[Federal Register Volume 60, Number 22 (Thursday, February 2, 1995)]
[Notices]
[Pages 6503-6506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2610]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-357-810]
Preliminary Determination of Sales at Less Than Fair Value and
Postponement of Final Determination: Oil Country Tubular Goods From
Argentina
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: February 2, 1995.
FOR FURTHER INFORMATION CONTACT: John Beck or Stuart Schaag, Office of
Antidumping Investigations, Import Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW., Washington, D.C.
20230; telephone (202) 482-3464 or (202) 482-0192, respectively.
Preliminary Determination
We preliminarily determine that oil country tubular goods (OCTG)
from Argentina are being, or are likely to be, sold in the United
States at less than fair value, as provided in section 733(b) of the
Tariff Act of 1930, as amended (the Act). The estimated margins are
shown in the ``Suspension of Liquidation'' section of this notice.
Case History
Since the initiation of this investigation on July 20, 1994 (59 FR
37962, July 26, 1994), the following events have occurred.
On August 15, 1994, the U.S. International Trade Commission (ITC)
issued an affirmative preliminary determination.
On August 26, 1994, the Department determined that Siderca S.A.I.C.
(Siderca), an Argentine exporter of the subject merchandise, should be
the sole recipient of the antidumping questionnaire. This company
accounted for at least 60 percent of exports of OCTG from Argentina
during the period of investigation (POI).
On August 26, 1994, the Department sent an antidumping duty
questionnaire to Siderca. The Department received initial questionnaire
responses in September, October and November 1994. The Department
received deficiency questionnaire responses in December 1994, and
January 1995.
On November 1, 1994, the Department determined that Siderca's home
market was not viable within the meaning of section 773(a)(1)(B) of the
Act and 19 CFR 353.48, and that the People's Republic of China (PRC)
was the appropriate third-country market for this investigation (see
the November 1, 1994, memorandum from David L. Binder to Richard W.
Moreland). This decision was consistent with our decision not to expand
the period of investigation to include home market sales made pursuant
to long-term contracts (see the November 3, 1994, memorandum from
Richard W. Moreland to Barbara R. Stafford).
On November 10, 1994, Koppel Steel Corporation, U.S. Steel Group (a
unit of USX Corporation) and USS/Kobe Steel Company, (the petitioners),
timely requested that the Department postpone the preliminary
determination in accordance with section 733(c)(1) of the Act (19
U.S.C. 1673b(c)(1)), and 19 CFR 353.15(c). We did so on November 15,
1994 (59 FR 60130, November 22, 1994).
On December 12, 1994, the petitioners submitted an allegation of
sales at prices below the cost of production (COP) based on Siderca's
sales to the PRC. The Department initiated a COP investigation on
January 13, 1995 (see the January 13, 1995, memorandum from Gary
Taverman to Barbara R. Stafford).
On December 16, 1994, Siderca timely requested that the final
determination be postponed in accordance with 19 CFR 353.20(b) in the
event of an affirmative preliminary determination.
Scope of Investigation
For purposes of this investigation, OCTG are hollow steel products
of circular cross-section, including oil well casing, tubing, and drill
pipe, of iron (other than cast iron) or steel (both
[[Page 6504]]
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 investigation does not cover
casing, tubing, or drill pipe containing 10.5 percent or more of
chromium. The OCTG subject to this investigation is currently
classified in the Harmonized Tariff Schedule of the United States
(HTSUS) under item numbers: 7304.20.10.00, 7304.20.10.10,
7304.20.10.20, 7304.20.10.30, 7304.20.10.40, 7304.20.10.50,
7304.20.10.60, 7304.20.10.80, 7304.20.20.00, 7304.20.20.10,
7304.20.20.20, 7304.20.20.30, 7304.20.20.40, 7304.20.20.50,
7304.20.20.60, 7304.20.20.80, 7304.20.30.00, 7304.20.30.10,
7304.20.30.20, 7304.20.30.30, 7304.20.30.40, 7304.20.30.50,
7304.20.30.60, 7304.20.30.80, 7304.20.40.00, 7304.20.40.10,
7304.20.40.20, 7304.20.40.30, 7304.20.40.40, 7304.20.40.50,
7304.20.40.60, 7304.20.40.80, 7304.20.50.10, 7304.20.50.15,
7304.20.50.30, 7304.20.50.45, 7304.20.50.50, 7304.20.50.60,
7304.20.50.75, 7304.20.60.10, 7304.20.60.15, 7304.20.60.30,
7304.20.60.45, 7304.20.60.50, 7304.20.60.60, 7304.20.60.75,
7304.20.70.00, 7304.20.80.00, 7304.20.80.30, 7304.20.80.45,
7304.20.80.60, 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.
Although the HTSUS subheadings are provided for convenience and
customs purposes, our written description of the scope of this
investigation is dispositive.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the Statute and to the
Department's regulations are in reference to the provisions as they
existed on December 31, 1994.
Period of Investigation
The POI is January 1, 1994, through June 30, 1994.
Such or Similar Comparisons
We have determined for purposes of the preliminary determination
that the OCTG covered by this investigation comprises a single category
of ``such or similar'' merchandise within the meaning of section
771(16) of the Act. Where there were no sales of identical merchandise
in the third country to compare to U.S. sales, we made similar
merchandise comparisons on the basis of the characteristics listed in
Appendix V of the Department's antidumping questionnaire.
The Appendix V criteria were intended to avoid matching casing and
tubing products. However, in using the product matches supplied by
Siderca, a casing product was matched to a tubing product in two
instances. Therefore, we modified the Appendix V criteria to match,
whenever possible, U.S. sales of tubing with PRC sales of tubing and
U.S. sales of casing with PRC sales of casing, by making that the
primary matching criterion.
Thus, we made similar merchandise comparisons on the basis of: (1)
Whether OCTG is casing or tubing; (2) whether OCTG is seamless or
welded; (3) the grade of OCTG finish; (4) end finish; (5) outside
diameter; (6) OCTG length; (7) full-body normalization; and 8) wall
thickness (see the January 24, 1995, memorandum from John Beck to David
L. Binder for a detailed discussion).
In certain other instances, Siderca did not follow correctly the
Department's matching hierarchy instructions. We have corrected the
product concordance for these problems (see the January 24, 1995,
memorandum from John Beck to David L. Binder for a detailed
discussion).
We made adjustments, where appropriate, for differences in the
physical characteristics of the merchandise, in accordance with section
773(a)(4)(C) of the Act.
Fair Value Comparisons
To determine whether Siderca's sales of OCTG from Argentina to the
United States were made at less than fair value, we compared the United
States price (USP) to the foreign market value (FMV), as specified in
the ``United States Price'' and ``Foreign Market Value'' sections of
this notice.
United States Price
We based USP on exporter's sales price (ESP), in accordance with
section 772(c) of the Act, because the subject merchandise was sold to
the first unrelated purchaser after importation into the United States.
For OCTG that was further manufactured in the United States, we
deducted all value added in the United States, pursuant to section
772(e)(3) of the Act. The value added consists of the costs of the
materials, fabrication, and general expenses associated with the
portion of the merchandise further manufactured in the United States,
as well as a proportional amount of profit attributable to the value
added. We accepted Siderca's cost data without making any adjustments
for purposes of the preliminary determination. We calculated profit by
deducting from the sales price of the finished product all production
and selling costs incurred by the company. We then allocated the total
profit proportionately to all components of cost. We deducted only the
profit attributable to the value added. In determining the costs
incurred to produce the finished merchandise, we included: (1)
Materials; (02) fabrication; and (3) general expenses including selling
(SG&A), and interest expenses.
We calculated ESP based on packed, delivered and ex-U.S. warehouse
prices to unrelated customers in the United States. We made deductions
from gross unit price, where appropriate, for foreign loading charges,
foreign inland freight, ocean freight, marine insurance, U.S. duty,
U.S. inland freight, U.S. handling, U.S. brokerage, credit expense and
U.S. and Argentine indirect selling expenses, including technical
services, inventory carrying costs, and other U.S. and Argentine
indirect selling expenses. Finally, we added duty drawback and duties
uncollected by reason of exportation.
For certain sales, Siderca had not yet shipped or received payment
for the sale. In order to calculate credit expenses, we assigned the
average number of credit days when shipment and payment dates were
missing, and used the date of the preliminary determination, January
26, 1995, as the assumed payment date when only payment dates were
missing (see the January 26, 1995, concurrence memorandum).
Foreign Market Value
We compared the volume of home market sales of subject merchandise
to the volume of third-country sales to determine whether there was a
sufficient volume of sales in the home market to serve as a viable
basis for calculating FMV, in accordance with section 773(a)(1)(B) of
the Act. Pursuant to 19 CFR 353.48, we found that the home market was
not viable because it represented less than five percent of the amount
sold to third countries. We therefore based FMV on third-country sales.
We determined, pursuant to 19 CFR 353.49(b), that the PRC is the
most appropriate third-country market because: (1) The volume of
Siderca's PRC sales during the POI was the largest of any third
country; (2) the merchandise exported to the PRC is
[[Page 6505]]
most similar or identical to the merchandise exported to the United
States; and (3) Siderca's sales to the PRC were to an OCTG market whose
organization and development were similar to that of the U.S. market
based on our analysis of the sales and distribution process for those
sales. However, petitioner has questioned the legitimacy of certain
sales made by Siderca to the Chinese market. The Department intends to
scrutinize these sales at verification.
Cost of Production Analysis
Based on the petitioners' allegation that Siderca is selling OCTG
in the PRC at prices below its COP, the Department initiated a COP
investigation for the PRC sales of Siderca. Although this COP
investigation was not initiated until January 13, 1995, Siderca
submitted its cost information before this date. The Department was,
therefore, able to use this information for purposes of the preliminary
determination.
In order to determine whether the third-country prices were above
the COP, we calculated the COP based on the sum of Siderca's reported
cost of materials, fabrication, general expenses, and packing. We
accepted Siderca's cost data without making any adjustments for
purposes of the preliminary determination.
Results of COP Analysis
Under our standard practice, where we find that less than 10
percent of a company's sales are at prices below the COP, we disregard
any below-cost sales because that company's below-cost sales were not
made in substantial quantities. Where we find between 10 and 90 percent
of the company's sales were at prices below the COP, and the below-cost
sales were made over an extended period of time, we disregard only the
below-cost sales. Where we find that more than 90 percent of the
company's sales were at prices below the COP, and the sales were made
over an extended period of time, we disregard all sales for that
product and calculate FMV based on constructed value (CV).
In accordance with section 773(b)(1) of the Act, in order to
determine whether below-cost sales were made over an extended period of
time, we compare the number of months in which below-cost sales
occurred for each product to the number of months in the POI in which
that product was sold. If a product was sold in three or more months of
the POI, we do not exclude below-cost sales unless there were below-
cost sales in at least three months during the POI. When we find that
sales of a product only occurred in one or two months, the number of
months in which the sales occurred constituted the extended period of
time; i.e., where sales of a product were made in only two months, the
extended period of time was two months, where sales of a product were
made in only one month, the extended period of time was one month (see
the Preliminary Results and Partial Termination of Antidumping Duty
Administrative Review: Tapered Roller Bearings, Four Inches or Less in
Outside Diameter, and Components Thereof, From Japan (58 FR 69336,
69338, December 10, 1993).
Based on this preliminary analysis, none of Siderca's PRC sales
were found to be below cost. Accordingly, we calculated FMV based on
packed, FOB and C&F prices to unrelated customers in the PRC. In light
of the Court of Appeals for the Federal Circuit's (CAFC) decision in Ad
Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v.
United States, Slip. Op. 93-1239 (Fed. Cir., January 4, 1994), the
Department no longer can deduct third country market movement charges
from FMV pursuant to its inherent power to fill in gaps in the
antidumping statute. Instead, we will adjust for those expenses under
the circumstance-of sale provision of 19 CFR 353.56(a), as appropriate.
Accordingly, in the present case, we deducted from FMV the following
direct selling expenses pursuant to 19 CFR 353.56(a): foreign loading
charges, foreign inland freight and ocean freight.
We also made deductions from gross unit price, where appropriate,
for credit expense, commissions and warranties. We deducted indirect
selling expenses, including, where appropriate, technical services,
inventory carrying costs and other indirect selling expenses, up to the
amount of indirect selling expenses incurred on U.S. sales, in
accordance with 19 CFR 353.56(b)(2). We deducted third-country packing
costs and added U.S. packing costs. Finally, we added duty drawback and
duties uncollected by reason of exportation.
For certain sales, Siderca had not yet shipped or received payment
for the sale. In order to calculate credit expenses, we applied the
same methodology described above for USP.
Currency Conversion
Because certified exchange rates for Argentina were unavailable
from the Federal Reserve, we made currency conversions for expenses
denominated in Argentine pesos based on the official monthly exchange
rates in effect on the dates of the U.S. sales as published by the
International Monetary Fund.
Verification
As provided in section 776(b) of the Act, we will verify the
information used in making our final determination.
Suspension of Liquidation
In accordance with section 733(d)(1) (19 U.S.C. 1673b(d)(1)) of the
Act, we are directing the Customs Service to suspend liquidation of all
entries of OCTG from Argentina, as defined in the ``Scope of
Investigation'' section of this notice, that are entered, or withdrawn
from warehouse, for consumption on or after the date of publication of
this notice in the Federal Register.
The Customs Service shall require a cash deposit or posting of a
bond equal to the estimated preliminary dumping margin, as shown below.
The suspension of liquidation will remain in effect until further
notice.
------------------------------------------------------------------------
Margin
Producer/manufacturer/exporter percentage
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Siderca S.A.I.C............................................. 0.61
All others.................................................. 0.61
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Postponement of Final Determination
On December 16, 1994, in accordance with 19 CFR 353.20(b), Siderca
requested that, in the event of an affirmative determination, the
Department postpone the final determination. We find no compelling
reason to deny the request. Accordingly, we are postponing the date of
the final determination until not later than 135 days after the date of
publication of this notice.
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our preliminary determination.
If our final determination is affirmative, the ITC will determine
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry before the later of 120 days after the
date of this preliminary determination or 45 days after our final
determination.
Public Comment
In accordance with 19 CFR 353.38, case briefs or other written
comments in at least ten copies may be submitted by any interested
party to the Assistant Secretary for Import Administration no later
than April 21, 1995, and rebuttal briefs no later than April 28, 1995.
We request that parties in this case provide an executive summary of no
more than two pages in conjunction with case briefs on the major issues
to be addressed. Further, briefs should
[[Page 6506]]
contain a table of authorities. Citations to Commerce determinations
and court decisions should include the page number where cited
information appears. In preparing the briefs, please begin each issue
on a separate page. In accordance with 19 CFR 353.38(b), we will hold a
public hearing, if requested, to give interested parties an opportunity
to comment on arguments raised in case or rebuttal briefs. Tentatively,
the hearing will be held on May 2, 1995, at 10:00 a.m. at the U.S.
Department of Commerce, Room 1414, 14th Street and Constitution Avenue,
N.W., Washington, D.C. 20230. Parties should confirm the time, date,
and place of the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing must submit a
written request to the Assistant Secretary for Import Administration,
U.S. Department of Commerce, Room B-099, within ten days of the
publication of this notice in the Federal Register. Requests should
contain: (1) The party's name, address, telephone number; (2) the
number of participants; and (3) a list of the issues to be discussed.
In accordance with 19 CFR 353.38(b), oral presentations will be limited
to the issues raised in the briefs.
This determination is published pursuant to section 733(f) of the
Act (19 U.S.C. 1673b(f)) and 19 CFR 353.15(a)(4).
Dated: January 26, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-2610 Filed 2-1-95; 8:45 am]
BILLING CODE 3510-DS-P