[Federal Register Volume 64, Number 248 (Tuesday, December 28, 1999)]
[Notices]
[Pages 72645-72649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33654]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-580-810]


Certain Welded ASTM A-312 Stainless Steel Pipe from Korea: 
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: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on certain welded 
ASTM A-312 stainless steel pipe (WSSP) from Korea in response to a 
request by Avesta Sheffield Pipe Co.; Damascus Tube Division, Damascus-
Bishop Tube Co.; and the United Steelworkers of America (AFL-CIO/CLC), 
herein referred to as ``the domestic industry.'' This review covers 
exports of subject merchandise to the United States during the period 
December 1, 1997, through November 30, 1998.
    We have preliminarily determined that SeAH Steel Corporation Ltd. 
(SeAH) has made sales below normal value (NV). 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 
based on the difference between the constructed export price (CEP) and 
the NV.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit comments are requested to submit with each 
comment a statement of the issue and a brief summary of the comment.

EFFECTIVE DATE: December 28, 1999.

FOR FURTHER INFORMATION CONTACT: Thomas Gilgunn, Mark Hoadley, or 
Maureen Flannery, AD/CVD Enforcement, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington D.C. 20230: telephone: 
(202) 482-0648, (202) 482-0666, and (202) 482-3020, respectively.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise stated, all 
citations to the statute are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the 
Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act. In 
addition, unless otherwise stated, all

[[Page 72646]]

citations to the Department's regulations are references to the 
regulations as codified at 19 CFR Part 351 (1999).

SUPPLEMENTARY INFORMATION:

Background

    The Department published in the Federal Register the antidumping 
duty order on WSSP from Korea on December 30, 1992 (57 FR 62301). On 
December 8, 1998, we published in the Federal Register (63 FR 67646) a 
notice of opportunity to request an administrative review of the 
antidumping duty order on WSSP from Korea covering the period December 
1, 1998 through November 30, 1999.
    In accordance with 19 CFR 351.213(b)(1), the domestic parties 
requested that we conduct an administrative review of SeAH's sales. We 
published a notice of initiation of this antidumping duty 
administrative review on January 25, 1999 (64 FR 36821).
    During this review, the Department conducted a verification of the 
information provided by SeAH from November 11, 1999 through November 
13, 1999. We used standard verification procedures, including the 
examination of relevant sales and financial records. Our verification 
results for SeAH are outlined in business proprietary and public 
versions of the verification reports on file with the Central Records 
Unit, in Room B-099 of the Herbert C. Hoover Building.

Scope of the Review

    The merchandise subject to this administrative review, WSSP, is 
austenitic stainless steel pipe 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. 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 
these products are currently classifiable under the following United 
States Harmonized Tariff Schedule (HTS) subheadings: 7306.40.5005, 
7306.40.5015, 7306.40.5045, 7306.40.5060 and 7306.40.5075. Although 
these subheadings include both pipes and tubes, the scope of this order 
is limited to welded austenitic stainless steel pipes.
    Although HTS subheadings are provided for convenience and Customs 
purposes, the written description of the scope of this order remains 
dispositive.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by SeAH covered by the description in the ``Scope of 
Review'' section, above, and sold in the home market during the period 
of review (POR) to be foreign like products for the purposes of 
determining appropriate product comparisons with U.S. sales. In the 
Product Characteristics section (B3.1-B3.n and C3.1-C3.n) of our 
questionnaire, we provided the following hierarchy of product 
characteristics to be used for reporting identical and most similar 
comparisons of merchandise: (1) Specification/Alloy; (2) Size; (3) Hot 
or Cold Finish; (4) Wall Thickness; (5) End Finish; (6) Pipe Length; 
and (7) Other Characteristics.

Comparisons to Normal Value

    To determine whether sales of subject merchandise to the United 
States were made at less than NV, we compared the CEP to NV, as 
described in the ``United States Price'' and ``Normal Value'' sections 
of this notice. In accordance with section 777A(d)(2) of the Act, we 
calculated monthly weighted-average home market prices for NV and 
compared these to individual U.S. transaction prices.

United States Price

    Because SeAH and Pusan Pipe of America (PPA) are affiliated, and 
the subject merchandise was not sold to an unaffiliated purchaser until 
after its importation into the United States, we used CEP as United 
States Price. The starting price for CEP is the price from PPA to 
unaffiliated customers in the United States.
    The Department calculated CEP for SeAH based on the ``ex port duty 
paid'' (net of discounts) price to PPA's customer in the United States. 
In accordance with section 772(c)(2) of the Act, we reduced CEP by 
movement expenses (foreign inland freight, foreign brokerage, ocean 
freight, marine insurance, U.S. brokerage, and U.S. duties). In 
accordance with section 772(d)(1) of the Act, we deducted direct 
selling expenses (credit and warranty expenses) and indirect selling 
expenses, including inventory carrying costs. Finally, we added Korean 
duty drawback and made an adjustment for an amount of profit allocated 
to selling expenses incurred in the United States, in accordance with 
section 772(c) and (d) of the Act.

Date of Sale

    Under the Department's current practice, the invoice date is 
normally the date of sale. We may, however, use a date other than the 
invoice date if we are satisfied that a different date better reflects 
the date on which the exporter or producer establishes the material 
terms of sale. See 19 CFR 351.401(i); Preamble to the Antidumping Duty 
Regs., 62 FR at 27411.
    SeAH reported PPA's date of invoice as its U.S. date of sale. The 
domestic industry argued that the Department should deny SeAH's 
reported date of sale. The domestic industry asserts that both price 
and quantity are established before the date that PPA issues its 
invoice and that PPA is ``not responsible for the establishment of the 
terms of sale.''
    After examination of SeAH's and PPA's respective roles in sales 
process, we determined that one of the material terms (i.e. quantity) 
of SeAH's sales to unaffiliated customers are not fixed until PPA's 
invoice date. Thus, we used the date of PPA's invoice to its 
unaffiliated customer as the date of sale.
    Because most of the information on which we relied to perform our 
analysis is proprietary, it cannot be discussed in this notice. 
However, a memorandum detailing our analysis has been prepared. (See 
the proprietary version of the Memo from Thomas Gilgunn to Barbara E. 
Tillman regarding ``Date of Sale for SeAH Steel Corporation and Pusan 
Pipe America'' (Decision Memo), dated December 17, 1999.)

Normal Value

    The Department determines the viability of the home market as the 
comparison market by comparing the aggregate quantity of home market 
and U.S. sales. We found that SeAH's quantity of sales in its home 
market exceeded five percent of its sales to the United States. We 
therefore have determined that SeAH's home market sales are viable for 
purposes of comparison with sales of the subject merchandise to the 
United States, pursuant to section 773(a)(1)(C) of the Act and section 
351.404 of our regulations. Therefore, in accordance with section 
773(a)(1)(B)(i) of the Act, we based NV on the price, net of discounts, 
at which the foreign like product was first sold for consumption in the 
home market, in the usual commercial quantities and in the ordinary 
course of trade and, to the extent practicable, at the same level of 
trade as the CEP sales. See the ``Level of

[[Page 72647]]

Trade section'' below. We determined what home market merchandise was 
most similar to the merchandise sold in the United States on the basis 
of product characteristics set forth in sections B and C of the 
Department's questionnaire.
    For comparisons to CEP, we made COS adjustments by deducting home 
market direct selling expenses (credit expenses) pursuant to section 
773(a)(6)(C)(iii) of the Act. We also made adjustments, where 
applicable, for movement expenses, in accordance with sections 
773(a)(6)(A) and (a)(6)(B) of the Act. We also made adjustments for 
differences in the costs of manufacture for subject merchandise and 
matching foreign like products, attributable to their differing 
physical characteristics, pursuant to section 773(a)(6)(C)(ii) of the 
Act, and, based upon our level of trade analysis, discussed below, for 
home market indirect selling expenses up to the amount of U.S. indirect 
selling expenses, in accordance with section 773(a)(7)(B) of the Act 
and section 351.412(f) of the Department's regulations. See Analysis 
Memorandum (December 17, 1999).

Cost of Production

    In the last completed segment of this proceeding, the Department 
disregarded sales below the cost of production (COP). See Final 
Determination of Sales at Less Than Fair Value: Certain Welded 
Stainless Steel Pipe From The Republic of Korea, 57 FR 53693, (November 
12, 1992). We therefore have reasonable grounds to believe or suspect, 
pursuant to section 773(b)(2)(A)(ii) of the Act, that sales of the 
foreign like product under consideration for the determination of NV in 
this review may have been made at prices below COP. Pursuant to section 
773(b)(1) of the Act, we initiated a COP investigation of sales in the 
home market. Using market sales and COP information provided by the 
respondent, we compared sales of the foreign like product in the 
comparison market with the model-specific COP figure for the POR. In 
accordance with section 773(b)(3) of the Act, we calculated the COP 
based on the sum of the costs of materials and fabrication employed in 
producing the foreign like product, plus selling, general and 
administrative (SG&A) expenses, including all costs and expenses 
incidental to placing the foreign like product in condition packed and 
ready for shipment.
    After calculating COP, we tested whether comparison market sales of 
the foreign like product were made at prices below COP and, if so, 
whether the below-cost sales were made within an extended period of 
time in substantial quantities, and at prices that did not permit 
recovery of all costs within a reasonable period of time. Because each 
individual price was compared to the POR-long average COP, any sales 
that were below cost were also determined not to be at prices which 
permitted cost recovery within a reasonable period of time. We compared 
model-specific COPs to the reported comparison market prices less any 
applicable movement charges, discounts, and rebates.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given model were at prices less 
than COP, we did not disregard any below-cost sales of that model 
because the below-cost sales were not made in substantial quantities 
within an extended period of time. Where 20 percent or more of a 
respondent's sales of a given model during the POR were at prices less 
than the weighted-average COPs for the POR, we disregarded the below-
cost sales because they were made over an extended period of time in 
substantial quantities in accordance with sections 773(b)(2) (B) and 
(C) of the Act, and were at prices which would not permit recovery of 
all costs within a reasonable period of time in accordance with section 
773(b)(2)(D) of the Act.

Constructed Value

    In accordance with section 773(a)(4) of the Act, we used 
constructed value (CV) as the basis for NV when there were no above-
cost contemporaneous sales of identical or similar merchandise in the 
comparison market. We calculated CV in accordance with section 773(e) 
of the Act. We included the cost of materials and fabrication, selling, 
general and administrative expenses (SG&A), and profit. In accordance 
with section 773(e)(2)(A) of the Act, we based SG&A expenses and profit 
on the amounts incurred and realized by the respondents 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 weighted-average home market 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 home market at the 
same level of trade (LOT) as U.S. sales. The NV LOT is the level of the 
starting-price sale in the home market or, when NV is based on 
constructed value, the level of the sales from which we derive selling, 
general, and administrative expenses (SG&A) and profit. For export 
price, 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 export price 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 a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, 
for CEP sales, if the NV level is more remote from the factory than the 
CEP level and there is no basis for determining whether the difference 
in the levels between NV and CEP affects price comparability, we adjust 
NV under section 773(a)(7)(B) of the Act (the CEP offset provision). 
See Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 
(November 19, 1997).
    For merchandise sold in the home market during this POR, SeAH 
claimed two distribution channels and one LOT. Regardless of the 
distribution channel, the selling functions performed by SeAH were 
substantially the same. Therefore, we concluded all sales in the home 
market were made at one LOT. Further, because all U.S. sales were CEP 
sales made in the same distribution channel and SeAH performed the same 
selling functions for all customers, we concluded that all sales in the 
U.S. market were made at one LOT.
    We then compared the selling functions in the U.S. and home 
markets. At the level of CEP sales to the United States, i.e., after 
eliminating from consideration the selling functions associated with 
deductions made under section 772 of the Act, we found that the CEP 
sales were made at a different and less advanced level of trade than 
home market sales.
    Because there are no sales in the home market made at the same LOT 
as sales in the United States, we were not able to determine whether 
the difference in LOT affects price comparability. Therefore, we made a 
CEP offset adjustment. In accordance with 19 CFR 351.412(f)(2), we 
deducted indirect selling expenses from NV to the extent of U.S. 
indirect selling expenses deducted in calculating CEP. For a further 
discussion of the Department's

[[Page 72648]]

LOT analysis with respect to SeAH, see Analysis Memorandum (December 
17, 1999).

Currency Conversion

    We made currency conversions in accordance with section 773A of the 
Act. Section 773A(a) of the Act directs the Department to use a daily 
exchange rate to convert foreign currencies into U.S. dollars unless 
the daily rate involves a fluctuation. The Department considers a 
``fluctuation'' to exist when the daily exchange rate differs from the 
benchmark rate by 2.25 percent or more. The benchmark is defined as the 
moving average of rates for the past 40 business days. When we 
determine a fluctuation to have existed, we generally substitute the 
benchmark rate for the daily rate, in accordance with established 
practice. (An exception to this rule is described below.) (For an 
explanation of this method, see Policy Bulletin 96-1: Currency 
Conversions (61 FR 9434, March 8, 1996).)
    Our analysis of the U.S. dollar/Korean won exchange rates 
demonstrates that the Korean won declined rapidly in November and 
December 1997. Specifically, the won declined more than 40 percent over 
this two-month period. The decline was, in both speed and magnitude, 
many times more severe than any change in the dollar-won exchange rate 
during recent years, and it did not rebound significantly in a short 
time. As such, we determine that the decline in the won during November 
and December 1997 was of such magnitude that the dollar-won exchange 
rate cannot reasonably be viewed as having simply fluctuated at that 
time, i.e., as having experienced only a momentary drop in value 
relative to the normal benchmark. Accordingly, the Department used 
actual daily exchange rates exclusively in November and December 1997. 
See Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Sheet and Strip from the Republic of Korea, 64 FR 
30664, 30670 (June 8, 1999) (``SSSS from Korea''). We note, however, 
that we have refined our methodology somewhat from that applied in SSSS 
from Korea. We recognize that, following a large and precipitous 
decline in the value of a currency, a period may exist wherein it is 
unclear whether further declines are a continuation of the large and 
precipitous decline or merely fluctuations. Under the circumstances of 
this case, such uncertainty may have existed following the large, 
precipitous drop in November and December 1997. Thus, we devised a 
methodology for identifying the point following a precipitous drop at 
which it is reasonable to presume that rates, more than 2.25 percent 
from the benchmark, were merely fluctuating. Following the precipitous 
drop in November and December 1997, we continued to use only actual 
daily rates until the daily rates were not more than 2.25 percent below 
the average of the 20 previous daily rates for five consecutive days. 
At that point, we determined that the pattern of daily rates no longer 
reasonably precluded the possibility that they were merely 
``fluctuating.'' Using a 20-day average for this purpose provides a 
reasonable indication that it is no longer necessary to refrain from 
using the normal methodology, while avoiding the use of daily rates 
exclusively for an excessive period of time. Accordingly, from the 
first of these five days, we resumed classifying daily rates as 
``fluctuating'' or ``normal'' in accordance with our standard practice, 
except that we began with a 20-day benchmark and on each succeeding day 
added a daily rate to the average until the normal 40-day average was 
restored as the benchmark. See Notice of Final Results of Antidumping 
Duty Administrative Review: Certain Welded Carbon Steel Pipes and Tubes 
from Thailand, 64 FR 56759, 56763 (October 21, 1999). See also 
Polyethylene Terephthalate Film, Sheet and Strip From Korea: Final 
Results of Antidumping Duty Administrative Review and Notice of Intent 
Not To Revoke in Part, 64 FR 62648, 62649 (November 17, 1999).
    Applying this methodology in the instant case, we used daily rates 
from November 3, 1997, through January 13, 1998. We then resumed the 
use of our normal methodology, starting with a benchmark based on the 
average of the 20 reported daily rates from January 14, 1998. We used 
the normal 40-day benchmark from February 12, 1998 to the close of the 
review period.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the weighted-
average dumping margin for the period December 1, 1997 through November 
30, 1998 to be as follows:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      percentage
------------------------------------------------------------------------
SeAH.......................................................         2.44
------------------------------------------------------------------------

    The Department will disclose to the parties to the proceeding 
calculations performed in connection with these preliminary results of 
review within five days after the date of publication of these 
preliminary results of review.
    Any interested party may request a hearing within 30 days of 
publication. Any hearing, if requested, will be held 2 days after the 
date of filing of rebuttal briefs or the first business day thereafter. 
Case briefs from interested parties may be submitted not later than 30 
days after publication. Rebuttal briefs, limited to issues raised in 
case briefs, may be filed not later than five days after the date of 
filing of case briefs. The Department will publish the final results of 
this administrative review, including its analysis of issues raised in 
the case and rebuttal briefs, not later than 120 days after the date of 
publication of this notice.
    Upon issuance of the final results of review, the Department shall 
determine, and the U.S. Customs Service shall assess, antidumping 
duties on all appropriate entries. In accordance with 19 CFR 
351.202(b), we calculated an importer-specific ad valorem duty 
assessment rate based on the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total customs value of 
the sales used to calculate those duties. This rate will be assessed 
uniformly on all entries of that particular importer made during the 
POR.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a) of the Act: (1) The cash deposit rate for 
each reviewed company will be that established in the final results of 
review (except that no deposit will be required for firms with de 
minimis margins, i.e., margins less than 0.5 percent); (2) for 
exporters not covered in this review, but covered in the less than fair 
value (LTFV) investigation or a previous review, the cash deposit rate 
will continue to be the company-specific rate published for the most 
recent period; (3) if the exporter is not a firm covered in this 
review, a previous review, or the LTFV investigation, but the 
manufacturer is, the cash deposit rate will be the rate established for 
the most recent period for the manufacturer of the merchandise; (4) the 
cash deposit rate for all other manufacturers or exporters will 
continue to be the ``all others'' rate established in the LTFV 
investigation, which was 6.83 percent. These requirements, when 
imposed, shall remain in effect until publication of the final results 
of the next administrative review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) to file a certificate regarding 
the

[[Page 72649]]

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 issued in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) and 
19 U.S.C 1677f(i)(1)).

    Dated: December 17, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-33654 Filed 12-27-99; 8:45 am]
BILLING CODE 3510-DS-P