[Federal Register Volume 64, Number 174 (Thursday, September 9, 1999)]
[Notices]
[Pages 48983-48986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23433]
[[Page 48983]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-201-817]
Oil Country Tubular Goods From Mexico: Preliminary Results of
Antidumping Duty Administrative Review and Partial Recission of
Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review and partial rescission of administrative review.
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SUMMARY: In response to a request from respondents, the Department of
Commerce (the Department) is conducting an administrative review of the
antidumping duty order on oil country tubular goods (``OCTG'') from
Mexico. The review covers one manufacturer/exporter of the subject
merchandise to the United States and the period August 1, 1997 through
July 31, 1998. We preliminarily determine that sales of subject
merchandise have not been made below normal value. (``NV''). If these
preliminary results are adopted in our final results of administrative
review, we will instruct U.S. Customs to assess antidumping duties
based on the difference between export price (``EP'') or constructed
export price (``CEP'') and NV.
Interested parties are invited to comment on these preliminary
results. Parties who submit argument in this proceeding are requested
to submit with the argument (1) a statement of the issue and (2) a
brief summary of the argument (no longer than five pages, including
footnotes).
EFFECTIVE DATE: September 9, 1999.
FOR FURTHER INFORMATION CONTACT: John Drury, Nancy Decker or Linda
Ludwig, Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC 20230; telephone (202) 482-0195 (Drury), (202) 482-0196
(Decker), (202) 482-3833 (Ludwig).
SUPPLEMENTARY INFORMATION:
Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act) are references 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
references to the provisions codified at 19 CFR part 351 (April 1998).
Background
The Department published a final determination of sales at less
than fair value for OCTG from Mexico on June 28, 1995 (60 FR 33567),
and subsequently published the antidumping duty order on August 11,
1995 (60 FR 41056). The Department published a notice of ``Opportunity
To Request Administrative Review'' of the antidumping order for the
1997/1998 review period on August 11, 1998 (63 FR 42821). Upon
receiving requests for administrative review from two respondents,
Hylsa S.A. de C.V. (``Hylsa'') and Tubos de Acero de Mexico, S.A.
(``TAMSA''), we initiated a review on September 23, 1998 (63 FR 51893,
September 29, 1998).
On November 2, 1998, Hylsa timely withdrew its request for review.
Therefore, this review has now been terminated as to Hylsa as a result
of the withdrawal of Hylsa's request for review.
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 April 14, 1999, the Department
extended the time limits for these preliminary results to August 31,
1999. See Oil Country Tubular Goods from Mexico; Extension of Time
Limits for Antidumping Duty Administrative Review (64 FR 24370, May 6,
1999).
Scope of the Review
Imports covered by this review are oil country tubular goods,
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
OCTG subject to this order are currently classified in the Harmonized
Tariff Schedule of the United States (HTSUS) under item numbers:
7304.20.10.10, 7304.20.10.20, 7304.20.10.30, 7304.20.10.40,
7304.20.10.50, 7304.20.10.60, 7304.20.10.80, 7304.20.20.10,
7304.20.20.20, 7304.20.20.30, 7304.20.20.40, 7304.20.20.50,
7304.20.20.60, 7304.20.20.80, 7304.20.30.10, 7304.20.30.20,
7304.20.30.30, 7304.20.30.40, 7304.20.30.50, 7304.20.30.60,
7304.20.30.80, 7304.20.40.10, 7304.20.40.20, 7304.20.40.30,
7304.20.40.40, 7304.20.40.50, 7304.20.40.60, 7304.20.40.80,
7304.20.50.15, 7304.20.50.30, 7304.20.50.45, 7304.20.50.60,
7304.20.50.75, 7304.20.60.15, 7304.20.60.30, 7304.20.60.45,
7304.20.60.60, 7304.20.60.75, 7304.20.70.00, 7304.20.80.30,
7304.20.80.45, 7304.20.80.60, 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
proceeding is dispositive.
Period of Review
The review covers the period August 1, 1997 through July 31, 1998.
The Department is conducting this review in accordance with section 751
of the Act, as amended.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by the respondents, covered by the description in the
Scope of the Review section, above, and sold in the home market during
the period of review (POR), to be foreign like products for purposes of
determining appropriate product comparisons to U.S. sales. 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 foreign like
product on the basis of the characteristics listed in the Department's
October 16, 1998 questionnaire, or to constructed value (``CV'').
Normal Value Comparisons
To determine whether sales of the subject merchandise by TAMSA were
made at less than NV, we compared the CEP to the NV, as described in
the CEP and NV sections of this notice, below. In accordance with
section 777A(d)(1)(A)(i) of the Act, we compared CEPs to weight-
averaged NVs.
United States Price
In its response to the Department, TAMSA claimed that its sales to
the United States were EP sales. After careful examination of the
record, and
[[Page 48984]]
based upon our analysis using the three-pronged test defined below, the
Department has preliminarily determined to treat TAMSA's U.S. sales as
CEP sales, as defined in section 772(b) of the Act. See Analysis
Memorandum for TAMSA for a further discussion.
Pursuant to section 772(a) and (b) of the Act, an EP sale is a sale
of merchandise for export to the United States made by a foreign
producer or exporter outside the United States prior to importation. A
CEP sale is a sale made in the United States before or after
importation by or for the account of the exporter/producer or by a
party affiliated with the exporter or producer. In determining whether
the sales activity of a U.S. affiliate rises to such a level that CEP
methodology is warranted, the Department has examined the following
criteria: (1) whether the merchandise was shipped directly from the
manufacturer to the unaffiliated U.S. customer (rather than being
introduced into the inventory of the U.S. affiliate), (2) whether this
was a customary commercial channel between the parties involved, and
(3) whether the function of the U.S. affiliate is limited to that of a
``processor of sales-related documentation'' and a ``communication
link'' with the unaffiliated U.S. buyer. See, e.g., Certain Corrosion-
Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon
Steel Plate From Canada: Final Results of Antidumping Duty
Administrative Review (``Canadian Steel''), 63 Fed. Reg. 12725, 12738
(March 16, 1998).
In the Canadian Steel case, the Department clarified its
interpretation of the third prong of this test, as follows. ``Where the
factors indicate that the activities of the U.S. affiliate are
ancillary to the sale (e.g., arranging transportation or customs
clearance, invoicing), we treat the transactions as EP sales. Where the
U.S. affiliate has more than an incidental involvement in making sales
(e.g., solicits sales, negotiates contracts or prices) or providing
customer support, we treat the transactions as CEP sales.'' Id.
Our examination of the record with respect to this administrative
review indicates that the fact pattern for sales to the United States
is substantially identical to the pattern for sales in the previous
administrative review. In Oil Country Tubular Goods From Mexico: Final
Results of Antidumping Duty Administrative Review, 64 FR 13962 (March
23, 1999), the Department stated in part:
As an initial matter, the selling agreement between TAMSA and
Siderca Corp. is quite clear with respect to the services that
Siderca Corp. performs. Siderca Corp. is the exclusive selling agent
for TAMSA products in the United States and other parts of the
world, and has certain rights affecting the price for any sales
under the agreement. In exchange for providing marketing and selling
functions, and for providing other services, such as paying for
brokerage and importer duties, Siderca Corp. is entitled to receive
compensation under the agreement. The record indicates that Siderca
Corp. did receive, in connection with this sale, the compensation
provided for under the agreement.
In addition, Siderca Corp. played the primary role in generating
this sale by bringing the customer to TAMSA. The record shows that
Siderca Corp. has a longstanding working relationship with the
United States customer, is in frequent contact with that customer,
and that sales of other TAMSA products to this and other customers
occur because of these contacts. Conversely, TAMSA itself appears to
have little, if any, contact outside of Mexico with regard to the
sale of its products in the United States. Indeed, under the terms
of the agreement, TAMSA is precluded from soliciting or negotiating
sales directly in the United States. The agreement places the rights
and responsibilities of selling and marketing TAMSA products in the
United States squarely on Siderca Corp.
Based on this fact pattern, it appears that, * * * the sale to
the United States of subject merchandise was within the framework of
the agreement between TAMSA and Siderca Corp. Evidence on the record
indicates that, consistent with its rights and responsibilities
under the selling agreement, Siderca Corp. maintained contacts with
the United States customer and, through these contacts, was able to
match that customer's requirements with subject merchandise
available from TAMSA. The fact that Siderca Corp. may not have fully
exercised its rights with regards to price negotiation, deferring to
TAMSA with respect to the final approval, neither negates the
substance and importance of the agreement nor diminishes the
importance of Siderca Corp.'s role in arranging this sale. Simply
put, under the current agreement, it appears that TAMSA would be
precluded from seeking sales in the United States directly. Sales of
TAMSA products in the United States must, as a condition of the
agreement, begin with Siderca Corp. The fact that Siderca Corp.
performed other functions as specified in the agreement, even if
these were ancillary services, and received compensation according
to the terms of the agreement, reinforces the conclusion that
Siderca Corp.'s activities under the agreement were the primary
factors in creating the sale to the United States.
Based on our examination of the record, the selling agreement between
TAMSA and its U.S. affiliate (Siderca Corp.) has not changed.
Furthermore, Siderca Corp. has longstanding ties to the United States
customer and is in frequent contact with that customer concerning sales
of TAMSA products worldwide. Conversely, TAMSA does not communicate
directly with the customer and, under the agreement, appears to be
precluded from contacting United States customers. Based on these
facts, it is clear that the U.S. affiliate has more than an incidental
involvement in making these sales. Since the sales in question do not
meet the third prong of the test for indirect EP sales described above,
we need not consider the other two prongs. Based on our analysis, we
are treating TAMSA's U.S. transactions as CEP sales.
We based CEP on the delivered price to unaffiliated customers in
the United States. We made adjustments, where applicable, for movement
expenses (U.S. inland freight, U.S. brokerage and handling expenses,
and U.S. customs duties), credit expenses, and other selling expenses
that were associated with economic activity in the United States, in
accordance with section 772(d) of the Act. Finally, we made an
adjustment for CEP profit in accordance with section 772(d)(3) of the
Act.
Normal Value
In order to determine whether there were sufficient sales of OCTG
in the home market (``HM'') to serve as a viable basis for calculating
NV, we compared the volume of home market sales of subject merchandise
to the volume of subject merchandise sold in the United States, in
accordance with section 773(a)(1)(C) of the Act.
TAMSA's aggregate volume of HM sales of the foreign like product
was greater than five percent of its aggregate volume of U.S. sales of
the subject merchandise. Therefore, for TAMSA, we have based NV on HM
sales. We made adjustments to NV for HM inland freight, discounts,
credit expenses, warehousing expenses, packing, and warranty expenses.
Cost of Production Analysis
Because the Department disregarded sales below cost for TAMSA in
the comparison market during the last completed segment of the
proceeding, we initiated a cost of production (``COP'') analysis in
accordance with section 773(b) of the Act. We conducted the COP
analysis as described below.
A. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated the
weighted-average COP, by model, based on the sum of the cost of
materials, fabrication and general expenses, and packing costs. We
relied on the submitted COPs.
[[Page 48985]]
B. Test of Home Market Prices
We used respondent's weighted-average COP for the period August 1,
1997 to July 31, 1998. We compared the weighted-average COP figures to
home market sales of the foreign like product as required under section
773(b) of the Act. In determining whether to disregard home-market
sales made at prices below the COP, we examined whether (1) within an
extended period of time, such sales were made in substantial
quantities, and (2) such sales were made at prices which permitted the
recovery of all costs within a reasonable period of time. On a product-
specific basis, we compared the COP to the home market prices, less any
applicable movement charges, rebates, and discounts.
C. Results of COP Test
Pursuant to section 773(b)(2)(C), where less than 20 percent of
TAMSA's sales of a given product were at prices less than the COP, we
did not disregard any below-cost sales of that product because we
determined that the below-cost sales were not made in ``substantial
quantities.'' Where 20 percent or more of respondent's sales of a given
product during the POR were at prices less than the COP, we determined
such sales to have been made in ``substantial quantities'' within an
extended period of time in accordance with section 773(b)(2)(B) of the
Act. Because we compared prices to POR-average costs, we also
determined that such sales were also not made at prices which would
permit recovery of all costs within a reasonable period of time, in
accordance with section 773(b)(2)(D) of the Act; therefore, we
disregarded the below-cost sales.
D. Calculation of CV
In accordance with section 773(e) of the Act, we calculated CV
based on the sum of TAMSA's cost of materials, fabrication, SG&A,
including interest expenses, and U.S. packing costs, as reported and a
calculated profit. In accordance with section 773(e)(2)(A) of the Act,
we based SG&A and profit on the amounts incurred and realized by the
respondent in connection with the production and sale of the foreign
like product in the ordinary course of trade, for consumption in the
foreign country.
Level of Trade
In accordance with section 773(a)(1)(B)(i) of the Act, to the
extent practicable, we determine NV based on sales in the comparison
market at the same level of trade (LOT) as the EP or CEP transaction.
The NV LOT is that of the starting price sales in the comparison market
or, when NV is based on CV, that of the sales from which we derive
selling, general and administrative expenses and profit. For EP, the
U.S. LOT is also the level of the starting price sale, which is usually
from the exporter to the 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
sales, 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 a 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 differences 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 e.g., 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).)
As the Department explained in Gray Portland Cement and Clinker
from Mexico: Final Results of Antidumping Duty Administrative Review
(``Cement from Mexico''), 62 FR 17156 (April 9, 1997), for both EP and
CEP the relevant transaction for the LOT analysis is the sale from the
exporter to the importer. While the starting price for CEP is that of a
subsequent resale to an unaffiliated buyer, the construction of the CEP
results in a price that would have been charged by the exporter to the
importer if the importer had not been affiliated. We calculate the CEP
by removing from the first resale to an unaffiliated U.S. customer the
expenses referenced in section 772(d) of the Act and the profit
associated with these expenses. These expenses represent activities
undertaken by the affiliated importer in making the sale to the
unaffiliated customers. Because the expenses deducted under section
772(d) of the Act are incurred for selling activities in the United
States, the deduction of these expenses may yield a different LOT for
the CEP than for the later resale (which we use for the starting
price). Movement charges, duties, and taxes deducted under section
772(c) of the Act do not represent activities of the affiliated
importer, and we do not remove them to obtain the price on which the
CEP LOT is based.
To determine whether some or all home market sales are at a
different LOT than U.S. sales, we examined both the chain of
distribution and the selling functions in both markets. An analysis of
the chain of distribution and of the selling functions substantiates or
invalidates the claimed LOTs. Our analysis revealed that while all
sales in the home market were in the same chain of distribution, there
were substantial differences in selling functions between certain types
of customers.
Some of the home market sales were made on a Just In Time (``JIT'')
basis. As in the prior review, the Department preliminarily determines
that the infrastructure required to support the selling functions
involving JIT sales results in these sales being made at a different
LOT than non-JIT sales. Some sales in the home market, which would
match to the U.S. sale, were not made on a JIT basis. The Department
examined the selling functions provided by TAMSA to these customers to
determine if these sales were at the same LOT as sales to the United
States.
In Stainless Steel Sheet and Strip in Coils from the United
Kingdom, Preliminary Determination of Sales at Less than Fair Value and
Postponement of Final Determination, 64 FR 85 (January 4, 1999), the
Department determined that some of the items listed by respondent were
not selling functions relevant to the Department's LOT analysis because
they did not characterize significant services provided to customers.
Based on this analysis, we conclude that customer solicitation is not a
selling function. Therefore, we are disregarding this item in our LOT
analysis.
Of the remaining 13 selling functions listed by TAMSA, all but one
were provided in both the home market and the United States to non-JIT
customers. Only customer visits are listed by TAMSA as a selling
function provided in the home market, but not in the United States.
However, TAMSA does not quantify or otherwise describe the nature of
these visits. Given the absence of evidence, we preliminarily determine
that the actual differences in selling functions in connection with
sales to non-JIT customers in the home market, and sales to the United
States, are relatively minor.
Based on this determination, we preliminarily determine that sales
to home market customers which do not receive JIT services are at the
same level of trade as CEP sales. As a result, we have based our margin
analysis on the
[[Page 48986]]
comparison of CEP sales to these non-JIT home market sales.
Because we have preliminarily determined that there are sales in
the home market at the same level of trade as the sale to the United
States, and because we have used only these same LOT sales as matching
in calculating the margin, we are not making an LOT adjustment or a CEP
offset.
Preliminary Results of Review
We preliminarily determine that the following margins exist for the
period August 1, 1997 through July 31, 1998:
TAMSA--0.00%
Parties to this proceeding may request disclosure within five days
of publication of this notice and any interested party may request a
hearing within 30 days of publication. Any hearing, if requested, will
be held 37 days after the date of publication, or the first working day
thereafter. Interested parties may submit case briefs and/or written
comments no later than 30 days after the date of publication. Rebuttal
briefs and rebuttals to written comments, limited to issues raised in
such briefs or comments, may be filed no later than 35 days after the
date of publication. The Department will publish the final results of
this administrative review, which will include the results of its
analysis of issues raised in any such written comments or at a hearing,
within 120 days after the publication of this notice.
The Department shall determine, and Customs shall assess,
antidumping duties on all appropriate entries. The Department will
issue appraisement instructions directly to Customs. The final results
of this review shall be the basis for the assessment of antidumping
duties on entries of merchandise covered by the determination and for
future deposits of estimated duties. For duty assessment purposes, we
calculated an importer-specific assessment rate by taking the dumping
margin calculated for the U.S. sale to the importer and dividing this
amount by the total entered value of the sale. This specific rate
calculated will be used for the assessment of antidumping duties on the
entry of the subject merchandise during the POR.
Furthermore, the following deposit requirements will be effective
upon completion of the final results of these administrative reviews
for all shipments of OCTG from Mexico entered, or withdrawn from
warehouse, for consumption on or after the publication date of the
final results of these administrative reviews, as provided by section
751(a)(1) of the Act: (1) The cash deposit rate for reviewed firms will
be the rate established in the final results of administrative review,
except if the rate is less than 0.50 percent, and therefore, de minimis
within the meaning of 19 CFR 351.106(d)(1), in which case the cash
deposit rate will be zero; (2) for merchandise exported by
manufacturers or exporters not covered in this review but covered in
the original less-than-fair-value (LTFV) investigation or a previous
review, the cash deposit will continue to be the most recent rate
published in the final determination or final results for which the
manufacturer or exporter received a company-specific rate; (3) if the
exporter is not a firm covered in this review, or the original
investigation, but the manufacturer is, the cash deposit rate will be
that established for the manufacturer of the merchandise in the final
results of these reviews, or the LTFV investigation; and (4) if neither
the exporter nor the manufacturer is a firm covered in this or any
previous review or the original fair value investigation, the cash
deposit rate will be 23.79%, the ``all other'' rate from the original
investigation.
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 351.402(f)(2) to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during this review period. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This administrative review and notice are in accordance with
sections 751(a)(1) and 777(i)(1)of the Act.
Dated: August 31, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-23433 Filed 9-8-99; 8:45 am]
BILLING CODE 3510-DS-P