[Federal Register Volume 71, Number 92 (Friday, May 12, 2006)]
[Notices]
[Pages 27676-27680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-7284]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-817]


Certain Oil Country Tubular Goods from Mexico; Preliminary 
Results of Antidumping Duty Administrative Review and Partial 
Rescission

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request from United States Steel Corporation 
and Hylsa, S.A. de C.V. (Hylsa), the Department of Commerce (the 
Department) is conducting an administrative review of the antidumping 
duty order on certain oil country tubular goods (OCTG) from Mexico. The 
period of review (POR) is August 1, 2004, through July 31, 2005.
    We preliminarily find that Hylsa made sales of the subject 
merchandise at less than normal value (NV). In addition, we are 
preliminarily rescinding this review with respect to Tubos de Acero de 
Mexico, S.A. (Tamsa) because Tamsa reported, and we confirmed, that it 
made no shipments of subject merchandise to the United States during 
the POR. If these preliminary results are adopted in the final results 
of this administrative

[[Page 27677]]

review, we will instruct U.S. Customs and Border Protection (CBP) to 
assess antidumping duties based on the difference between constructed 
value (CV) and the NV for Hylsa.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit argument in this proceeding are requested 
to submit with the argument: (1) A statement of the issues, (2) a brief 
summary of the argument, and 3) a table of authorities.

EFFECTIVE DATE: May 12, 2006.

FOR FURTHER INFORMATION CONTACT: Stephen Bailey or David Kurt Kraus, 
AD/CVD Operations, Office 7, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230, telephone: (202) 482-
0193 or (202) 482-7871, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On August 11, 1995, the Department published the antidumping duty 
order on OCTG from Mexico. See Antidumping Duty Order: Oil Country 
Tubular Goods From Mexico, 60 FR 41056 (August 11, 1995) (AD Order). On 
August 1, 2005, the Department published the opportunity to request 
administrative review of, inter alia, OCTG from Mexico for the period 
August 1, 2004, through July 31, 2005. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 70 FR 44085 (August 1, 
2005).
    In accordance with 19 CFR 351.213(b), on August 31, 2005, United 
States Steel Corporation (petitioner) and Hylsa requested that we 
conduct an administrative review of the sales of subject merchandise of 
Tamsa and Hylsa. On September 28, 2005, the Department published in the 
Federal Register a notice of initiation of this antidumping duty 
administrative review covering the period August 1, 2004, through July 
31, 2005. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Request for Revocation in Part, 70 FR 56631 
(September 28, 2005).
    On October 6, 2005, the Department issued its antidumping duty 
questionnaire to Hylsa and Tamsa. On October 27, 2005, Tamsa submitted 
a no-shipment certification letter to the Department explaining that it 
had no sales of subject merchandise during the POR and requested a 
rescission of the administrative review with respect to Tamsa. 
Furthermore, on February 22, 2006, the Department sent a memorandum to 
CBP requesting assistance in obtaining copies of the complete entry 
packages for certain shipments made by Tamsa or believed to be made by 
Tamsa. See Partial Rescission of Administrative Review below for a 
discussion of this issue.
    Hylsa submitted its response to section A of the Department's 
questionnaire on November 7, 2005, and its response to section C on 
November 28, 2005. In its section A response, Hylsa informed the 
Department that it had no viable home market or third country sales to 
use as NV and was therefore reporting CV data. The Department issued a 
supplemental sections A and C questionnaire to Hylsa on January 9, 
2006. Hylsa submitted its response to the Department's sections A and C 
supplemental questionnaire on January 30, 2006. On February 6, 2006, 
Hylsa provided clarifying additional information pertaining to its 
January 30, 2006, sections A and C supplemental questionnaire response 
at page 20, footnote 15. The Department issued a second supplemental 
sections A and C questionnaire on February 22, 2006, and on March 13, 
2006, Hylsa submitted its response. The Department issued a third 
supplemental section C questionnaire to Hylsa on March 23, 2006, and on 
March 24, 2006, Hylsa submitted its response. We issued a fourth 
supplemental section C questionnaire to Hylsa on March 31, 2006, and on 
April 4, 2006, Hylsa submitted its response.
    Because Hylsa did not have home market or third country sales of 
subject merchandise during the POR, Hylsa submitted a section D 
response on November 28, 2005. We issued a supplemental questionnaire 
regarding Hylsa's response to section D on February 8, 2006, and on 
March 3, 2006, Hylsa submitted its response. We issued a second 
supplemental section D questionnaire on March 22, 2006, and on March 
31, 2006, Hylsa submitted its response. On April 6, 2006, we issued a 
third Section D supplemental questionnaire to Hylsa and on April 13, 
2006, Hylsa submitted its response.

Period of Review

    The POR is August 1, 2004, through July 31, 2005.

Scope of the Order

    The merchandise covered by this order is oil country tubular goods 
(OCTG), hollow steel products of circular cross-section, including oil 
well casing and tubing of iron (other than cast iron) or steel (both 
carbon and alloy), whether seamless or welded, whether or not 
conforming to American Petroleum Institute (API) or non-API 
specifications, whether finished or unfinished (including green tubes 
and limited-service OCTG products). This scope does not cover casing or 
tubing pipe containing 10.5 percent or more of chromium, or drill pipe. 
The OCTG subject to this order are currently classified in the 
Harmonized Tariff Schedule of the United States (HTSUS) under item 
numbers: 7304.29.10.10, 7304.29.10.20, 7304.29.10.30, 7304.29.10.40, 
7304.29.10.50, 7304.29.10.60, 7304.29.10.80, 7304.29.20.10, 
7304.29.20.20, 7304.29.20.30, 7304.29.20.40, 7304.29.20.50, 
7304.29.20.60, 7304.29.20.80, 7304.29.30.10, 7304.29.30.20, 
7304.29.30.30, 7304.29.30.40, 7304.29.30.50, 7304.29.30.60, 
7304.29.30.80, 7304.29.40.10, 7304.29.40.20, 7304.29.40.30, 
7304.29.40.40, 7304.29.40.50, 7304.29.40.60, 7304.29.40.80, 
7304.29.50.15, 7304.29.50.30, 7304.29.50.45, 7304.29.50.60, 
7304.29.50.75, 7304.29.60.15, 7304.29.60.30, 7304.29.60.45, 
7304.29.60.60, 7304.29.60.75, 7305.20.20.00, 7305.20.40.00, 
7305.20.60.00, 7305.20.80.00, 7306.20.10.30, 7306.20.10.90, 
7306.20.20.00, 7306.20.30.00, 7306.20.40.00, 7306.20.60.10, 
7306.20.60.50, 7306.20.80.10, and 7306.20.80.50. The Department has 
determined that couplings, and coupling stock, are not within the scope 
of the antidumping order on OCTG from Mexico. See Letter to Interested 
Parties; Final Affirmative Scope Decision, August 27, 1998, which is on 
file in the Department's Central Records Unit in Room B-099 of the Main 
Department building. The HTSUS subheadings are provided for convenience 
and customs purposes. Our written description of the scope of this 
order is dispositive.

Partial Rescission of Administrative Review

    In response to our October 6, 2005, original questionnaire, Tamsa 
submitted an October 27, 2005, letter claiming it made no exports of 
the subject merchandise during the POR. We examined CBP data to confirm 
that Tamsa was not listed as a manufacturer or exporter of the subject 
merchandise on entries during the POR. We requested and received from 
CPB entry documents relating to entries that were either produced by 
Tamsa or related to entries that CBP informed the Department may have 
been produced by Tamsa. See the Department's February 22, 2006, 
memorandum ``Request for U.S. Entry Documents Oil Country Tubular Goods 
from Mexico A-201-

[[Page 27678]]

817,'' from Richard Weible, Director Office 7, to Alice J. Buchanan of 
CBP and the entry documents dated April 10, 2006. After reviewing the 
information, we determined that the entries either were imported to the 
United States to a foreign trade zone or Tamsa did not produce the 
entries in question.
    In addition, there is no information on the record to indicate that 
Tamsa had U.S. sales or exports of subject merchandise during the POR. 
As a result, we find that Tamsa made no entries, exports, or sales of 
the subject merchandise during the POR that are subject to the 
administrative review. Therefore, in accordance with 19 CFR 
351.213(d)(3), we are preliminarily rescinding the review with respect 
to Tamsa.

Product Comparisons

    Because Hylsa had no sales of identical or similar merchandise in 
the home market or any third country comparison market during the POR, 
we compared U.S. sales to CV in accordance with section 773(a)(4) of 
the Tariff Act of 1930, as amended (the Act).

Fair Value Comparisons

    To determine whether Hylsa made sales of OCTG to the United States 
at less than fair value, we compared export price (EP) to NV, as 
described in the Export Price and Normal Value sections of this notice. 
Because Hylsa had no sales of subject merchandise either in the home 
market or to third countries during the POR, in accordance with section 
773(a)(4) of the Act, we compared the EP of U.S. transactions falling 
within the period of review to CV.

Export Price

    Section 772(a) of the Act defines EP as the price at which the 
subject merchandise is first sold (or agreed to be sold) before the 
date of importation by the producer or exporter of the subject 
merchandise outside of the United States to an unaffiliated purchaser 
in the United States or to an unaffiliated purchaser for exportation to 
the United States, as adjusted under section 772(c). In contrast, 
section 772(b) of the Act defines constructed export price (CEP) as the 
price at which the subject merchandise is first sold (or agreed to be 
sold) in the United States before or after the date of importation by, 
or for the account of, the producer or exporter of such merchandise, or 
by a seller affiliated with the producer or exporter, to a purchaser 
not affiliated with the producer or exporter, as adjusted under 
sections 772(c) and (d).
    For sales to the United States, we have used EP in accordance with 
section 772(a) of the Act because the subject merchandise was sold 
directly to an unaffiliated purchaser prior to importation.
    We calculated EP based on the prices charged to the first 
unaffiliated customer in the United States. We used the date of invoice 
as the date of sale. We based EP on the packed delivered duty paid 
prices to the first unaffiliated purchasers in the United States. We 
made deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act, including: foreign inland freight, foreign 
brokerage and handling, transport insurance expense, U.S. inland 
freight and U.S. brokerage and handling.
    Consistent with the Department's practice, we limited our universe 
to EP sales entered during the POR. See Notice of Final Results of 
Antidumping Duty Administrative Review: Certain Hot-Rolled Carbon Flat 
Steel Flat Products from the Netherlands, 69 FR 33630 (June 16, 2004). 
Therefore, we excluded certain U.S. sales that entered the U.S. after 
the current POR. See Notice of Final Results and Partial Rescission of 
Antidumping Duty Administrative Review: Certain Oil Country Tubular 
Goods from Mexico, 70 FR 60492 (October 18, 2005). For a further 
discussion of this issue and the margin programming language see 
Analysis Memorandum for the Preliminary Results of Administrative 
Review of the Antidumping Duty Order on Oil Country Tubular Goods from 
Mexico: Hylsa S.A. de C.V. (Hylsa), from Stephen Bailey and David Kurt 
Kraus to the File, dated May 3, 2006 (Analysis Memorandum).
    The Department has determined that brokerage and handling services 
provided by Hylsa's affiliate Galvak, S.A. de C.V. (Galvak) in Mexico 
were not made at arm's length. The Department calculated a simple 
average of brokerage and handling expenses incurred from affiliated 
(Galvak) and unaffiliated brokers, which showed that services provided 
by Galvak were lower than those charged by unaffiliated brokers. 
Because these charges were not made at arm's length, the Department has 
not used Hylsa's reported brokerage and handling expenses incurred from 
Galvak. See exhibit 1 of Hylsa's February 6, 2006, submission for the 
list of sales for which Galvak provided brokerage and handling 
services. Instead, we are using information available on the record; 
specifically, we are using brokerage and handling expenses Hylsa 
incurred from its unaffiliated brokerage and handling providers, to 
calculate an average brokerage and handling expense to apply to all 
U.S. sales for which Galvak provided these services. See Notice of 
Final Determination of Sales at Less Than Fair Value: Bottle-Grade 
Polyethylene Terephthalate (PET) Resin From Indonesia, 70 FR 13456 
(March 21, 2005). For a further discussion of this issue including the 
margin programming language and the calculation of average brokerage 
and handling expenses for affiliated and unaffiliated brokers, see 
Analysis Memorandum.

Calculation of Constructed Value

    Hylsa reported that it had no viable home or third country market 
during the POR. Therefore, in accordance with section 773(a)(4) of the 
Act, we based NV for Hylsa on CV. In accordance with section 773(e)(1) 
of the Act, we calculated CV based on the sum of the costs of 
materials, labor, overhead, selling, general and administrative (SG&A), 
profit, interest expenses, and U.S. packing costs. Section 773(e)(2)(A) 
states that SG&A and profit are to be based on the actual amounts 
incurred in connection with sales of a foreign like product. In the 
event such data are not available, section 773(e)(2)(B) of the Act sets 
forth three alternatives for computing profit and SG&A without 
establishing a hierarchy or preference among the alternative methods. 
The alternative methods are: (1) Calculate SG&A and profit incurred by 
the producer based on the sale of merchandise of the same general type 
as the exports in question; (2) average SG&A and profit of other 
producers of the foreign like product for sales in the home market; or 
(3) any other reasonable method, capped by the amount normally realized 
on sales in the foreign country of the general category of the 
products. In addition, the Statement of Administrative Action 
accompanying the Uruguay Round Agreements Act, H.R. Rep. 103-316, Vol. 
1, at 841 (1994), states that, if the Department does not have the data 
to determine amounts for profit under alternatives one and two, or a 
profit cap under alternative three, it still may apply alternative 
three (without the cap) on the basis of the ``facts available.''
    In this case, because Hylsa did not have a viable home market or 
third country market for this product, we based Hylsa's profit and 
indirect selling expenses on the following methodology. In accordance 
with section 773(e)(2)(B)(iii) of the Act, we calculated indirect 
selling expenses incurred and profit realized by the producer based on 
the sale of

[[Page 27679]]

merchandise of the same general types as the exports in question. 
Specifically, we based our profit calculations and indirect selling 
expenses on the income statement of Hylsa's tubular products division, 
a general pipe division that produces OCTG and products in the same 
general category. We calculated a CV profit using Hylsa's tubular 
products division financial statements for 2004 (i.e., tubular products 
division profit 2004 divided by tubular products division 2004 cost of 
goods sold). We deducted packing expenses allocated to Hylsa's tubular 
products division from the cost of goods sold denominator when we 
calculated CV profit and indirect selling expenses.
    For the preliminary results we recalculated Hylsa's G&A expense, 
based on the 2004 tubular products division financial statement, by 
deducting packing expenses from the cost of goods sold. We used the 
financial statements of Alfa, S.A. de C.V., Hylsa's parent company, to 
calculate financial expenses. Additionally, we adjusted the transfer 
price for a major input, i.e., iron ore, purchased by Hylsa from 
affiliated suppliers to reflect the higher of the transfer price or the 
cost of production pursuant to section 773(f)(3) of the Act. See 
Analysis Memorandum and Preliminary Calculation Memorandum, to Neal 
Halper, Director with the Office of Accounting, from Christopher J. 
Zimpo, Analyst with the Office of Accounting, through Peter S. Scholl, 
Program Manager with the Office of Accounting: Analysis and adjustments 
to the section D costs submitted by Hylsa, S.A. de C.V., dated May 3, 
2006, for further discussion.
    As there were no home market sales during the POR, there were no 
allegations of below-cost sales for Hylsa. Consequently, we did not 
initiate a cost of production (COP) analysis for Hylsa.

Price-to-CV Comparisons

    For price-to-CV comparisons, we made circumstance-of-sale 
adjustments by adding to CV U.S. direct selling expenses (i.e., imputed 
credit, commissions, and other direct selling expenses) in accordance 
with section 773(a)(8) of the Act and 19 CFR 351.401(c). For computing 
credit expenses, it is the Department's normal practice to use an 
interest rate applicable to loans in the same currency as that in which 
the sales are denominated. See Notice of Final Determination of Sales 
at Less Than Fair Value:Stainless Steel Plate in Coils (``SSPC'') from 
the Republic of Korea, 64 FR 15443 (March 31, 1999), and accompanying 
Issues and Decision Memorandum at comment 6. Because Hylsa had no 
short-term borrowings in U.S. dollars, the credit expense for Hylsa's 
U.S. sales was calculated using the average U.S. prime rate during the 
POR. See Hylsa's section C response dated November 28, 2005, at exhibit 
7.

Currency Conversion

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

Preliminary Results of Review

    As a result of our review, we preliminarily find the weighted-
average dumping margin for the period August 1, 2004, through July 31, 
2005, to be as follows:

------------------------------------------------------------------------
               Manufacturer / Exporter                 Margin (percent)
------------------------------------------------------------------------
Hylsa, S.A. de C.V..................................                0.68
------------------------------------------------------------------------

    The Department will disclose calculations performed in connection 
with these preliminary results of review within five days of the date 
of publication of this notice in accordance with 19 CFR 351.224(b). 
Pursuant to section 351.309 of the Department's regulations, interested 
parties may submit written comments in response to these preliminary 
results. Unless extended by the Department, case briefs are to be 
submitted within 30 days after the date of publication of this notice, 
and rebuttal briefs, limited to arguments raised in case briefs, are to 
be submitted no later than five days after the time limit for filing 
case briefs. Parties submitting arguments in this proceeding are 
requested to submit with the argument: (1) A statement of the issue, 
(2) a brief summary of the argument, and (3) a table of authorities. 
Case and rebuttal briefs and comments must be served on interested 
parties in accordance with section 351.303(f) of the Department's 
regulations.
    Also, an interested party may request a hearing within 30 days of 
the date of publication of this notice. See section 351.310(c) of the 
Department's regulations. Unless otherwise specified, the hearing, if 
requested, will be held two days after the date for submission of 
rebuttal briefs, or the first business day thereafter. The Department 
will issue the final results of this administrative review, including 
the results of its analysis of the issues raised in any briefs or 
comments at a hearing, within 120 days of publication of these 
preliminary results.

Assessment Rates

    The Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries. In accordance with 19 CFR 
351.212(b)(1), we have calculated, whenever possible, an exporter/
importer (or customer) -specific assessment rate or value for 
merchandise subject to this review.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. See Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This 
clarification will apply to entries of subject merchandise during the 
POR produced by the company included in these preliminary results for 
which the reviewed company did not know their merchandise was destined 
for the United States. In such instances, we will instruct CBP to 
liquidate unreviewed entries at the all-others rate if there is no rate 
for the intermediate company (ies) involved in the transaction.

Cash Deposit Requirements

    The following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate will be the rate 
established in the final results of this review; (2) for previously 
reviewed or investigated companies not listed above, the cash deposit 
rate will be the company-specific rate established for the most recent 
period; (3) if the exporter is not a firm covered in this review, a 
prior review, or the LTFV investigation, but the manufacturer is, the 
cash deposit rate will be the rate established for the most recent 
period for the manufacturer of the subject merchandise; and (4) if 
neither the exporter nor the manufacturer is a firm covered in this 
review, any previous reviews, or the LTFV investigation, the cash 
deposit rate will be 23.79 percent, the ``all others'' rate established 
in the LTFV investigation. See AD Order, 60 FR at 41056. These deposit 
rates, when imposed, shall remain in effect until publication of the 
final results of the next administrative review.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping

[[Page 27680]]

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.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: May 3, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-7284 Filed 5-11-06; 8:45 am]
Billing Code: 3510-DS-S