[Federal Register Volume 64, Number 245 (Wednesday, December 22, 1999)]
[Notices]
[Pages 71728-71735]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33220]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-815]


Certain Welded Stainless Steel Pipe From Taiwan: Preliminary 
Results of Antidumping Administrative Review and Intent To Revoke in 
Part

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

ACTION: Notice of preliminary results in the antidumping duty 
administrative review of certain welded stainless steel pipe from 
Taiwan.

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SUMMARY: In response to requests from Ta Chen Stainless Pipe Co., Ltd. 
(``Ta Chen'') and the domestic industry, the U.S. Department of 
Commerce (``Department'') is conducting an administrative review of the 
antidumping duty order on certain welded stainless steel pipe 
(``WSSP'') from Taiwan for the period December 1, 1997 through November 
30, 1998. The Department preliminarily determines that a de minimis 
dumping margin exists for Ta Chen's sales of WSSP in the United States. 
If these preliminary results are adopted in our final results of this 
administrative review, we will instruct the U.S. Customs Service to 
assess antidumping duties on entries of Ta Chen's merchandise during 
the period of review, in accordance with the Department's regulations 
(19 CFR 351.106). The preliminary results are listed in the section 
titled ``Preliminary Results of Review,'' infra.

EFFECTIVE DATE: December 22, 1999.


[[Page 71729]]


FOR FURTHER INFORMATION CONTACT: Juanita H. Chen or Robert Bolling, 
Enforcement Group III, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue, 
NW., Washington, DC 20230; telephone: 202-482-0409, or 202-482-3434, 
respectively.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``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 
to the regulations codified at 19 CFR part 351 (1999).

Background

    On December 30, 1992, the Department published in the Federal 
Register (57 FR 62300) the amended antidumping duty order on WSSP from 
Taiwan. On December 8, 1998, the Department published in the Federal 
Register (63 FR 67646) a notice of opportunity to request 
administrative review of this order for the period December 1, 1997 
through November 30, 1998. On December 29, 1998, Ta Chen, a Taiwan 
producer and exporter of subject merchandise, requested that the 
Department conduct a review of its sales and also requested revocation 
of the Department's antidumping duty order on WSSP from Taiwan. On 
December 30, 1998, Avesta Sheffield Pipe Co., Damascus Tube Division, 
Damascus-Bishop Tube Co., and the United Steelworkers of America, AFL-
CIO/CLC (collectively ``Petitioners''), on behalf of the domestic 
industry, requested that the Department conduct an administrative 
review with respect to Ta Chen. On January 25, 1999, in accordance with 
section 751(a) of the Act, the Department published in the Federal 
Register a notice of initiation of this antidumping duty administrative 
review for the period December 1, 1997 through November 30, 1998 (64 FR 
3682).
    On March 12, 1999, Ta Chen reported that it made sales of subject 
merchandise to the United States during the period of review in its 
response to Section A of the Department's questionnaire. On April 5, 
1999, Ta Chen submitted its responses to Sections B, C and D of the 
Department's questionnaire. On July 27, 1999, Petitioners requested 
that the Department reject Ta Chen's request for revocation. Ta Chen 
submitted a response on August 3, 1999 to the Department's supplemental 
questionnaire. On September 22, 1999, Ta Chen requested an extension of 
time in which to respond to the Department's second supplemental 
questionnaire due to the earthquake in Taiwan on September 21, 1999. On 
October 5, 1999, Ta Chen submitted its response to the Department's 
second supplemental questionnaire. On December 8, 1999, the Department 
issued a third supplemental questionnaire to Ta Chen, the response to 
which is due December 23, 1999.

Scope of Review

    The merchandise subject to this administrative review is certain 
welded austenitic stainless steel pipe (``WSSP'') that meets the 
standards and specifications set forth by the American Society for 
Testing and Materials (``ASTM'') for the welded form of chromium-nickel 
pipe designated ASTM A-312. The merchandise covered by the scope of the 
order also includes austenitic welded stainless steel pipes made 
according to the standards of other nations which are comparable to 
ASTM A-312.
    WSSP is produced by forming stainless steel flat-rolled products 
into a tubular configuration and welding along the seam. WSSP is a 
commodity product generally used as a conduit to transmit liquids or 
gases. Major applications for WSSP include, but are not limited to, 
digester lines, blow lines, pharmaceutical lines, petrochemical stock 
lines, brewery process and transport lines, general food processing 
lines, automotive paint lines, and paper process machines.
    Imports of WSSP are currently classifiable under the following 
Harmonized Tariff Schedule of the United States (``HTSUS'') 
subheadings: 7306.40.5005, 7306.40.5015, 7306.40.5040, 7306.40.5062, 
7306.40.5064, 7306.40.5085. Although these subheadings include both 
pipes and tubes, the scope of this investigation is limited to welded 
austenitic stainless steel pipes. Although the HTSUS subheadings are 
provided for convenience and Customs purposes, our written description 
of the scope of this order is dispositive.

Period of Review

    The period of review (``POR'') for this administrative review is 
December 1, 1997 through November 30, 1998.

Verification

    Due to administrative constraints, verification prior to the 
issuance of this notice of preliminary results was not conducted. The 
Department's regulations stipulate, at section 351.307, that the 
Department will verify factual information upon which it relies in the 
final results of an administrative review or in a revocation under 
section 751(d) of the Act, prior to issuing final results in an 
administrative review. Accordingly, the Department will verify the 
information to be used in the final results, after these preliminary 
results.

Product Comparison

    In accordance with section 771(16) of the Act, we considered all 
WSSP products produced by Ta Chen, covered by the description in the 
``Scope of Review'' section of this notice, supra, and sold in the home 
market during the POR to be foreign like products for the purpose of 
determining appropriate product comparisons to WSSP products sold in 
the United States. In making the product comparisons, we matched 
foreign like products based on the physical characteristics reported by 
Ta Chen as follows (listed in order of preference): specification, 
grade, size, schedule, and hot/cold rolled. 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 next most similar foreign like product on 
the basis of the characteristics listed in the February 12, 1999 
antidumping duty questionnaire and instructions, or to constructed 
value (``CV''), as appropriate.

Date of Sale

    In the home market and U.S. market, Ta Chen has reported the 
invoice date as the date of sale. However, the record is unclear as 
certain information reported in Ta Chen's questionnaire response 
appears to support the date of the order confirmation as the 
appropriate date of sale. For instance, for home market sales, Ta Chen 
reported that between the date of order confirmation and the date of 
invoice, ``it is rare for the terms to change in that short a period, 
but sometimes the order quantity changes.'' See Ta Chen's Supplemental 
Response, at 20 (August 3, 1999). Further, Ta Chen reported that, for 
its export price (``EP'') sales, it would not expect prices to change 
much between the time of the order and invoicing, and changes did not 
often occur. For constructed export price (``CEP'') sales, Ta Chen 
reported that price usually does not change during this short period 
but that quantity might change, though that too is rare. As a result of 
the unclear record and the nature of marketing of these made-to-order 
products, on December 8, 1999, the Department requested Ta Chen to

[[Page 71730]]

provide additional data on its date of sale.
    Section 351.401(i) of the Department's regulations states that the 
Department will normally use the date of invoice, as recorded in the 
exporter's or producer's records kept in the ordinary course of 
business, as the date of sale. The preamble to the Final Rules 
(``Preamble'') provides an explanation of this policy, as well as 
examples of when the Department may choose to base the date of sale on 
a date other than the date of invoice. See Antidumping Duties; 
Countervailing Duties, 62 FR 27296, 27348-49 (May 19, 1997). Ta Chen 
has reported invoice date, as it understands it to be the Department's 
preferred approach toward date of sale. See Ta Chen's Section A 
Response at 8 (March 12, 1999). In accordance with 19 CFR 351.401(i), 
where appropriate, we based date of sale on invoice dates recorded in 
the ordinary course of business by the involved sellers and resellers 
of the subject merchandise. However, we intend to fully verify 
information concerning Ta Chen's claims that invoice date is the 
appropriate date of sale. Based on the outcome of our verification, we 
will determine whether it is appropriate to continue to use the date of 
invoice as the date of sale. We will consider, among other things, 
whether, in fact, there were any changes to the material contract terms 
between the original order confirmation and the date of invoice and, if 
so, their frequency and relative affected volumes of subject 
merchandise. See e.g., Notice of Final Results of Antidumping Duty 
Administrative Review: Canned Pineapple Fruit from Thailand, 63 FR 7392 
at 7394-95 (February 13, 1998). However, we note that in past reviews, 
we have used Ta Chen's date of invoice as the date of sale. In adopting 
the date of sale regulation, we noted that, because of the risk of 
double-counting, or of omitting sales from our analysis, we would 
exercise particular care before switching date of sale methodologies 
between reviews. See 62 FR at 27351.

Export Price/Constructed Export Price

    Ta Chen reported both EP and CEP sales of subject merchandise for 
the POR. See Ta Chen's Section A Response, at 3 (March 12, 1999). We 
analyzed Ta Chen's sales made to the United States and preliminarily 
determine that, as reported by Ta Chen, there are both EP and CEP sales 
in the United States during the POR, as there appears to be a 
distinction in the level of sales activity which Ta Chen's U.S. 
affiliate performs between the two types of sales, as described below. 
We will carefully scrutinize each of the claimed differences at 
verification.
    For certain sales to the United States, 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, U.S. 
inland freight, foreign brokerage and handling, U.S. brokerage and 
handling, containerization expenses, marine insurance, harbor 
construction tax, international freight, U.S. customs duties, and 
warehousing expenses.
    We preliminarily determined that the remaining sales were CEP in 
accordance with section 772(b) of the Act, because the subject 
merchandise was first sold by Ta Chen's U.S. affiliate, Ta Chen 
International (``TCI''), 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, U.S. inland freight, foreign 
brokerage and handling, U.S. brokerage and handling, containerization 
expenses, marine insurance, harbor construction tax, international 
freight, U.S. customs duties, and warehousing expenses. 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 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 recalculated credit 
expenses because the Department has determined that Ta Chen's submitted 
U.S. short-term interest rate was not based solely on short-term debt. 
For a further explanation, see Analysis Memo from Juanita Chen to The 
File, dated December 14, 1999.
    With respect to its reported EP sales, Ta Chen states that it 
considers these sales as EP sales because: (1) The price and quantity 
are determined before the pipe is imported into the United States; (2) 
Ta Chen's U.S. subsidiary, TCI, performs no function with respect to 
the sales other than processing the paperwork and the pipe is shipped 
direct from Ta Chen to the U.S. customer, without entering a TCI 
warehouse; and (3) this has been Ta Chen's normal course of business 
for such sales and the Department has always treated such sales as EP 
sales. Id.; see also, Ta Chen's Second Supplemental Response, at 6-8 
(October 5, 1999). Petitioners argue that Ta Chen's EP sales should 
properly be classified as CEP sales due to TCI's various 
responsibilities, involvement and activities related to the sales. See 
Petitioners' letter to the Department, at 5-6 (August 12, 1999).
    Where a U.S. affiliate is involved in making a sale, we consider 
the sale to be CEP unless the record demonstrates that the affiliate's 
involvement in making the sale is incidental or ancillary. See Certain 
Welded Stainless Steel Pipe From Taiwan; Final Results of Review 
(``1995-1996 WSSP Final Results''), 63 FR 38382, 38385 (July 16, 1998), 
citing Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat 
Products from Korea (``Steel Flat Product from Korea''), 63 FR 13170, 
13177 (March 18, 1998). However, whenever sales are made prior to 
importation through an affiliated entity in the United States, the 
Department applies the following three-pronged test in order to 
determine whether to treat such sales at EP: (1) Whether the 
merchandise was shipped directly to the unaffiliated buyer, without 
first being introduced into the affiliated selling agent's inventory; 
(2) whether direct shipment from the manufacturer to the unaffiliated 
buyer was the customary channel for sales of this merchandise between 
the parties involved; and (3) whether the affiliated selling agent 
located in the United States acts only as a processor of sales-related 
documentation and communication link between the foreign producer and 
the unaffiliated purchaser. See Steel Flat Products from Korea, 63 FR 
at 13177; see also PQ Corp. v. U.S., 652 F. Supp. 724, 731 (CIT 1987); 
Outokumpu Copper Rolled Products v. U.S., 829 F. Supp. 1371, 1379 (CIT 
1993). Where the requirements for all three prongs are met, the sales 
are treated as EP.
    The first prong is whether the merchandise was shipped directly to 
the unaffiliated buyer, without first being introduced into the 
affiliated selling agent's inventory. As in the previous review, for 
the 1995-1996 administrative review period, no evidence has been 
presented on the record that contradicts Ta Chen's representation that, 
in this review, Ta Chen shipped the subject merchandise directly to the 
unaffiliated U.S. customer without subject merchandise entering a TCI 
warehouse in the United States. While we note that the verification for 
the previous review found no evidence to suggest that the merchandise 
was shipped in any other fashion, we shall nevertheless subject

[[Page 71731]]

this statement to verification for this review. Accordingly, the first 
prong of the EP test is met.
    The second prong is whether direct shipment from the manufacturer 
to the unaffiliated buyer was the customary channel for sales of this 
merchandise between the parties involved. As with the first prong of 
the EP test, no evidence has been presented on the record to contradict 
Ta Chen's representation in this review that direct shipment to the 
U.S. customer has been its normal course of business with respect to 
its sales since before this dumping matter began. Accordingly, the 
second prong of the EP test is met.
    The third prong is whether the affiliated selling agent located in 
the United States acts only as a processor of sales-related 
documentation and communication link between the foreign producer and 
the unaffiliated purchaser. The information submitted to the record 
suggests that TCI's involvement in the sales process remains largely 
unchanged from the previous administrative review. For the 1995-1996 
review period, Ta Chen reported all of its U.S. sales as EP and we 
determined that ``the evidence on record does not support a 
reclassification of Ta Chen's U.S. sales from EP to CEP transactions. 
Nothing in the statute, however, precludes the Department from doing 
so, where appropriate.'' See 1995-1996 WSSP Final Results, 63 FR at 
38385 (July 16, 1998). Ta Chen reports that, for its reported EP sales, 
TCI merely processes paperwork and serves as a communication link 
between Ta Chen and the U.S. customer, relaying U.S. customers' price 
requests to Ta Chen, and relaying the negotiations, acceptances or 
rejections that follow between the entities. See Ta Chen's Section A 
Response at 5, 9 (March 12, 1999); Ta Chen's Supplemental Response at 
10 (August 3, 1999). Petitioners' argue that TCI issues acceptance or 
alternative pricing to the U.S. customer. See Petitioners' letter to 
the Department, at 5 (August 12, 1999). However, Ta Chen has indicated 
that TCI is merely communicating acceptance or alternative pricing as 
instructed by Ta Chen. Ta Chen continues to set the base, minimum 
acceptable price for subject merchandise. See Ta Chen's Supplemental 
Response at 10, 11 (August 3, 1999). Accordingly, the third prong of 
the EP test appears to be met for purposes of this preliminary 
determination, and subject to verification.
    The Department takes note that TCI engages in various other 
functions in the selling process, such as, among others, taking title 
to subject merchandise, clearing shipment through customs, invoicing 
the U.S. customer, receiving payment from the U.S. customer (after 
which TCI pays Ta Chen), paying for ocean shipping, U.S. customs broker 
charges, and international freight, and issuing credit for returns and 
errors. In the previous review, we found that three of these activities 
``were performed by TCI, but that these activities alone were not 
sufficient to warrant treatment of such sales as CEP transactions.'' 
See 1995-1996 WSSP Final Results, 63 FR at 38386 (July 16, 1998). In 
this review, there is some record evidence that TCI may be performing 
additional activities. Accordingly, the Department intends to verify 
closely Ta Chen's description of TCI's activities with respect to its 
EP sales to evaluate whether TCI's activities rise to the level where 
they can no longer be considered merely ancillary or incidental to the 
sale, whereupon such sales should be considered CEP. For our 
preliminary results, however, the data on the record to date suggests 
that TCI's involvement in U.S. sales of subject merchandise continues 
to be minimal, and that the EP sales identified by Ta Chen should 
remain as such.

Normal Value

    After testing home market viability, as discussed below, we 
calculated normal value (``NV'') as noted in the ``Price-to-CV 
Comparisons'' and ``Price-to-Price Comparisons'' sections of this 
notice.

1. Home Market Viability

    In accordance with section 773(a)(1)(C) of the Act, to determine 
whether there was 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 greater than or 
equal to five percent of the aggregate volume of U.S. sales), we 
compared Ta Chen's volume of home market sales of the foreign like 
product to the volume of U.S. sales of the subject merchandise. Because 
Ta Chen's 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. We therefore based NV on home market sales.
Price-to-Price Comparisons
    For those product comparisons for which there were sales at prices 
above the cost of production (``COP''), we based NV on prices to home 
market customers. We calculated NV based on prices to unaffiliated home 
market customers. Where appropriate, we deducted early payment 
discounts, credit expenses, and inland freight. We also made 
adjustments, where applicable, for home market indirect selling 
expenses to offset U.S. commissions in CEP comparisons. We made 
adjustments, where appropriate, for physical differences in the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. 
Additionally, in accordance with section 773(a)(6), we deducted home 
market packing costs and added U.S. packing costs. In accordance with 
the Department's practice, where all contemporaneous matches to a U.S. 
sale observation resulted in difference-in-merchandise adjustments 
exceeding 20 percent of the cost of manufacturing (``COM'') of the U.S. 
product, we based NV on CV.
Price-to-CV Comparisons
    In accordance with section 773(a)(4) of the Act, we based NV on CV 
if we were unable to find a home market match of identical or similar 
merchandise. We calculated CV based on the costs of materials and 
fabrication employed in producing the subject merchandise, selling, 
general and administrative expenses (``SG&A''), and profit. In 
accordance with section 773(e)(2)(A) of the Act, we based SG&A expense 
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 Taiwan. For selling 
expenses, we used the weighted-average home market selling expenses. 
Where appropriate, we made adjustments to CV in accordance with section 
773(a)(8) of the Act. We deducted from CV the weighted-average home 
market direct selling expenses.

2. Cost of Production Analysis

    Because we disregarded sales below the cost of production in our 
last administrative review, the most-recently completed segment of 
these proceedings, we have reasonable grounds to believe or suspect 
that sales by Ta Chen in its home market were made at prices below the 
COP, pursuant to section 773(b)(1) of the Act. See 1995-1996 WSSP Final 
Results, 63 FR 38382; see also section 773(b)(2)(A)(ii) of the Act. 
Therefore, pursuant to section 773(b)(1) of the Act, we conducted a COP 
analysis of home market sales by Ta Chen.
A. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP based on the sum of Ta Chen's cost of materials 
and fabrication

[[Page 71732]]

for the foreign like product, plus amounts for general and 
administrative expenses (``G&A''), interest expenses, and packing 
costs. We relied on the COP data submitted by Ta Chen in its original 
and supplemental cost questionnaire responses. For these preliminary 
results, we did not make any adjustments to Ta Chen's submitted costs.
B. Test of Home Market Prices
    We compared the weighted-average COP for Ta Chen 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 the COP. In determining whether to disregard home market 
sales made at prices below the COP, we examined whether such sales were 
made (1) within an extended period of time in substantial quantities, 
and (2) at prices which permitted the recovery of all costs within a 
reasonable period of time in the normal course of trade, in accordance 
with section 773(b)(1)(A) and (B) of the Act. On a product-specific 
basis, we compared the COP to home market prices, less any applicable 
billing adjustments, movement charges, discounts, and direct and 
indirect selling expenses.
C. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of Ta Chen'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 Ta Chen's sales 
of a given product during the POI were at prices less than the COP, we 
determined that such sales have been 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 use POR average 
costs, 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 the below-cost sales.
D. Calculation of Constructed Value
    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of Ta Chen's cost of materials, fabrication, G&A 
(including interest expenses), U.S. packing costs, direct and indirect 
selling expenses, 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 Ta Chen in connection with the production and sale of the 
foreign like product in the ordinary course of trade, for consumption 
in the foreign country. For selling expenses, we used the actual 
weighted-average home market direct and indirect selling expenses.

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 CV, that of the sales from which we derive SG&A 
expenses and profit. For EP, the U.S. LOT is also the level of the 
starting-price sale, which is usually from exporter to importer. For 
CEP, it is the level of the constructed sale from the exporter to the 
importer.
    To determine whether NV sales are at a different LOT than EP or 
CEP, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make an LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in 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, 61732 (November 19, 1997).
    In reviewing the selling functions reported by the respondent, we 
examined all types of selling functions and activities reported in 
respondent's questionnaire response on LOT. In analyzing whether 
separate LOTs existed in this review, we found that no single selling 
function was sufficient to warrant a separate LOT in the home market. 
See Antidumping Duties; Countervailing Duties, Final Rule, 62 FR 27296, 
27371 (May 19, 1997).
    In the home market, Ta Chen reported that it sold to distributors 
and end users. Ta Chen claimed that its two customer categories 
constituted a single LOT. Based upon our examination of information 
supplied by Ta Chen in its original and supplemental questionnaire 
responses, we agree that only one LOT existed for Ta Chen in the home 
market. According to Ta Chen, it provided no strategic or economic 
planning services, market research, business system development 
assistance, personnel-training, engineering, advertising, procurement 
services, inventory maintenance, or post-sale warehousing for customers 
in either category. However, end-user customers did receive slightly 
higher levels of research and development and technical assistance than 
did distributors, but this one slight difference is not sufficient to 
establish discrete LOTs.
    In order to determine whether there were different LOTs among sales 
in the U.S. market, we reviewed the selling activities associated with 
each channel of distribution. Ta Chen reported both EP and CEP sales in 
the U.S. market. However, Ta Chen reported for all of its U.S. sales a 
single customer category (i.e., distributor). Thus, according to Ta 
Chen, because all of Ta Chen's sales in the U.S. market were made 
through a distributor there was only one LOT. In determining whether, 
in fact, a single stage of marketing existed, we examined the selling 
functions as reflected in the EP and the CEP. In its questionnaire 
responses, Ta Chen reported it performed only two selling functions for 
both EP and CEP sales (i.e., packing, and freight and delivery). Ta 
Chen reported that it performed a small amount of packing for its U.S. 
sales and a moderate level of freight and delivery for its U.S. sales. 
We find preliminarily that there are no differences in selling 
activities for EP and CEP sales and, as a result, we preliminarily 
agree with Ta Chen that its EP and CEP sales constitute a single LOT. 
Once again, these issues will be subject to verification.
    When we compared the LOT of Ta Chen's U.S. sales to its home market 
LOT, we found that Ta Chen provided no strategic or economic planning, 
market research, business system development assistance, personnel-
training, engineering, advertising, procurement services, inventory 
maintenance, or post-sale warehousing at the EP, CEP, or home market 
LOT. Ta Chen reported that it provided moderate-to-low technical 
assistance at its home market LOT, while providing none at its EP or 
CEP level. Additionally, Ta Chen reported that it provided low after 
sales services at its home market LOT, while providing none at its EP 
or CEP level. The majority of packing activity at the home market LOT 
and EP or CEP level was performed by Ta Chen; however, some repacking 
occurred at the TCI Los Angeles

[[Page 71733]]

warehouse. Freight and delivery arrangements varied between the two 
markets in that U.S. movement expenses on certain U.S. sales were 
incurred by TCI, while other sales were made on an ``F.O.B.'' basis. 
Our analysis of the selling functions performed by Ta Chen in both 
markets leads us to conclude that any differences in selling activities 
are not significant. Accordingly, we preliminarily find that all sales 
in the home market and the U.S. market were made at the same LOT. 
Therefore, we have not made a LOT adjustment because all price 
comparisons are at the same LOT and an adjustment pursuant to section 
773(a)(7)(A) of the Act is not appropriate. Additionally, because we 
found that the LOT in the home market matched the LOT of the CEP 
transactions, we did not provide a CEP offset by adjusting normal value 
under section 773(a)(7)(B) of the Act.

Revocation

    The Department's regulations provide for revocation of antidumping 
orders under section 351.222. On December 29, 1998, Ta Chen, in its 
capacity as a Taiwan producer and exporter of subject merchandise, 
requested that the Department revoke the antidumping duty order on WSSP 
from Taiwan with respect to Ta Chen. Ta Chen stated that it sold the 
subject merchandise at not less than normal value for a period of at 
least three consecutive years, including the current period under 
administrative review, and that it sold the subject merchandise in 
commercially significant quantities to the United States during each of 
these three years.\1\ Ta Chen also stated that it would not sell the 
subject merchandise at less than normal value to the United States in 
the future and agreed to reinstatement of the order against Ta Chen, as 
long as any exporter or producer is subject to the order, if the 
Department concludes that Ta Chen sold the subject merchandise at less 
than normal value, subsequent to the revocation.
---------------------------------------------------------------------------

    \1\ On October 12, 1999, the Department requested that Ta Chen 
provide volume and value data on its exports and sales of subject 
merchandise for the three consecutive years. Ta Chen provided this 
data in an October 19, 1999 submission, which supported Ta Chen's 
statement that it sold subject merchandise in commercially 
significant quantities to the United States during these three 
years.
---------------------------------------------------------------------------

    The three review periods on which Ta Chen is basing its request for 
revocation consist of: (1) The period for 12/1/95 through 11/30/96, for 
which the Department found a de minimis margin of 0.10 percent; (2) the 
period for 12/1/96 through 11/30/97, for which no administrative review 
was conducted; and (3) the period for 12/1/97 through 11/30/98, for 
which the Department is currently conducting an administrative review. 
On July 27, 1999, Petitioners requested that the Department reject Ta 
Chen's request for revocation, arguing that: (1) The 12/1/96 through 
11/30/97 period should not count towards the three successive years of 
no significant dumping necessary for revocation; and (2) public 
information indicates that Ta Chen will continue its dumping practices 
if granted revocation, and thus, the years of no dumping 
notwithstanding, application of the order to Ta Chen continues to be 
necessary to offset dumping.
    First, Petitioners argue that while they did not request an 
administrative review for the 1996-1997 period, such lack of request 
was not meant to indicate an opinion that Ta Chen did not dump during 
that period. See also Petitioners' letter to the Department (March 4, 
1998). Petitioners state that Ta Chen's past and current behavior 
indicates its willingness to sell below normal value. Petitioners 
provide as examples the results in the 1992-1993 and 1993-1994 
administrative reviews of WSSP (wherein the Department found that Ta 
Chen impeded the reviews), as well as the results in administrative 
reviews of other Ta Chen products for which the Department issued 
margins ranging from 10.2-34.95 percent, such as stainless steel plate, 
and stainless steel sheet and strip (wherein Ta Chen provided 
incomplete information). Petitioners also assert that Ta Chen has 
continually restructured its selling practices of WSSP, effectively 
preventing Petitioners from obtaining the necessary information to 
estimate the extent of Ta Chen's dumping for the period. Accordingly, 
Petitioners assert that the Department cannot presume that there was no 
significant dumping during the unreviewed period.
    Under Sec. 351.222(d) of our regulations, the Department may revoke 
a company from an antidumping order based on three years of no dumping 
even if the middle year was not subject to administrative review. As 
noted, supra, Ta Chen has provided information indicating that it had 
sales in commercial quantities during the intervening year. Regarding 
Petitioners' citation of the margins issued for Ta Chen in stainless 
steel plate and in stainless steel sheet and strip, these 
determinations have little to do with the case at hand. Not only do 
those administrative reviews involve margins for products other than 
WSSP, they also involve review periods other than the 1996-1997 period. 
The Department cannot presume that Ta Chen engaged in dumping of WSSP 
during the 1996-1997 period merely because it was found to have engaged 
in dumping for other products in other periods. In the immediately 
preceding review period of 1995-1996, the Department issued a de 
minimis margin of 0.10 percent. This margin has greater relevance 
because it is based on more recent data, and in this case there is no 
basis to consider older margins as being more relevant. The fact that 
the margin is subject to change from year to year is why the Department 
provides the opportunity to request administrative reviews. See 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR at 27325. 
Because no administrative review was conducted for the 1996-1997 
period, the Department cannot presume a margin exists for that review 
period. To do so would result in unfairly penalizing the respondent 
where no review is requested or conducted. As for Petitioners' argument 
that Ta Chen has restructured its selling practices, Petitioners offer 
no evidence of how this restructuring has occurred, nor how such 
restructuring precluded Petitioners from learning about Ta Chen's 
activities. This is an insufficient basis for the Department to presume 
that Ta Chen engaged in dumping practices for the 1996-1997 period.
    Second, Petitioners argue that trends in pricing, imports and 
economic factors, as well as Ta Chen's aggressive search for facilities 
in the United States, indicate that Ta Chen will continue to engage in 
significant dumping in the future if granted revocation. Petitioners 
provide three articles discussing the Asian financial crisis in 
relation to the steel industry. See Petitioners' letter to the 
Department, at Exhibit 2a (July 27, 1999). However, there is no direct 
discussion in these articles on the effect the crisis had on Ta Chen 
and its exports of WSSP. While the first article does discuss the 
impact of the Asian financial crisis on the Asia-Pacific area, the 
article focuses only on Japan and Korea; the impact on Taiwan is not 
discussed. The second article mentions Ta Chen only in the single 
statement that Ta Chen carries a 6.06 percent margin from the 1992 
dumping orders. The third article states that U.S. prices for stainless 
steel pipe and tube are down after imports to the United States soared 
from a year earlier. The article Petitioners provide on Ta Chen's 
alleged search for facilities in the United States (see Petitioners' 
letter to the Department, at Exhibit 2b (July 27, 1999)) discusses 
talks between SouthStar Steel Corp. (``SouthStar''), a North Carolina 
company which imports

[[Page 71734]]

and distributes stainless steel bars, and an undisclosed company 
identified by industry sources as Ta Chen. The article focuses on 
SouthStar and how such a partnership would move SouthStar into the coil 
and sheet business. The article also quotes SouthStar's chairman and 
chief executive officer as stating that it could be from three weeks to 
three years before a deal is announced. Thus, the article is both 
remote and speculative. The remaining reasons Petitioners give to 
indicate a likelihood that Ta Chen will engage in future dumping are 
that: (1) The decline of the New Taiwan dollar demonstrates how dumping 
margins for Ta Chen have been masked due to fluctuations in the 
exchange rates (see Petitioners' letter to the Department, at Exhibit 
2c (July 27, 1999)); and, (2) the pricing of WSSP has declined since 
1996 (see Petitioners' letter to the Department, at Exhibit 1 
(September 21, 1999)).
    Based on the information submitted by Petitioners, there is 
insufficient support for Petitioners' argument that the Department 
should reject Ta Chen's request for revocation. The information 
provided by Petitioners does not indicate a sufficient link between the 
Asian economic crisis, SouthStar's actions, the decline of the New 
Taiwan dollar, and/or the pricing of WSSP, and potential future dumping 
by Ta Chen. We note that the Asian economic crisis reached its peak, 
and the New Taiwan dollar began its decline during the period covered 
by the instant review, a period during which our preliminary analysis 
shows de minimis dumping margins for Ta Chen. Accordingly, a finding by 
the Department that continued application of the order to Ta Chen is 
necessary to offset future dumping is too speculative (and effectively 
presumes dumping by all Asian exporters of stainless steel products), 
based on the information provided. Accordingly, the Department shall 
continue to consider Ta Chen's request for revocation, and review the 
relevant information. Since we preliminarily conclude that all criteria 
for revocation have been satisfied, we intend to revoke the order as to 
Ta Chen, subject to verification after this preliminary determination.

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 the daily exchange rate in effect 
on the date of sale 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 Review

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

                   Certain Welded Stainless Steel Pipe
------------------------------------------------------------------------
                                                              Weighted-
                                                               average
               Producer/manufacturer/exporter                   margin
                                                              (percent)
------------------------------------------------------------------------
Ta Chen....................................................         0.04
------------------------------------------------------------------------

    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.
    Upon issuance of the final results of review, 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 results 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 merchandise by that 
importer during the POR.
    If the revocation is made final for Ta Chen, it will apply to all 
unliquidated entries of subject merchandise produced by Ta Chen, 
exported to the United States and entered, or withdrawn from warehouse, 
for consumption on or after December 1, 1998, the first day after the 
period under review.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication of the final 
results of this administrative review, as provided in section 751(a)(1) 
of the Act: (1) The cash deposit rate for Ta Chen, the only reviewed 
company, will be that established in the final results of this review; 
(2) For previously reviewed or investigated companies not covered in 
this review, the cash deposit rate will continue to be the company-
specific rate published for the most recent period; (3) If the exporter 
is not a firm covered in this review, a prior review, or the original 
LTFV investigation, but the manufacturer is, the cash deposit rate will 
be the rate established in 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 conducted 
by the Department, the cash deposit rate will continue to be the ``all 
other'' rate established in the LTFV investigation, which was 19.84 
percent. See Amended Final Determination and Antidumping Duty Order; 
Certain Welded Stainless Steel Pipe From Taiwan, 57 FR 62300 (December 
30, 1992).
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant 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 is published in accordance 
with

[[Page 71735]]

sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: December 15, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-33220 Filed 12-21-99; 8:45 am]
BILLING CODE 3510-DS-P