    In its original response to our antidumping duty questionnaire, SMI 
stated that ``none of the products under review were sold to 
affiliates,'' a position that it has argued consistently throughout 
this review. Although SMI has acknowledged substantive, long-standing 
commercial and corporate links with SC, including but not limited to 
those mentioned in the petitioner's May 20, 1999 submission, SMI 
asserts that these links do not constitute ``affiliation'' as defined 
by the statute and the Department's regulations.
    Section 771(33) of the Act describes affiliated persons, in part, 
as ``two or more persons directly or indirectly controlling, controlled 
by, or under common control with, any person.'' Moreover, the statute 
provides that ``a person shall be considered to control another person 
if the person is legally or operationally in a position to exercise 
restraint or direction over the other person.'' Id.
    The legislative history makes clear that the statute does not 
require majority ownership for a finding of control.1 
Rather, the statutory definition of control encompasses both legal and 
operational control. A minority ownership interest, examined within the 
context of the totality of the evidence, is a factor that the 
Department considers in determining whether one party is legally or 
operationally in a position to control another. See Certain Cut-To-
Length Carbon Steel Plate From Brazil, 62 FR 18486, 18490 (April 15, 
1997); see also 19 CFR 351.102(b).
---------------------------------------------------------------------------

    \1\ The Statement of Administrative Action states that: ``[t]he 
traditional focus on control through stock ownership fails to 
address adequately modern business arrangements, which often find 
one firm `operationally in a position to exercise restraint or 
direction' over another even in the absence of an equity 
relationship.'' See SAA at 838.
---------------------------------------------------------------------------

    Additionally, evidence of actual control is not required for a 
finding of affiliation within the meaning of section 771(33) of the 
Act; it is the ability to control that is at issue. See also Proposed 
Rules, 61 FR 7308, 7310 (February 27, 1996). The Department has stated 
that merely identifying ``the presence of one or more of the other 
indicia of control (as per Section 771(33) of the Act) does not end our 
{the Department's} task.'' 2 The Department is compelled to 
examine all indicia, in light of business and economic reality, to 
determine whether they are evidence of control. In determining whether 
control over another person exists, within the meaning of section 
771(33) of the Act, the Department will consider the following factors, 
among others: corporate or family groupings; franchise or joint venture 
agreements; debt financing; and close supplier relationships. However, 
the Department will not find affiliation on the basis of these factors 
unless the relationship has the potential to impact decisions 
concerning the production, pricing, or cost of the subject merchandise 
or foreign like product. See 19 CFR 351.102(b).
---------------------------------------------------------------------------

    \2\ See 61 FR 7310 (February 27, 1996) Antidumping Duties; 
Countervailing Duties. Notice of proposed rulemaking and Request for 
Public Comments.
---------------------------------------------------------------------------

    SMI and SC have significant equity interests in multiple joint 
ventures. We considered whether these joint ownership interests 
establish that SMI and SC control these third parties, as contemplated 
by section 771(33)(F) of the Act. In doing so, we took note of the 
decision of the CIT in Mitsubishi Heavy Industries, Ltd. v. United 
States, 15 F. Supp. 2d 807 (1998) (Mitsubishi). In Mitsubishi, the CIT 
held that ``the statutory definition of affiliated parties at 19 U.S.C. 
1677(33)(F) does not require two companies exercise control over each 
other. The statute requires only that two or more persons control a 
third person.''
    Because of the nature of SMI's and SC's holdings in these joint 
ventures, the Department has found SMI and SC are ``legally or 
operationally in a position to exercise restraint'' over those third 
parties. Thus, we conclude that SMI and SC have a joint control 
relationship within the meaning of section 771(33)(F) of the Act. 
Because most of the information on which we relied to perform our 
analysis is proprietary, it cannot be discussed in this notice. 
However, a memorandum

[[Page 48592]]

detailing our analysis has been prepared. (See the proprietary version 
of the Memo from Barbara E. Tillman to Robert S. LaRussa regarding 
``Affiliation of Sumitomo Metal Industries Ltd. and Sumitomo 
Corporation,'' dated August 31, 1999 (Decision Memo).
    While SMI and SC control these joint ventures, we recognize the 
regulatory guidance indicating that a control relationship will not 
establish affiliation for the purposes of our antidumping duty analysis 
unless that relationship ``has the potential to impact decisions 
concerning the production, pricing, or cost of the subject merchandise 
or foreign like product.'' See 19 CFR 351.102(b). In reaching a 
determination in this regard, we considered the totality of the record 
evidence relevant to the relationship between SMI and SC. As discussed 
below, numerous other factors reflect a relationship between these two 
parties such that there is potential to impact the transactions between 
SMI and SC involving the subject merchandise.
    In addition to the joint ventures which we examined in finding a 
control relationship under section 771(33)(F) of the Act, SMI and SC 
are jointly invested in other companies. SMI's and SC's history of 
extensive joint investments in numerous companies reflects a 
significant commonality of interests between SMI and SC. This 
commonality of interests between SMI and SC gives rise to a potential 
to impact decisions concerning the pricing of OCTG sold by SMI to SC. 
See Decision Memo.
    The potential to impact pricing decisions in transactions between 
SMI and SC is further reflected in SMI's and SC's long standing 
customer and supplier relationship. SMI started dealing with SC with 
regard to OCTG around 1952 and has maintained the business relationship 
since that time. On a worldwide basis, SMI sells a significant portion 
of its OCTG to SC. Likewise, SC derives a significant percentage of its 
OCTG purchases from SMI. See Decision Memo.
    Finally, we viewed SMI's and SC's relationship in the context of 
the Sumitomo Group (SG) as a whole. SG holds itself out as a corporate 
group which consists of twenty ``core'' companies that operate in 
thirteen different business sectors. SMI and SC are core members of the 
group. The 20 core companies have a variety of close corporate and 
commercial links. SMI's and SC's membership in the SG is further 
evidence that SMI's and SC's relationship has the potential to impact 
decisions concerning the transactions between SMI and SC involving the 
subject merchandise. See Decision Memo.
    In sum, SMI and SC, through their substantial joint interests in 
several joint ventures, have the potential to control or restrain those 
joint ventures within the meaning of paragraph (F) of section 771(33). 
In addition, SMI's and SC's significant commonality of interests, 
demonstrated by multiple joint investments, a long-standing customer/
supplier relationship, and their membership in the SG, establishes that 
the relationship has the potential to impact pricing in transactions 
involving the subject merchandise. Therefore, we determine that SMI and 
SC are affiliated parties under paragraph (F) of section 771 (33) of 
the Act.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondents that are covered by the 
description in the ``Scope of Review'' section above and sold in the 
home market during the POR to be foreign like products for purposes of 
determining appropriate product comparisons for merchandise sold to the 
United States. Where there were no sales of identical merchandise in 
the home market to compare to U.S. sales, we compared U.S. sales to the 
most similar home market like product on the basis of the 
characteristics listed in Appendix III of the Department's October 16, 
1998 antidumping questionnaire.

Comparisons to Normal Value

    To determine whether sales of subject merchandise to the United 
States were made at less than NV, we compared the CEP to NV, as 
described in the ``United States Price'' and ``Normal Value'' sections 
of this notice. In accordance with section 777A(d)(2) of the Act, we 
calculated monthly weighted-average home market prices for NV and 
compared these to individual U.S. transaction prices.

United States Price

    For sales in the United States, the Department uses EP when the 
subject merchandise was sold to the first unaffiliated purchaser in the 
United States by the producer or exporter outside the United States 
prior to importation, and CEP is not otherwise warranted by facts on 
the record. Because the Department has found SMI and SC to be 
affiliated, and the subject merchandise was not sold to an unaffiliated 
purchaser until after its importation into the United States, the 
starting price for CEP is the price from SC's U.S. affiliate to 
unaffiliated customers in the United States.
    The Department calculated CEP (there were no EP sales) for SMI 
based on packed, prepaid or delivered prices to SC's customer in the 
United States. In accordance with section 772(c) of the Act, we reduced 
CEP by movement expenses (international freight, marine insurance, 
inland freight, and duties. In accordance with section 772(d)(1) of the 
Act, we deducted direct selling expenses (credit, advertising, and 
warranty expenses) and indirect selling expenses, including inventory 
carrying costs. Finally, we made an adjustment for an amount of profit 
allocated to selling expenses incurred in the United States, in 
accordance with section 772(c) of the Act.
    It is the Department's current practice normally to use the invoice 
date as the date of sale; we may, however, use a date other than the 
invoice date if we are satisfied that a different date better reflects 
the date on which the exporter or producer establishes the material 
terms of sale. See 19 CFR Sec. 351.401(i); Preamble to the Antidumping 
Duty Regs., 62 FR at 27411. Our questionnaire instructed SMI/SC to 
report the date of invoice as the date of sale; it also stated, 
however, that, for CEP sales, ``(t)he date of sale cannot occur after 
the date of shipment.'' In this review, SC's date of shipment always 
preceded the date of invoice, and therefore we cannot use the date of 
invoice. Instead, in accordance with 19 CFR 351.401(i), the home market 
sales dates are the dates on which the goods were shipped to the 
unaffiliated customer. In addition, the U.S. sales dates are the dates 
on which SC shipped the goods from the U.S. port of unloading to its 
unaffiliated customer.

Normal Value

    The Department determines the viability of the home market as the 
comparison market by comparing the aggregate quantity of home market 
and U.S. sales. We found that SMI's quantity of sales in its home 
market exceeded five percent of its sales to the United States. We 
therefore have determined that SMI's home market sales are viable for 
purposes of comparison with sales of the subject merchandise to the 
United States, pursuant to section 773(a)(1)(C) of the Act. Therefore, 
in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on 
the price, net of discounts, at which the foreign like product was 
first sold for consumption in the home market, in the usual commercial 
quantities and in the ordinary course of trade and, to the extent 
practicable, at the same level of

[[Page 48593]]

trade as the CEP sales. See the ``Level of Trade section'' below. We 
determined what home market merchandise was most similar to the 
merchandise sold in the United States on the basis of product 
characteristics set forth in sections B and C of the Department's 
questionnaire.
    For comparisons to CEP, we made COS adjustments by deducting home 
market direct selling expenses (credit expenses, advertising, and 
royalties) pursuant to section 773(a)(6)(C)(iii) of the Act. We also 
made adjustments, where applicable, for movement expenses, in 
accordance with sections 773(a)(6)(A) and (a)(6)(B) of the Act. We also 
made adjustments for differences in the costs of manufacture for 
subject merchandise and matching foreign like products, attributable to 
their differing physical characteristics, pursuant to section 
773(a)(6)(C)(ii) of the Act, and for home market indirect selling 
expenses, up to the amount of U.S. indirect selling expenses, in 
accordance with section 773(a)(7)(B) of the Act.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the home market at the 
same LOT as U.S. sales. The NV LOT is the level of the starting-price 
sale in the home market or, when NV is based on constructed value, the 
level of the sales from which we derive selling, general, and 
administrative expenses (SG&A) and profit. For export price, the U.S. 
LOT is also the level of the starting-price sale, which is usually from 
exporter to importer. For CEP, it is the level of the constructed sale 
from the exporter to the importer. To determine whether NV sales are at 
a different LOT than EP or CEP, we examine stages in the marketing 
process and selling functions along the chain of distribution between 
the producer and the unaffiliated customer. If the comparison-market 
sales are at a different LOT, and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales on which NV is based and comparison-
market sales at the LOT of the export transaction, we make an LOT 
adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP 
sales, if the NV level is more remote from the factory than the CEP 
level and there is no basis for determining whether the difference in 
the levels between NV and CEP affects price comparability, we adjust NV 
under section 773(a)(7)(B) of the Act (the CEP offset provision). See 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 
(November 19, 1997).
    For merchandise sold in the home market during this POR, SMI 
claimed one distribution channel and one LOT and SC claimed two 
distribution channels and one LOT. Regardless of the distribution 
channel, the selling functions performed by SMI, or by SMI and SC 
combined where the sale was made through SC, were substantially the 
same. Therefore, we concluded all sales in the home market were made at 
one LOT.
    We then compared the selling functions in the U.S. and home 
markets. At the level of CEP sales to the United States, i.e., after 
eliminating from consideration the selling functions associated with 
deductions made under section 772 of the Act, we found that the CEP 
sales were made at a different and less advanced level of trade than 
home market sales.
    Because there are no sales in the home market made at the same LOT 
as sales in the United States, we were not able to determine whether 
the difference in LOT affects price comparability. Therefore, we made a 
CEP offset adjustment. In accordance with 19 CFR 351.408(f)(2), we 
deducted indirect selling expenses from NV to the extent of U.S. 
indirect selling expenses. For a further discussion of the Department's 
LOT analysis with respect to SC, see Memorandum to the File: Analysis 
Memorandum for the Preliminary Results of Review for SMI, August 31, 
1999.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A of the Act based on the exchange rates in effect on the 
dates of the U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the weighted-
average dumping margin for the period August 1, 1997 through July 31, 
1998 to be as follows:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      percentage
------------------------------------------------------------------------
SMI........................................................         0.00
------------------------------------------------------------------------

    The Department will disclose to the parties to the proceeding 
calculations performed in connection with these preliminary results of 
review within five days after the date of publication of these 
preliminary results of review.
    Any interested party may request a hearing within 30 days of 
publication. Any hearing, if requested, will be held 2 days after the 
date of filing of rebuttal briefs or the first business day thereafter. 
Case briefs from interested parties may be submitted not later than 30 
days after publication. Rebuttal briefs, limited to issues raised in 
case briefs, may be filed not later than five days after the date of 
filing of case briefs. The Department will publish the final results of 
this administrative review, including its analysis of issues raised in 
the case and rebuttal briefs, not later than 120 days after the date of 
publication of this notice.
    Upon issuance of the final results of review, 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 based on the ratio of the total amount of antidumping duties 
calculated for the examined sales to the total customs value of the 
sales used to calculate those duties. This rate will be assessed 
uniformly on all entries of that particular importer made during the 
POR.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a) of the Act: (1) The cash deposit rate for 
each reviewed company will be that established in the final results of 
review (except that no deposit will be required for firms with de 
minimis margins, i.e., margins less than 0.5 percent); (2) for 
exporters not covered in this review, but covered in the less than fair 
value (LTFV) investigation or a previous review, the cash deposit rate 
will continue to be the company-specific rate published for the most 
recent period; (3) if the exporter is not a firm covered in this 
review, a previous review, or the 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 the ``all others'' rate established in the LTFV 
investigation, which was 44.20 percent. 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

[[Page 48594]]

entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are issued in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) and 
19 U.S.C 1677f(i)(1)).

    Dated: August 31, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-23212 Filed 9-3-99; 8:45 am]
BILLING CODE 3510-DS-P