[Federal Register Volume 66, Number 124 (Wednesday, June 27, 2001)]
[Notices]
[Pages 34151-34154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16169]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-857]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Welded Large Diameter Line Pipe From Japan

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

EFFECTIVE DATE: June 27, 2001.

FOR FURTHER INFORMATION CONTACT: John Drury or Helen Kramer at (202) 
482-0195 and (202) 482-0405, respectively; AD/CVD, Enforcement, Office 
8, Group III, Import Administration, Room 7866, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230.

The 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 refer to the regulations codified at 19 CFR part 351 (April 
2000).

Preliminary Determination

    We preliminarily determine that certain welded large diameter line 
pipe from Japan is being, or is likely to be, sold in the United States 
at less than fair value (LTFV), as provided in section 733 of the Act. 
The estimated margins of sales at LTFV are shown in the Suspension of 
Liquidation section of this notice.

Case History

    On January 10, 2001, the Department received a petition on welded 
large diameter line pipe from Japan and Mexico in proper form by 
American Steel Pipe Division of American Cast Iron Pipe Company, Berg 
Steel Pipe Corporation, and Stupp Corporation (collectively 
``petitioners''). The Department received information from the 
petitioners supplementing the petition on January 22, January 24, 
January 26, and January 29, 2001.
    This investigation was initiated on January 30, 2001. See Notice of 
Initiation of Antidumping Duty Investigations: Welded Large Diameter 
Line Pipes from Mexico and Japan, 66 FR 11266 (February 23, 2001) 
(Initiation Notice). Since the initiation of these investigations, the 
following events have occurred.
    The Department set aside a period for all interested parties to 
raise issues regarding product coverage. See Initiation Notice, 66 FR 
11267. We received comments regarding product coverage in the Japan 
investigation from Sumitomo Metal Industries on February 20, 2001 and 
February 23, 2001, Kawasaki Steel Corporation, Nippon Steel 
Corporation, NKK Corporation, and Sumitomo Metal Industries on February 
20, 2001, and from petitioners on April 9, 2001. For the concurrent 
investigation of welded large diameter line pipe from Mexico, 
respondent Tubesa submitted comments on scope which also affect both 
investigations.
    In response to comments by interested parties the Department has 
determined that certain welded large diameter line pipe products are 
excluded from the scope of this investigation. These excluded products 
are described below in the section on the scope of the investigation. 
See also  Memorandum from Richard Weible and Ed Yang to Joseph 
Spetrini, Scope Issues for Welded Large Diameter Line Pipe, June 19, 
2001.
    On February 26, 2001, the Department issued a letter to interested 
parties in the two concurrent antidumping investigations, providing an 
opportunity to comment on the Department's proposed model matching 
characteristics and hierarchy. Comments were submitted by the 
petitioners, and respondents Nippon Steel Corporation and Kawasaki 
Steel Corporation. All comments were received on March 8, 2001. 
Petitioners agreed with the Department's proposed characteristics 
categories, but wished to add more subcategories. Furthermore, 
petitioners suggested that the Department change its hierarchy of 
characteristics. Nippon Steel Corporation suggested that the Department 
elevate ``weld type'' to the top of the model match criteria hierarchy. 
Kawasaki also suggested that weld type be used as the first model 
matching criterion. Also, Kawasaki proposed that the Department change

[[Page 34152]]

the individual product codes for wall thickness from absolute numbers 
to ranges. Based on these comments, the Department made a number of 
changes which were reflected in subsequent questionnaires to the 
respondents. The Department changed the hierarchy by placing weld type 
as the second criterion for model match purposes. Additionally, the 
Department consolidated the subcategories in outside diameter, wall 
thickness, and end finish, as well as adding a subcategory to surface 
finish. These changes are a better reflection of the cost and price 
differentials between products and allow for better comparisons between 
sales of identical or similar welded large diameter line pipe products.
    On March 6, 2001, the United States International Trade Commission 
(ITC) preliminarily determined that there is a reasonable indication 
that imports of the products subject to this investigation are 
materially injuring an industry in the United States producing the 
domestic like product. See Certain Welded Large Diameter Line Pipe from 
Japan and Mexico, 66 FR 13568(March 6, 2001).
    On February 26, 2001, the Department issued an antidumping 
questionnaire to Kawasaki Steel Corporation, Nippon Steel Corporation, 
NKK Corporation, and Sumitomo Metal Industries. On March 20, 2001, the 
Department limited the respondents in the investigation to Nippon Steel 
Corporation and Kawasaki Steel Corporation (See Memorandum from Ed Yang 
to Joseph A. Spetrini, March 20, 2001). On March 28, 2001, Kawasaki 
Steel Corporation submitted a response to section A of the Department's 
antidumping duty questionnaire. On April 12, 2001, Nippon Steel 
Corporation notified the Department that it would not be responding to 
the Department's questionnaire. Nippon provided no further elaboration, 
nor did it suggest alternatives to the Department's requirements 
pursuant to section 782(c) of the Act. On April 20, 2001, Kawasaki 
Steel Corporation notified the Department that it would not be 
participating further in the investigation. Kawasaki provided no 
further elaboration, nor did it suggest alternatives to the 
Department's requirements pursuant to section 782(c) of the Act.

Period of Investigation

    The POI for this investigation is January 1, 2000 through December 
31, 2000. This period corresponds to the four most recent fiscal 
quarters prior to the month of the filing of the petition (i.e., 
January 2001).

Scope of the Investigation

    The product covered by this investigation is certain welded carbon 
and alloy line pipe, of circular cross section and with an outside 
diameter greater than 16 inches, but less than 64 inches, in diameter, 
whether or not stencilled. This product is normally produced according 
to American Petroleum Institute (API) specifications, including Grades 
A25, A, B, and X grades ranging from X42 to X80, but can also be 
produced to other specifications. The product currently is classified 
under U.S. Harmonized Tariff Schedule (HTSUS) item numbers 
7305.11.10.30, 7305.11.10.60, 7305.11.50.00, 7305.12.10.30, 
7305.12.10.60, 7305.12.50.00, 7305.19.10.30, 7305.19.10.60, and 
7305.19.50.00. Although the HTSUS item numbers are provided for 
convenience and customs purposes, the written description of the scope 
is dispositive. Specifically not included within the scope of this 
investigation is American Water Works Association (AWWA) specification 
water and sewage pipe and the following size/grade combinations; of 
line pipe:
     Having an outside diameter greater than or equal to 18 
inches and less than or equal to 22 inches, with a wall thickness 
measuring 0.750 inch or greater, regardless of grade.
     Having an outside diameter greater than or equal to 24 
inches and less than 30 inches, with wall thickness measuring greater 
than 0.875 inches in grades A, B, and X42, with wall thickness 
measuring greater than 0.750 inches in grades X52 through X56, and with 
wall thickness measuring greater than 0.688 inches in grades X60 or 
greater.
     Having an outside diameter greater than or equal to 30 
inches and less than 36 inches, with wall thickness measuring greater 
than 1.250 inches in grades A, B, and X42, with wall thickness 
measuring greater than 1.000 inches in grades X52 through X56, and with 
wall thickness measuring greater than 0.875 inches in grades X60 or 
greater.
     Having an outside diameter greater than or equal to 36 
inches and less than 42 inches, with wall thickness measuring greater 
than 1.375 inches in grades A, B, and X42, with wall thickness 
measuring greater than 1.250 inches in grades X52 through X56, and with 
wall thickness measuring greater than 1.125 inches in grades X60 or 
greater.
     Having an outside diameter greater than or equal to 42 
inches and less than 64 inches, with a wall thickness measuring greater 
than 1.500 inches in grades A, B, and X42, with wall thickness 
measuring greater than 1.375 inches in grades X52 through X56, and with 
wall thickness measuring greater than 1.250 inches in grades X60 or 
greater.

Facts Available

1. Application of Facts Available

    Section 776(a)(2) of the Act provides that, if an interested party 
(A) withholds information requested by the Department, (B) fails to 
provide such information by the deadline, or in the form and manner 
requested, subject to sections 782(c)(1) and (e) of the Act, (C) 
significantly impedes a proceeding, or (D) provides information that 
cannot be verified, as provided in section 782(i) of the Act, the 
Department shall use, subject to sections 782(d) and (e) of the Act, 
facts otherwise available in reaching the applicable determination. 
Pursuant to section 782(e) of the Act, the Department shall not decline 
to consider submitted information if all of the following requirements 
are met: (1) The information is submitted by the established deadline; 
(2) the information can be verified; (3) the information is not so 
incomplete that it cannot serve as a reliable basis for reaching the 
applicable determination; (4) the interested party has demonstrated 
that it acted to the best of its ability; and (5) the information can 
be used without undue difficulties.
    In selecting from among the facts otherwise available, section 
776(b) of the Act authorizes the Department to use an adverse 
inference, if the Department finds that an interested party failed to 
cooperate by not acting to the best of its ability to comply with the 
request for information. See, e.g., Certain Welded Carbon Steel Pipes 
and Tubes From Thailand: Final Results of Antidumping Duty 
Administrative Review, 62 FR 53808, 53819-20 (October 16, 1997). 
Finally, section 776(b) of the Act states that an adverse inference may 
include reliance on information derived from the petition. See also 
Statement of Administrative Action Accompanying the URAA (SAA), H.R. 
Rep. No. 103-316 at 870 (1994).
    In accordance with section 776(a)(2)(A) of the Act and section 
776(b) of the Act, for the reasons explained below, because both Nippon 
Steel Corporation and Kawasaki Steel Corporation failed to respond to 
Section B (which asks for sales-specific data and information for the 
comparison market, the basis for the calculation of normal value) or 
Section C (which asks for sales-specific data and information for

[[Page 34153]]

the U.S. market, the basis for the calculation of U.S. price) of our 
questionnaire, we preliminarily determine that the use of total adverse 
facts available is warranted with respect to both companies.
    Section 776(b) of the Act provides that the Department may use an 
inference adverse to the interests of a party that has failed to 
cooperate by not acting to the best of its ability to comply with the 
Department's requests for information. See also SAA at 870. In 
examining whether either Nippon Steel Corporation or Kawasaki Steel 
Corporation acted to the best of their abilities in responding to our 
requests for information, we note that neither respondent requested an 
extension to the deadline for submitting responses to Sections B and C 
of the questionnaire, nor did they even indicate that they were 
encountering any difficulties with preparing responses to those 
sections. Nippon Steel Corporation only stated that it ``has determined 
not to participate further'' in the Department's investigation, and 
asked that its counsel be removed from the service list. See Letter 
from Nippon Steel Corporation to the Department of Commerce, April 12, 
2001. Kawasaki Steel Corporation merely noted that it was ``not 
submitting responses to Sections B or C of the Department's Request for 
Information.'' See Letter from Kawasaki Steel Corporation to the 
Department of Commerce, April 20, 2001. Neither company offered any 
further explanation, nor did either company suggest alternative forms 
in which it could submit the data, as required for application of 
section 782(c) of the Act. Moreover, both respondents received the 
Department's standard questionnaire that clearly indicates that failure 
to respond may result in a determination based on the facts available. 
See Antidumping Duty Questionnaires to Nippon Steel Corporation and 
Kawasaki Steel Corporation, March 14, 2001 (General Instructions, p. 
1). We find that the evidence on the record indicates that both 
companies explicitly refused to participate by withholding information 
requested by the Department. Therefore, we determine that the failure 
by Nippon Steel Corporation and Kawasaki Steel Corporation to respond 
fully to the Department's antidumping questionnaire constitutes a 
failure to act to the best of their ability to comply with a request 
for information from the Department, within the meaning of section 
776(b) of the Act, and that an adverse inference is warranted in 
selecting the facts available for these companies.
    As discussed below, consistent with Department practice, we 
assigned both companies the highest margin alleged in the petition (in 
this case, in an amendment to the petition), i.e., 30.80 percent. See 
Initiation Notice.

2. Selection and Corroboration of Facts Available

    Section 776(b) states that an adverse inference may include 
reliance on information derived from the petition. See also SAA at 870. 
Section 776(c) of the Act provides that, when the Department relies on 
secondary information (such as the petition) in using the facts 
otherwise available, it must, to the extent practicable, corroborate 
that information from independent sources that are reasonably at its 
disposal.
    The SAA clarifies that ``corroborate'' means that the Department 
will satisfy itself that the secondary information to be used has 
probative value (see SAA at 870). The SAA also states that independent 
sources used to corroborate such evidence may include, for example, 
published price lists, official import statistics and customs data, and 
information obtained from interested parties during the particular 
investigation (See SAA at 870).
    To corroborate the margins calculated in the petition, we compared 
the U.S. price and normal value to independent source material 
petitioner used to derive these figures, such as import statistics, 
data from U.S. producers, and other publicly available cost data. We 
found that EP was determined based on the import average unit value 
(AUV) for one ten-digit category of the HTSUS accounting for 40 percent 
of the in-scope imports from Japan during the first eleven months of 
2000. The AUVs are based on import statistics derived from U.S. Customs 
data. This HTSUS classification was the largest portion of line pipe 
imported from Japan during this period of time. Petitioners presumed 
that the Customs values used to calculate the AUV reflect the actual 
``transaction value'' of the merchandise being shipped by Japanese 
mills. No further corroboration of the U.S. price is necessary because 
it is based on U.S. official import statistics, which the Department 
considers to be an independent source. See Notice of Final 
Determination of Sales at Less Than Fair Value: Collated Roofing Nails 
from the People's Republic of China, 62 FR 51410, 51412 (October 1, 
1997).
    To corroborate the CV calculation used for normal value, we 
reexamined the margin in the petition in light of information obtained 
during the investigation. Specifically, we examined the cost components 
used to calculate CV for the petition. Petitioners calculated the cost 
for a product which falls within the HTSUS category used to calculate 
EP. The cost components used by petitioners include contemporaneous 
financial statements from one of the companies under investigation 
(Nippon Steel Corporation) to calculate SG&A and profit rates. 
Petitioners obtained costs for plate, the largest cost component from 
publicly available, contemporaneous sources. Specifically, the plate 
prices originated from spot rates for plate in Japan during the year 
2000, as published by Metal Bulletin. Costs for labor and electricity 
were obtained from public sources, and were indexed to current prices 
using the Japanese Wholesale Prices Index. Electricity prices are from 
data published by the OECD International Energy Agency for the year 
1997, while labor costs were obtained from the International Trade 
Administration's web site. Other costs used by petitioners came from a 
U.S. surrogate company, such as other materials (wire, flux), and 
overhead. These costs are also contemporaneous. We consider the normal 
value calculation, based on CV, to be corroborated because the elements 
of the CV calculation are based on independent sources.
    Based on the above, we find that the estimated margins set forth in 
the petitioner have probative value.

All-Others Rate

    Section 735(c)(5)(B) of the Act provides that, where the estimated 
weighted-average dumping margins established for all exporters and 
producers individually investigated are zero or de minimis margins, or 
are determined entirely under section 776 of the Act, the Department 
may use any reasonable method to establish the estimated ``all-others'' 
rate for exporters and producers not individually investigated. Our 
recent practice under these circumstances has been to assign, as the 
``all-others'' rate, the simple average of the margins in the petition. 
See Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Cold-Rolled Flat-Rolled Carbon Quality Steel Flat Products from 
Venezuela, 65 FR 18047, 18048 (April 6, 2000). However, given that the 
petition alleges only one rate for all companies, we have used the same 
rate as the ``all-others'' rate.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing 
Customs to

[[Page 34154]]

suspend liquidation of all entries of welded large diameter line pipe 
from Japan that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct Customs to require a cash deposit or 
the posting of a bond equal to the amount by which the NV exceeds the 
EP, as indicated in the chart below. These suspension-of-liquidation 
instructions will remain in effect until further notice. The dumping 
margins are as follows:

------------------------------------------------------------------------
                                                                 Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Nippon Steel Corporation (Nippon)............................      30.80
Kawasaki Steel Corporation (Kawasaki)........................      30.80
All Others...................................................      30.80
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final antidumping determination is 
affirmative, the ITC will determine whether these imports are 
materially injuring, or threaten material injury to, the U.S. industry. 
The deadline for that ITC determination would be the later of 120 days 
after the date of this preliminary determination or 45 days after the 
date of our final determination.

Public Comment

    Case briefs must be submitted no later than 50 days after the 
publication of this notice in the Federal Register. Rebuttal briefs 
must be filed within five days after the deadline for submission of 
case briefs. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes. Public versions of all comments and 
rebuttals should be provided to the Department and made available on 
diskette.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
scheduled for two days after the deadline for submission of the 
rebuttal briefs, at the U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230. In the event that the 
Department receives requests for hearings from parties to more than one 
large diameter line pipe case, the Department may schedule a single 
hearing to encompass all cases. Parties should confirm by telephone the 
time, date, and place of the hearing 48 hours before the scheduled 
time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request within 30 days of 
the publication of this notice. Requests should specify the number of 
participants and provide a list of the issues to be discussed. Oral 
presentations will be limited to issues raised in the briefs.
    If this investigation proceeds normally, we will make our final 
determination in this investigation no later than 75 days after the 
date of this preliminary determination.
    This determination is published pursuant to sections 733(f) and 
777(i)(1) of the Act.

    Dated: June 19, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-16169 Filed 6-26-01; 8:45 am]
BILLING CODE 3510-DS-P