[Federal Register Volume 64, Number 236 (Thursday, December 9, 1999)]
[Notices]
[Pages 68995-68999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-31983]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-201-805]


Circular Welded Non-Alloy Steel Pipe and Tube From Mexico: 
Preliminary Results of Antidumping Duty Administrative Review

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

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

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SUMMARY: In response to requests from two respondents, the Department 
of Commerce (the Department) is conducting an administrative review of 
the antidumping duty order on circular welded non-alloy steel pipe and 
tube from Mexico. This review covers two manufacturers and exporters of 
the subject merchandise, Tuberia Nacional S.A. de C.V. (TUNA) and Hylsa 
S.A. de C.V. (Hylsa). The period of review (POR) is November 1, 1997, 
through October 31, 1998.

EFFECTIVE DATE: December 9, 1999.

FOR FURTHER INFORMATION CONTACT: John Drury (TUNA), Charles Rast 
(Hylsa), or Linda Ludwig, Enforcement Group III, Office 8, Import 
Administration, International Trade Administration, US Department of 
Commerce, 14th Street and Constitution Avenue, NW, Room 7866, 
Washington, DC 20230; telephone (202) 482-0195, (202) 482-1324, or 
(202) 482-3833, respectively.

SUPPLEMENTARY INFORMATION:

The 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 an antidumping duty order on circular 
welded non-alloy steel pipe and tube from Mexico on November 2, 1992 
(57 FR 49453). The Department published a notice of ``Opportunity to 
Request an Administrative Review'' of the antidumping duty order for 
the 1997/98 review period on November 12, 1998 (63 FR 63287). 
Respondents TUNA and Hylsa requested that the Department conduct an 
administrative review of the antidumping duty order on circular welded 
non-alloy steel pipe and tube from Mexico. We initiated this review on 
December 23, 1998. See 63 FR 71091 (December 17, 1998).
    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for issuing a preliminary determination in an 
administrative review if it determines that it is not practicable to 
complete the preliminary review within the statutory time limit of 245 
days. On August 12, 1999, the Department published a notice of 
extension of the time limit for the preliminary results in this case to 
November 30, 1999. See Extension of Time Limit: Circular Welded Non-
Alloy Pipe From Mexico; Antidumping Administrative Review, 64 FR 43982 
(August 12, 1999).

[[Page 68996]]

    The Department is conducting this review in accordance with section 
751(a) of the Act.

Scope of the Review

    The products covered by these orders are circular welded non-alloy 
steel pipes and tubes, of circular cross-section, not more than 406.4 
millimeters (16 inches) in outside diameter, regardless of wall 
thickness, surface finish (black, galvanized, or painted), or end 
finish (plain end, beveled end, threaded, or threaded and coupled). 
These pipes and tubes are generally known as standard pipes and tubes 
and are intended for the low pressure conveyance of water, steam, 
natural gas, and other liquids and gases in plumbing and heating 
systems, air conditioning units, automatic sprinkler systems, and other 
related uses, and generally meet ASTM A-53 specifications. Standard 
pipe may also be used for light load-bearing applications, such as for 
fence tubing, and as structural pipe tubing used for framing and 
support members for reconstruction or load-bearing purposes in the 
construction, shipbuilding, trucking, farm equipment, and related 
industries. Unfinished conduit pipe is also included in these orders.
    All carbon steel pipes and tubes within the physical description 
outlined above are included within the scope of these orders, except 
line pipe, oil country tubular goods, boiler tubing, mechanical tubing, 
pipe and tube hollows for redraws, finished scaffolding, and finished 
conduit. Standard pipe that is dual or triple certified/stenciled that 
enters the U.S. as line pipe of a kind used for oil or gas pipelines is 
also not included in these orders.
    Imports of the products covered by these orders are currently 
classifiable under the following Harmonized Tariff Schedule (HTS) 
subheadings: 7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 
7306.30.50.40, 7306.30.50.55, 7306.30.50.85, and 7306.30.50.90.
    Although the HTS subheadings are provided for convenience and 
customs purposes, our written description of the scope of these 
proceedings is dispositive.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered each 
circular welded non-alloy steel pipe and tube product produced by the 
respondents, covered by the descriptions in the ``Scope of the Review'' 
section of this notice, supra, and sold in the home market during the 
POR, to be a foreign like product for purposes of determining 
appropriate product comparisons to US sales of circular welded non-
alloy steel pipe and tube. Where there were no sales of identical 
merchandise in the home market to compare to US sales, we compared US 
sales to the next most similar foreign like product on the basis of the 
characteristics listed in the Department's December 23, 1998 
questionnaire, or to constructed value (CV).

Normal Value Comparisons

    To determine whether sales of circular welded non-alloy steel pipe 
from Mexico to the United States were made at less than fair value, we 
compared the export price (EP) or constructed export price (CEP) to the 
normal value (NV), as described in the ``Export Price and Constructed 
Export Price'' and ``Normal Value'' sections of this notice, below. In 
accordance with section 777A (d)(2) of the Act, we calculated monthly 
weighted-average prices for NV and compared these to individual US 
transactions.
    We have used the date of invoice as the date of sale for all home 
market sales made by both TUNA and Hylsa during the POR. For US sales 
made by TUNA, we have also used the date of invoice as the date of 
sale. For US sales made by Hylsa, we have used the reported purchase 
order date as the date of sale because it is the most accurate on the 
record. See Analysis Memorandum for Hylsa, dated November 30, 1999.

Export Price and Constructed Export Price

Hylsa

    We calculated EP in accordance with section 772(a) of the Act, 
because the subject merchandise was sold directly to the first 
unaffiliated purchaser in the United States prior to importation. We 
based EP on packed prices to unaffiliated customers in the United 
States. Where appropriate, we made deductions from the starting price 
for foreign inland freight, foreign brokerage and handling, U.S. 
brokerage and handling and U.S. customs duties.

Tuna

    For TUNA, we analyzed sales made to the United States, and 
determined that there are both EP and CEP sales in the United States 
during the POR. For certain sales to the United States, we calculated 
CEP in accordance with section 772(b) of the Act, because the subject 
merchandise was first sold by TUNA's U.S. affiliate (Acerotex) after 
having been imported into the United States. We based CEP on packed 
prices to unaffiliated purchasers in the United States. Where 
appropriate, we made deductions from the starting price for foreign 
inland freight, foreign brokerage and handling, U.S. brokerage and 
handling, and U.S. customs duties. In accordance with section 772(d)(1) 
of the Act, we deducted those selling expenses associated with economic 
activities occurring in the United States, including direct selling 
expenses (credit costs, warranty expenses), and indirect selling 
expenses. For CEP sales, we also made an adjustment for profit in 
accordance with section 772(d)(3) of the Act.
    We determined that the remaining sales were EP sales based on the 
fact that TUNA sold the subject merchandise directly to the 
unaffiliated U.S. customer prior to importation, and CEP treatment was 
not otherwise indicated. We calculated EP in accordance with section 
772(a) of the Act. We based EP on packed prices to unaffiliated 
customers in the United States. Where appropriate, we made deductions 
from the starting price for foreign inland freight, foreign brokerage 
and handling, U.S. brokerage and handling and U.S. customs duties.

Normal Value

    Based on a comparison of the aggregate quantity of home-market and 
U.S. sales, we determined that the quantity of the foreign like product 
sold in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States, pursuant to section 773(a) of the Act. Therefore, in accordance 
with section 773(a)(1)(B)(i) of the Act, we based NV on the price at 
which the foreign like product was first sold for consumption in the 
home market.
    Sales to affiliated customers for consumption in the home market 
which were determined not to be at arm's-length were excluded from our 
analysis. To test whether these sales were made at arm's-length, we 
compared the prices of sales of comparison products to affiliated and 
unaffiliated customers, net of all movement charges, direct selling 
expenses, discounts, and packing. Pursuant to 19 CFR 351.403 and in 
accordance with our practice, where the prices to the affiliated party 
were on average less than 99.5 percent of the prices to unaffiliated 
parties, we determined that the sales made to the affiliated party were 
not at arm's-length. See Notice of Final Results and Partial Recission 
of Antidumping Duty Administrative Review: Roller Chain, Other Than 
Bicycle, From Japan, 62 FR. 60472 (November 10, 1997); 62 FR 27295, 
27355-56 (May 19, 1997). We

[[Page 68997]]

included those sales that passed the arm's-length test in our analysis 
(see 19 CFR 351.403; 62 FR at 27355-56). For TUNA, we used sales from 
TUNA directly to unaffiliated customers, and from affiliated resellers 
to the first unaffiliated customer, as the basis for determining normal 
value. See TUNA Analysis Memorandum, dated November 30, 1999. For 
Hylsa, we excluded from our analysis downstream sales made by 
affiliated customers because of their small volumes. See Memorandum to 
the File, dated October 20, 1999.
    Where appropriate, in accordance with section 773(a)(6)(A) of the 
Act, we deducted credit expenses, warranties, advertising, insurance, 
packing, and certain discounts, and we added interest revenue.

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 
allocated to 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 the stages of marketing and 
the selling functions in both markets. An analysis of the selling 
functions substantiates or invalidates the claimed LOTs.

Hylsa

    For sales made by Hylsa during the POR, the record shows that sales 
in both markets were made at the same LOT. In the U.S. market, Hylsa 
sold to unaffiliated industrial end-users and distributors. In the home 
market, Hylsa sold to unaffiliated industrial end-users, distributors, 
and employees. Based on Hylsa's questionnaire responses, selling 
functions performed for customers in either market generally did not 
vary according to customer category or channel of distribution. 
Accordingly, we preliminary find that all sales in the home market and 
the U.S. market were made at the same level of trade, and we are not 
making a LOT adjustment.

TUNA

    Our analysis of the data submitted by TUNA indicates that sales to 
the United States were made through two channels of distribution, and 
sales in the home market were through multiple channels of 
distribution. Furthermore, there were differences in selling functions 
between certain types of customers in both markets, depending upon the 
channel of distribution. All sales in the home market to unaffiliated 
parties were to end users. Conversely, sales in the United States were 
to distributors.
    An examination of the selling functions in both markets indicates 
that TUNA performs a ``core'' of selling functions in the home market 
for all customers. These functions include inventory maintenance, 
salesman visits to customers, and technical services. Depending upon 
the channel of distribution, TUNA also performs additional selling 
functions for certain customers in the home market. TUNA provides just 
in time (JIT), and other specialized services to one channel of trade, 
which are not provided to any other home market customers. In a 
separate channel of trade, TUNA performs additional selling functions, 
related principally to affiliated resellers, which allows the resellers 
to perform selling functions for their unaffiliated customers. The 
selling functions provided by TUNA in this channel of trade are unique.
    Based on our analysis, we preliminarily determine that there are 
three levels of trade in the home market. Those sales receiving JIT and 
other specialized services constitute one level of trade. Downstream 
sales through affiliates receive a unique set of selling functions and 
thus constitute a separate level of trade. All other sales in the home 
market constitute a third level of trade, in which there exists only 
the ``core'' selling functions.
    In the United States, we preliminarily determine that there are two 
separate levels of trade. These correspond to EP and CEP sales, 
respectively. For CEP sales, we found minimal selling functions 
performed by TUNA for its U.S. affiliate. Accordingly, the CEP is at a 
different LOT than any of those HM LOTs. For EP sales, we found that 
TUNA performs certain selling functions consistent with the ``core'' 
functions performed for sales in the home market. Therefore, the 
selling functions are the same, and we preliminarily determine that EP 
sales in the U.S. are at the same level of trade as those sales in the 
home market which do not receive JIT services, or services provided on 
downstream sales (i.e. the third level of trade in the home market).
    Section 773(a)(7)(A) of the Act directs us to make an adjustment 
for differences in LOTs where such differences affect price 
comparability. For CEP, because there is insufficient data to perform 
an analysis of the affect on price comparability, and each home market 
LOT is more advanced than the CEP LOT, the Department must make a CEP 
offset. Therefore, regarding those sales

[[Page 68998]]

to the United States which are classified as CEP sales, in accordance 
with section 773(a)(7)(B) of the Act, a CEP offset is warranted.
    As we have determined that TUNA's home market sales at the third 
LOT are at the same level of trade as the EP sales in the United 
States, we have made no LOT adjustment when TUNA's EP sales matched 
sales at this LOT. See TUNA Analysis Memorandum, dated November 30, 
1999.

Cost-of-Production Analysis

    Because the Department disregarded sales below cost for both Hylsa 
and TUNA in the comparison market during the last completed segment of 
the proceeding, we initiated a cost of production analysis in 
accordance with section 773(b) of the Act. We conducted the COP 
analysis as described below.

A. Calculation of COP

    We calculated the COP based on the sum of Hylsa's and TUNA's cost 
of materials and fabrication for the foreign like product, plus amounts 
for home-market selling, general, and administrative expenses 
(``SG&A''), and packing costs in accordance with section 773(b)(3) of 
the Act. We relied on the submitted COPs for TUNA, except as follows. 
Our analysis of the most recently submitted data by TUNA indicated that 
certain home market sales were not assigned a cost. As facts available, 
we assigned an average cost, by size and finish, to sales which might 
match to United States sales. We will request supplemental information 
on these certain home market sales and consider responsive submission 
prior to the publication of the final determination.
    For Hylsa, we adjusted COPs to reflect similar physical 
characteristics for certain products. We subsequently weight-averaged 
the reported costs by control number. See Hylsa Analysis Memorandum.

B. Test of Home-Market Prices

    We used the respondents' weighted-average COPs for the period 
November 1, 1997 through October 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, discounts, and rebates.

C. Results of COP Test

    In accordance with section 773(b)(2)(C), where less than 20 percent 
of Hylsa's and TUNA's sales of a given product were at prices less than 
the COP, we do not disregard any below-cost sales of that product 
because we determine that the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a TUNA's and 
Hylsa's sales during the POR were at prices less than the COP, we 
determine 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. Furthermore, because we compared prices to POR 
average COPs, we determined that below-cost prices do not 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 of TUNA and Hylsa. Where all contemporaneous sales of 
comparison products were disregarded, we calculated NV based on CV.

D. Calculation of CV

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of TUNA's and Hylsa's cost of materials, fabrication, 
SG&A, U.S. packing costs, interest expenses as reported in the U.S. 
sales database and 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.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions in accordance with section 773A of the Act, based on the 
official exchange rates in effect on the dates of the U.S. sales as 
certified by the Federal Reserve Bank of New York. Section 773A(a) of 
the Act directs the Department to use a daily exchange rate in order to 
convert foreign currencies into U.S. dollars, unless the daily rate 
involves a ``fluctuation.'' In accordance with the Department's 
practice, we have determined as a general matter that a fluctuation 
exists when the daily exchange rate differs from a benchmark by 2.25 
percent. See, e.g., Certain Stainless Steel Wire Rods from France; 
Preliminary Results of Antidumping Duty Administrative Review, 61 FR 
8915, 8918 (March 6, 1998), and Policy Bulletin 96-1: Currency 
Conversions, 61 FR 9434 (March 8, 1996). The benchmark is defined as 
the rolling average of rates for the past 40 business days. When we 
determine a fluctuation exists, we substitute the benchmark for the 
daily rate.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following weighted-average dumping margin exists:

             Circular Welded Non-Alloy Steel Pipes and Tubes
------------------------------------------------------------------------
                                                               Weighted-
                                                                average
                Producer/Manufacturer/Exporter                   margin
                                                               (percent)
------------------------------------------------------------------------
TUNA.........................................................       1.92
Hylsa........................................................      10.38
------------------------------------------------------------------------

    The Department will disclose to any party to the proceeding, within 
ten days of publication of this notice, the calculations performed (19 
CFR 351.224). 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 dividing the total 
dumping margins calculated for the U.S. sales to the importer by the 
total entered value of these sales. This rate will be used for the 
assessment of antidumping duties on all entries of the subject

[[Page 68999]]

merchandise by that importer 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 circular welded-non-alloy steel pipe 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(c), 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 36.62%, 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: November 30, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-31983 Filed 12-8-99; 8:45 am]
BILLING CODE 3510-DS-P