[Federal Register Volume 69, Number 170 (Thursday, September 2, 2004)]
[Notices]
[Pages 53677-53681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2045]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-832]


Light-Walled Rectangular Pipe and Tube From Mexico: Notice of 
Final Determination of Sales at Less Than Fair Value

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

ACTION: Notice of final determination of sales at less than fair value.

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EFFECTIVE DATE: September 2, 2004.

FOR FURTHER INFORMATION CONTACT: Magd Zolak (LM) at (202) 482-4162; 
Richard Johns (Galvak/Hylsa) at (202) 482-2305, Crystal Crittenden 
(Regiomontana) at (202) 482-0989, and Maisha Cryor (Prolamsa) at (202) 
482-5831; Office of AD/CVD Enforcement, Office IV, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230.

SUPPLEMENTARY INFORMATION:

Final Determination

    The Department of Commerce (the Department) has determined that 
light-walled rectangular pipe and tube (LWRPT) from Mexico is being 
sold, or is likely to be sold, in the United States at less than fair 
value (LTFV), as provided in section 733 of the Tariff Act of 1930, as 
amended (the Act). The estimated margins of sales at LTFV are shown in 
the Final Determination of Investigation section of this notice.

Case History

    On April 13, 2004, the Department published the preliminary 
determination of sales at LTFV in the antidumping duty investigation of 
LWRPT from Mexico. See Light-Walled Rectangular Pipe and Tube from 
Mexico; Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination, 69 FR 19400 (April 13, 
2004) (Preliminary Determination). Since the Preliminary Determination, 
the following events have occurred.
    The Department received a timely supplemental questionnaire 
response from Perfiles y Herrajes LM, S.A. de CV (LM) on April 6, 2004, 
and Regiomontana de Perfiles Y Tubos, S.A. de C.V. (Regiomontana) on 
April 8, 2004. The Department received a post preliminary determination 
submission from Galvak, S.A. de C.V. and Hylsa, S.A. de C.V. (Galvak/
Hylsa) on April 12,

[[Page 53678]]

2004. On April 14, 2004, Galvak/Hylsa submitted a ministerial error 
allegation regarding the Department's calculations in the Preliminary 
Determination. Because the alleged ministerial errors were not 
significant within the meaning of section 351.224(g)(1) of the 
Department's regulations, the Department did not issue an amended 
preliminary determination but has instead addressed the ministerial 
errors in the Changes Since the Preliminary Determination section of 
this notice. See Memorandum from Maisha Cryor, Senior International 
Trade Compliance Analyst, to Thomas F. Futtner, Acting Office Director, 
``Antidumping Duty Investigation of Light-Walled Rectangular Pipe and 
Tube from Mexico: Analysis of Ministerial Error Allegations,'' dated 
May 12, 2004. We conducted verification of the sales and cost 
questionnaire responses of the respondents LM, from April 19, 2004, 
through April 30, 2004; Galvak/Hylsa from April 19, 2004, through April 
30, 2004; Regiomontana from April 26, 2004, through May 7, 2004; and 
Productos Laminados de Monterrey, S.A. de C.V. (Prolamsa) from May 3, 
2004, through May 18, 2004. Regiomontana submitted revisions and data 
resulting from minor corrections made at verification on May 15, 2004. 
On July 26, 2004, the Department requested that Galvak/Hylsa submit new 
sales and cost databases and provided an itemized list of changes to be 
made to the data. Galvak/Hylsa complied with that request and submitted 
its post-verification databases on August 5, 2004. We gave interested 
parties an opportunity to comment on our Preliminary Determination and 
our findings at verification. On July 15, 2004, the petitioners \1\, 
LM, Galvak/Hylsa, Regiomontana, and Prolamsa submitted case briefs. On 
July 23, 2004, these parties submitted rebuttal briefs. On May 13, 
2004, Galvak submitted a request for a public hearing, but subsequently 
withdrew its request on July 21, 2004; consequently, no public hearing 
was held.
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    \1\ The petitioners in this investigation are 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).
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Period of Investigation

    The period of investigation (POI) is July 1, 2002, through June 30, 
2003. See 19 CFR 351.204(b)(1).

Scope of Investigation

    The merchandise covered by this investigation is LWRPT from Mexico, 
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 LWRPT 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. LWRPT 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 copper, 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.

Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties to 
this proceeding and to which we have responded are listed in the 
Appendix to this notice and addressed in the Memorandum from Jeffrey A. 
May, Deputy Assistant Secretary for Import Administration, to James J. 
Jochum, Assistant Secretary for Import Administration, ``Issues and 
Decision Memorandum,'' (Decision Memorandum) dated concurrently with 
this notice, which is hereby adopted by this notice. Parties can find a 
complete discussion of the issues raised in this investigation and the 
corresponding recommendations in this public memorandum which is on 
file in the Central Records Unit, room B-099, of the main Department of 
Commerce building. In addition, a complete version of the Decision 
Memorandum can be accessed directly on the Web at http://ia.ita.doc.gov.frn. The paper copy and electronic version of the 
Decision Memorandum are identical in content.

Use of Partial Adverse Facts Available

    With respect to Prolamsa, we have determined that the use of 
partial adverse facts available is warranted, in accordance with 
sections 776(a)(2)(B) and 776(b) of the Act, to calculate the dumping 
margin because the respondent did not provide information critical to 
the calculation of a dumping margin and impeded the conduct of the 
administrative review by providing information that could not be 
substantiated. These inadequacies relate to Prolamsa's sales to 
affiliated resellers. Prolamsa stated that it would not provide the 
Department with its affiliated resellers downstream sales because sales 
to its affiliated reseller were made at arm's-length. The Department 
informed Prolamsa that, pursuant to section 351.403(d) of the 
Department's regulations, it would allow the exclusion of these sales 
from Prolamsa's reported data, as long as its statements concerning the 
arm's-length nature of these sales could be substantiated. However, 
there were sales made by Prolamsa to its affiliated resellers that 
failed the arm's-length test. Therefore, the Department determined that 
partial adverse facts available should be applied to the sales that 
failed the arm's-length test because Prolamsa failed to provide 
accurate information concerning its sales to affiliated resellers. To 
address this inadequacy, we selected the highest gross unit price of 
comparable merchandise sold to another customer that passed the arm's-
length test.
    We have considered the arguments raised by petitioners and Prolamsa 
regarding this issue of partial adverse facts available and have 
addressed them in the Decision Memorandum at Comment 3. Based on our 
analysis of the parties' comments, we have determined that partial 
adverse facts available is applicable in this instance.

Verification

    As provided in section 782(i) of the Act, we verified the 
information submitted by the respondents for use in our final 
determination. We used standard verification procedures including 
examination of relevant accounting and production records, and original 
source documents provided by the respondent.

Changes Since the Preliminary Determination

    Based on our findings at verification and analysis of comments 
received, we have made certain adjustments to the margin calculations 
used in the Preliminary Determination. These adjustments are discussed 
in detail in the Decision Memorandum each respondent's respective 
calculation memoranda and are listed below:

[[Page 53679]]

    1. LM: Based on the verification of LM's responses, we made a 
revision to the calculation of the U.S. inventory carrying costs to 
account for a correction relating to the number of days in inventory 
and correct the formula used to calculate inventory carrying costs by 
deducting certain discounts from the gross unit price.
    2. LM: Based on verification findings, we revised the calculation 
of the U.S. brokerage and handling charges.
    3. LM: We noted that LM inadvertently reported certain expenses as 
warehousing expenses incurred at the factory, although these expenses 
are properly categorized as indirect selling expenses. Accordingly, for 
purposes of the final determination, we set the reported expenses for 
that warehouse to zero.
    4. LM: We deducted, when applicable, warehousing expenses, incurred 
by the remote warehouses after the merchandise left the factory, from 
home market prices. The adjustment for these warehousing expenses was 
inadvertently omitted from the Department's margin calculation in the 
preliminary determination.
    5. LM: We recalculated indirect selling expenses to reflect a 
correction relating to the indirect selling expense ratio used to 
calculate these expenses.
    6. LM: Since LM was unable during verification to sufficiently 
document its revisions of the reported charges for freight from its 
factory to certain of its warehouses, we disallowed any adjustment to 
home market prices for the freight charges relating to these 
warehouses.
    7. LM: We revised the financial expense ratio calculation to 
correctly include the monetary correction under Mexican GAAP Bulletin 
B-10, thus lowering the financial expense ratio.
    8. LM: We adjusted the G&A expense ratio calculation for the effect 
of double counting of indirect selling expenses. This adjustment had 
the effect of lowering G&A ratio.
    9. LM: We adjusted total cost of manufacturing to include the 
effects of yield loss.
    10. Prolamsa: We applied partial adverse facts available to certain 
sales from Prolamsa to affiliated resellers that failed the arm's-
length test, where information concerning downstream sales was not on 
the record of this investigation.
    11. Prolamsa: We excluded inventory carrying costs from the 
calculation of constructed export price indirect selling expenses.
    12. Prolamsa: For certain expenses, we converted the currency by 
dividing, rather than multiplying.
    13. Prolamsa: We increased the reported total cost of manufacturing 
(TOTCOM) for the unreconciled difference between Prolamsa's cost 
accounting system and the extended TOTCOM reported to the Department. 
We also increase the reported TOTCOM to include an amount for the 
expenses related to the importation of raw material i.e., freight, 
insurance, and handling charges.
    14. Galvak/Hylsa: We corrected the error in the margin calculation 
program which incorrectly converted U.S. dollar amounts into Mexican 
pesos using the exchange rate on the date of the home-market sale. The 
program incorrectly multiplied the U.S. dollar amounts by the dollar-
to-peso exchange rate instead of dividing them by the exchange rate. 
The program then converted the calculated peso amounts back into 
dollars using the weighted-average exchange rate based on the date of 
the U.S. sales.
    15. Galvak/Hylsa: We corrected the error in the margin calculation 
program which failed to convert home-market sales prices that were 
denominated in U.S. dollars into Mexican pesos when determining whether 
those sales were made at below-cost prices. Instead, the preliminary 
program incorrectly compared the U.S. dollar prices to the Mexican peso 
costs.
    16. Galvak/Hylsa: We recalculated home market credit expenses to 
exclude value added taxes.
    17. Galvak/Hylsa: We corrected a calculation error for the 
galvanizing expense variance and applied it to each of the galvanized 
products.
    18. Galvak/Hylsa: In addition to the changes we made to the 
financial expense ratio at the preliminary determination, we subtracted 
Galvak and Hylsa's packing expenses from the cost of goods sold 
denominator. We revised the ratio to include an offset in the numerator 
of the current portion of the gain on debt restructure from the parent 
company's 2002 financial statements.
    19. Galvak/Hylsa: In addition to the changes we made to the general 
and administrative expense ratio at the preliminary determination, we 
subtracted Galvak's packing expenses from the cost of goods sold 
denominator.
    20. Galvak/Hylsa: We revised the reported costs for the coils that 
were obtained from Hylsa to reflect the major input adjustment made to 
Hylsa's iron ore purchases.
    21. Galvak/Hylsa: We revised the financial expense ratio by 
including the current portion of the gain on debt restructure as an 
offset to the numerator and also subtracted Hylsa and Galvak's packing 
expenses from the denominator.
    22. Galvak/Hylsa: We revised the general and administrative expense 
ratio by adding the income for the sale of land, the gain on 
restructuring bank liability, and bonus expense to and subtracting debt 
restructuring expenses and general and administrative expenses 
attributable to affiliates from the numerator as well as subtracting 
packing expenses from the denominator.
    23. Galvak/Hylsa: We adjusted the per-unit total cost of 
manufacturing for certain control numbers to include costs that were 
mis-classified as costs related to products sold to third countries and 
not reported.
    24. Galvak/Hylsa: We revised the reported cost of iron ore obtained 
from affiliated suppliers and adjusted reported direct material costs 
to reflect the higher of the transfer price, market price, or cost of 
production in accordance with the major input rule.
    25. Regiomontana: We corrected the error in the comparison market 
calculation program which incorrectly compared theoretical quantities 
for home market sales with gross unit prices and adjustments based on 
actual quantities.
    26. Regiomontana: We recalculated credit expense for sales in the 
U.S. and home market due to minor corrections made at verification.
    27. Regiomontana: We included the cost of scrap from all production 
processes and included all corrections of errors found while preparing 
supporting documentation for the cost of scrap.
    28. Regiomontana: For the interest expense, we included the 
monetary effect from Regiomontana's financial statements and deducted 
the year end adjustment for inflation from the cost of goods sold. We 
also added the depreciation from the revaluation of fixed assets to the 
cost of goods sold.
    29. Regiomontana: We adjusted G&A expense to included the employee 
profit sharing expense and to exclude the year end adjustment for 
inflation from the cost of goods sold. We also added the depreciation 
from the revaluation of fixed assets to the cost of goods sold.
    30. Regiomontana: We included the unreconcilable difference from 
the reconciliation of Regiomontana's cost of manufacture to the 
reported cost in the RECON field.
    31. Regiomontana: We revised the per unit fabrication costs and per 
unit paint costs to reflect the first day corrections submitted by 
Regiomontana.
    32. Regiomontana: We used the direct material cost from the COP/CV 
file

[[Page 53680]]

submitted with the minor corrections on the first day of corrections.

Continuation of Suspension of Liquidation

    Pursuant to section 735(c)(1)(B) of the Act, we will instruct U.S. 
Customs and Border Protection (CBP) to continue to suspend liquidation 
of all entries of LWRPT from Mexico that are entered, or withdrawn from 
warehouse, for consumption on or after April 13, 2004, the date of 
publication of the Preliminary Determination in the Federal Register. 
We will instruct CBP to continue to require a cash deposit or the 
posting of a bond for each entry equal to the weighted-average amount 
by which the normal value exceeds the export price or constructed 
export price, where appropriate, as indicated below. These instructions 
suspending liquidation will remain in effect until further notice.

Final Determination of Investigation

    We have determined that the following weighted-average dumping 
margins exist for the period July 1, 2002, through June 30, 2003:

 
------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Manufacturer/exporter                        margin
                                                              (percent)
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Galvak, S.A. de C.V. and Hylsa, S.A. de C.V................        17.46
Perfiles y Herrajes LM, S.A. de C.V........................        14.45
Productos Laminados de Monterrey, S.A. de C.V..............         6.08
Regiomontana de Perfiles y Tubos, S.A. de C.V..............         6.36
All Others.................................................        11.23
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International Trade Commission Notification

    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (ITC) of our determination. As our final 
determination is affirmative, the ITC will determine, within 45 days, 
whether these imports are causing material injury, or threat of 
material injury, to an industry in the United States. If the ITC 
determines that material injury, or threat of injury does not exist, 
the proceeding will be terminated and all securities posted will be 
refunded or canceled. If the ITC determines that such injury does 
exist, the Department will issue an antidumping order directing CBP 
officials to assess antidumping duties on all imports of the subject 
merchandise entered, or withdrawn from warehouse for consumption, on or 
after the effective date of the suspension of liquidation.

Notification Regarding Administrative Protective Order

    This notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.305(a)(3). Timely written 
notification of the return/destruction of APO materials or conversion 
to judicial protective order is hereby requested. Failure to comply 
with the regulations and the terms of an APO is a sanctionable 
violation.

    This determination is issued and published in accordance with 
sections 735(d) and 777(i)(1) of the Act.
    Dated: August 26, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.

Appendix--Issues in Decision Memorandum

I. SALES

General Issues

    Comment 1: Whether the Department Should Deny Certain Home 
Market Billing Adjustments, Rebates and Discounts Not Allocated on a 
Product-Specific or Sale-Specific Basis.
    Comment 2: Whether the Department Properly Indicated Where Sales 
of Respondents Failed the Cost Test.

Prolamsa

    Comment 3: Whether the Department Should Apply Partial Adverse 
Facts Available (AFA) for Home Market Sales to Affiliated Resellers 
that Failed the Arm's-Length Test.
    Comment 4: Whether the Department Should Apply Partial AFA to 
Account for Unreported Sales Discovered at Verification.
    Comment 5: Whether the Department Should Exclude Pre-Primered 
LWRPT from the Scope of Any Antidumping Duty Order Issued in this 
Investigation.
    Comment 6: Whether the Department Should Make an Adjustment for 
Differences in Prolamsa's Coil Costs.
    Comment 7: Whether the Department Should Correct Certain 
Clerical Errors in its Comparison Market and Margin Programs.
    Comment 8: Whether the Department Should ``Zero'' Negative 
Dumping Margins.

Galvak/Hylsa

    Comment 9: Whether Galvak and Hylsa's U.S. Sales Should Be 
Classified as Constructed Export Price Transactions Because Galvak 
and Hylsa Were the U.S. Importers of Record.
    Comment 10: Whether Galvak and Hylsa's U.S. Sales Made Through 
an Affiliated U.S. Reseller Should be Classified as Constructed 
Export Price Transactions.
    Comment 11: Whether There Should be a Commission Offset.
    Comment 12: Whether Movement Expenses and Value-Added Taxes 
Should be Excluded from the Calculation of Credit Expense.
    Comment 13: Whether the ASTM Grade Should be Considered in the 
Department's Product Matching Criteria.
    Comment 14: Whether the Department Should Revise its Preliminary 
Level-of-Trade Analysis.
    Comment 15: Whether the Department Should Correct Minor Errors 
in its Preliminary Margin Calculation Program and in Data Submitted 
by Galvak/Hylsa.

Regiomontana

    Comment 16: Whether to Calculate Normal Value and Export Price 
Based on an Actual or Theoretical-Weight Basis.
    Comment 17: Whether the Department Correctly Calculated the 
Reconciliation of Regiomontana's Home Market Sales in Regiomontana's 
Sales Verification Report.
    Comment 18: Whether the Department Should Classify Sales Made 
Through U.S. Commissioned Selling Agents as Constructed Export Price 
Transactions.

LM

    Comment 19: Whether the Department Should Deny an Adjustment for 
Home Market Freight to the Customer for Sales from Warehouses.
    Comment 20: Whether the Department Should Deduct Home Market 
Prices For Warehousing at the Monterrey Warehouse.

II. COST OF PRODUCTION

    Comment 21: Whether the Department Should Adjust Depreciation.
    Comment 22: Whether the Department Should Account for Total 
Foreign. Exchange Gains and Losses in Interest Expense.
    Comment 23: Whether the Department Should Make a Monetary 
Correction.
    Comment 24: Whether the Department Should Use Period of 
Investigation. (POI) Data for Calculation of General and 
Administrative and Interest Expense Rates.
    Comment 25: Whether the Department Should Accept a Layered 
General and Administrative Expense Calculation.
    Comment 26: Whether a Reorganization Charge for Transfer of 
Administrative Activities to an Affiliate Should be Included as an 
Offset to General and Administrative Expenses.
    Comment 27: Whether Labor Charges for Affiliates Should be 
Included in Hylsa's General and Administrative Expenses.
    Comment 28: Whether Gain on Debt Restructuring Should be 
Included in Interest Expense.
    Comment 29: Whether Bonus Compensation Should be Included in 
Calculating Hylsa's General and Administrative Expense Ratio.
    Comment 30: Whether Certain Product Costs Were Mis-Classified.
    Comment 31: Whether the Value of Iron Ore Should Reflect the 
Higher of Transfer Price or Production Costs.
    Comment 32: Whether LM's Financial Expenses Are Overstated.
    Comment 33: Whether General and Administrative Expenses Should 
be Reduced to Correct Double Counting.

[[Page 53681]]

    Comment 34: Whether Overhead Expenses from Affiliates are 
Overstated.
    Comment 35: Whether Yield Loss Should be Adjusted.
    Comment 36: Whether Labor Costs Excluded Social Security Taxes.
    Comment 37: Whether the Total Cost of Manufacturing Should be 
Adjusted for an Unreconciled Difference.
    Comment 38: Whether Freight, Insurance, and Handling Charges 
Should be Included in Reported Costs.
    Comment 39: Whether the Department Should Correct Minor Errors 
Relating to Total Cost of Manufacturing.

 [FR Doc. E4-2045 Filed 9-1-04; 8:45 am]
BILLING CODE 3510-DS-P