[Federal Register Volume 65, Number 26 (Tuesday, February 8, 2000)]
[Notices]
[Pages 6159-6162]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2846]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-489-501]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review: Certain Welded Carbon Steel Pipe and Tube From Turkey

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

SUMMARY:  In response to a request by the respondent, the Department of 
Commerce is conducting an administrative review of the antidumping duty 
order on certain welded carbon steel pipe and tube from Turkey. This 
review covers shipments of this merchandise to the United States during 
the period May 1, 1998, through April 30, 1999.
    We preliminarily determine that sales have been made below normal 
value. If these preliminary results are adopted in our final results, 
we will instruct the U.S. Customs Service to assess antidumping duties 
equal to the differences between the United States price and the normal 
value.
    Interested parties are invited to comment on the preliminary 
results. Parties who submit arguments are requested to submit with each 
argument: (1) a statement of the issue; and (2) a brief summary of the 
argument.

EFFECTIVE DATE:  February 8, 2000.

FOR FURTHER INFORMATION CONTACT:  David Layton or Charles Riggle, AD/
CVD Enforcement, Office 5, Group II, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230; telephone: 
(202) 482-0371 or (202) 482-0650, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to Department of Commerce (the Department) 
regulations are to the regulations codified at 19 CFR Part 351 (1999).

Background

    On May 15, 1986, the Department published in the Federal Register 
the antidumping duty order on certain welded carbon steel pipe and tube 
from Turkey (51 FR 17784). On May 19, 1999 (64 FR 27235), we published 
in the Federal Register the notice of ``Opportunity to Request an 
Administrative Review'' of this order covering the period May 1, 1998, 
through April 30, 1999, hereinafter referred to as the POR. In 
accordance with 19 CFR 351.213(b)(2), on May 28, 1999, The Borusan 
Group (Borusan), a producer and exporter of certain welded carbon steel 
pipe and tube, requested a review. On June 30, 1999, we published the 
notice of initiation of this antidumping duty administrative review 
covering the period May 1, 1998, through April 30, 1999 (64 FR 35124). 
We are now conducting this administrative review in accordance with 
section 751 of the Act.

Scope of the Review

    The products covered by this review include 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 and coupled). Those pipes and 
tubes are generally known as standard pipe, though they may also be 
called structural or mechanical tubing in certain applications. 
Standard pipes and tubes are intended for the low pressure conveyance 
of water, steam, natural gas, air, and other liquids and gases in 
plumbing and heating systems, air conditioner units, automatic 
sprinkler systems, and other related uses. Standard pipe may also be 
used for light load-bearing and mechanical applications, such as for 
fence tubing, and for protection of electrical wiring, such as conduit 
shells.
    The scope is not limited to standard pipe and fence tubing, or 
those types of mechanical and structural pipe that are used in standard 
pipe application. All carbon steel pipes and tubes within the physical 
description outlined above are included in the scope of this review, 
except for line pipe, oil country tubular goods, boiler tubing, cold-
drawn or cold-rolled mechanical tubing, pipe and tube hollows for 
redraws, finished scaffolding, and finished rigid conduit.
    Imports of these products are currently classifiable under the 
following Harmonized Tariff Schedule of the United States (HTSUS) 
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 HTSUS subheadings are provided for convenience and 
customs

[[Page 6160]]

purposes, our written description of the scope of this proceeding is 
dispositive.

Fair Value Comparisons

    We compared the export price (EP) to the normal value (NV), as 
described in the Export Price and Normal Value sections of this notice. 
Because Turkey's economy experienced high inflation during the POR 
(approximately 45 percent), as is Department practice, we limited our 
comparisons to comparison market sales made during the same month in 
which the U.S. sale occurred and did not apply our ``90/60 
contemporaneity rule'' (see, e.g., Notice of Final Results and Partial 
Rescission of Antidumping Duty Administrative Review: Certain Pasta 
From Turkey, 63 FR 68429, 68430 (December 11, 1998). This methodology 
minimizes the extent to which calculated dumping margins are overstated 
or understated due solely to price inflation that occurred in the 
intervening time period between the U.S. and home market sales. We 
first attempted to compare products sold in the U.S. and home markets 
that were identical with respect to the following characteristics: 
grade, diameter, wall thickness, finish, and end finish. However, given 
that there were no contemporaneous sales of identical merchandise, we 
compared U.S. products with the most similar merchandise sold in the 
home market based on the characteristics listed above, in that order of 
priority.

Export Price

    Because Borusan sold subject merchandise directly to the first 
unaffiliated purchaser in the United States prior to importation, and 
constructed export price methodology was not otherwise warranted based 
on the record facts of this review, in accordance with section 772(a) 
of the Act, we used EP as the basis for all of Borusan's sales.
    We calculated EP as the packed, delivered price to unaffiliated 
purchasers in the United States. In accordance with section 
772(c)(2)(A) of the Act, we made deductions from the starting price 
(gross unit price), where appropriate, for foreign inland freight, 
foreign inland insurance, international freight and other related 
charges. In addition, we added countervailing duties and duty drawback.

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared Borusan's volume of home market sales of the foreign like 
product to the volume of its U.S. sales of the subject merchandise, in 
accordance with section 773(a)(1)(C) of the Act. Because Borusan'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 of the 
subject merchandise, we determined that the home market was viable. We 
calculated NV as noted in the ``Price to Price Comparisons'' section of 
this notice.

Cost of Production Analysis

    Because the Department disregarded sales below the cost of 
production (COP) in the last completed review of Borusan, we had 
reasonable grounds to believe or suspect that sales of the foreign 
product under consideration for the determination of NV in this review 
may have been made at prices below the COP as provided by section 
773(b)(2)(A)(ii) of the Act. Therefore, pursuant to section 773(b)(1) 
of the Act, we initiated a COP investigation of sales by Borusan in the 
home market. (See Notice of Final Results and Partial Rescission of 
Antidumping Duty Administrative Review: Certain Welded Carbon Steel 
Pipes and Tubes From Turkey (Final Results), 63 FR 35190 (June 29, 
1998)).

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated the 
COP based on the sum of Borusan's costs of materials and fabrication 
employed in producing the foreign like product, plus selling, general, 
and administrative expenses (SG&A)and the cost of all expenses 
incidental to placing the foreign like product in condition packed 
ready for shipment.
    In order to avoid the distortive effect of inflation on our 
comparison of costs and prices, we requested that Borusan submit 
monthly production costs incurred during each month of the POR. We 
calculated a POR-average cost for each product after indexing the 
reported monthly costs of manufacturing (COM) during the POR to an 
equivalent currency level using the wholesale price index for Turkey 
from the International Financial Statistics, published by the 
International Monetary Fund. We then restated the POR-average COM to 
the currency level of each month and calculated monthly COP and 
constructed value (CV) for each product. We relied on Borusan's 
submitted costs to calculate COP and CV. To obtain a Borusan Group 
general and administrative (G&A) expense factor, we used the company-
wide cost information from Borusan's three pipe and tube manufacturing 
companies. We applied the G&A and interest expense rates to the COM 
plus packing because the denominator used to compute the rates included 
packing.
    The respondent provided information in the response showing that 
one of the Borusan mills, Kartal Boru, received coil and zinc inputs 
from affiliated parties. We consider coil and zinc to be major inputs 
and therefore we have applied the major input rule to value such 
purchases (see Notice of Final Results and Partial Recission of 
Antidumping Review: Certain Pasta from Italy, 64 FR 6615, 6621 
(February 10, 1999)). The major input rule of section 773(f)(3), 
together with section 772(f)(2) of the Act, provides that the 
Department may value inputs obtained from affiliated parties at the 
highest of the transfer price, the market price or the affiliated 
supplier's costs. See 16 CFR Section 351.407(b). However, some of the 
inputs in this review were purchased from an affiliated mill that was 
collapsed with Borusan for purposes of this and previous reviews. With 
respect to those inputs (i.e., inputs from a collapsed entity), we do 
not apply the major input rule. Rather, in those instances, we value 
the purchases based upon the cost of producing the input. See e.g., AK 
Steel Corp. v. United States, 34 F Supp. 2d 75b(CIT 1998) (affirming 
the Department's determination not to apply the major input rule to 
transactions between collapsed entities).
    Therefore, for major input purchases of coil from the affiliated 
party not collapsed with Borusan, we have utilized the highest of: (1) 
The cost of producing the input; (2) the transfer price; or (3) the 
market price. In contrast, we have valued major input purchases of coil 
and zinc from the collapsed entity at the cost to the affiliated 
provider. See Preliminary Results Analysis Memorandum, dated January 
31, 2000, on file in the Central Records Unit (room B-099 of the main 
Commerce Department Building).

B. Test of Home Market Prices

    We compared the indexed weighted-average COP figures to home market 
sales of the foreign like product as called for by section 773(b) of 
the Act, in order to determine whether these sales had been made at 
prices below the COP. On a product-specific basis, we compared the COP 
to the home market prices, less any applicable movement charges, 
rebates and direct selling expenses.

C. Results of COP Test

    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of a respondent's sales of a given product were at prices less 
than the COP, we do

[[Page 6161]]

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 respondent's sales of a given product are 
at prices less than the COP, we disregard the below-cost sales because 
they (1) 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 (2) based on comparisons of prices to weighted-average COPs for the 
POR, were at prices which would not permit the recovery of all costs 
within a reasonable period of time in accordance with section 
773(b)(2)(D) of the Act.
    We found that, for certain products, more than 20 percent of 
Borusan's home market sales were sold at below the COP. Further, we did 
not find that the prices for these sales provided for the recovery of 
costs within a reasonable period of time. We therefore excluded these 
sales from our analysis and used the remaining above-cost sales as the 
basis for determining NV, in accordance with section 773(b)(1).

Price to Price Comparisons

    For those comparison products for which there were sales at prices 
above the COP, we based NV on home market prices. In these preliminary 
results, we were able to match all U.S. sales to contemporaneous sales 
of a similar foreign like product made in the ordinary course of trade, 
based on matching characteristics. We calculated NV based on FOB mill/
warehouse or delivered prices to unaffiliated customers, or prices to 
affiliated customers which were determined to be at arm's length (see 
discussion below regarding these sales). We made deductions, where 
appropriate, from the starting price for inland freight, pre-sale 
warehouse expense, discounts, and rebates. Additionally, we added late 
payment charges. In accordance with section 773(a)(6) of the Act, we 
deducted home market packing costs and added U.S. packing costs.
    In accordance with section 773(a)(6)(C)(iii) of the Act, we 
adjusted for differences in the circumstances of sale. These 
circumstances included differences in imputed credit expenses. We also 
made adjustments, where appropriate, for physical differences in the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. We 
calculated POR-average variable and total COMs, by product, after 
indexing the reported monthly costs using the wholesale price index for 
Turkey. We then restated the average variable and total COMs to the 
currency level of each respective month.

Arm's-Length Sales

    We included in our analysis Borusan's home market sales to 
affiliated customers only where we determined that such sales were made 
at arm's-length prices, i.e., at prices comparable to prices at which 
Borusan sold identical merchandise to unrelated customers. See section 
773(a)(1)(B) of the Act. In order to determine the arm's-length nature 
of Borusan's home market sales to affiliated customers we compared the 
gross unit prices of sales to affiliated and unaffiliated customers net 
of all movement charges, direct and indirect selling expenses, and 
packing (see Final Determination of Sales at Less Than Fair Value; 
Certain Cold-Rolled Carbon Steel Flat Products from Argentina, 58 FR 
37062, 37077 (July 9, 1993)).

Level of Trade

    As set forth in section 773(a)(1)(B)(i) of the Act and in the 
Statement of Administrative Action (SAA) accompanying the Uruguay Round 
Agreements Act, at 829-831 (see H.R. Doc. No. 316, 103d Cong., 2d Sess. 
829-831 (1994)), to the extent practicable, the Department calculates 
NV based on sales at the same level of trade (LOT) as the U.S. sales 
(either EP or Constructed Export Price). When the Department is unable 
to find sale(s) in the comparison market at the same LOT as the U.S. 
sale(s), the Department may compare sales in the U.S. and foreign 
markets at different LOTs. The NV LOT is that of the starting-price 
sales in the home market. To determine whether home market sales are at 
a different LOT than U.S. 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 differences affect 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 Tariff Act. 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).
    In implementing these principles in this review, we examined 
information from the respondent regarding the marketing stages involved 
in the reported home market and EP sales, including a description of 
the selling activities performed by Borusan for each channel of 
distribution. Consistent with the prior review of this respondent (POR 
96-97), we determined that with respect to Borusan's sales, there were 
two home market LOTs and one U.S. LOT (i.e., the EP LOT). See Final 
Results, 63 FR 35190, 35193.
    Where possible, we compared sales at the U.S. LOT to sales at the 
identical home market LOT. If no match was available at the same LOT, 
we compared sales at the U.S. LOT to sales at the second home market 
LOT.
    To determine whether a LOT adjustment was warranted, we examined, 
on a monthly basis, the prices of comparable product categories, net of 
all adjustments, between sales at the two home market LOTs we had 
designated. We found a pattern of consistent price differences between 
sales at these LOTs.
    In making the LOT adjustment, we calculated the difference in 
weighted-average prices between the two different home market LOTs. 
Where U.S. sales were compared to home market sales at a different LOT, 
we reduced the home market price by the amount of this calculated 
difference.

Currency Conversion

    The Department's preferred source for daily exchange rates is the 
Federal Reserve Bank. However, the Federal Reserve Bank does not track 
or publish exchange rates for the Turkish lira. Therefore, we made 
currency conversions based on the daily exchange rates from the Dow 
Jones Business Information Services.
    Section 773A(a) 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.'' It is the Department's practice 
to find that a fluctuation exists when the daily exchange rate differs 
from a benchmark rate by 2.25 percent. The benchmark rate is defined as 
the rolling average of the rates for the past 40 business days. When we 
determine a fluctuation to have existed, we generally utilize the 
benchmark rate instead of the daily rate, in accordance with 
established practice.
    When the rate of domestic price inflation is significant, as it is 
in this case, it is important that we use as a basis for NV home market 
prices that are as contemporaneous as possible with the date of the 
U.S. sale. This is to minimize the extent to which calculated dumping 
margins are overstated or understated due solely to price inflation 
that occurred in the intervening time period between the U.S. and the 
home market sales. For this reason, as

[[Page 6162]]

discussed above, we are comparing home market and U.S. sales in the 
same month. For the same reason, we have used the daily exchange rates 
for currency conversion purposes. See, e.g., Certain Porcelain on Steel 
Cookware From Mexico: Final Results of Antidumping Duty Administrative 
Review, 62 FR 42496, 42503 (August 7, 1997) and Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Pasta From 
Turkey, 61 FR 30309 (June 14, 1996).

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following margins exist for the period May 1, 1998, through April 30, 
1999:

------------------------------------------------------------------------
                                                                Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Borusan.....................................................        0.48
------------------------------------------------------------------------

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding within five (5) days after the date of 
publication of this notice any calculations performed in connection 
with these preliminary results.
    Any interested party may request a hearing within 10 days of the 
date of publication. Any hearing, if requested, will be held 44 days 
after the date of publication, or the first workday thereafter. 
Interested parties may submit case briefs within 30 days of the date of 
publication. Rebuttal briefs, limited to issues raised in the case 
briefs, may be filed not later than 37 days after the date of 
publication. The Department will publish a notice of the final results 
of this administrative review, which will include the results of its 
analysis of issues raised in any such written comments.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with 19 CFR 351.212(b)(1), we have calculated importer-specific 
assessment rates by dividing the dumping margin found on the subject 
merchandise examined by the entered value of such merchandise. Upon 
completion of this review, the Department will issue appraisement 
instructions directly to the U.S. Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of pipe and tube from Turkey entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 752(a)(2)(c) of the Act: (1) The cash deposit rate 
for Borusan will be the rate established in the final results of this 
review, except if the rate is less than 0.5 percent and, therefore, de 
minimis within the meaning of section 733(b)(3) of the Act, the cash 
deposit will be zero; (2) for previously reviewed or investigated 
companies not listed above, 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 less-than-fair-value (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; 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 be 14.74 percent, the ``all others'' rate established in the 
LTFV investigation.
    These cash deposit 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)(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 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).

    Dated: January 31, 2000.
Holly A. Kuga,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-2846 Filed 2-7-00; 8:45 am]
BILLING CODE 3510-DS-P