[Federal Register Volume 64, Number 229 (Tuesday, November 30, 1999)]
[Notices]
[Pages 66886-66889]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30963]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-122-506]


Notice of Preliminary Results of Antidumping Duty New Shipper 
Review and Extension of Time Limit for Final Results of New Shipper 
Review: Oil Country Tubular Goods From Canada

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

ACTION: Notice of preliminary results of antidumping duty new shipper 
review and extension of time limit for final results of new shipper 
review.

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SUMMARY: In response to a request from the respondent, Atlas Tube, Inc. 
(``Atlas''), the Department of Commerce (the ``Department'') is 
conducting a new shipper review of the antidumping duty order on oil 
country tubular goods (``OCTG'') from Canada. This review covers one 
manufacturer/exporter, Atlas, and the period June 1, 1998 through 
November 30, 1998.
    We have preliminarily determined the dumping margin for Atlas to be 
0.86 percent during the period June 1, 1998, through November 30, 1998. 
Interested

[[Page 66887]]

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.

EFFECTIVE DATE: November 30, 1999.

FOR FURTHER INFORMATION CONTACT: Mark Manning or Nithya Nagarajan, AD/
CVD Enforcement Group II, Office IV, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone 
(202) 482-3936 or (202) 482-5253 respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute

    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 Rounds Agreements Act (``URAA''). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
current regulations at 19 CFR part 351 (1998).

Background

    The Department published an antidumping duty order on OCTG from 
Canada on June 16, 1986 (51 FR 21782) and an amended order on August 
19, 1986 (51 FR 29579). On December 30, 1998, Atlas Tube Inc., 
requested the Department to initiate a new shipper review pursuant to 
section 751(a)(2)(B) of the Act, and 19 CFR 351.214(b). We initiated 
this new shipper review on February 3, 1999, (64 FR 5265) for the 
period June 1, 1998 through November 30, 1998.
    The Department issued its questionnaire on February 24, 1999, and 
received Atlas' response to Section A on March 15, 1999, Sections B and 
C on April 2, 1999, and supplemental responses on August 30, 1999. 
Subsequently, on June 23, 1999, (64 FR 33475) due to the complexity of 
the issues raised in this review, the Department extended the time 
limit for the completion of preliminary results of the new shipper 
review. After an analysis of Atlas' Section A, B, and C responses, the 
Department initiated on August 6, 1999, an investigation to determine 
whether Atlas made sales below the cost of production. Respondent 
submitted its Section D response on August 30, 1999, and supplemental 
Section D response on October 29, 1999.
    The Department is conducting this new shipper review in accordance 
with section 751(a)(2)(B) of the Act. Concurrent with the instant new 
shipper review, the Department is also conducting an administrative 
review of Atlas under section 751(a)(1) of the Act. Pursuant to 
respondent's request, due to the fact that the new shipper review 
covers shipments through November 30, 1999, the administrative review 
of Atlas (which would normally cover the period June 1, 1998 through 
May 31, 1999) is limited to the examination of shipments during the 
period December 1, 1998 through May 31, 1999. See 19 CFR 351.214(j). 
The preliminary results of administrative review are currently 
scheduled for February 29, 2000.

Extension of Final Results of Review

    Section 751(a)(2)(B)(iv) of the Act permits the Department to 
extend the deadlines for the final results of review if the review is 
extraordinarily complicated. We have determined that this review is 
extraordinarily complicated and that we are unable to complete this 
review in the time frame provided by the statute. The Department is 
hereby extending the time limit for issuing the final results to 120 
days after the publication of this preliminary results of review in the 
Federal Register.

Scope of the Review

    The products covered by this review include shipments of OCTG from 
Canada. This includes American Petroleum Institute (``API'') 
specification OCTG and all other pipe with the following 
characteristics except entries which the Department determined through 
its end-use certification procedure were not used in OCTG applications: 
Length of at least 16 feet; outside diameter of standard sizes 
published in the API or proprietary specifications for OCTG with 
tolerances of plus \1/8\ inch for diameters less than or equal to 8\5/
8\ inches and plus \1/4\ inch for diameters greater than 8\5/8\ inches, 
minimum wall thickness as identified for a given outer diameter as 
published in the API or proprietary specifications for OCTG; a minimum 
of 40,000 PSI yield strength and a minimum 60,000 PSI tensile strength; 
and if with seams, must be electric resistance welded. Furthermore, 
imports covered by this review include OCTG with non-standard size wall 
thickness greater than the minimum identified for a given outer 
diameter as published in the API or proprietary specifications for 
OCTG, with surface scabs or slivers, irregularly cut ends, ID or OD 
weld flash, or open seams; OCTG may be bent, flattened or oval, and may 
lack certification because the pipe has not been mechanically tested or 
has failed those tests. This merchandise is currently classifiable 
under the Harmonized Tariff Schedules (HTS) item numbers 7304.20, 
7305.20, and 7306.20. The HTS item numbers are provided for convenience 
and U.S. Customs purposes. The written description remains dispositive.

Fictitious Market

    On April 22, 1999, petitioners alleged that Atlas had created a 
fictitious home market sale for comparison purposes. Petitioners based 
their allegation on the fact that all of the subject merchandise sold 
in the United States during the POR was of one outside diameter size 
and that there was only a single sale of subject merchandise with the 
same outside diameter in the home market. Furthermore, they allege that 
the Department does not have sufficient information to make a 
determination, pursuant to section 773(a)(2) of the Act, whether there 
have been different movements in the prices at which different forms of 
subject merchandise have been sold in the home market and whether any 
such movement appears to reduce the amount by which foreign market 
value exceeds the U.S. price of the merchandise. Petitioners cite the 
Department's findings in Porcelain-on-Steel Cookware from Mexico, 58 FR 
32095, 32096 (June 8, 1993), as support for their argument.
    In our August 6, 1999, Section B supplemental questionnaire, we 
requested Atlas to demonstrate that the single home market sale of 
subject merchandise of the same outside diameter as the merchandise 
sold in the United States was made in the normal course of trade. In 
its August 30, 1999 response, Atlas stated that the circumstances 
surrounding this sale involved a shipping error where its customer 
inadvertently received merchandise of the wrong outside diameter size. 
Although the customer did not order the size of material delivered, 
Atlas stated that the customer kept the merchandise after it negotiated 
certain adjustments to the terms of the sale. Upon reviewing the 
information on the record, we note the following: (1) the sale in 
question accounts for a small percentage of total home market sales, 
(2) Atlas sold subject merchandise with the same outside diameter as 
the merchandise sold in the United States to only one customer while 
its home market sales of subject merchandise with other diameters were 
to multiple customers, and (3) Atlas was forced to negotiate certain 
adjustments to the terms of the sale in order to persuade its

[[Page 66888]]

customer to accept the delivery. Based upon these facts, the Department 
concludes that the sale at issue is most appropriately considered in 
the context of the ordinary course of trade provision of the statute 
rather than the fictitious market context. The Department preliminarily 
finds that the circumstances surrounding this sale are unusual enough 
to determine that this sale was made outside the ordinary course of 
trade. See Decision Memorandum: Oil Country Tubular Goods from Canada--
Petitioners' Allegation That Atlas Tube Inc.'s Matching Home Market 
Sale Is Outside the Ordinary Course of Trade, November 24, 1999. 
Therefore, consistent with section 773(a)(1)(B) of the Act, we have 
excluded this sale from our calculations for the preliminary results 
because it is outside the ordinary course of trade. For this reason, we 
need not address whether to exclude this sale pursuant to section 
773(a)(2) of the Act. However, we will continue to examine this issue 
in the final results of this review.

United States Price

    Atlas reported as export price (``EP'') transactions sales of 
subject merchandise to unaffiliated U.S. customers prior to 
importation.
    We calculated EP, in accordance with section 772(a) of the Act, 
because the merchandise was sold to the first unaffiliated purchaser in 
the United States prior to importation and constructed export price 
(``CEP'') methodology was not otherwise warranted, based on the facts 
of record. We based EP on the delivered price to unaffiliated 
purchasers in the United States. We adjusted the starting price by the 
amount Atlas reported for billing adjustments and made deductions to 
the starting price for discounts. We also made deductions for movement 
expenses in accordance with section 772(c)(2)(A) of the Act; these 
included foreign inland freight, U.S. inland freight, and U.S. 
brokerage and handling charges.

Normal Value

    After testing (1) home market viability and (2) whether home market 
sales were at below-cost prices, we calculated NV as noted in the 
``Price-to-Price Comparisons'' section of this notice.

1. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
the aggregate volume of home market sales of the foreign like product 
is equal to or greater than five percent of the aggregate volume of 
U.S. sales), we compared Atlas' volume of home market sales of the 
foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1)(C) of the Act. 
Because Atlas' aggregate volume of home market sales of the foreign 
like product was greater than five percent of its aggregate volume of 
U.S. sales for the subject merchandise, we determined that the home 
market was viable for Atlas.

2. Cost of Production Analysis

    On April 22, 1999, petitioners filed an allegation that Atlas made 
home market sales at prices that were below the cost of production 
(``COP''). Our analysis of the allegation indicated that there were 
reasonable grounds to believe or suspect that Atlas had sold OCTG in 
the home market at prices less than the COP. Accordingly, on August 30, 
1999, pursuant to section 773(b) of the Act, we initiated a COP 
investigation with respect to Atlas to determine whether sales were 
made at prices less than the COP.
    We conducted the COP analysis described below.
A. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of Atlas' cost of materials and fabrication for the 
foreign like product, direct and indirect selling expenses, plus an 
amount for home market SG&A, interest expenses, and packing costs.
B. Test of Home Market Sales Prices
    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 order to determine whether these sales had been made at prices 
below COP. In determining whether to disregard home market sales made 
at prices less than 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 and rebates.
C. Results of the COP Test
    Pursuant to section 773(b)(2)(C), where less than 20 percent of 
respondent's sales of a given product were at prices less than the COP, 
we did not disregard any below-cost sales of that product because we 
determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of respondent's sales of a given 
product during the POI were at prices less than the COP, we determined 
such sales to be made in ``substantial quantities'' within an extended 
period of time in accordance with section 773(b)(2)(B) of the Act. In 
such cases, because we compare prices to weighted-average COPs for the 
POI, we also determined that such sales were not made at prices which 
would permit recovery of all costs within a reasonable period of time, 
in accordance with section 773(b)(2)(D) of the Act. Therefore, we 
disregarded such below-cost sales.

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 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 constructed value (``CV''), that of the sales from 
which we derive selling, general and administrative (``SG&A'') expenses 
and profit. With respect to U.S. price for EP transactions, the LOT is 
also the level of the starting-price sale, which is usually from the 
exporter to the importer. For CEP, the LOT 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 examined 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 home 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 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).
    Atlas reported one customer category and one channel of 
distribution (i.e., sales to unaffiliated distributors) for its home 
market sales. Atlas reported EP sales in the U.S. market. For EP sales, 
Atlas also reported one customer

[[Page 66889]]

category and one channel of distribution (i.e., direct sales to 
unaffiliated distributors). Atlas claimed in its response that its EP 
sales were made at the same LOT as home market sales to unaffiliated 
distributors. For this reason, Atlas has not asked for a LOT adjustment 
to NV for comparison to its EP sales.
    In determining whether separate LOTs actually existed in the home 
market and U.S. market, we examined whether Atlas' sales involved 
different marketing stages (or their equivalent) based on the channel 
of distribution, customer categories and selling functions. Atlas 
reported that its selling functions for home market sales are arranging 
for freight, warehousing, and warranty service; however, we noted that 
Atlas did not report any warehouse or warranty expenses for home market 
sales during the POR. After reviewing the record evidence, we agree 
with Atlas that its home market sales comprise a single LOT.
    In analyzing Atlas' selling activities for its EP sales, we noted 
that the sales generally involved the same selling functions associated 
with the home market LOT described above. Atlas reported that these 
selling activities are arranging for freight, warehousing, and warranty 
services; however, we noted that Atlas did not report any warehouse or 
warranty expenses for U.S. market sales during the POR. Based upon the 
record evidence, we have determined that there is one LOT for all EP 
sales and that it is the same LOT as that in the home market. 
Accordingly, because we find the U.S. sales and home market sales to be 
at the same LOT, no LOT adjustment under section 773(a)(7)(A) is 
warranted.

Price-to-Price Comparisons

    We calculated NV based on delivered prices to unaffiliated 
customers, where appropriate. The NV price was reported on a Goods and 
Services Tax-exclusive basis. We adjusted the starting price by the 
amount Atlas reported for billing adjustments. We made deductions from 
the starting price for rebates, inland freight, and inland freight 
insurance. We made adjustments for differences in the merchandise in 
accordance with section 773(a)(6)(C)(ii) of the Act. We made 
adjustments under section 773(a)(6)(C)(iii) of the Act for differences 
in circumstances of sale for imputed credit expenses. Finally, we 
deducted home market packing costs and added U.S. packing costs in 
accordance with section 773(a)(6)(A) and (B) of the Act.

Currency Conversion

    Pursuant to section 773A(a) of the Act, we made currency 
conversions into U.S. dollars based on the exchange rates in effect on 
the dates of the U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results

    As a result of this review, we preliminarily determine that a 0.86 
percent dumping margin exists for Atlas for the period June 1, 1998, 
through November 30, 1998.
    The Department will disclose calculations performed within five 
days of the date of publication of this notice in accordance with 19 
CFR 351.224(b). A party may request a hearing within thirty days of 
publication. See 19 CFR 351.310(c). Any hearing, if requested, will be 
held 44 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 37 days after the 
date of publication. The Department will issue the final results of 
this new shipper review, which will include the results of its analysis 
of issues raised in any such comments, within 120 days of publication 
of these preliminary results.
    Upon completion of this new shipper review, the Department shall 
determine, and Customs shall assess, antidumping duties on all 
appropriate entries. There was only one importer during the POR. We 
have calculated an importer-specific duty assessment rate based on the 
ratio of the total amount of antidumping duties calculated for the 
examined sales to the total entered value of examined sales. Atlas 
reported entered value on an actual basis by subtracting discounts, 
freight, and brokerage and handling costs from the its reported U.S. 
price. This rate will be assessed uniformly on all entries made during 
the POR. The Department will issue appraisement instructions directly 
to Customs.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of OCTG from Canada entered, or withdrawn from warehouse, 
for consumption on or after the publication date of the final results 
of this administrative review, as provided by section 751(a)(1) of the 
Act: (1) The cash deposit rate for Atlas will be the rate established 
in the final results of this administrative review; (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 rate will continue to be the company-
specific rate published for the most recent period; (3) if the exporter 
is not a firm covered in this review, or the original 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; and (4) if neither the exporter nor the manufacturer is a 
firm covered in this or any previous review, the cash deposit rate will 
be 16.65 percent, the ``all-others'' rate established in the LTFV 
investigation.
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of administrative review for a 
subsequent review period.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402 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 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 351.213 
and 351.214.

    Dated: November 19, 1999.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-30963 Filed 11-29-99; 8:45 am]
BILLING CODE 3510-DS-P