[Federal Register Volume 69, Number 66 (Tuesday, April 6, 2004)]
[Notices]
[Pages 18049-18052]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-7806]


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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-489-501]


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

AGENCY: Import Administration, International Trade Administration, U.S. 
Department of Commerce.
SUMMARY: In response to a request by domestic interested parties, the 
Department of Commerce (the Department) is conducting an administrative 
review of the antidumping duty order on certain welded carbon steel 
pipe and tube (welded pipe and tube) from Turkey. This review covers 
one producer/exporter of the subject merchandise, The Borusan Group 
(Borusan). We preliminarily determine that Borusan made sales below 
normal value (NV). If these preliminary results are adopted in our 
final results, we will instruct U.S. Customs and Border Protection 
(CBP) to assess antidumping duties based on the difference between the 
export price (EP) and the NV.

EFFECTIVE DATE: April 6, 2004.

FOR FURTHER INFORMATION CONTACT: Martin Claessens or Erin Begnal, at 
(202) 482-5451 or (202) 482-1442, respectively; AD/CVD Enforcement 
Office 5, Group II, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On May 15, 1986, the Department published in the Federal Register 
the antidumping duty order on welded pipe and tube from Turkey (51 FR 
17784). On May 1, 2003, the Department published a notice of 
opportunity to request an administrative review of this order. See 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity to Request Administrative Review, 68 FR 
23281 (May 1, 2003). On May 30, 2003, in accordance with 19 CFR 
351.213(b), interested parties Allied Tube & Conduit Corporation, IPSCO 
Tubulars, Inc., and Wheatland Tube Company requested a review of 
Borusan.
    On July 1, 2003, the Department published a notice of initiation of 
administrative review of the antidumping duty order on welded pipe and 
tube from Turkey, covering the period May 1, 2002, through April 30, 
2003 (68 FR 39055). On January 6, 2004 the Department extended the 
deadline for the preliminary results until no later than March 31, 
2004. See Certain Welded Carbon Steel Pipe and Tube from Turkey: 
Extension of the Time Limit for the Preliminary Results of Antidumping 
Duty Administrative Review (69 FR 628). From March 1 through March 12, 
2004, we conducted sales and cost verifications of Borusan's 
questionnaire response.

Scope of the Review

    The products covered by this order include circular welded non-
alloy steel pipes and tubes, of circular cross-section, not more than 
406.4 millimeters (16 inches) in outside diameter, regardless of wall 
thickness, surface finish (black, or galvanized, painted), or end 
finish (plain end, beveled end, threaded and coupled). Those pipes and 
tubes are generally known as standard pipe, though they may also be 
called structural or mechanical tubing in certain applications. 
Standard pipes and tubes are intended for the low pressure conveyance 
of water, steam, natural gas, air, and other liquids and gases in 
plumbing and heating systems, air conditioner units, automatic 
sprinkler systems, and other related uses. Standard pipe may also be 
used for light load-bearing and mechanical applications, such as for 
fence tubing,

[[Page 18050]]

and for protection of electrical wiring, such as conduit shells.
    The scope is not limited to standard pipe and fence tubing, or 
those types of mechanical and structural pipe that are used in standard 
pipe application. All carbon steel pipes and tubes within the physical 
description outlined above are included in the scope of this review, 
except for line pipe, oil country tubular goods, boiler tubing, cold-
drawn or cold-rolled mechanical tubing, pipe and tube hollows for 
redraws, finished scaffolding, and finished rigid conduit.
    Imports of these products are currently classifiable under the 
following Harmonized Tariff Schedule of the United States (HTSUS) 
subheadings: 7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 
7306.30.50.40, 7306.30.50.55, 7306.30.50.85, and 7306.30.50.90. 
Although the HTSUS subheadings are provided for convenience and customs 
purposes, our written description of the scope of this proceeding is 
dispositive.

Verification

    As provided in sections 782(i)(3) of the Tariff Act of 1930, as 
amended (the Act), we verified the information provided by Borusan. We 
used standard verification procedures, including on-site inspection of 
the respondent producer's facilities and examination of relevant sales 
and financial records.

Product Comparisons

    We compared the EP to the NV, as described in the Export Price and 
Normal Value sections of this notice. Because Turkey's economy 
experienced high inflation during the period of review (POR) 
(approximately 35 percent), as is Department practice, we limited our 
comparisons of U.S. sales to comparison-market sales made during the 
same month in which the U.S. sale occurred and did not apply our ``90/
60 contemporaneity rule'' (see, e.g., Notice of Final Results and 
Partial Rescission of Antidumping Duty Administrative Review: Certain 
Pasta From Turkey, 63 FR 68429, 68430 (December 11, 1998). This 
methodology minimizes the extent to which calculated dumping margins 
are overstated or understated due solely to price inflation that 
occurred during the time between the U.S. and the home-market sales. We 
first attempted to compare products sold in the U.S. and home markets 
that were identical with respect to the following characteristics: 
grade, diameter, wall thickness, finish, and end finish. Where there 
was not an identical comparison, we compared U.S. products with the 
most similar merchandise sold in the home market based on the 
characteristics listed above, in that order of priority.

Export Price

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

Normal Value

A. Selection of Comparison Market

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

B. Cost of Production Analysis

    Because the Department disregarded sales below the cost of 
production (COP) in the last completed review of Borusan, we had 
reasonable grounds to believe or suspect that sales of the foreign like 
product under consideration for the determination of NV in this review 
may have been made at prices below the COP as provided by section 
773(b)(2)(A)(ii) of the Act. Therefore, pursuant to section 773(b)(1) 
of the Act, we initiated a COP investigation of sales by Borusan in the 
home market. (See Notice of Final Results of Antidumping Duty 
Administrative Review: Certain Welded Carbon Steel Pipes and Tubes From 
Turkey (Final Results), 65 FR 37116 (June 13, 2000)).
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated the 
COP based on the sum of Borusan's costs of materials and fabrication 
employed in producing the foreign like product, plus selling, general, 
and administrative expenses (SG&A) and the cost of all expenses 
incidental to packing and preparing the foreign like product for 
shipment.
    In order to avoid the distortive effect of inflation on our 
comparison of costs and prices, we requested that Borusan submit 
monthly production costs incurred during each month of the POR. We 
calculated a POR-average cost for each product, then deflated that POR-
average for each product back to every month to take into account 
inflation. To do this, we indexed the reported monthly costs of 
manufacturing (COM) during the POR to the final month of the POR using 
the wholesale price index for Turkey from the International Financial 
Statistics, published by the International Monetary Fund, and 
calculated a POR-average COM for each product. We then restated the 
POR-average COM to the inflation level of each month and calculated 
monthly COP and constructed value (CV) for each product (see, e.g., 
Certain Steel Concrete Reinforcing Bars from Turkey; Final Results, 
Rescission of Antidumping Duty Administrative Review in Part, and 
Determination Not to Revoke in Part, 68 FR 23972 (September 9, 2003) as 
explained in Certain Steel Concrete Reinforcing Bars from Turkey; 
Preliminary Results of Antidumping Duty Administrative Review and 
Notice of Intent Not to Revoke in Part 68 FR 53127 (May 6, 2003)). To 
obtain a Borusan Group general and adminstrative (G&A) expense factor, 
we used the company-wide cost information from the two Borusan Group 
producers involved in the production of the subject merchandise and the 
foreign like product. We applied the G&A and interest expense rates to 
the monthly indexed COM.
2. Test of Comparison Market Sales Prices
    We compared the indexed weight-averaged COP figures to home-market 
sales of the foreign like product as called for by section 773(b) of 
the Act, in order to determine whether these sales had been made at 
prices below the COP. On a product-specific basis, we compared the COP 
to the home-market prices, less any applicable movement charges, 
rebates, discounts, packing, and direct selling expenses.

[[Page 18051]]

3. Results of the COP Test
    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of the respondent's sales of a given product were at prices 
less than the COP, we do not disregard any below-cost sales of that 
product because we determine that the below-cost sales were not made in 
``substantial quantities.'' To avoid the distortive effects of high 
inflation, we compared the price for each CONNUM to its COP in the same 
month. We found that, for certain products, more than 20 percent of 
Borusan's home market sales were sold at prices below the COP. Further, 
we did not find that the prices for these sales provided for the 
recovery of costs within a reasonable period of time. We therefore 
excluded these sales from our analysis and used the remaining above-
cost sales as the basis for determining NV, in accordance with section 
773(b)(1) of the Act.

C. Calculation of NV Based on Comparison Market Prices

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

Arm's-Length Sales

    We included in our analysis Borusan's home-market sales to 
affiliated customers only where we determined that such sales were made 
at arm's-length prices, i.e., at prices comparable to prices at which 
Borusan sold identical merchandise to unrelated customers. To test 
whether the sales to affiliates were made at arm's-length prices, we 
compared the starting prices of sales to affiliated and unaffiliated 
customers net of all movement charges, direct selling expenses, 
discounts, and packing. Where the price to that affiliated party was, 
on average, within a range of 98 to 102 percent of the price of the 
same or comparable merchandise sold to the unaffiliated parties we 
determined that the sales made to the affiliated party were at arm's 
length. See Modification Concerning Affiliated Party Sales in the 
Comparison Market, 67 FR 69186 (November 15, 2002).

Level of Trade

    As set forth in section 773(a)(1)(B)(i) of the Act and in the 
Statement of Administrative Action (SAA) accompanying the Uruguay Round 
Agreements Act, at 829-831 (see H.R. Doc. No. 316, 103d Cong., 2d Sess. 
829-831 (1994)), to the extent practicable, the Department calculates 
NV based on sales at the same level of trade (LOT) as the U.S. sales 
(either EP or CEP). When the Department is unable to find sale(s) in 
the comparison market at the same LOT as the U.S. sale(s), the 
Department may compare sales in the U.S. and foreign markets at 
different LOTs. The NV LOT is that of the starting-price sales in the 
home market. To determine whether home-market sales are at a different 
LOT than U.S. sales, we examine stages in the marketing process and 
selling functions along the chain of distribution between the producer 
and the unaffiliated customer. If the comparison-market sales are at a 
different LOT and the differences affect price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act.
    In implementing these principles, we examined information from the 
respondent regarding the marketing stages involved in the reported 
home-market and EP sales, including a description of the selling 
activities performed by Borusan for each channel of distribution. 
Consistent with the prior review of this respondent for the period 
1998-1999, we determined that with respect to Borusan's sales, there 
were two home market LOTs and one U.S. LOT (i.e., the EP LOT). See 
Final Results, 65 FR 37116 (June 13, 2000).
    For home-market sales, we found that Borusan's back-to-back sales 
by affiliated resellers and mill-direct sales comprised one LOT, and 
Borusan's inventory sales by affiliated resellers warranted a separate 
LOT. Back-to-back sales by affiliated resellers are sales by Borusan 
through an affiliated selling agent. Such sales are very similar to 
mill-direct sales, however the affiliated agent arranges for freight. 
The affiliated agent does not take possession of the merchandise; it is 
transferred directly from the mill to the final customer. For mill-
direct sales, Borusan provided customer advice, product information and 
technical services, warranty services, and advertising. For back-to-
back sales by affiliated resellers, the resellers engage in marketing 
activities and make freight arrangements, and warranty services are 
provided by the mill. For inventory sales by affiliated resellers, the 
resellers have a sales staff that sells Borusan products out of the 
reseller's warehouse. Those resellers maintain such warehouses, provide 
product information, and customer advice. Warranty services for these 
sales were provided by the mill.
    Besides the large difference of warehousing expenses for Borusan's 
inventory sales by affiliated resellers, with back-to-back and mill-
direct sales Borusan transfers the title of the merchandise directly 
and immediately to the first unaffiliated customer. Borusan also 
provides discounts for both mill-direct and back-to-back sales, but 
provides only very limited discounts for inventory sales.
    Borusan's U.S. sales were made at only one LOT. The selling 
functions for U.S. sales included customer advice and product 
information, warranty services, and freight and delivery arrangements. 
Borusan's sales to the United States were not made out of warehouses. 
This LOT is most similar to the first LOT in the home market (mill-
direct and back-to-back sales).
    Where possible, we compared U.S. sales to sales at the identical 
home-market LOT--mill-direct sales and back-to-back affiliated reseller 
sales. If no match was available at the same LOT, we compared sales at 
the U.S. LOT to sales at the second home-market LOT.
    To determine whether a LOT adjustment was warranted, we examined, 
on a monthly basis, the

[[Page 18052]]

prices of comparable product categories, net of all adjustments, 
between sales at the two home-market LOTs we had designated. We found a 
pattern of consistent price differences between sales at these LOTs.
    In making the LOT adjustment, we calculated the difference in 
monthly weight-averaged prices between the two home-market LOTs. Where 
U.S. sales were compared to home-market sales at a different LOT, we 
adjusted the home-market price by the amount of this calculated 
difference.

Currency Conversion

    The Department's preferred source for daily exchange rates is the 
Federal Reserve Bank. However, the Federal Reserve Bank does not track 
or publish exchange rates for the Turkish lira. Therefore, we made 
currency conversions based on the daily exchange rates from the Dow 
Jones Business Information Services.
    Section 773A(a) directs the Department to use a daily exchange rate 
in order to convert foreign currencies into U.S. dollars, unless the 
daily rate involves a ``fluctuation.'' It is the Department's practice 
to find that a fluctuation exists when the daily exchange rate differs 
from a benchmark rate by 2.25 percent. The benchmark rate is defined as 
the rolling average of the rates for the past 40 business days. When we 
determine that a fluctuation existed, we generally utilize the 
benchmark rate instead of the daily rate, in accordance with 
established practice.
    When the rate of domestic price inflation is significant, as it is 
in this case, it is important that we use as a basis for NV home-market 
prices that are as contemporaneous as possible with the date of the 
U.S. sale. This is to minimize the extent to which calculated dumping 
margins are overstated or understated due solely to price inflation 
that occurred in the time between the U.S. and the home market sales. 
For this reason, as discussed above, we are comparing home-market and 
U.S. sales in the same month. For the same reason, we have used the 
daily exchange rates for currency conversion purposes. See, e.g., 
Certain Porcelain on Steel Cookware from Mexico: Final Results of 
Antidumping Duty Administrative Review, 62 FR 42496, 42503 (August 7, 
1997) and Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Pasta from Turkey, 61 FR 30309 (June 14, 1996).

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following margin exists for the period May 1, 2002, through April 30, 
2003:

------------------------------------------------------------------------
                                                                 Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Borusan Group................................................       1.78
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See section 351.224(b) of the Department's regulations. 
Interested parties are invited to comment on the preliminary results. 
Interested parties may submit case briefs within 30 days of the date of 
publication of this notice. Rebuttal briefs, limited to issues raised 
in the case briefs, may be filed no later than 37 days after the date 
of publication of this notice. Parties who submit arguments are 
requested to submit with each argument: (1) A statement of the issue, 
(2) a brief summary of the argument, 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 a diskette. Any interested party may 
request a hearing within 30 days of publication of this notice. See 
section 351.310(c) of the Department's regulations. If requested, a 
hearing will be held 44 days after the publication of this notice, or 
the first workday thereafter. The Department will publish a notice of 
the final results of this administrative review, which will include the 
results of its analysis of issues raised in any written comments or 
hearing, within 120 days from publication of this notice.

Assessment

    Pursuant to section 351.212(b) of the Department's regulations, the 
Department calculated an assessment rate for each importer of subject 
merchandise. Upon completion of this review, the Department will 
instruct CBP to assess antidumping duties on all entries of subject 
merchandise by those importers. We have calculated each importer's duty 
assessment rate based on the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total calculated 
entered value of examined sales. Where the assessment rate is above de 
minimis, the importer-specific rate will be assessed uniformly on all 
entries made during the POR.

Cash Deposit Requirements

    The following cash deposit rates will be effective upon publication 
of the final results of this administrative review for all shipments of 
welded pipe and tube from Turkey entered, or withdrawn from warehouse, 
for consumption on or after the publication date, as provided by 
section 751(a)(1) of the Act: (1) The cash deposit rate for the company 
listed above will be the rate established in the final results of this 
review, except if the rate is less than 0.5 percent and, therefore, de 
minimis, the cash deposit will be zero; (2) for previously reviewed or 
investigated companies not listed above, the cash deposit rate will 
continue to be the company-specific rate published for the most recent 
period; (3) if the exporter is not a firm covered in this review, a 
prior review, or the less-than-fair-value (LTFV) investigation, but the 
manufacturer is, the cash deposit rate will be the rate established for 
the most recent period for the manufacturer of the merchandise; and (4) 
if neither the exporter nor the manufacturer is a firm covered in this 
or any previous review or the LTFV investigation conducted by the 
Department, the cash deposit rate will be 14.74 percent, the ``All 
Others'' rate established in the LTFV investigation.
    These cash deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under section 351.402(f)(2) of the Department's 
regulations 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 determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: March 31, 2004.
Jeffrey A. May,
Acting Assistant Secretary for Import Administration.
[FR Doc. 04-7806 Filed 4-5-04; 8:45 am]
BILLING CODE 3510-DS-P