[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