[Federal Register Volume 68, Number 193 (Monday, October 6, 2003)]
[Notices]
[Pages 57667-57670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25282]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-832 and A-489-812]


Notice of Initiation of Antidumping Investigations: Light-Walled 
Rectangular Pipe and Tube from Mexico and Turkey

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

ACTION: Initiation of Antidumping Investigations.

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EFFECTIVE DATE: October 6, 2003.

FOR FURTHER INFORMATION CONTACT: Maisha Cryor (Mexico) at 202-482-5831; 
Mark Manning (Turkey) at 202-482-5253 or Ronald Trentham at 202-482-
6320, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230.

SUPPLEMENTARY INFORMATION:

Initiation of Investigations

The Petition

    On September 9, 2003, the Department of Commerce (the Department) 
received a petition filed in proper form by California Steel and Tube; 
Hannibal Industries, Inc.; Leavitt Tube Company, LLC; Maruichi American 
Corporation; Northwest Pipe Company; Searing Industries, Inc.; Vest 
Inc.; and Western Tube and Conduit Corporation (collectively, the 
petitioners). See Letter from Schagrin Associates to Secretary Evans of 
the Department and Secretary Abbott of the U.S. International Trade 
Commission (ITC), ``Petition for the Imposition of Antidumping Duties: 
Light-Walled Rectangular Pipe and Tube from Mexico and Turkey'' 
(September 9, 2003) (Petition). The petitioners are domestic producers 
of light-walled rectangular (LWR) pipe and tube products. In accordance 
with section 732(b) of the Tariff Act of 1930, as amended (the Act), 
the petitioners allege that imports of LWR pipe and tube from Mexico 
and Turkey are being, or are likely to be, sold in the United States at 
less-than-fair value (LTFV) within the meaning of section 731 of the 
Act, and that such imports are materially injuring, or are threatening 
to materially injure an industry in the United States.
    The Department issued a questionnaire to the petitioners on 
September 12, 2003, to clarify certain aspects of the Petition. The 
petitioners responded with the requested supplemental information on 
September 22, 2003. On September 23, 2003, two Mexican producers, and 
two U.S. importers of Mexican LWR pipe and tube (collectively, the 
Mexican industry), filed a submission in which they argued that the 
petitioners have not adequately established that they represent over 50 
percent of the U.S. domestic industry. The Department issued a second 
questionnaire to the petitioners on September 24, 2003. The 
petitioners, on September 26, 2003, responded to the Department's 
second questionnaire and, in addition, provided rebuttal comments 
concerning the Mexican industry's allegations. On September 26 and 29, 
2003, the Mexican industry responded to the petitioners' September 22, 
2003 rebuttal comments and reiterated the arguments made in its 
September 23, 2003 submission, respectively.
    After reviewing the contents of the Petition and the two amendments 
provided by the petitioners, the Department finds that the petitioners 
filed the Petition on behalf of the domestic industry because they are 
interested parties as defined in section 771(9)(C) of the Act, and they 
have demonstrated sufficient industry support with respect to the 
investigations they are presently seeking. See, ``Determination of 
Industry Support for the Petitions,'' below.

[[Page 57668]]

Period of Investigation

    The period of investigation (POI) for these cases will be July 1, 
2002, through June 30, 2003. See 19 CFR 351.204(b)(1).

Scope of Investigations

    The merchandise covered by these investigations are LWR pipe and 
tube from Mexico and Turkey, which are welded carbon-quality pipe and 
tube of rectangular (including square) cross-section, having a wall 
thickness of less than 0.156 inch. These LWR pipe and tube have 
rectangular cross sections ranging from 0.375 x 0.625 inches to 2 x 6 
inches, or square cross sections ranging from 0.375 to 4 inches, 
regardless of specification. LWR pipe and tube are currently 
classifiable under item number 7306.60.5000 of the Harmonized Tariff 
System of the United States (HTSUS). The HTSUS item number is provided 
for convenience and customs purposes only. The written product 
description of the scope is dispositive.
    The term ``carbon-quality'' applies to products in which (i) iron 
predominates, by weight, over each of the other contained elements, 
(ii) the carbon content is 2 percent or less, by weight, and (iii) none 
of the elements listed below exceeds the quantity, by weight, 
respectively indicated: 1.80 percent of manganese, or 2.25 percent of 
silicon, or 1.00 percent of cooper, or 0.50 percent of aluminum, or 
1.25 percent of chromium, or 0.30 percent of cobalt, or 0.40 percent of 
lead, or 1.25 percent of nickle, or 0.30 percent of tungsten, or 0.10 
percent of molybdenum, or 0.10 percent of niobium (also called 
columbium), or 0.15 percent of vanadium, or 0.15 percent of zirconium.
    As discussed in the preamble to the Department's regulations, we 
are setting aside a period for parties to raise issues regarding 
product coverage. See Antidumping Duties; Countervailing Duties; Final 
Rule, 62 FR 27296, 27323 (May 19, 1997). The Department encourages all 
interested parties to submit such comments within 20 days of 
publication of this notice. Comments should be addressed to Import 
Administration's Central Records Unit, Room 1870, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230. This period of scope consultations is intended to provide the 
Department with ample opportunity to consider all comments and consult 
with parties prior to the issuance of the preliminary determinations.

Determination of Industry Support for the Petition

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that the Department's industry support determination, which is 
to be made before the initiation of the investigation, be based on 
whether a minimum percentage of the relevant industry supports the 
petition. A petition meets this requirement if the domestic producers 
or workers who support the petition account for: (1) at least 25 
percent of the total production of the domestic like product; and (2) 
more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act 
provides that, if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the Department shall: (1) poll 
the industry or rely on other information in order to determine if 
there is support for the petition, as required by subparagraph (A), or 
(2) determine industry support using a statistically valid sampling 
method.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether a 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The ITC, which is responsible for determining whether 
``the domestic industry'' has been injured, must also determine what 
constitutes a domestic like product in order to define the industry. 
While both the Department and the ITC must apply the same statutory 
definition regarding the domestic like product (section 771(10) of the 
Act), they do so for different purposes and pursuant to a separate and 
distinct authority. In addition, the Department's determination is 
subject to limitations of time and information. Although this may 
result in different definitions of the like product, such differences 
do not render the decision of either agency contrary to law. See USEC, 
Inc. v. United States, 132 F. Supp. 2d 1, 8 (Ct. Int'l Trade 2001), 
citing Algoma Steel Corp. Ltd. v. United States, 688 F. Supp. 639, 642-
44 (Ct. Int'l Trade 1988) (``the ITC does not look behind ITA's 
determination, but accepts ITA's determination as to which merchandise 
is in the class of merchandise sold at LTFV'').
    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    The domestic like product defined in the Petition does not differ 
from the scope of the investigations defined in the Scope of 
Investigations section above. The Department has no basis on the record 
to find this definition of the domestic like product to be inaccurate. 
The Department, therefore, has adopted this domestic like product 
definition. See Import Administration Antidumping Investigation 
Checklist (September 29, 2003) at 2 (Initiation Checklist) (the public 
version on file in the Central Records Unit of the Department, Room B-
099, Main Commerce Building).
    The Department has further determined that, pursuant to section 
732(c)(4)(A) of the Act, the Petition contains adequate evidence of 
industry support, and, therefore, polling is unnecessary. Information 
contained in the Petition demonstrates that the domestic producers or 
workers who support the Petition account for over 50 percent of total 
production of the domestic like product. Therefore, the domestic 
producers or workers who support the Petition account for at least 25 
percent of the total production of the domestic like product, and the 
requirements of section 732(c)(4)(A)(i) of the Act are met. See 
Initiation Checklist, at 3-4 and Attachment I. As mentioned above, the 
Department received opposition to the Petition from the Mexican 
industry. We note that the Mexican companies opposed to the petition 
are not domestic producers of LWR pipe and tube. Although we reviewed 
and analyzed the arguments made by the Mexican industry, we continue to 
find that the domestic producers or workers who support the Petition 
account for more than 50 percent of the production of the domestic like 
product produced by that portion of the industry expressing support for 
or opposition to the Petition. See Initiation Checklist, at 3 and 
Attachment I. Thus, the requirements of section 732(c)(4)(A)(ii) of the 
Act are also met.
    Accordingly, the Department determines that the Petition was filed 
on

[[Page 57669]]

behalf of the domestic industry within the meaning of section 732(b)(1) 
of the Act. Id. at 3-4.

Export Price and Normal Value

    The following are descriptions of the allegations of sales at LTFV 
upon which the Department based its decision to initiate these 
investigations. The sources of data for the deductions and adjustments 
relating to U.S. and foreign market prices and cost of production (COP) 
and constructed value (CV) have been accorded treatment as business 
proprietary information. The petitioners' sources and methodology are 
discussed in greater detail in the business proprietary version of the 
Petition and in the Initiation Checklist. Should the need arise to use 
any of this information as facts available under section 776 of the Act 
in our preliminary or final determinations, we may re-examine this 
information and revise the margin calculations, if appropriate.

Mexico

Export Price
    The petitioners calculated export price (EP) through two different 
methods, using price quotes and the average unit value (AUV) for LWR 
pipe and tube imported from Mexico based upon IM-145 import data for 
the anticipated POI provided by the Bureau of Customs and Border Patrol 
(BCBP). First, the petitioners identified two sizes of LWR pipe and 
tube commonly sold in the U.S. market. The petitioners submitted four 
price quotes, two for each size of LWR pipe and tube, obtained from 
U.S. distributors of Mexican products, identical in size to the home 
market products, acquired from Mexican producers. The petitioners 
calculated net U.S. prices by deducting foreign inland freight, U.S. 
import duties, and U.S. inland freight. The petitioners stated that 
packing charges are included in both the home market and the United 
States. However, because home market packing is not significantly 
different from packing for export to the U.S. market, the petitioners 
did not make any adjustments for packing when calculating the margins. 
See Initiation Checklist at 6-7.
    Second, the petitioners calculated EP using the AUV for LWR pipe 
and tube imported from Mexico. The petitioners did not deduct 
international freight because the AUV provides the free alongside ship 
(FAS) value at the foreign port. The petitioners deducted foreign 
inland freight from the AUV to calculate EP. Id.
Normal Value
    To calculate normal value (NV), the petitioners provided two price 
quotes, one for each size of LWR pipe and tube, obtained through 
foreign market research regarding products manufactured by a major 
Mexican producer named in the Petition and offered for sale to 
unaffiliated Mexican purchasers. The petitioners calculated net Mexican 
prices by deducting inland freight because the price quote was for 
delivery to a specific location in Mexico. See Initiation Checklist at 
7-8; see also Mexico Export Price section infra for discussion of 
packing charges.
    Based on comparisons of EP (method derived from price quotes) to 
NV, calculated in accordance with section 773(a) of the Act, the 
estimated dumping margins for LWR pipe and tube from Mexico range from 
48.42 percent to 83.86 percent.

Turkey

Export Price
    The petitioners calculated EP for Turkey using two different 
methods. First, as with Mexico, the petitioners identified two sizes of 
LWR pipe and tube commonly sold in the U.S. market. The petitioners 
submitted four price quotes, two for each size of LWR pipe and tube, 
obtained from U.S. distributors of Turkish products, identical in size 
to the home market products, acquired from producers in Turkey. The 
petitioners calculated net U.S. prices by deducting international 
freight and U.S. import duties. The petitioners stated that packing 
charges are included in both the home market and the United States. 
However, because home market packing is not significantly different 
from packing for export to the U.S. market, the petitioners did not 
make any adjustments for packing when calculating the margins. See 
Initiation Checklist at 8-9.
    The petitioners also calculated EP using the AUV for LWR pipe and 
tube imported from Turkey, based upon IM-145 import data for the 
anticipated POI provided by BCBP. The petitioners did not deduct 
international freight because the AUV provides the FAS value at the 
foreign port. Id.
Normal Value
    To calculate NV, the petitioners obtained through foreign market 
research two price quotes, one for each size of LWR pipe and tube, from 
resellers in Turkey regarding products manufactured by a major Turkish 
producer named in the Petition. The petitioners calculated net Turkish 
prices by deducting the average discount offered by the Turkish 
resellers. See Initiation Checklist at 9-11; see also Export Price 
section infra for discussion of packing charges.
    Although the petitioners provided margins based on a price-to-price 
and price-to-AUV comparisons, the petitioners also provided information 
demonstrating reasonable grounds to believe or suspect that sales of 
LWR pipe and tube in the home market were made at prices below the 
fully absorbed COP, within the meaning of section 773(b) of the Act, 
and requested that the Department conduct a country-wide sales-below-
cost investigation. See Initiation of Cost Investigation section infra 
for further discussion.
    Pursuant to section 773(b)(3) of the Act, COP consists of the cost 
of manufacturing (COM); selling, general, and administrative expenses 
(SG&A); financial expenses; and packing expenses. The petitioners 
calculated COM based on their own production experience, adjusted for 
known differences between costs incurred to produce LWR pipe and tube 
in the United States and in Turkey using publicly available data. We 
corrected an error in converting CV from dollars per metric ton (MT) to 
dollars per hundred feet for one of the products. To calculate SG&A and 
financial expenses, the petitioners relied upon amounts reported in the 
2002 financial statements of Borusan Holding A.S., which is the parent 
company of Mannesman Boru, a principal producer of the subject 
merchandise in Turkey. Packing costs were omitted from the COP 
calculations. Based upon a comparison of the prices of the foreign like 
product in the home market to the calculated COP of the product, we 
find reasonable grounds to believe or suspect that sales of the foreign 
like product were made below the COP, within the meaning of section 
773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a 
country-wide cost investigation.
    Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the 
petitioners also calculated a NV for sales in Turkey based on CV. The 
petitioners calculated CV using the same COM, SG&A, and financial 
expense figures used to compute the Turkish home market costs. 
Consistent with 773(e)(2) of the Act, the petitioners included in CV an 
amount for profit. For profit, the petitioners relied upon amount 
reported in the Turkish LWR pipe & tube producer's 2002 financial 
statements which was zero because the producer experienced a loss.

[[Page 57670]]

    Based on comparisons of EP (method derived from price quotes) to 
CV, calculated in accordance with section 773(a) of the Act, the 
estimated dumping margins for LWR pipe and tube from Turkey range from 
27.04 percent to 34.89 percent. We note that these margins are 
conservative since the petitioners did not include packing in the CV 
calculation.

Initiation of Cost Investigation

    As noted above, pursuant to section 773(b) of the Act, the 
petitioners provided information demonstrating reasonable grounds to 
believe or suspect that sales in the home market of Turkey were made at 
prices below the fully absorbed COP and, accordingly, requested that 
the Department conduct a country-wide sales-below-COP investigation in 
connection with the requested antidumping investigation for this 
country. The Statement of Administrative Action (SAA), submitted to the 
U.S. Congress in connection with the interpretation and application of 
the URAA, states that an allegation of sales below COP need not be 
specific to individual exporters or producers. SAA, H.R. Doc. No. 103-
316 at 833 (1994). The SAA states that ``Commerce will consider 
allegations of below-cost sales in the aggregate for a foreign country, 
just as Commerce currently considers allegations of sales at less than 
fair value on a country-wide basis for purposes of initiating an 
antidumping investigation.'' Id.
    Further, the SAA provides that ``new section 773(b)(2)(A) retains 
the current requirement that Commerce have 'reasonable grounds to 
believe or suspect' that below cost sales have occurred before 
initiating such an investigation. 'Reasonable grounds' ... exist when 
an interested party provides specific factual information on costs and 
prices, observed or constructed, indicating that sales in the foreign 
market in question are at below-cost prices.'' Id. Based upon the 
comparison of the adjusted prices from the petition for the 
representative foreign like products to their COPs, we find the 
existence of ``reasonable grounds to believe or suspect'' that sales of 
these foreign like products in Turkey were made below their respective 
COPs within the meaning of section 773(b)(2)(A)(i) of the Act. 
Accordingly, the Department is initiating the requested country-wide 
cost investigation.

Fair Value Comparisons

    Based on the data provided by the petitioners, the Department finds 
that there is reason to believe that imports of LWR pipe and tube from 
Mexico and Turkey are being, or are likely to be, sold at LTFV.

Allegations and Evidence of Material Injury and Causation

    With respect to Mexico and Turkey, the petitioners allege the U.S. 
industry producing the domestic like product is being materially 
injured, or is threatened with material injury, by reason of the 
individual and cumulated imports of the subject merchandise sold at 
less than NV.
    The petitioners contend that the industry's injured condition is 
evident in examining market share, production, shipments, capacity 
utilization, lost sales, profit and employment. See Petition at 21-25 
and Exhibits 14-29. The petitioners assert that their share of the 
market has declined from 2000 to 2002. See Petition at 21-22 and 
Exhibits 18-19. Finally, the petitioners note that one LWR pipe and 
tube manufacturer went out of business altogether in 2002, thereby 
taking significant domestic LWR pipe and tube production out of the 
market. See Petition at 23. For a full discussion of the allegations 
and evidence of material injury, see Initiation Checklist at Attachment 
II.

Initiation of Antidumping Investigations

    Based on our examination of the Petition covering LWR pipe and tube 
from Mexico and Turkey, the Department finds it meets the requirements 
of section 732 of the Act. Therefore, we are initiating antidumping 
investigations to determine whether imports of LWR pipe and tube from 
Mexico and Turkey are being, or are likely to be, sold in the United 
States at LTFV. Unless this deadline is extended pursuant to section 
733(b)(1)(A) of the Act, we will make our preliminary determinations no 
later than 140 days after the date of this initiation.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the Petition has been provided to representatives of 
the governments of Mexico and Turkey. We will attempt to provide a copy 
of the public version of the Petition to each exporter named in the 
Petition, as provided in section 19 CFR 351.203(c)(2).

ITC Notification

    The ITC will preliminarily determine no later than October 24, 
2003, whether there is reasonable indication that imports of LWR pipe 
and tube from Mexico and Turkey are causing, or threatening, material 
injury to a U.S. industry. A negative ITC determination for any country 
will result in the investigation being terminated with respect to that 
country; otherwise, these investigations will proceed according to 
statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: September 29, 2003.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 03-25282 Filed 10-3-03; 8:45 am]
BILLING CODE 3510-DS-S