[Federal Register Volume 69, Number 172 (Tuesday, September 7, 2004)]
[Notices]
[Pages 54119-54125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2081]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-485-805]


Certain Small Diameter Carbon and Alloy Seamless Standard, Line, 
and Pressure Pipe From Romania: Preliminary Results and Partial 
Rescission of Antidumping Duty Administrative Review and Preliminary 
Determination Not To Revoke in Part

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

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

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SUMMARY: In response to a request by S.C. Silcotub S.A. (Silcotub), a 
producer/exporter of subject merchandise, and in response to a request 
by United States Steel Corporation (the petitioner), the Department of 
Commerce (the Department) is conducting an administrative review of the 
antidumping duty order on certain small diameter carbon and alloy 
seamless standard, line, and pressure pipe (seamless pipe) from 
Romania. The period of review (POR) is August 1, 2002, through July 31, 
2003.
    We preliminarily find that sales have been made below normal value 
(NV). If these preliminary results are adopted in our final results of 
administrative review, we will instruct U.S. Customs and Border 
Protection (CBP) to assess antidumping duties on the subject 
merchandise that was exported by Silcotub and entered during the POR. 
Because the preliminary margin for Silcotub in this review is above de 
minimis, we also preliminarily determine not to revoke the order in 
part with respect to that company. Finally, we are rescinding the 
review of S.C. Petrotub S.A. (Petrotub) because the petitioner withdrew 
its request for a review of that company.

EFFECTIVE DATE: September 7, 2004.

FOR FURTHER INFORMATION CONTACT: David Layton at (202) 482-0371 or Erin 
Begnal at (202) 482-1442, Office of AD/CVD Enforcement, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230.

SUPPLEMENTARY INFORMATION:

Background

    On August 10, 2000, the Department published an antidumping duty 
order on certain small diameter carbon and alloy seamless standard, 
line, and pressure pipe from Romania. See Notice of Amended Final 
Determination of Sales at Less Than Fair Value and Antidumping Duty 
Order: Certain Small Diameter Carbon and Alloy Seamless Standard, Line, 
and Pressure Pipe From Romania, 65 FR 48963 (August 10, 2000). On 
August 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 45218. On August 
29, 2003, in accordance with 19 CFR 351.213(b)(2), Silcotub requested a 
review. In addition, in accordance with 19 CFR 351.222(e), Silcotub 
requested that the Department revoke the order with regard to Silcotub, 
pursuant to 19 CFR 351.222(b)(2). On September 2, 2003, the petitioner 
requested reviews of Silcotub and Petrotub, producers/exporters of 
certain small diameter carbon and alloy seamless standard, line, and 
pressure pipe from Romania.
    On September 30, 2003, the Department published a notice of 
initiation of administrative review of the antidumping duty order on 
certain small diameter carbon and alloy seamless standard, line, and 
pressure pipe from Romania, covering the period August 1, 2002, through 
July 31, 2003. Initiation of Antidumping and Countervailing Duty 
Administrative Reviews, Request for Revocation in Part and Deferral of 
Administrative Review, 68 FR 56262. On March 31, 2004, the Department 
published a notice of Extension of the Time Limit for the Preliminary 
Results of Antidumping Duty Administrative Review (69 FR 16893), 
extending the deadline for the issuance of the preliminary results by 
90 days. On July 2, 2004, the Department published a second notice of 
Extension of the Time Limit for the Preliminary Results of Antidumping 
Duty Administrative Review (69 FR 16893), extending the deadline for 
the issuance of the preliminary results until no later than August 30, 
2004. We are conducting this review under Section 751(a) of the Tariff 
Act of 1930, as amended (the Act).
    Romania's designation as a non-market-economy (NME) country 
remained in effect until January 1, 2003.\1\ Since the first five 
months of the period of review (POR) fell before Romania's graduation 
to market-economy status and the last seven months of this POR came 
after its graduation, in its antidumping questionnaire to Silcotub, 
dated November 14, 2003, the Department determined that it would treat 
Romania as an NME country from August 1, 2002, through December 31, 
2002, and a market-economy (ME) country from January 1, 2003, through 
July 31, 2003. The first part of this notice refers to the NME portion 
of the POR (NME POR) and the Department's NME methodology, and the 
second part of this notice refers to the ME portion of the POR (ME POR) 
and the Department's ME methodology. In the section of this notice 
entitled Preliminary Results of the Review, we have calculated a 
weighted-average dumping margin reflecting the margin we calculated for 
the NME POR and the dumping margin we calculated for the ME POR. This 
weighted-average figure reflects the margin of dumping for the entire 
POR.
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    \1\ In Certain Small Diameter Carbon and Alloy Seamless 
Standard, Line, and Pressure Pipe from Romania: Final Results of 
Antidumping Duty Administrative Review, 68 FR 12672, 12673 (March 
17, 2003), the Department reviewed the non-market-economy status of 
Romania and determined to reclassify Romania as a market economy for 
purposes of antidumping and countervailing duty proceedings, 
pursuant to section 771(18)(A) of the Act, effective January 1, 
2003. See Memorandum from Lawrence Norton, Import Policy Analyst, to 
Joseph Spetrini, Acting Assistant Secretary for Import 
Administration: Antidumping Duty Administrative Review of Certain 
Small Diameter Carbon and Alloy Seamless Standard, Line, and 
Pressure Pipe from Romania--Non-Market Economy Status Review (March 
10, 2003).
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Partial Rescission of Antidumping Duty Administrative Review

    On November 12, 2003, the petitioner withdrew its request for a 
review of Petrotub. Because there was no other request for a review of 
Petrotub and because the letter withdrawing its request for a review 
was timely filed, we are rescinding the review with respect to Petrotub 
in accordance with 19 CFR 351.213(d)(1).

[[Page 54120]]

Scope of the Order

    The products covered by the order are seamless carbon and alloy 
(other than stainless) steel standard, line, and pressure pipes and 
redraw hollows produced, or equivalent, to the ASTM A-53, ASTM A-106, 
ASTM A-333, ASTM A-334, ASTM A-335, ASTM A-589, ASTM A-795, and the API 
5L specifications and meeting the physical parameters described below, 
regardless of application. The scope of the order also includes all 
products used in standard, line, or pressure pipe applications and 
meeting the physical parameters described below, regardless of 
specification. Specifically included within the scope of the order are 
seamless pipes and redraw hollows, less than or equal to 4.5 inches 
(114.3 mm) in outside diameter, regardless of wall-thickness, 
manufacturing process (hot finished or cold-drawn), end finish (plain 
end, beveled end, upset end, threaded, or threaded and coupled), or 
surface finish.
    The seamless pipes subject to the order are currently classifiable 
under the subheadings 7304.10.10.20, 7304.10.50.20, 7304.31.30.00, 
7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 7304.39.00.24, 
7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 7304.51.50.60, 
7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 7304.59.80.20, and 
7304.59.80.25 of the Harmonized Tariff Schedule of the United States 
(HTSUS).
    Specifications, Characteristics, and Uses: Seamless pressure pipes 
are intended for the conveyance of water, steam, petrochemicals, 
chemicals, oil products, natural gas and other liquids and gases in 
industrial piping systems. They may carry these substances at elevated 
pressures and temperatures and may be subject to the application of 
external heat. Seamless carbon steel pressure pipe meeting the ASTM A-
106 standard may be used in temperatures of up to 1000 degrees 
Fahrenheit, at various ASME code stress levels. Alloy pipes made to 
ASTM A-335 standard must be used if temperatures and stress levels 
exceed those allowed for ASTM A-106. Seamless pressure pipes sold in 
the United States are commonly produced to the ASTM A-106 standard.
    Seamless standard pipes are most commonly produced to the ASTM A-53 
specification and generally are not intended for high temperature 
service. They are intended for the low temperature and pressure 
conveyance of water, steam, natural gas, air and other liquids and 
gasses in plumbing and heating systems, air conditioning units, 
automatic sprinkler systems, and other related uses. Standard pipes 
(depending on type and code) may carry liquids at elevated temperatures 
but must not exceed relevant ASME code requirements. If exceptionally 
low temperature uses or conditions are anticipated, standard pipe may 
be manufactured to ASTM A-333 or ASTM A-334 specifications.
    Seamless line pipes are intended for the conveyance of oil and 
natural gas or other fluids in pipe lines. Seamless line pipes are 
produced to the API 5L specification.
    Seamless water well pipe (ASTM A-589) and seamless galvanized pipe 
for fire protection uses (ASTM A-795) are used for the conveyance of 
water.
    Seamless pipes are commonly produced and certified to meet ASTM A-
106, ASTM A-53, API 5L-B, and API 5L-X42 specifications. To avoid 
maintaining separate production runs and separate inventories, 
manufacturers typically triple or quadruple certify the pipes by 
meeting the metallurgical requirements and performing the required 
tests pursuant to the respective specifications. Since distributors 
sell the vast majority of this product, they can thereby maintain a 
single inventory to service all customers.
    The primary application of ASTM A-106 pressure pipes and triple or 
quadruple certified pipes is use in pressure piping systems by 
refineries, petrochemical plants, and chemical plants. Other 
applications are in power generation plants (electrical-fossil fuel or 
nuclear), and in some oil field uses (on shore and off shore) such as 
for separator lines, gathering lines and metering runs. A minor 
application of this product is for use as oil and gas distribution 
lines for commercial applications. These applications constitute the 
majority of the market for the subject seamless pipes. However, ASTM A-
106 pipes may be used in some boiler applications.
    Redraw hollows are any unfinished pipe or ``hollow profiles'' of 
carbon or alloy steel transformed by hot rolling or cold drawing/
hydrostatic testing or other methods to enable the material to be sold 
under ASTM A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-335, ASTM 
A-589, ASTM A-795, and API 5L specifications.
    The scope of the order includes all seamless pipe meeting the 
physical parameters described above and produced to one of the 
specifications listed above, regardless of application, with the 
exception of the specific exclusions discussed below, and whether or 
not also certified to a non-covered specification. Standard, line, and 
pressure applications and the above-listed specifications are defining 
characteristics of the scope of the order. Therefore, seamless pipes 
meeting the physical description above, but not produced to the ASTM A-
53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-335, ASTM A-589, ASTM A-
795, and API 5L specifications shall be covered if used in a standard, 
line, or pressure application, with the exception of the specific 
exclusions discussed below.
    For example, there are certain other ASTM specifications of pipe 
which, because of overlapping characteristics, could potentially be 
used in ASTM A-106 applications. These specifications generally include 
ASTM A-161, ASTM A-192, ASTM A-210, ASTM A-252, ASTM A-501, ASTM A-523, 
ASTM A-524, and ASTM A-618. When such pipes are used in a standard, 
line, or pressure pipe application, with the exception of the specific 
exclusions discussed below, such products are covered by the scope of 
the order.
    Specifically excluded from the scope of the order is boiler tubing 
and mechanical tubing, if such products are not produced to ASTM A-53, 
ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-335, ASTM A-589, ASTM A-795, 
and API 5L specifications and are not used in standard, line, or 
pressure pipe applications. In addition, finished and unfinished OCTG 
are excluded from the scope of the order, if covered by the scope of 
another antidumping duty order from the same country. If not covered by 
such an OCTG order, finished and unfinished OCTG are included in this 
scope when used in standard, line or pressure applications.
    With regard to the excluded products listed above, the Department 
will not instruct CBP to require end-use certification until such time 
as the petitioner or other interested parties provide to the Department 
a reasonable basis to believe or suspect that the products are being 
used in a covered application. If such information is provided, we will 
require end-use certification only for the product(s) (or 
specification(s)) for which evidence is provided that such products are 
being used in covered applications as described above. For example, if, 
based on evidence provided by petitioner, the Department finds a 
reasonable basis to believe or suspect that seamless pipe produced to 
the A-161 specification is being used in a standard, line or pressure 
application, we will require end-use certifications for imports of that 
specification. Normally we will require only the importer of record to 
certify to the end use of the imported merchandise. If it later proves 
necessary

[[Page 54121]]

for adequate implementation, we may also require producers who export 
such products to the United States to provide such certification on 
invoices accompanying shipments to the United States.
    Although the HTSUS subheadings are provided for convenience and CBP 
purposes, our written description of the merchandise subject to this 
scope is dispositive.

Verification

    As provided in sections 782(i)(2) of the Act, in June and July 2004 
we verified information provided by Silcotub. We used standard 
verification procedures, including on-site inspection of the respondent 
producer's facilities and examination of relevant sales and financial 
records.

Analysis of the NME POR

Separate Rates

    As stated above, since Romania was classified as an NME country 
until January 1, 2003, we are treating Romania as an NME country for 
the first five months of the POR, from August 1, 2002, through December 
31, 2002.
    It is the Department's standard policy to assign all exporters 
subject to review in an NME country a single rate unless an exporter 
can demonstrate an absence of government control, both in law and in 
fact, with respect to exports. To establish whether an exporter is 
sufficiently independent of government control to be entitled to a 
separate rate, the Department analyzes the exporter in light of the 
criteria established in the Final Determination of Sales at Less Than 
Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 
(May 6, 1991) (Sparklers), as amplified in Final Determination of Sales 
at Less Than Fair Value: Silicon Carbide from the People's Republic of 
China, 59 FR 22585 (May 2, 1994) (Silicon Carbide). Under this test, 
exporters in NME countries are entitled to separate, company-specific 
margins when they can demonstrate an absence of government control over 
exports, both in law (de jure) and in fact (de facto).
Absence of De Jure Control
    Evidence supporting, though not requiring, a finding of de jure 
absence of government control over export activities includes (1) an 
absence of restrictive stipulations associated with an individual 
exporter's business and export licenses, (2) any legislative enactments 
decentralizing control of companies, and (3) any other formal measures 
by the government decentralizing control of companies. See Sparklers, 
56 FR at 20589.
Absence of De Facto Control
    A de facto analysis of absence of government control over exports 
is based on four factors--whether the respondent (1) sets its own 
export prices independently of the government and other exporters, (2) 
retains the proceeds from its export sales and makes independent 
decisions regarding the disposition of profits or financing of losses, 
(3) has the authority to negotiate and sign contracts and other 
agreements, and (4) has autonomy from the government regarding the 
selection of management. See Silicon Carbide, 59 FR at 22587; see also 
Sparklers, 56 FR at 20589.
    We have determined, according to the criteria identified in 
Sparklers and Silicon Carbide, that evidence on the record demonstrates 
an absence of government control, both in law and in fact, with respect 
to exports by Silcotub. Silcotub is a private joint-stock commercial 
company organized under the Romanian Commercial Companies Law, Law No. 
31/1990, as amended. Silcotub is limited only by its articles of 
incorporation and bylaws. Specifically, the information on the record 
shows that Silcotub is autonomous in selecting its management, 
negotiating and signing contracts, setting its own export prices, and 
retaining its own profits. For a complete discussion of the 
Department's analysis regarding Silcotub's entitlement to a separate 
rate, see the August 30, 2004, memorandum, Assignment of Separate Rates 
for S.C. Silcotub S.A., which is on file in the Central Record Unit 
(CRU), Room B-099, U.S. Department of Commerce, Pennsylvania Avenue and 
14th Street, NW., Washington, DC 20230.

Constructed Export Price

    For all sales made by Silcotub to the United States, we used 
constructed export price (CEP) in accordance with section 772(b) of the 
Act because the first sale to an unaffiliated purchaser occurred after 
importation of the merchandise into the United States. We calculated 
CEP based on the packed, ex-warehouse or delivered prices from 
Silcotub's U.S. affiliate to unaffiliated customers. In accordance with 
section 772(c) of the Act, we made deductions, where appropriate, from 
the starting price for CEP for foreign inland freight, foreign 
brokerage and handling, international freight, marine insurance, CBP 
duties, U.S. brokerage and handling, and other U.S. transportation 
expenses such as wharfage, stevedoring, and surveying. For the 
deductions of foreign inland freight and foreign brokerage and 
handling, we used Egyptian surrogate values because these services were 
provided by Romanian companies and paid for in Romanian lei. In 
accordance with section 772(d)(1) of the Act, we made further 
deductions for the following selling expenses that related to economic 
activity in the United States: credit expenses, direct selling expenses 
(i.e., bank charges incurred in the United States and in Switzerland), 
and indirect selling expenses (incurred in both the United States and 
Switzerland, and including inventory carrying costs). In accordance 
with section 772(d)(3) of the Act, we have deducted from the starting 
price an amount for profit.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine the NV using a factors-of-production methodology if the 
merchandise is exported from an NME country, and the information does 
not permit the calculation of NV using home-market prices, third-
country prices, or constructed value (CV) under section 773(a) of the 
Act.
    As discussed above, the Department is treating Romania as a NME 
country for the period August 1, 2002, through December 31, 2002. 
Furthermore, information available on the record of this review does 
not permit the calculation of NV using home-market prices, third-
country prices, or CV under section 773(a) of the Act. Thus, the 
Department calculated NV for the NME portion of this review by valuing 
the factors of production in a surrogate country.

Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value the 
NME producer's factors of production, to the extent possible, in one or 
more market-economy countries that are at a level of economic 
development comparable to that of the NME and are significant producers 
of comparable merchandise. We chose Egypt as the surrogate country on 
the basis of the criteria set out in 19 CFR 351.408(b). For a further 
discussion of our surrogate-country selection, see the August 30, 2004, 
memorandum entitled Selection of Surrogate Country. This memorandum is 
on file in the Department's CRU.

Factors of Production

    We used publicly available information from Egypt to value the 
various factors of production. Because some of the Egyptian data were 
not contemporaneous with the POR, we adjusted the data to the POR using 
the Egyptian wholesale price index (WPI)

[[Page 54122]]

published by the International Monetary Fund.
    In accordance with section 773(c) of the Act, we valued Silcotub's 
reported factors of production by multiplying them by publicly 
available Egyptian values. In selecting the surrogate values, we 
considered the quality, specificity, and contemporaneity of the data. 
As appropriate, we adjusted input prices to make them delivered prices. 
We added to Egyptian surrogate values a surrogate freight cost using 
the reported distance from each supplier to the factory because this 
distance was shorter than the distance from the nearest seaport to the 
factory. This adjustment is in accordance with the decision of the 
Court of Appeals for the Federal Circuit in Sigma Corp. v. United 
States, 117 F.3d 1401 (Fed. Cir. 1997).
    We valued material inputs and packing material (i.e., where 
applicable, plastic caps, plastic tags, lacquer, and ink) by Harmonized 
Tariff Schedule (HTS) number using import statistics from the Egyptian 
Central Agency for Public Mobilization and Statistics, National 
Information Center. Where a material input was purchased in a market-
economy currency from a market-economy supplier (i.e., billet, steel 
strap, and clips), we valued the input at the actual purchase price in 
accordance with 19 CFR 351.408(c)(1). Although Silcotub purchased 
billets from both a market-economy supplier and non-market-economy 
supplier, we have valued all billets based on the price for the market-
economy purchase. This methodology is consistent with 19 CFR 
351.408(c)(1), which explains that the Department will normally value 
the factor using the price paid to the market-economy supplier where a 
portion of a factor is purchased from a market economy and the 
remainder is purchased from an NME supplier.
    We valued labor using the method described in 19 CFR 351.408(c)(3). 
For a complete analysis of surrogate values, see the August 30, 2004, 
memorandum, Factors-of-Production Valuation for Preliminary Results 
(Valuation Memorandum), on file in the CRU.
    To value electricity, we used the 2001 electricity rates for Egypt 
reported on the Web site of the International Trade Administration 
under ``Trade Information Center.'' See http://www.web.ita.doc.gov/ticwebsite/neweb.nsf/. We based the value of natural gas in Egypt on a 
published article that shows the price at which the Government of Egypt 
purchased natural gas, which was also used in the final results of the 
previous administrative review and placed on the record of this 
review.\2\
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    \2\ See Certain Small Diameter Carbon and Alloy Seamless 
Standard, Line, and Pressure Pipe from Romania: Final Results of 
Antidumping Administrative Review, 68 FR 54418 (September 17, 2003), 
and corresponding Issues and Decisions Memorandum at Comment 2. See 
also Valuation Memorandum.
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    We based our calculation of factory overhead and selling, general, 
and administrative (SG&A) expenses, as well as profit, on 1998/1999 
financial statements of El-Nasr Steel Pipes & Fittings Co. (El-Nasr), 
an Egyptian producer of comparable merchandise. The Department used the 
1998/1999 financial statements of El-Nasr in the final results of the 
previous review and placed on the record of this review. These are the 
most recent available financial statements from El-Nasr reflecting a 
profit. We reviewed information on El-Nasr from more recent financial 
periods (2001-2002 and 2002-2003) and found that the company made no 
profit in those periods, and the publicly available information lacked 
sufficient detail to estimate overhead costs.\3\ We were not able to 
obtain more detailed company information from the more recent periods 
for El-Nasr or any other producers from our list of surrogate 
countries. For a discussion of the Department's analysis regarding 
surrogate countries, see the August 30, 2004, memorandum, Selection of 
Surrogate Country, which is on file in the CRU.
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    \3\ See http://www.micor.com.eg/micor/welcome05.htm, El-Nasr's 
Web site.
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    To value truck freight rates, we used a 1999 rate (adjusted for 
inflation) provided by a trucking company located in Egypt. For rail 
transportation, we used rail rates in Egypt, information also used in 
Titanium Sponge from the Republic of Kazakhstan: Notice of Final 
Results of Antidumping Duty Administrative Review, 64 FR 66169 
(November 24, 1999), which we obtained from a 1999 letter from the 
Egyptian International House. We adjusted these rail rates for 
inflation. For further details, see the Valuation Memorandum.
    For brokerage and handling, we used a 1999 rate (adjusted for 
inflation) provided by a trucking and shipping company located in 
Alexandria, Egypt. For further details, see the Valuation Memorandum.

Currency Conversion

    We made currency conversions in accordance with section 773A(a) of 
the Act. For currency conversions involving the Egyptian pound, we used 
daily exchange rates published by the Federal Reserve Bank.

Analysis of the ME POR

Product Comparisons

    We compared the CEP to the NV, as described in the Constructed 
Export Price and Normal Value sections below, for the market-economy 
portion of the POR. We first attempted to compare contemporaneous sales 
in the U.S. and home market of products that were identical with 
respect to the following characteristics: specification, manufacturing 
process, outside diameter, schedule, wall thickness, surface finish, 
and end finish. Where we were unable to compare sales of identical 
merchandise, we compared products sold in the United States with the 
most similar merchandise sold in the home market based on the 
characteristics listed above in that order of priority. Where there 
were no appropriate home-market sales of comparable merchandise, we 
compared the merchandise sold in the United States to CV in accordance 
with section 773(a)(4) of the Act.

Constructed Export Price

    As mentioned in the NME section of this notice, for all sales made 
by Silcotub to the United States, we used CEP in accordance with 
section 772(b) of the Act because the first sale to an unaffiliated 
purchaser occurred after importation of the merchandise into the United 
States. We calculated CEP based on the packed, ex-warehouse or 
delivered prices from Silcotub's U.S. affiliate to unaffiliated 
customers. In accordance with section 772(c) of the Act, we made 
deductions, where appropriate, from the starting price for CEP for 
foreign inland freight, foreign brokerage and handling, international 
freight, marine insurance, CBP duties, U.S. brokerage and handling, and 
other U.S. transportation expenses such as wharfage, stevedoring, and 
surveying. In accordance with section 772(d)(1) of the Act, we made 
further deductions for the following selling expenses that related to 
economic activity in the United States: credit expenses, direct selling 
expenses (i.e., bank charges incurred in the United States and in 
Switzerland), and indirect selling expenses (incurred in both the 
United States and Switzerland, and including inventory carrying costs). 
In accordance with section 772(d)(3) of the Act, we have deducted from 
the starting price an amount for profit.

[[Page 54123]]

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 Silcotub'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 Silcotub'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 discussed in the Calculation of Normal Value Based on 
Home-Market Prices and Calculation of Normal Value Based on Constructed 
Value sections below.
B. Cost-of-Production Analysis
    On January 30, 2004, the petitioner made a sales-below-cost 
allegation concerning sales by Silcotub in the home market. Based on 
this allegation and in accordance with section 773(b)(2)(A)(i) of the 
Act, we found reasonable grounds to believe or suspect that home-market 
sales of certain small diameter carbon and alloy seamless standard, 
line, and pressure pipe from Romania were made at prices below the cost 
of production (COP). See Petitioner's Allegation of Sales Below the 
Cost of Production for S.C. Silcotub S.A. Memorandum from Martin 
Claessens to Holly Kuga, Acting Deputy Assistant Secretary, dated 
February 20, 2004, on file in the CRU. As a result, the Department has 
conducted a COP inquiry to determine whether Silcotub made sales in the 
home market at prices below its COP during the POR within the meaning 
of section 773(b) of the Act. We conducted the COP analysis described 
below.
    1. Calculation of Cost of Production. In accordance with section 
773(b)(3) of the Act, we calculated a weighted-average COP based on the 
sum of the cost of materials and fabrication for the foreign like 
product, plus amounts for home-market general and administrative (G&A) 
expenses, selling expenses, packing expenses, and interest expenses. We 
relied on the COP data submitted by Silcotub in its response to the COP 
questionnaire.
    2. Startup Adjustment. Section 773(f)(1)(C)(ii) of the Act 
authorizes adjustments for startup operations ``only where (I) a 
producer is using new production facilities or producing a new product 
that requires substantial additional investment, and (II) production 
levels are limited by technical factors associated with the initial 
phase of commercial production. For purposes of subclause (II), the 
initial phase of commercial production ends at the end of the startup 
period. In determining whether commercial production levels have been 
achieved, the administering authority shall consider factors unrelated 
to startup operations that might affect the volume of production 
processed, such as demand, seasonality, or business cycles.'' Moreover, 
the Statement of Administrative Action Accompanying the Uruguay Round 
Agreement Act, H. Doc. No. 103-315, Vol. 1 (SAA), at 836 directs that 
attainment of peak production levels will not be the standard for 
identifying the end of the startup period because the startup period 
may end well before a company achieves optimum capacity utilization. In 
addition, the SAA indicates that the Department will not extend the 
startup period so as to cover improvements and cost reductions that may 
occur over the entire life cycle of the product. The SAA instructs 
further that a producer's projections of future volume or cost will be 
accorded little weight, as actual data regarding production are much 
more reliable than a producer's expectations. The SAA also states that 
the burden is on the respondent to demonstrate its entitlement to a 
startup adjustment; specifically, the respondent must demonstrate that 
production levels were limited by technical factors associated with the 
initial phase of commercial production and not by factors unrelated to 
startup, such as marketing difficulties or chronic production problems.
    Silcotub claimed a startup adjustment for a modernization project 
commissioned during January to April 2003, with the startup period 
falling from April to August 2003, which included installing new 
equipment and replacing parts of the core production lines in its 
factory in order to extend the company's product range. We 
preliminarily determine that the statute's requirements for granting 
Silcotub a startup adjustment have not been met, as Silcotub is not 
producing a new product that required substantial investment. We 
recognize that Silcotub was unable to produce seamless pipe greater 
than 4.5 inches in diameter prior to the upgrade and is now able to 
produce pipe up to 5.75 inches in diameter, but we preliminarily view 
Silcotub's modernization as a limited expansion of its product range.
    3. Test of Home-Market Sales Prices. We compared the adjusted 
weighted-average COP to the home-market sales of the foreign like 
product, as required under section 773(b) of the Act, in order to 
determine whether these sales had been made at prices below the COP 
within an extended period of time (i.e., a period of one year) in 
substantial quantities and whether such prices were sufficient to 
permit the recovery of all costs within a reasonable period of time. On 
a model-specific basis, we compared the revised COP to the home-market 
prices, less any applicable movement charges, discounts, and rebates.
    4. Results of the COP Test. We disregard below-cost sales where 20 
percent or more of a respondent's sales of a given product during the 
POR were made at prices below the COP and thus 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 based on comparisons of 
price to weighted-average COPs for the POR. In this instance, we 
determined that the below-cost sales of the product were made at prices 
which would not permit recovery of all costs within a reasonable time 
period, in accordance with section 773(b)(2)(D) of the Act. We found 
that Silcotub made sales below cost, and we disregarded such sales 
where appropriate.
C. Calculation of Normal Value Based on Home-Market Prices
    For those sales at prices above COP, we based NV on home-market 
prices. Home-market starting prices were based on packed prices to 
unaffiliated purchasers in the home market. We made adjustments, where 
applicable, for packing and movement expenses in accordance with 
sections 773(a)(6)(A) and (B) of the Act. We also made adjustments for 
differences in costs attributable to differences in physical 
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) 
of the Act. For comparison to CEP, we deducted home-market direct 
selling expenses pursuant to section 773(a)(6)(C)(iii) of the Act and 
19 CFR 351.410(c). In addition, because the NV level of trade is more 
remote from the factory than the CEP level of trade and available data 
provide no appropriate basis to determine a level-of-trade adjustment 
between NV and CEP, we made a CEP offset adjustment pursuant to section 
773(a)(7)(B) of the Act (see the Level of Trade section, below).
D. Calculation of Normal Value Based on Constructed Value
    In accordance with section 773(a)(4) of the Act, we used CV as the 
basis for NV when there were no above-cost contemporaneous sales of 
identical or similar merchandise in the comparison

[[Page 54124]]

market. We calculated CV in accordance with section 773(e) of the Act. 
We included the cost of materials and fabrication, SG&A, and profit. 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 used the weighted-average home-market selling 
expenses.

Level of Trade/CEP Offset

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the comparison 
market at the same level of trade as the CEP transaction. The NV level 
of trade is that of the starting price sales in the comparison market 
or, when NV is based on CV, that of the sales from which we derive SG&A 
expenses and profit. For CEP, it is the level of the constructed sale 
from the exporter to the importer. Moreover, for CEP sales, we consider 
only the selling activities reflected in the price after the deduction 
of expenses and profit, pursuant to section 772(d) of the Tariff Act. 
See Micron Technology, Inc. v. United States, 243 F.3d 1301, 1314-1315 
(Fed. Cir. 2001). To determine whether NV sales are at a different 
level of trade than CEP 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 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, for CEP sales, if the NV level is more remote from the factory 
than the CEP level and there is no basis for determining whether the 
differences in the levels between NV and CEP affect price 
comparability, we adjust NV under section 773(a)(7)(B) of the Act (the 
CEP offset provision). See Final Determination of Sales at Less Than 
Fair Value: Greenhouse Tomatoes From Canada, 67 FR 8781 (February 26, 
2002).
    In implementing these principles in this review, we asked Silcotub 
to identify the specific differences and similarities in selling 
functions and support services between all phases of marketing in the 
home market and the United States. Silcotub identified one channel of 
distribution in the home market and two customer categories in the home 
market, end-users and distributors. For a description of the selling 
functions performed in the home market by Silcotub, see the Analysis 
Memorandum. Based on our analysis of selling functions for Silcotub's 
two customer categories in the home market, we determined that one 
level of trade exists for Silcotub's home-market sales.
    For the U.S. market, Silcotub also reported one channel of 
distribution, CEP sales made through Silcotub's affiliated importer, 
Duferco Steel. All U.S. sales were CEP transactions. Therefore, the 
U.S. market has one level of trade. For a description of the selling 
functions performed by Silcotub for CEP sales, see the Analysis Memo. 
We compared CEP sales (after deductions made pursuant to section 772(d) 
of the Act) to home-market sales, and we determined that the 
differences in selling functions performed for home-market and CEP 
transactions indicate that home-market sales involved a more advanced 
stage of distribution than CEP sales.
    Based on our analysis, we determined that CEP and the starting 
price of home-market sales represent different stages in the marketing 
process and are thus at different levels of trade. Therefore, when we 
compared CEP sales to home-market sales, we examined whether a level of 
trade adjustment may be appropriate. In this case Silcotub sold at one 
level of trade in the home market; therefore, there is no basis upon 
which to determine whether there is a pattern of consistent price 
differences between levels of trade. Further, we do not have the 
information which would allow us to examine pricing patterns of 
Silcotub's sales of other similar products, and there is no other 
record evidence upon which such an analysis could be based. Because the 
data available do not provide an appropriate basis for making a level-
of-trade adjustment but the level of trade in Romania for Silcotub is 
at a more advanced stage than the level of trade of its CEP sales, a 
CEP offset is appropriate in accordance with section 773(a)(7)(B) of 
the Act, as claimed by Silcotub. This offset is equal to the amount of 
indirect selling expenses incurred in the home market not exceeding the 
amount of indirect selling expenses deducted from the U.S. price in 
accordance with 772(d)(1)(D) of the Act. We applied the CEP offset to 
NV, whether based on home-market prices or CV.

Currency Conversion

    We made currency conversions into U.S. dollars, in accordance with 
section 773A of the Act, based on exchange rates in effect on the date 
of the U.S. sale, as certified by the Federal Reserve Bank.

Preliminary Determination Not To Revoke

    The Department ``may revoke, in whole or in part'' an antidumping 
duty order upon completion of a review under section 751 of the Act. 
While Congress has not specified the procedures that the Department 
must follow in revoking an order, the Department has developed a 
procedure for revocation of a company from the order based on an 
absence of dumping. This procedure is described in 19 CFR 
351.222(b)(2). Revocation under that provision requires, inter alia, 
that a company requesting revocation from the order must submit the 
following: (1) A certification that the company has sold the subject 
merchandise at not less than NV in the current review period and that 
the company will not sell at less than NV in the future; (2) a 
certification that the company sold the subject merchandise in 
commercial quantities in each of the three years forming the basis of 
the revocation request; and (3) an agreement to reinstatement in the 
order or suspended investigation, as long as any exporter or producer 
is subject to the order (or suspended investigation), if the Secretary 
concludes that the exporter or producer, subsequent to the revocation, 
sold the subject merchandise at less than NV. See 19 CFR 351.222(e)(1). 
The Department will consider the following in determining whether to 
revoke the order in part: (1) Whether the producer or exporter 
requesting revocation has sold subject merchandise at not less than NV 
for a period of at least three consecutive years; (2) whether the 
continued application of the antidumping duty order is otherwise 
necessary to offset dumping; and (3) whether the producer or exporter 
requesting revocation in part has agreed in writing to immediate 
reinstatement of the order, as long as any exporter or producer is 
subject to the order, if the Department concludes that the exporter or 
producer, subsequent to revocation, sold the subject merchandise at 
less than NV. See 19 CFR 351.222(b)(2); see also Notice of Final 
Results of Antidumping Duty Administrative Review, and Partial 
Rescission of Antidumping Duty Administrative Review, and Revocation of 
Antidumping

[[Page 54125]]

Duty Order in Part: Certain Pasta From Italy, 67 FR 300-303 (January 3, 
2002).
    On August 29, 2003, Silcotub submitted a request, in accordance 
with 19 CFR 351.222(e)(1), that the Department revoke the order in part 
on certain small diameter carbon and alloy seamless standard, Line, and 
pressure pipe from Romania with respect to its sales. In accordance 
with 19 CFR 351.222(e)(1), the request was accompanied by 
certifications from Silcotub that, for three consecutive years, 
including this review period, it sold the subject merchandise in 
commercial quantities at not less than NV and would continue to do so 
in the future. Silcotub also agreed to its immediate reinstatement in 
this antidumping order, as long as any producer or exporter is subject 
to the order, if the Department concludes, subsequent to revocation, 
that Silcotub sold the subject merchandise at less than NV.
    For these preliminary results, the Department has relied upon 
Silcotub's sales activity during the 2000-2001, 2001-2002, and 2002-
2003 PORs in making its decision regarding Silcotub's revocation 
request. Although Silcotub had two consecutive years of sales at not 
less than NV, Silcotub has not received a zero or de minimis margin in 
the instant review. Thus, Silcotub is not eligible for consideration 
for revocation, and we preliminarily determine not to revoke the order 
with respect to Silcotub's sales of certain small diameter carbon and 
alloy seamless standard, Line, and pressure pipe to the United States.

Preliminary Results of the Review

    We preliminarily determine that the following dumping margin exists 
for the period August 1, 2002, through July 31, 2003. This margin is 
the weighted-average margin of all sales made in both the NME and ME 
portions of the POR:

------------------------------------------------------------------------
                                                             Weighted-
                  Exporter/manufacturer                   average margin
                                                             percentage
------------------------------------------------------------------------
Silcotub................................................            1.38
------------------------------------------------------------------------

    Within five days of the date of publication of this notice, in 
accordance with 19 CFR 351.224, the Department will disclose its 
calculations. Any interested party may request a hearing within 30 days 
of the date of publication of this notice. Any hearing, if requested, 
will be held approximately 37 days after the publication of this 
notice. Issues raised in hearings will be limited to those raised in 
the case and rebuttal briefs. Interested parties may submit case briefs 
within 30 days of the date of publication of this notice. Rebuttal 
briefs, which must be limited to issues raised in the case briefs, may 
be filed not later than 35 days after the date of publication of this 
notice. Parties who submit case briefs or rebuttal briefs in this 
review are requested to submit with each argument (1) a statement of 
the issue and (2) a brief summary of the argument, and (3) a table of 
authorities. Parties are also requested to submit such arguments, and 
public versions thereof, with an electronic version on a diskette.

Assessment

    Upon completion of this administrative review, the Department will 
determine, and CBP shall assess, antidumping duties on all appropriate 
entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an 
exporter/importer (or customer)-specific assessment rate for 
merchandise subject to this review. The Department will issue 
appropriate assessment instructions to CBP within 15 days of 
publication of the final results of review. If these preliminary 
results are adopted in the final results of review, we will direct CBP 
to assess antidumping duties on the merchandise subject to review 
pursuant to 19 CFR 351.106(c)(2). This rate will be assessed uniformly 
on all entries of that particular importer made during the POR.

Cash Deposits

    The following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of seamless pipe from Romania entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a)(2)(C) of the Act: (1) The cash-deposit rate 
for Silcotub 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 covered in this review, 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 original less than fair value (LTFV) 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established in 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 conducted by the 
Department, the cash deposit rate will be the ``all others'' rate 
described in the final results of this review. We invite comments on 
the value to be used for the ``all others'' rate.
    These cash-deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    The cash-deposit rate we establish in the final results of this 
review will be applied prospectively to cover future entries. Given 
that the effective date of the Department's decision to treat Romania 
as an ME was within the POR, we have applied both NME and ME 
methodologies to calculate the dumping margins in this review. The 
Department is considering whether it is more appropriate to base 
Silcotub's cash-deposit rate on a weighted-average margin calculated 
using only sales from the seven-month ME portion of the POR or, 
alternatively, a weighted-average margin calculated using all sales 
from both the NME and ME portions of the POR. We invite comments on 
this issue.
    This notice also serves as a preliminary reminder to importers of 
their responsibility 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 and published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: August 30, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
 [FR Doc. E4-2081 Filed 9-3-04; 8:45 am]
BILLING CODE 3510-DS-P