[Federal Register Volume 65, Number 7 (Tuesday, January 11, 2000)]
[Notices]
[Pages 1593-1596]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-633]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-201-817]
Oil Country Tubular Goods From Mexico; Final Results of
Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Antidumping Duty Administrative
Review.
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SUMMARY: On September 9, 1999, the Department of Commerce (``the
Department'') published the preliminary results of its administrative
review of the antidumping order on oil country tubular goods (``OCTG'')
from Mexico covering exports of this merchandise to the United States
by one manufacturer, Tubos de Acero de Mexico, S.A. (``TAMSA''). Oil
Country Tubular Goods from Mexico; Preliminary Results of
Administrative Review (``Preliminary Results''), 64 FR 48983. We
invited interested parties to comment on the Preliminary Results. We
received comments from TAMSA and rebuttal comments from petitioners. We
have now completed our final results of review and determine that the
results have not changed.
EFFECTIVE DATE: January 11, 2000.
FOR FURTHER INFORMATION CONTACT: Dena Aliadinov, John Drury, or Linda
Ludwig, Enforcement Group III--Office 8, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW, Room 7866, Washington, DC 20230;
telephone (202) 482-2667 (Aliadinov), (202) 482-0195 (Drury), or (202)
482-3833 (Ludwig).
SUPPLEMENTARY INFORMATION:
Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act) are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (URAA). In addition, unless
otherwise indicated, all citations to the Department's regulations are
references to the provisions codified at 19 CFR Part 351 (1998).
Background
The Department published a final determination of sales at less
than fair value for OCTG from Mexico on June 28, 1995 (60 FR 33567),
and subsequently published the antidumping order on August 11, 1995 (60
FR 41056). The Department published a notice of ``Opportunity to
Request Administrative Review'' of the antidumping order for the 1997/
1998 review period on August 11, 1998 (63 FR 42821). Upon receiving a
request for an administrative review from TAMSA, we published a notice
of initiation of the review on September 29, 1998 (63 FR 51893).
Scope of the Review
Imports covered by this review are oil country tubular goods,
hollow steel products of circular cross-section, including oil well
casing, tubing, and drill pipe, 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,
tubing, or drill pipe containing 10.5 percent or more of chromium. The
OCTG subject to this order are currently classified in the Harmonized
Tariff Schedule of the United States (HTSUS) under item numbers:
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, 7304.20.20.10,
7304.20.20.20, 7304.20.20.30, 7304.20.20.40, 7304.20.20.50,
7304.20.20.60, 7304.20.20.80, 7304.20.30.10, 7304.20.30.20,
7304.20.30.30, 7304.20.30.40, 7304.20.30.50, 7304.20.30.60,
7304.20.30.80, 7304.20.40.10, 7304.20.40.20, 7304.20.40.30,
7304.20.40.40, 7304.20.40.50, 7304.20.40.60, 7304.20.40.80,
7304.20.50.15, 7304.20.50.30, 7304.20.50.45, 7304.20.50.60,
7304.20.50.75, 7304.20.60.15, 7304.20.60.30, 7304.20.60.45,
7304.20.60.60, 7304.20.60.75, 7304.20.70.00, 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
proceeding is dispositive.
Period of Review
The period of review (``POR'') is August 1, 1997 through July 31,
1998. The Department is conducting this review in accordance within
section 751 of the Act, as amended.
Analysis of Comments Received
We invited parties to comment on the preliminary results of the
review. We received comments from TAMSA and rebuttal comments from the
petitioners. The following is a summary of these comments.
Comment 1: EP/CEP
TAMSA argues that the Department incorrectly treated its sole U.S.
sale as a constructed export price (``CEP'') transaction in the
preliminary results of this review. See Preliminary Results, 64 FR at
48984. Regarding whether sales should be classified as EP sales despite
some involvement by a U.S. affiliate, the Department uses the following
criteria: (1) Whether the merchandise was shipped directly to the
unaffiliated buyer, without being introduced into the affiliated
selling agent's inventory; (2) whether this is the customary sales
channel between the parties; and (3) whether the affiliated selling
agent located in the United States acts only as a processor of
documentation and a communications link between the foreign producer
and the unaffiliated buyer. See, e.g., Notice of Final Determination of
Sales at Less Than Fair Value: Newspaper Printing Presses From Germany,
61 FR 38175 (July 23, 1996).
TAMSA argues that the Department relied solely on the third
criterion for its CEP determination, and did not properly address the
first two criteria. TAMSA claims that its sale meets the first two
criteria for indirect EP sales because the merchandise in question is
not introduced into the physical inventory of the affiliated selling
agent, and direct shipment to the customer is the customary commercial
channel for sales of this merchandise. TAMSA also claims that it, in
fact, meets the third criterion because its affiliated selling agent in
the United States, Siderca Corp., had an ``ancillary'' role.
[[Page 1594]]
According to TAMSA, setting price is the only U.S. selling activity
the existence of which would justify CEP treatment. Referring to
Certain Corrosion-Resistant Carbon Steel Flat Products & Certain Cut-
to-Length Carbon Steel Plate from Canada: Final Results of Antidumping
Duty Administrative Reviews (``Canadian Steel''), 63 FR 12738 (March
16, 1998); Certain Welded Stainless Steel Pipe from Taiwan: Final
Results of Administrative Reviews (``Taiwan Pipe''), 63 FR 38382, 38385
(July 16, 1998); Stainless Steel Wire Rod From Korea: Final
Determination of Sales at Less Than Fair Value (``Korean Wire Rod''),
63 FR 40418 (July 29, 1998); and Notice of Final Determination of Sales
at Less Than Fair Value: Beryllium Metal and High Beryllium Alloys From
the Republic of Kazakhstan (``Beryllium Metal''), 62 FR 2648, 2649
(January 17, 1997), TAMSA points out that the Department categorized
sales as EP sales when the affiliates in these cases had limited or no
pricing authority. Additionally, TAMSA claims that U.S. Steel Group v.
United States, 15 F. Supp. 2d 892 (CIT 1998) (``U.S. Steel Group'')
strengthens its argument, because the Court's ruling in that case
looked to the existence of sale or contract negotiations. TAMSA also
relies upon AK Steel v. United States (``AK Steel''), 34 F. Supp. 2d
756, 762 (CIT 1998), in which the affiliate negotiated the initial
price, but within certain limitations set by the exporter. TAMSA states
that the Court in AK Steel upheld the Department's decision to treat
the sales at issue as EP sales, even though the U.S. affiliate found
customers, negotiated price based upon predetermined factors, and
maintained contact with the customer. TAMSA concludes that the
Department must therefore reconsider the nature of Siderca Corp.'s
activities in the light of AK Steel.
TAMSA claims that information in its Section A questionnaire
response supports its claim that it, and not Siderca Corp., has the
authority to set price and sales terms and therefore that its U.S. sale
meets the third criterion. See TAMSA November 4, 1998 Section A
Response, at A-20-21. According to TAMSA, the Department does not have
any facts to support its conclusion that Siderca Corp. brought the
customer to TAMSA. On the contrary, TAMSA argues that Siderca Corp.
acted merely as a communications link and processor of documentation.
TAMSA also disputes that the existence of a commercial agreement
constitutes sufficient grounds for concluding that a transaction is a
CEP sale. Citing Certain Cold-Rolled Carbon Steel Flat Products from
the Netherlands: Final Results of Antidumping Duty Administrative
Review (``Dutch Steel''), 64 FR 11825 (March 10, 1999), TAMSA argues
that Siderca Corp.'s selling functions are not sufficient for Commerce
to classify its POR sale as a CEP sale. TAMSA supports its argument by
stating that Siderca Corp. stopped its OCTG selling and marketing
activities in the United States at or around the time of the
antidumping order in this case, making the sales agency agreement
``meaningless.'' See TAMSA Supplemental Response, February 2, 1999, at
9-10.
The petitioners counter that TAMSA has not provided sufficient
evidence for the Department to change its position, and that the
respondent bears the burden of proving that all three EP criteria have
been met. The petitioners state that Siderca Corp. may not have total
autonomy in setting final sales terms, but its role in the sales
process is not ``ancillary.''
With regard to U.S. Steel Group and AK Steel, the petitioners argue
that the former supports CEP classification for TAMSA because Siderca
had the freedom to negotiate prices, and the latter has limited
relevance because the Department sought a remand to reconsider EP
classification. Furthermore, the petitioners assert that, as was the
case in U.S. Steel, Siderca Corp.'s additional selling functions--i.e.,
taking title to the merchandise, using its insurance policy to cover
shipment, etc.--add weight to the other factors in this case,
supporting CEP classification.
The petitioners argue that TAMSA has not proven that Siderca Corp.
did not play any role in determining price; therefore, even greater
weight must be accorded to the sales agency agreement between TAMSA and
Siderca Corp. TAMSA may have set the minimum price, according to the
petitioners' analysis of the sales agency agreement, but Siderca played
a substantial role in negotiating the price with the customer. The
petitioners further assert that a U.S. affiliate does not need to make
independent pricing decisions for its role to be more than ``incidental
or ancillary.'' See Industrial Nitrocellulose from the United Kingdom:
Final Results of Antidumping Duty Administrative Review (``Industrial
Nitrocellulose''), 64 FR 6609, 6611 (February 10, 1999).
The petitioners maintain that signed contracts among parties are
more important than internal communications, such as the e-mails relied
upon by TAMSA. See Section A Response at Attachment A-10 (APO Version).
The petitioners contend that the e-mails do not provide evidence that
TAMSA authorized this sale or that this sale would have been made
without Siderca Corp.'s contacts with the U.S. customer. Furthermore,
the petitioners disagree with TAMSA's assertion that its sales and
marketing agreement is not dispositive with respect to this case. In
fact, according to the petitioners, Siderca Corp. has exclusive rights
to market and sell TAMSA's product in the United States, demonstrating
Siderca's pivotal, primary role.
Referring to Dutch Steel, the petitioners disagree with TAMSA's
allegation that failure to solicit new customers invalidates the agency
agreement. The petitioners state that TAMSA has not proven that its
sale in the instant review was to the same customer as the sale in the
previous review. Additionally, the petitioners disagree with TAMSA's
claim that the agreement became ``meaningless'' because TAMSA
discontinued OCTG exports to the United States after the antidumping
order, and Siderca Corp. did not take part in OCTG selling or marketing
activities for nearly two years. The petitioners argue that the sales
and marketing agreement never ceased to exist and, in fact, was renewed
after the antidumping order was issued. According to the petitioners,
this proves that TAMSA continued to sell to the United States.
Furthermore, Siderca Corp. received payment and compensation for its
U.S. sale and maintained a sales staff for OCTG, according to the terms
of the agreement.
The petitioners also claim that TAMSA does not meet criterion two
because TAMSA only had one U.S. sale, making it difficult to determine
the customary commercial channel. Moreover, the merchandise associated
with the U.S. sale in this review was picked up by the customer at the
port, and petitioners argue that this was not the customary commercial
channel established in the sales agency agreement.
Department's Position
After careful examination of the record, and based upon our
analysis using the three-pronged test discussed below, the Department
has determined to treat TAMSA's U.S. sale as a CEP sale, as defined in
section 772(b) of the Act. Pursuant to section 772 (a) and (b) of the
Act, an EP sale is a sale of merchandise for export to the United
States made by a foreign producer or exporter outside the United States
prior to importation. A CEP sale is a sale made in the United States
before or after
[[Page 1595]]
importation by or for the account of the exporter/producer or by a
party affiliated with the exporter or producer. In determining whether
the sales activity of a U.S. affiliate rises to such a level that CEP
methodology is warranted, the Department has examined the following
criteria: (1) whether the merchandise was shipped directly from the
manufacturer to the unaffiliated U.S. customer (rather than being
introduced into the inventory of the U.S. affiliate), (2) whether this
was the customary commercial channel between the parties involved, and
(3) whether the function of the U.S. affiliate is limited to that of a
``processor of sales-related documentation'' and a ``communication
link'' with the unaffiliated U.S. buyer. See, e.g., Canadian Steel, 63
FR at 12738. Unless all three criteria are met, a sale made by the U.S.
affiliate will not be attributed to the exporting affiliated party and,
therefore, considered an indirect EP sale.
Because the third criterion is not met in this case, we need not
address the first two criteria. Our examination of the record with
respect to this administrative review indicates that the fact pattern
for sales to the United States is substantially similar to the pattern
for sales in the previous administrative review, in which we found that
sales involving Siderca Corp. were CEP sales.
Under the selling agreement between TAMSA and Siderca Corp.,
Siderca Corp. is the exclusive selling agent for TAMSA products in the
United States and other parts of the world, and has certain rights
affecting price for any sales under the agreement. In exchange for
providing marketing and selling functions, and for providing other
services, Siderca Corp. is entitled to receive compensation under the
agreement. The record indicates that Siderca Corp. did receive, in
connection with this sale, the compensation provided for under the
agreement.
In addition, Siderca Corp. played the primary role in generating
this sale by bringing the customer to TAMSA. The record shows that
Siderca Corp. has a working relationship with the United States
customer. Conversely, TAMSA itself appears to have little, if any,
contact outside of Mexico with regard to the sale of its products in
the United States. Indeed, under the agreement, TAMSA is precluded from
soliciting or negotiating sales directly in the United States.
The judicial cases TAMSA relies upon do not support its position.
Contrary to TAMSA's claim, the opinion in U.S. Steel does not suggest
that the Department should classify the sale in this case as an EP
sale. The Court's decision to uphold Commerce's CEP classification in
that case was not based solely on the evidence that the U.S. affiliate
negotiated the final sale price consistent with a floor price set by
the exporter. Instead, the Court also considered the fact that the U.S.
affiliate had ``flexibility'' to make decisions as to price. In this
case, as well, the binding sales agreement indicates that Siderca Corp.
had the exclusive right and flexibility to negotiate the price. Thus,
by analogy to U.S. Steel Corp., CEP classification is also appropriate
in this OCTG case.
The Court's opinion in AK Steel also does not compel the Department
to adopt an EP classification for the sale in this OCTG review.
Although the Court in that case denied the Department's request for a
remand to reconsider its classification of certain sales as EP sales,
the Court did not find that the facts of that case demanded an EP
classification. Instead, the AK Steel Court held that, prior to making
its determination, ``Commerce may have been free to assess the evidence
differently than it did.'' 34 F. Supp. 2d at 761. The principle of
finality of administrative decisions requires that once a final agency
decision is made, it cannot be changed unless the decision was
erroneous when made. Noting that nothing in the record showed that the
U.S. sales agents were free to negotiate prices, the Court held only
that (although Commerce might have reached a different conclusion),
``it was not an error'' to classify the sales as EP sales. Id.
Furthermore, the facts of this OCTG case weigh more heavily in favor of
a CEP classification than did those in the case underlying AK Steel,
because in this case the administrative record does contain evidence
that the U.S. subsidiary was authorized to negotiate prices.
The administrative cases relied upon by TAMSA also do not support
its claim that the sale in this case should be classified as an EP
sale. For example, although both this case and the Dutch Steel case
involve a sales agency agreement, the Dutch producer, Hoogovens,
maintained direct communication links with its U.S. customers, often
without its affiliate, HSUSA. Hoogovens' ``U.S. customers communicated
directly with Hoogovens regarding post-sale price adjustments for
quality defects.'' See Dutch Steel, 64 FR at 11829. In that case, ``the
preponderance of selling functions involved in U.S. sales occurred in
the Netherlands.'' Id. 64 FR at 11828. In this OCTG case, in contrast,
the preponderance of selling functions were performed in the United
States by Siderca Corp. While HSUSA had no authority to negotiate
prices, Siderca Corp. had the authority to negotiate prices through its
selling agreement. The agreement places the rights and responsibilities
of selling and marketing TAMSA products in the United States squarely
on Siderca Corp.
TAMSA's reliance on Canadian Steel, Taiwan Pipe, Korean Wire Rod,
and Beryllium Metal is also misplaced. Sales at issue in those cases
were deemed to be EP sales because the U.S. affiliates were not free to
solicit sales, negotiate contracts or prices, or provide customer
support. Siderca Corp., in contrast, was authorized to perform all of
the above functions on behalf of TAMSA as well as resolving any
disputes regarding the status of the order, delivery or quality, or any
other customer issues.
The Department's position in the Notice of Final Determination of
Sales at Less Than Fair Value: Stainless Steel Wire Rod from Spain
(``Wire Rod from Spain''), 63 FR at 40394 (July 29, 1998), also
supports the conclusion that TAMSA's sale is best classified as a CEP
sale. In that case, the Department treated the U.S. sales as CEP sales
under a similar fact pattern. Specifically, Acerinox's authority to
negotiate and accept sales terms, as well as its authority to initiate
contact with U.S. customers, contradicted the parent company's claim
that the U.S. affiliate's activities were ancillary. Thus, the
Department classified these sales as CEP sales.
Finally, although TAMSA claims that the contract was meaningless
during this period of review, and that an e-mail interchange included
in its submission shows that TAMSA was responsible for setting the
price of this sale, there is record evidence showing that the contract
remains in effect. Siderca Corp. retained its obligations under the
agreement (e.g., maintaining a sales staff) and was substantially
involved in the sales process for this sale. Based on the facts of the
case, and their similarity to previous cases concerning the issue of
whether a sale should be classified as CEP or EP, the Department has
classified TAMSA's sale to the United States as a CEP sale for these
final results.
Comment 2
TAMSA states that, in testing the home market sales database for
below-cost sales, the Department should not compare home market sales
prices that are unadjusted for inflation with costs of production that
are adjusted for inflation.
Petitioners did not comment.
[[Page 1596]]
Department's Position
We agree with respondent and have changed the program for the final
results. Circumstances do not warrant using the Department's high
inflation methodology in this review. Therefore, we have deleted the
inflation adjustment to costs of production.
Comment 3
TAMSA asserts that the Department's antidumping duty calculation
program contained an error in line 1693. According to TAMSA, the
Department underestimated selling expenses, leading to overestimated
levels of profit from U.S. sales and underestimated total expenses.
TAMSA requests that the Department include performance bond costs on
certain home market sales when calculating home market direct selling
expenses.
Petitioners did not comment.
Department's Position
We agree with respondent and have changed the program for the final
results. The program now includes BONDH, a variable for performance
bond costs, in the home market direct selling expenses calculation.
Final Results of the Review
As a result of this review, we determine that the following
weighted-average dumping margin exists:
Circular Welded Non-Alloy Steel Pipes and Tubes
------------------------------------------------------------------------
Weighted-
Producer/manufacturer/exporter average
margin
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TAMSA...................................................... 0.00
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. The Department
will issue appraisement instructions directly to the Customs Service.
Furthermore, the following deposit requirement will be effective upon
publication of this notice of final results of review for all shipments
of oil country tubular goods from Mexico entered, or withdrawn from
warehouse, for consumption on or after the publication date, as
provided for by section 751 (a)(1) of the Act: (1) The cash deposit
rate for the reviewed company will be the rate for that firm as stated
above; (2) for previously reviewed or investigated companies not listed
above, the cash deposit rate will continue to be the company-specific
rate published for the most recent period; (3) if the exporter is not a
firm covered in this review, or the original less than fair value
(LTFV) investigation, but the manufacturer is, the cash deposit rate
will be the rate established for the most recent period for the
manufacturer of the merchandise; and (4) if neither the exporter nor
the manufacturer is a firm covered in this review, the cash deposit
rate will be 23.79 percent, the ``all others'' rate from the LTFV
investigation. These deposit requirements, when imposed, shall remain
in effect until publication of the final results of the next
administrative review.
This notice serves as a final reminder to importers of their
responsibility under 19 CFR 351.402(f) of the Department's regulations
to file a certificate regarding the reimbursement of antidumping duties
prior to liquidation of the relevant entries during this review period.
Failure to comply with this requirement could result in the Secretary's
presumption that reimbursement of antidumping duties occurred and the
subsequent assessment of double antidumping duties. This notice also
serves as a reminder to parties subject to administrative protective
order (APO) of their responsibility concerning the disposition of
proprietary information disclosed under APO accordance with 19 CFR
351.306 of the Department's regulations. Timely written notification of
return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
This administrative review and this notice are in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: January 4, 2000.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 00-633 Filed 1-10-00; 8:45 am]
BILLING CODE 3510-DS-P
