[Federal Register Volume 65, Number 177 (Tuesday, September 12, 2000)]
[Notices]
[Pages 54998-55003]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23393]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-817]


Oil Country Tubular Goods From Mexico: Preliminary Results of 
Antidumping Duty Administrative Review and Notice of Intent Not To 
Revoke in Part

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review and intent not to revoke in part.

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SUMMARY: In response to requests from two respondents, the Department 
of Commerce (the Department) is conducting an administrative review of 
the antidumping duty order on oil country tubular goods (OCTG) from 
Mexico. This review covers two manufacturers and exporters of the 
subject merchandise, Tubos de Acero de Mexico, S.A. de C.V. (TAMSA) and 
Hylsa S.A. de C.V. (Hylsa). The period of review (POR) is August 1, 
1998, through July 31, 1999. We preliminarily determine that sales have 
not been made below normal value (NV). If these preliminary results are 
adopted in our final results of administrative review, we will instruct 
U.S. Customs to assess antidumping duties based on the difference 
between export price (EP) or constructed export price (CEP) and NV. 
Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE: September 12, 2000.

FOR FURTHER INFORMATION CONTACT: Phyllis Hall (TAMSA), Dena Aliadinov 
(Hylsa), or Linda Ludwig, Enforcement Group III, Office 8, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Room 7866, 
Washington, DC 20230; telephone (202) 482-1398, (202) 482-2667, or 
(202) 482-3833, respectively.

The Applicable Statute

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

Background

    The Department published a final determination of sales at less 
than fair value for OCTG from Mexico on June 28, 1995 (60 FR 33567), 
and subsequently published the antidumping duty order on August 11, 
1995 (60 FR 41056). The Department published a notice of ``Opportunity 
to Request an Administrative Review'' of the antidumping duty order for 
the 1998/1999 review period on August 11, 1999 (64 FR 43649). 
Respondents TAMSA and Hylsa requested that the Department conduct an 
administrative review of the antidumping duty order on OCTG from 
Mexico. On August 31, 1999, Hylsa and TAMSA submitted timely requests 
that the order be revoked in part with respect to Hylsa and TAMSA, 
respectively. We initiated this review on September 24, 1999. See 64 FR 
53318 (October 1, 1999).
    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for issuing a preliminary determination in an 
administrative review if it determines that it is not practicable to 
complete the preliminary review within the statutory time limit of 245 
days. On March 14, 2000, the Department published a notice of extension 
of the time limit for the preliminary results in this case to August 
30, 2000. See Extension of Time Limit: Oil Country Tubular Goods from 
Mexico; Antidumping Administrative Review, 65 FR 13716 (March 14, 
2000).

Period of Review

    The review covers the period August 1, 1998 through July 31, 1999. 
The Department is conducting this review in accordance with section 751 
of the Act.

Scope of the Review

    Imports covered by this review are oil country tubular goods, 
hollow steel products of circular cross-section, including oil well 
casing, tubing, and drill pipe, of iron (other than cast iron) or steel 
(both carbon and alloy), whether seamless or welded, whether or not 
conforming to American Petroleum Institute (API) or non-API 
specifications, whether finished or unfinished (including green tubes 
and limited service OCTG products). This scope does not cover casing, 
tubing, or drill pipe containing 10.5 percent or more of chromium. The 
OCTG subject to this order are currently classified in the Harmonized 
Tariff Schedule of the United States (HTSUS) under item numbers: 
7304.21.30.00, 7403.21.60.00, 7304.29.10.10, 7304.29.10.20, 
7304.29.10.30, 7304.29.10.40, 7304.29.10.50, 7304.29.10.60, 
7304.29.10.80, 7304.29.20.10, 7304.29.20.20, 7304.29.20.30, 
7304.29.20.40, 7304.29.20.50, 7304.29.20.60, 7304.29.20.80, 
7304.29.30.10, 7304.29.30.20, 7304.29.30.30, 7304.29.30.40, 
7304.29.30.50, 7304.29.30.60, 7304.29.30.80, 7304.29.40.10, 
7304.29.40.20, 7304.29.40.30, 7304.29.40.40, 7304.29.40.50, 
7304.29.40.60, 7304.29.40.80, 7304.29.50.15, 7304.29.50.30, 
7304.29.50.45, 7304.29.50.60, 7304.29.50.75, 7304.29.60.15, 
7304.29.60.30, 7304.29.60.45, 7304.29.60.60, 7304.29.60.75, 
7305.20.20.00, 7305.20.40.00, 7305.20.60.00, 7305.20.80.00, 
7306.20.10.30, 7306.20.10.90, 7306.20.20.00, 7306.20.30.00, 
7306.20.40.00, 7306.20.60.10, 7306.20.60.50, 7306.20.80.10, and 
7306.20.80.50.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
proceeding is dispositive.
    The Department has determined that couplings, and coupling stock, 
are not within the scope of the antidumping order on OCTG from Mexico. 
See Letter to Interested Parties; Final Affirmative Scope Decision, 
August 27, 1998.

Duty Absorption

    On November 1, 1999, a petitioner (North Star Steel Ohio) requested 
that the Department determine, with respect to TAMSA, whether 
antidumping duties had been absorbed during the POR. Section 751(a)(4) 
of the Act provides for the Department, if requested, to determine 
during an administrative review initiated two or four years after the 
publication of the order, whether antidumping duties have been absorbed 
by a foreign producer or exporter, if the subject merchandise is sold 
in the United States through an affiliated importer. Because TAMSA sold 
to the United States through an importer that is affiliated within the 
meaning of section 751(a)(4) of the Act, and because this review was 
initiated four years after the publication of the order, we will make a 
duty absorption determination in this segment of the proceeding.
    Because we have preliminarily determined that there are no dumping 
margins for TAMSA with respect to its U.S. sales, we also preliminarily 
determine that there is no duty absorption. As our analysis of the 
dumping margin may be modified in

[[Page 54999]]

our final results, if interested parties wish to submit evidence that 
the unaffiliated purchasers in the United States will pay any 
ultimately assessed duty charged to affiliated importers, they must do 
so no later than 15 days after publication of these preliminary 
results. Any such information will be considered by the Department if 
we determine in our final results that there are dumping margins on 
certain U.S. sales.

Intent Not To Revoke

    Section 351.222 of the Department's regulations requires, inter 
alia, that a company requesting revocation submit the following: (1) A 
certification that the company has sold the subject merchandise at not 
less than NV in the current review period and that the company will not 
sell at less than NV in the future; (2) a certification that the 
company sold the subject merchandise in commercial quantities in each 
of the three years forming the basis of the receipt of such a request; 
and (3) an agreement that the order will be reinstated if the company 
is subsequently found to be selling the subject merchandise at less 
than fair value. Id. at 351.222(e)(i). Thus, in determining whether a 
requesting party is entitled to a revocation inquiry, the Department 
must determine that the party received a zero or de minimis margins for 
three years forming the basis for the request. 19 CFR 351.222(e)(1). 
See, e.g., Notice of Final Results of Antidumping Duty Administrative 
Review and Determination Not to Revoke the Antidumping Duty Order: 
Brass Sheet and Strip From the Netherlands, 65 FR 742, 743 (January 6, 
2000).
    Additionally, in determining whether a requesting party is entitled 
to a revocation inquiry, the Department must be able to determine that 
the company has continued to participate meaningfully in the U.S. 
market during each of the three years at issue. See Pure Magnesium From 
Canada; Preliminary Results of Antidumping Administrative Review and 
Notice of Intent Not To Revoke Order in Part (Pure Magnesium From 
Canada), 63 FR 26147, 26149 (May 12, 1998). This practice has been 
codified by Sec. 351.222(e) where a party requesting a revocation 
review is required to certify that they have sold the subject 
merchandise in commercial quantities. See also Sec. 351.222(d)(1) of 
the Department's regulations, which state that, ``before revoking an 
order or terminating a suspended investigation, the Secretary must be 
satisfied that, during each of the three (or five) years, there were 
exports to the United States in commercial quantities of the subject 
merchandise to which a revocation or termination will apply.'' 
(emphasis added); see also the preamble of the Department's latest 
revision of the revocation regulation stating: ``The threshold 
requirement for revocation continues to be that respondent not sell at 
less than normal value for at least three consecutive years and that, 
during those years, respondent exported subject merchandise to the 
United States in commercial quantities.'' (emphasis added) Amended 
Regulation Concerning the Revocation of Antidumping and Countervailing 
Duty Orders, 64 FR 51236, 51237 (September 22, 1999) (Amended 
Revocation Regulations). For purposes of revocation, the Department 
must be able to determine that past margins reflect a company's normal 
commercial activity. Sales during the POR which, in the aggregate, are 
an abnormally small quantity do not provide a reasonable basis for 
determining that the discipline of the order is no longer necessary to 
offset dumping. As the Department has previously stated, the commercial 
quantities requirement is a threshold matter. See e.g., Pure Magnesium 
From Canada; Final Results of Antidumping Duty Administrative Review 
and Determination Not to Revoke Order in Part, 64 FR 50489, 50490 
(September 17, 1999). Thus, a party must have meaningfully participated 
in the marketplace in order to substantiate the need for further 
inquiry regarding whether continued imposition of the order is 
warranted.
    On August 31, 1999, TAMSA and Hylsa each submitted a request, in 
accordance with 19 CFR 351.222 (e)(1), that the Department revoke the 
order covering OCTG from Mexico with respect to their sales of this 
merchandise. The requests for revocation were accompanied by 
certifications from both TAMSA and Hylsa that they had not sold the 
subject merchandise at less than NV for a three-year period, including 
this review period, and would not do so in the future.

Hylsa

    We have preliminarily determined a weighted-average margin of 1.47 
percent for Hylsa in the current review period. The margin calculated 
during the current review period constitutes one of the three 
consecutive reviews cited by Hylsa to support its request for 
revocation. Consequently, we preliminarily find that Hylsa does not 
qualify for revocation of the order under section 351.222(b) of the 
Department's regulations. Therefore, we have not addressed the issues 
of whether Hylsa shipped in commercial quantities or whether the 
continued application of the antidumping duty order is necessary to 
offset dumping with regard to Hylsa.

TAMSA

    In analyzing normal commercial activities characteristic of TAMSA, 
we examined its sales of merchandise to the United States during the 
period covered by the antidumping investigation (annualized), and the 
second, third and fourth administrative reviews. TAMSA's actual sales 
volume for these periods, on which the Department has based this 
decision, is proprietary. However, based on ranged (i.e., approximate) 
quantities in the public version of TAMSA's second supplemental 
response, TAMSA made very limited sales in the United States, totaling 
approximately 51 metric tons of subject merchandise during the twelve 
month period covered by the fourth administrative review.\1\ By 
contrast, during the period covered by the antidumping investigation, 
which was only six months long, TAMSA made sales totaling approximately 
11,000 metric tons.\2\ In other words, TAMSA's sales for the entire 
year covered by the fourth review period were only 0.23 percent of its 
sales volume during the annualized period covered by the investigation. 
Similarly, TAMSA made only a few sales of subject merchandise in the 
United States during both the second and third administrative reviews, 
totaling approximately 110 metric tons and 130 metric tons 
respectively.\3\ In other words, TAMSA sales in the second and third 
reviews were only 0.5 percent and 0.59 percent, respectively. 
Therefore, the number of sales and total sales volume is so small in 
the U.S. market, both in absolute terms and in comparison with the 
period of investigation, that we cannot reasonably conclude that the 
zero margins TAMSA received are reflective of the company's normal 
commercial experience.
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    \1\ TAMSA's second supplemental response (ranged values, public 
version) in the current administrative review of OCTG from Mexico 
(May 17, 2000 at Exhibit A29).
    \2\ TAMSA's second supplemental response (ranged values, public 
version) in the current administrative review of OCTG from Mexico 
(May 17, 2000 at Exhibit A29).
    \3\ TAMSA's second supplemental response (ranged values, public 
version) in the current administrative review of OCTG from Mexico 
(May 17, 2000 at Exhibit A29).
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    In making a determination with respect to revocation based on an 
absence of dumping, the Department must consider ``whether the 
continued application of the antidumping order is otherwise necessary 
to offset dumping.''

[[Page 55000]]

See 19 CFR 351.222(b)(1) (B) and (C) as amended in Amended Revocation 
Regulations, 64 FR at 51236. The ability to sell to the United States 
market during three sequential years without dumping is normally deemed 
to be probative as to a company's future pricing practices. However, 
this approach assumes that the company continues to participate 
meaningfully in the U.S. market during that period. In this case, the 
three years in question are characterized by a negligible number and 
volume of sales by TAMSA to the U.S. market; therefore, the fact that 
TAMSA made these sales without dumping does not have the same probative 
value it would otherwise have. In light of this fact, we preliminarily 
find that TAMSA did not meaningfully participate in the marketplace for 
purposes of qualifying for a revocation inquiry and thus, because it 
has not sold the subject merchandise for three years in commercial 
quantities within the meaning of 351.222(e), does not qualify for a 
revocation inquiry. See Analysis Memorandum for TAMSA, dated August 30, 
2000.

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by both Hylsa and TAMSA (sales and cost) using standard 
verification procedures, including on-site inspection of the 
manufacturer's facilities and the examination of the relevant sales and 
financial records.
    Our verification results are outlined in the public versions of the 
verification reports. See Sales Verification Report dated August 30, 
2000 and Cost Verification Report dated August 28, 2000 for Hylsa and 
Sales Verification Report dated August 30, 2000 and Cost Verification 
Report dated August 24, 2000 for TAMSA.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondents, covered by the descriptions in 
the ``Scope of the Review'' section of this notice, supra, and sold in 
the home market during the POR, to be a foreign like product for 
purposes of determining appropriate product comparisons to U.S. sales. 
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 Department's October 4, 1999 questionnaire, or to constructed 
value (CV).

Fair Value Comparisons

    To determine whether sales of OCTG from Mexico to the United States 
were made at less than fair value, we compared the EP or CEP to the NV, 
as described in the ``Export Price and Constructed Export Price'' and 
``Normal Value'' sections of this notice, below. In accordance with 
section 777A (d)(2) of the Act, we calculated monthly weighted-average 
prices for NV and compared these to individual U.S. transactions.
    We have used the date of invoice as the date of sale for all home 
market sales made by TAMSA during the POR. For U.S. sales made by 
TAMSA, we have used the date of shipment, which corresponds to date of 
invoice, as the date of sale. For U.S. sales made by Hylsa, we have 
used the reported purchase order date as the date of sale. Although the 
Department generally uses invoice date as the date of sale, section 
351.401(i) of the Department's regulations stipulates that ``the 
Secretary may use a date other than the date of invoice if the 
Secretary is satisfied that a different date better reflects the date 
on which the exporter or producer establishes the material terms of 
sale.'' The agreed-upon price for Hylsa's U.S. sales does not change 
after the purchase order is issued; therefore, we determined that the 
purchase order date most accurately reflects the point in time at which 
the parties reached final agreement as to the material terms of the 
sale. See Analysis Memorandum for Hylsa, dated August 30, 2000.

Export Price and Constructed Export Price

Hylsa

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

TAMSA

    Section 772(a) of the Act states that EP is the price at which the 
subject merchandise is first sold (or agreed to be sold) before the 
date of importation by the producer or exporter of the subject 
merchandise outside of the United States to an unaffiliated purchaser 
in the United States. Section 772(b) of the Act states that CEP is the 
price at which the subject merchandise is first sold (or agreed to be 
sold) in the United States before or after the date of importation by 
or for the account of the producer or exporter of such merchandise or 
by a seller affiliated with the producer or exporter, to a purchaser 
not affiliated with the producer or exporter.
    In its response to the Department, TAMSA claimed that its sales to 
the United States were EP sales. However, we reclassified the U.S. 
sales as CEP sales because the subject merchandise was first sold to an 
unaffiliated purchaser by a U.S. affiliate of TAMSA (Siderca) after 
importation into the United States. Siderca receives the purchase order 
from the unaffiliated U.S. customer, confirms the purchase order with a 
sales acknowledgment, invoices the unaffiliated U.S. customer, and 
receives payment. Moreover, sales through Siderca are made through 
transactions in which Siderca takes title to the merchandise prior to 
making the sale to the U.S. customer. Based upon its analysis, the 
Department has preliminarily determined to treat TAMSA's U.S. sales as 
CEP sales, as defined in section 772(b) of the Act.
    We based CEP on the delivered price to unaffiliated customers in 
the United States. We made adjustments, where applicable, for movement 
expenses (foreign and U.S. inland freight, foreign and U.S. brokerage, 
handling expenses, ocean freight, insurance, and U.S. customs duties), 
credit expenses, and indirect selling expenses that were associated 
with economic activity in the United States. Finally, we made an 
adjustment for CEP profit in accordance with section 772(d)(3) of the 
Act.

Normal Value

    In order to determine whether there were sufficient sales of OCTG 
in the home market (HM) to serve as a viable basis for calculating NV, 
we compared the volume of home market sales of subject merchandise to 
the volume of subject merchandise sold in the United States, in 
accordance with section 773(a)(1)(C) of the Act.

Hylsa

    Hylsa reported that it had no viable home or third country market 
during the POR. Therefore, in accordance with section 773(a)(4) of the 
Act, we based NV for Hylsa on CV. In accordance with section 773(e)(1) 
of the Act, we calculated CV based on the sum of the costs of 
materials; labor; overhead; selling, general & administrative (SG&A) 
expenses; profit; interest expenses; and U.S. packing costs.
    We relied on Hylsa's submitted CV, except in the following specific

[[Page 55001]]

instances. (See Constructed Value Calculation Adjustments for the 
Preliminary Determination, Memorandum from Gina Lee to Neal Halper, 
August 30, 2000).
    1. We revised Hylsa's CV data to include the minor corrections 
presented to us at verification.
    2. We revised Hylsa's general and administrative (G&A) rate to be 
based on the 1999 financial statements instead of the POR financial 
data. We added extraordinary expenses which related to bonuses as well 
as the 1999 exchange gains and losses (EGL) related to purchases. We 
also deducted packing expenses from the cost of goods sold (COGS) 
denominator.
    3. We adjusted Hylsa's financial expense rate to be based on the 
1999 financial statements instead of the POR financial data of Alfa, 
S.A. de C.V., Hylsa's parent company. We also deducted packing expenses 
from the COGS denominator.
    4. We used the profit rate from Hylsa's tubular products division 
for purposes of calculating the CV. See below.
    In this case, because Hylsa did not have a viable home market or 
third country market for this product, we based Hylsa's profit and 
indirect selling expenses on the following methodology. In accordance 
with section 773(e)(2)(B)(iii) of the Act, we calculated indirect 
selling expenses incurred and profit realized by the producer based on 
the sale of merchandise of the same general types as the exports in 
question. Specifically, we based our profit calculations and indirect 
selling expenses on the income statement of Hylsa's tubular products 
division, a general pipe division that produces OCTG and like products.

TAMSA

    TAMSA's aggregate volume of HM sales of the foreign like product 
was greater than five percent of its respective aggregate volume of 
U.S. sales of the subject merchandise. Therefore, for TAMSA, we have 
based NV on HM sales.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the comparison 
market at the same level of trade (LOT) as the EP or CEP transaction. 
The NV LOT is that of the starting price sales in the comparison market 
or, when NV is based on CV, that of the sales from which we derive 
selling, general and administrative expenses and profit. For EP, the 
U.S. LOT is also the level of the starting price sale, which is usually 
from the exporter to the importer. For CEP, it is the level of the 
constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make 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 differences in the levels between NV and 
CEP affects price comparability, we adjust NV under section 
773(A)(7)(B) of the Act (the CEP offset provision). (See, e.g., Notice 
of Final Determination of Sales at Less Than Fair Value: Certain Cut-
to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 
19, 1997).

Hylsa

    Because NV for Hylsa is based on CV, the level of trade is that of 
the sales from which we derive SG&A expenses and profit used in the CV 
calculations. We derived profit and indirect selling expenses from 
Hylsa's tubular products division submitted financial sheets 
worksheets, which we examined at verification.
    We compared EP sales to home market sales of the tubular products 
division to determine whether they were made at the same LOT. To 
perform this analysis, we compared the selling functions performed by 
Hylsa on its EP sales to the functions performed on its home market 
sales in the tubular products division. We found that the selling 
functions performed for U.S. customers of OCTG did not vary from those 
performed for the home market customers of the tubular products 
division. Consequently, the Department preliminary determines that a 
LOT adjustment is not appropriate for Hylsa's sales.

TAMSA

    It is the Department's policy to match, whenever possible, U.S. 
sales to home market sales of identical merchandise. The Department 
determined that the U.S. sales made by TAMSA had matches in the home 
market of identical merchandise within the same month of the U.S. 
sales. The U.S. sales matched exclusively to home market sales made by 
TAMSA to PEMEX. We then sought to determine whether these sales to 
PEMEX were made at the same level of trade as TAMSA's sales to the 
United States. To determine whether TAMSA's CEP and NV sales were at 
the same LOT, we compared the CEP sales to the PEMEX HM sales in 
accordance with the methodology discussed above.
    Our analysis of the stages in the marketing process indicates that 
the sales to the United States were made at a different point in the 
chain of distribution than the relevant sales to PEMEX. Whereas the 
sales to PEMEX were made to the end user, TAMSA's U.S. sales, for which 
we have constructed an export price, were made to a distributor 
(Siderca). Therefore, the Department analyzed the different selling 
functions and services which TAMSA provided to these two customers.
    We requested information concerning the selling functions 
associated with sales in each market for TAMSA. In addition to the 
standard selling functions that TAMSA provided to all home market 
customers, such as inventory maintenance, technical advice, and others, 
TAMSA provides other services on a just-in-time basis to PEMEX. 
Provision of these services requires staff dedicated to administering 
the just-in-time agreements, and entails certain expenses for TAMSA. 
Such expenses include provisions and expenditures for breach of 
contract, salaries and overhead for extra personnel to administer the 
just-in-time agreements, and other costs. These expenses and selling 
functions do not exist for TAMSA's sales to the United States. See 
Analysis Memorandum for TAMSA dated August 30, 2000 for further 
discussion. Based on this analysis, we preliminarily determine that 
TAMSA's home market sales to PEMEX and its CEP sales were made at 
different LOTs.
    Section 773(a)(7)(B) of the Act directs us to make an adjustment 
for differences in LOTs where such differences affect price 
comparability. Where such an adjustment is not feasible, and the home 
market LOT is more advanced than the CEP LOT, the Department must make 
a CEP offset. We examined the data for TAMSA and have determined that 
we do not have an appropriate basis for a LOT adjustment. Specifically, 
we note that although TAMSA made sales to other customers which 
involved different sales functions, it made no sales in Mexico at the 
LOT of the CEP which could be used to calculate the extent to which 
price comparability can be attributed to differences in LOT. Thus, the 
Department is unable to

[[Page 55002]]

calculate the amount for a LOT adjustment.
    As indicated above, in accordance with section 773(a)(7)(B) of the 
Act, a CEP offset is warranted where NV is established at a LOT which 
constitutes a more advanced stage of distribution (or the equivalent) 
than the LOT of the CEP sale, and a LOT adjustment is not feasible. 
Because we have determined that TAMSA's home market LOT is different 
from the CEP LOT and is at a more advanced stage of distribution, as 
well as that an LOT adjustment is not feasible, we have made a CEP 
offset pursuant to section 773(a)(7)(B) of the Act.

Cost-of-Production Analysis

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

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP, by model, based on the sum of the cost of 
materials, fabrication and general expenses, and packing costs. We 
relied on the submitted COPs, except in the following specific 
instances where the submitted costs were not appropriately quantified 
or valued.
    1. We adjusted the COP and CV by including the standard costs plus 
the POR variance for those products which were sold, but not produced 
during the POR.
    2. We revised the fixed overhead and variance rate calculations for 
a mathematical error and computed the expenses as a percentage of 
standard cost of manufacturing rather than standard cost of sales.
    3. We revised the reserve for inventory obsolescence rate 
calculation by computing the expense as a percentage of total standard 
costs rather than a per-ton amount.
    4. We revised the 1999 G&A expense rate calculation to include 
certain ``other expenses.''
    5. We revised the 1999 financial expense rate calculation to 
exclude interest income related to accounts receivable.

B. Test of Home-Market Prices

    We used TAMSA's weighted-average COPs for the reporting period as 
adjusted above. In order to determine whether these sales had been made 
at prices below the COP, we compared the adjusted weighted-average COP 
figures to home-market sales of the foreign like product as required 
under section 773(b) of the Act. In determining whether to disregard 
home-market sales made at prices below the COP, we examined whether (1) 
within an extended period of time, such sales were made in substantial 
quantities, and (2) such sales were made at prices which permitted the 
recovery of all costs within a reasonable period of time. On a product-
specific basis, we compared the COP to the home-market prices, less any 
applicable movement charges, discounts, and rebates.

C. Results of COP Test

    In accordance with section 773(b)(2)(C), for models for which less 
than 20 percent of TAMSA's sales of a given product were at prices 
below 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.'' For models for which 20 percent or more 
of TAMSA's sales during the POR were at prices below the COP, we 
determined such sales to have been made in ``substantial quantities'' 
within an extended period of time in accordance with section 
773(b)(2)(B) of the Act. Furthermore, because we compared prices to POR 
average COPs, we determined that below-cost prices did not permit 
recovery of all costs within a reasonable period of time, in accordance 
with section 773(b)(2)(D) of the Act. Therefore, we disregarded such 
below-cost sales made by TAMSA.
    We found that for OCTG products, TAMSA made comparison-market sales 
at prices below the COP within an extended period of time in 
substantial quantities. Further, we found that these sales prices did 
not permit recovery of costs within a reasonable period of time. We 
therefore excluded these sales from our analysis in accordance with 
section 773(b)(1) of the Act.

D. Calculation of CV

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of each company's cost of materials, fabrication, 
SG&A, U.S. packing costs, interest expenses, and profit. See Normal 
Value section above for a discussion of the calculation of SG&A and 
profit for Hylsa.

Price-to-Price Comparisons

    We calculated NV for TAMSA based on packed, FOB or delivered prices 
to unaffiliated customers in Mexico. We made adjustments for discounts 
and billing adjustments. We made deductions, where appropriate, for 
foreign inland freight, warehousing and inland insurance pursuant to 
section 773(a)(6)(B) of the Act. In addition, we made adjustments for 
differences in circumstances-of-sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We made COS 
adjustments for imputed credit expenses, interest revenue, performance 
bond costs, royalties and warranties. Finally, we deducted home market 
packing costs and added U.S. packing costs in accordance with section 
773(a)(6) of the Act.

Price to Constructed Value Comparisons

    Where we compared EP to CV for Hylsa, we made COS adjustments by 
deducting from CV the weighted-average home market direct selling 
expenses and adding the U.S. direct selling expenses, in accordance 
with section 773(a)(8) of the Act and section 19 CFR 351.401(c).
    Based on our findings at verification, we made adjustments to the 
reported values for U.S. credit expense, U.S. packing, and U.S. direct 
selling expense. See Analysis Memorandum for Hylsa for further 
discussion.

Currency Conversion

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

Preliminary Results of the Review

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

[[Page 55003]]



                        Oil Country Tubular Goods
------------------------------------------------------------------------
                                                              Weighted-
             Producer/manufacturer/  exporter                  average
                                                               margin
------------------------------------------------------------------------
TAMSA.....................................................          0
Hylsa.....................................................          1.47
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of this 
proceeding in accordance with 19 CFR 351.224(b). An interested party 
may request a hearing within 30 days of publication of these 
preliminary results. See 19 CFR 351.310(c). 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 
of these preliminary results of review. 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. Parties who submit arguments are requested to submit with 
the argument (1) A statement of the issue, (2) a brief summary of the 
argument (no longer than five pages including footnotes) and (3) a 
table of authorities. Further, we would appreciate it if parties 
submitting written comments would provide the Department with an 
additional copy of the public version of any such comments on diskette. 
The Department will issue the final results of this administrative 
review, which will include the results of its analysis of issues raised 
in any such comments, within 120 days of publication of these 
preliminary results.
    Upon issuance of the final results of the review, the Department 
will determine, and Customs will assess, antidumping duties on all 
appropriate entries. The Department will issue appraisement 
instructions directly to Customs. The final results of this review will 
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 will calculate 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 Department determines that revocation is warranted for TAMSA 
or Hylsa, this decision will apply to all unliquidated entries of 
subject merchandise produced by TAMSA or Hylsa exported to the United 
States and entered, or withdrawn from warehouse, for consumption on or 
after August 1, 1999, 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 subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication of the final 
results of this administrative review, as provided for by section 
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed 
companies will be the rate as stated above; (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 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 other previous review conducted by the 
Department, the cash deposit rate will continue to be the ``all other'' 
rate established by the LTFV investigation, which was 23.79 percent.
    This notice serves as a preliminary reminder to importers of their 
responsibilities 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 this notice are in accordance with 
Section 751(a)(1) and 777(i)(1) of the Act.

    Dated: August 30, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-23393 Filed 9-11-00; 8:45 am]
BILLING CODE 3510-DS-P