[Federal Register Volume 66, Number 175 (Monday, September 10, 2001)]
[Notices]
[Pages 46999-47002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22656]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-825]


Oil Country Tubular Goods From Korea: Preliminary Results of 
Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of the antidumping duty 
administrative review of oil country tubular goods from Korea.

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SUMMARY: In response to a request from SeAH Steel Corporation 
(``SeAH''), the Department of Commerce (``the Department'') is 
conducting an administrative review of the antidumping duty order on 
oil country tubular goods (``OCTG'') from Korea. This review covers one 
manufacturer/exporter of the subject merchandise to the United States, 
SeAH, and the period August 1, 1999 through July 31, 2000, which is the 
fifth period of review (``POR'').
    We have preliminarily determined that SeAH 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 NV. The preliminary 
results are listed below in the section entitled ``Preliminary Results 
of Review.''

EFFECTIVE DATE: September 10, 2001.

FOR FURTHER INFORMATION CONTACT: Mike Strollo or Scott Lindsay, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone: (202) 482-5255, or (202) 482-3782, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are to the provisions effective January 1, 
1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to 19 CFR 
part 351 (2000).

Background

    On August 11, 1995, the Department published in the Federal 
Register an antidumping duty order on oil country tubular goods (OCTG) 
from Korea (60 FR 41058). On August 31, 2000, the Department received a 
timely request from SeAH to conduct an administrative review pursuant 
to section 351.213(b)(2) of the Department's regulations. We published 
a notice of initiation of this antidumping duty administrative review 
on OCTG on October 2, 2000 (65 FR 58733).
    The Department subsequently determined it was impracticable to 
complete the review within the standard time frame, and extended the 
deadline for completion of this antidumping duty administrative review. 
See Oil Country Tubular Goods from Korea: Extension of Time Limit for 
Preliminary Results of Antidumping Administrative Review, 66 FR 23232 
(May 8, 2001).

Scope of Review

    The products covered by this order are oil country tubular goods 
(``OCTG''), hollow steel products of circular cross-section, including 
only oil well casing and tubing, 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 or 
tubing pipe containing 10.5 percent or more of chromium, or drill pipe. 
The products subject to this order are currently classified in the 
Harmonized Tariff Schedule of the United States (``HTSUS'') under item 
numbers: 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. The HTSUS item numbers 
are provided for convenience and Customs purposes. The written 
description remains dispositive of the scope of this review.

Period of Review

    This review covers the period August 1, 1999 through July 31, 2000.

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by SeAH using standard verification procedures, including on-
site inspection of the manufacturer's facilities and the examination of 
relevant sales and financial records.

Date of Sale

    SeAH reported the date of invoice as the date of sale for its U.S. 
market sales and the purchase order date as the date of sale in the 
third country market. SeAH stated that, in the third country market, 
the material terms of sale, i.e. price and quantity, are finalized on 
the purchase order date, and therefore, this date was reported as the 
date of sale. For its U.S. sales, SeAH stated that the vast majority of 
sales are made from inventory. For these sales, the customer generally 
contacted Pusan Pipe America (``PPA''), SeAH's affiliated reseller. 
According to SeAH, no set purchase order was generated, and the invoice 
was the first document which indicated that a transaction occurred. 
Therefore, the invoice date best reflects the date on which the 
material terms of sale are established. On June 1, 2001, SeAH 
reiterated that the dates of sale reported in both markets best reflect 
the dates on which the material terms were set. The Department, 
therefore, is preliminarily using the dates of sale reported by SeAH.

[[Page 47000]]

Transactions Reviewed

    SeAH produced OCTG in Korea and shipped it to the United States. 
PPA was the importer of record for all U.S. sales. All of SeAH's U.S. 
sales are classified as CEP sales (see ``United States Price'' section 
below). The Department's questionnaire instructed the respondent to 
report CEP sales made after importation if the dates of sale fell 
within the POR (see page C-1 of the Department's October 26, 2000 
Questionnaire). Therefore, as it did in the 1997-1998 review, the 
Department again reviewed U.S. sales during the POR when those sales 
involved subject merchandise that had entered the United States and 
been placed in the physical inventory of SeAH's U.S. affiliate. The 
questionnaire also instructed the respondent to report CEP sales made 
prior to importation when the entry dates fell within the POR. 
Consequently, we have limited our U.S. database to these sets of 
transactions.

Comparison Market

    The Department determines the viability of a comparison market by 
comparing the aggregate quantity of comparison market sales to U.S. 
sales. An exporting country is not considered a viable comparison 
market if the aggregate quantity of sales of subject merchandise to 
that market amounts to less than five percent of the quantity of sales 
of subject merchandise into the United States during the POR. See 
section 773(a)(1)(B) of the Act; 19 CFR 351.404. We found Korea was not 
a viable comparison market because the aggregate quantity of SeAH's 
sales of subject merchandise in Korea during the POR amounted to less 
than five percent of the quantity of sales of subject merchandise to 
the United States during the POR.
    According to section 773(a)(1)(B)(ii) of the Act, the price of 
sales to a third country can be used as the basis for normal value only 
if such price is representative, if the aggregate quantity (or, where 
appropriate, value) of sales to that country is at least five percent 
of the quantity (or value) of total sales to the United States, and if 
the Department does not determine that the particular market situation 
in that country prevents proper comparison with the export price or 
constructed export price. The only third country market to which SeAH 
sold subject merchandise during the POR was Canada. Sales to Canada, on 
both a value and a volume basis, were found to be greater than the five 
percent threshold defined in section 773(a)(1)(B) of the Act and 
section 19 CFR 351.404 of the Department's regulations. In addition, we 
found that the market situation in Canada did not prevent proper 
comparison between normal value and constructed export price. 
Therefore, we used Canadian sales in our analysis of petitioners' 
allegation regarding sales below cost (see ``Normal Value'' section 
below), and have used SeAH's sales to Canada as the basis for normal 
value.

Normal Value Comparisons

    To determine whether sales of subject merchandise to the United 
States were made at less than normal value, we compared the Constructed 
Export Price (CEP) to the 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 prices for NV and compared these to individual U.S. transaction 
prices.

United States Price

    We preliminarily determine that all of SeAH's U.S. sales were made 
``in the United States'' by SeAH's U.S. affiliate on behalf of SeAH 
within the meaning of section 772(b) of the Act, and thus, should be 
treated as CEP transactions. See AK Steel Corp. v. United States, 226 
F.3d 1361, 1374 (Fed. Cir. 2000).
    The starting point for the calculation of CEP was the delivered 
price to unaffiliated customers in the United States. We identified the 
appropriate starting price by adjusting for early payment discounts. In 
accordance with section 772(c)(2) of the Act, we made deductions for 
movement expenses, including foreign inland freight, ocean freight, 
marine insurance, foreign and U.S. brokerage and handling, U.S. inland 
freight, U.S. wharfage, and U.S. customs duties. In accordance with 
section 772(d)(1) of the Act, we also deducted credit expenses and 
indirect selling expenses, including inventory carrying costs. In 
accordance with section 772(c)(1)(B) of the Act, we added duty drawback 
to the starting price. In accordance with section 772(d)(2) of the Act, 
we deducted the cost of further manufacturing where such deduction was 
appropriate. This deduction for further manufacturing was based on the 
fees charged by unaffiliated U.S. processors; SeAH indicated that the 
reported further processors' charges included processing costs and, 
where applicable, the cost of materials. SeAH also indicated that the 
reported further processors' charges did not include separate G&A 
expense information related to this further processing because all of 
the expenses incurred by PPA, including the minimal G&A expense 
associated with PPA's dealings with further processors, were reported 
as indirect selling expenses. Finally, we deducted an amount of profit 
allocated to these expenses, in accordance with section 772(d)(3) of 
the Act.

Normal Value

A. Model Match

    In making comparisons in accordance with section 771(16) of the 
Act, we considered all products described in the ``Scope of Review'' 
section of this notice, above, sold in the comparison market in the 
ordinary course of trade for purposes of determining appropriate 
product comparisons to U.S. sales. Where there were no sales of 
identical merchandise in the comparison market made in the ordinary 
course of trade to compare to U.S. sales, we compared U.S. sales to 
sales of the most similar foreign like product made in the ordinary 
course of trade, based on the characteristics listed in Appendix V of 
the Department's October 26, 2000 antidumping questionnaire.
    In the most recently completed segment of the proceeding involving 
SeAH, i.e., the third review, the Department disregarded SeAH's sales 
that failed the cost test. See Oil Country Tubular Goods From Korea; 
Final Results of Antidumping Duty Administrative Review, 65 FR 13364 
(March 13, 2000). We therefore had reasonable grounds to believe or 
suspect, pursuant to section 773(b)(2)(A)(ii) of the Act, that SeAH's 
sales of the foreign like product under consideration for the 
determination of NV in this review may have been made at prices below 
COP. Therefore, we examined whether sales in the comparison market were 
below the cost of production.

B. Cost of Production and Constructed Value

    1. Cost of Production: Using 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 figures 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 packed condition and 
ready for shipment.
    After calculating COP, we tested whether comparison market sales of 
the

[[Page 47001]]

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. See section 773(b)(1) of 
the Act. Because each individual price was compared to the POR 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. See section 773(b)(2)(D) of the Act. 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 within 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.
    2. Constructed Value: In accordance with section 773(a)(4) of the 
Act, we used CV as the basis for NV when there were no usable 
contemporaneous sales of subject merchandise in the comparison market. 
We calculated CV in accordance with section 773(e) of the Act. We 
included SeAH's cost of materials and fabrication (including packing), 
SG&A expenses, and profit. See section 773(e)(2)(A) of the Act. In 
accordance with the Department's October 26, 2000 questionnaire, the 
reported cost of materials included import duties associated with 
obtaining the materials. 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 respondent 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 relied on 
SeAH's reported weighted-average third country selling expenses.

C. Price-to-Price Comparison

    Where appropriate, for comparison to CEP, we made adjustments to NV 
by deducting Korean inland freight from the factory to the port, 
brokerage and handling, terminal charges, wharfage, international ocean 
freight and packing, in accordance with section 773(a)(6)(B) of the 
Act, and direct selling expenses (credit expenses) in accordance with 
section 773(a)(6)(C)(iii) of the Act. We also made adjustments for 
differences in costs attributable to differences in physical 
characteristics of merchandise, pursuant to section 773(a)(6)(C)(ii) of 
the Act.
    Finally, the Department added duty drawback to third-country prices 
for comparison to duty-inclusive cost of production and U.S. price. See 
Oil Country Tubular Goods from Korea: Final Results of Antidumping Duty 
Administrative Review, 64 FR 13169 (March 17, 1999).

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') of the U.S. sales. The NV LOT is that 
of the starting-price sales in the comparison market. The Court of 
Appeals for the Federal Circuit (``Federal Circuit'') has held that the 
statute unambiguously requires Commerce to deduct the selling expenses 
set forth in section 772(d) from the CEP starting price prior to 
performing its LOT analysis. See Micron Technology, Inc. v. United 
States, 243 F.3rd 1301, 1315 (Fed. Cir. 2001). Consequently, the 
Department will continue to adjust the CEP, pursuant to section 772(d), 
prior to performing the LOT analysis, as articulated by the 
Department's regulations at section 351.412. When NV is based on CV, 
the NV LOT is that of the sales from which we derive SG&A expenses and 
profit.
    To determine whether comparison market 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 unaffiliated customer. If the comparison-market sales are 
at a different level of trade 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 level of trade of the export transaction, we make a 
level-of-trade adjustment under section 773(a)(7)(A) of the Act. 
Finally, 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, 61732 
(November 17, 1997).
    In the instant review, SeAH only made sales in both the United 
States and the third country market, Canada, through its affiliate, 
PPA. In Canada, SeAH reported only one LOT. SeAH contends that when the 
CEP adjustments are made, the CEP LOT is less advanced than the foreign 
market LOT, qualifying SeAH for a CEP offset.
    In the foreign market (i.e., the third-country market), the 
relevant transaction for the Department's analysis is between the 
affiliate, PPA, and the unaffiliated purchaser in Canada. PPA performs 
the following selling functions with respect to its Canadian and U.S. 
sales: negotiating prices, meeting with customers, invoicing, extending 
credit, managing personnel (i.e., training), strategic and economic 
planning, computer, legal, accounting, and/or business system 
development, and procurement and/or sourcing. However, the relevant 
transaction for U.S. sales, after CEP adjustments are made, is between 
SeAH and PPA. SeAH does not perform any of the above-listed functions 
which PPA provides for Canadian customers. On the other hand, for 
SeAH's sales to PPA, PPA performs four functions that are not provided 
when PPA sells to Canadian customers: serving as importer of record, 
paying U.S. customs duties and wharfage, arranging import documents, 
and inventorying the merchandise. Finally, there is one selling 
function that PPA provides on its sales to the United States that is 
performed by SeAH for SeAH's sales through PPA to Canada, market 
research.
    As set forth in section 351.412(f) of the Department's regulations, 
a CEP offset will be granted where (1) normal value is compared to CEP 
sales, (2) normal value is determined at a more advanced LOT than the 
LOT of the CEP, and (3) despite the fact that the party has cooperated 
to the best of its ability, the data available do not provide an 
appropriate basis to determine whether the difference in LOT affects 
price comparability. Since the selling functions provided by PPA for 
SeAH's sales to the United States, after CEP adjustments are made, are 
at a marketing stage which is less advanced than for SeAH's sales to 
Canada, we preliminarily determine that sales in Canada are being made 
at a more advanced LOT than those to the U.S. Because there is only one 
level of trade

[[Page 47002]]

in Canada, the data available do not permit us to determine the extent 
to which this difference in LOT affects price comparability. Therefore, 
in accordance with section 351.412(f), we are granting SeAH a CEP 
offset. To calculate this offset, we deducted indirect selling expenses 
from NV to the extent of U.S. indirect selling expenses.

Currency Conversion

    We made currency conversions based on the exchange rates in effect 
on the dates of the U.S. sales, as certified by the Federal Reserve 
Bank, in accordance with section 773A(a) of the Act.

Preliminary Results of Review

    We preliminarily determine that the following dumping margin 
exists:

------------------------------------------------------------------------
                                                                Margin
            Manufacturer/exporter               Time period    (percent)
------------------------------------------------------------------------
SeAH Steel Corporation......................  8/1/1999-7/31/        1.54
                                                        2000
------------------------------------------------------------------------

    We will disclose to any party to the proceeding calculations 
performed in connection with these preliminary results of review, 
within five days after the date of the publication of the preliminary 
results of review. See 19 CFR 351.224(b). Interested parties may submit 
case briefs within 30 days of the date of publication of this notice in 
accordance with 19 CFR 351.309(c)(1)(ii). Rebuttal briefs, which must 
be limited to issues raised in the case briefs, may be filed not later 
than five days after the time limit for filing the case briefs. See 19 
CFR 351.309(d). Any interested party may request a hearing within 30 
days of publication of these preliminary results. The hearing, if 
requested, will be held two days after the scheduled date for 
submission of rebuttal briefs unless otherwise notified by the 
Department. Unless extended under section 751(a)(3)(A) of the Act, 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, not later than 120 days after the date of publication of 
this notice.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Upon completion 
of this review, the Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of OCTG from Korea entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided for by 
section 751(a)(2)(C) of the Act: (1) for SeAH, the cash deposit rate 
will be the rate established in the final results of this review; (2) 
for previously reviewed or investigated companies not listed above, the 
cash deposit rate will be the company-specific rate established 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 subject merchandise; and (4) for all other producers and/or 
exporters of this merchandise, the cash deposit rate shall be the rate 
established in the LTFV investigation, which is 12.17 percent. See 
Final Determination of Sales at Less Than Fair Value: Oil Country 
Tubular Goods from Korea, 60 FR 33561 (June 28, 1995).
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice 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. 1677(f)(i)(1)).

    Dated: August 31, 2001.
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 01-22656 Filed 9-7-01; 8:45 am]
BILLING CODE 3510-DS-P