E5-5712. Certain Circular Welded Carbon Steel Pipes and Tubes from Taiwan: Preliminary Results of Antidumping Duty Changed Circumstance Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On April 4, 2005, the Department of Commerce (the Department) published a notice of initiation of changed circumstance review of the antidumping order on certain circular welded carbon steel pipes and tubes from Taiwan to determine whether Yieh Phui is a successor-in-interest to Yieh Hsing. See Certain Circular Welded Carbon Steel Pipes and Tubes From Taiwan: Initiation of Antidumping Duty Changed Circumstance Review, 70 FR 17063 (April 4, 2005) (Initiation Notice). We have preliminarily concluded that Yieh Phui Enterprise, Ltd. (Yieh Phui) is the successor-in-interest to Yieh Hsing Enterprise, Ltd. (Yieh Hsing) for purposes of determining antidumping duty liability in this proceeding. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

October 17, 2005.

FOR FURTHER INFORMATION CONTACT:

Angela Strom or Robert James at [phone] or [phone], respectively; AD/CVD Operations, Office 7, Import Administration, International Trade Administration, Department of Commerce, 14th Street and Constitution Ave. NW, Washington DC 20230.

SUPPLEMENTARY INFORMATION:

Background

On February 15, 2005, Yieh Phui requested that the Department conduct an expedited changed circumstances review of the order on certain circular welded carbon steel pipes and tubes from Taiwan. The Department determined that the information submitted by Yieh Phui was sufficient to warrant initiation of a changed circumstance review and, on April 4, 2005, the Department published the Initiation Notice for this review. On April 6, 2005, the Department issued Yieh Phui a questionnaire requesting further details on the acquisition of Yieh Hsing's pipe facilities. Yieh Phui responded on April 29, 2005. On May 17, 2005, the Department issued a second supplemental questionnaire, to which Yieh Phui responded on June 13, 2005.

Scope of the Order

Imports covered by this order are shipments of certain circular welded carbon steel pipes and tubes. The Department defines such merchandise as welded carbon steel pipes and tubes of circular cross section, with walls not thinner than 0.065 inch and 0.375 inch or more but not over 4.5 inches in outside diameter. These products are commonly referred to in the industry as “standard pipe” and are produced to various American Society for Testing Materials specifications, most notably A-53, A-120 and A-135. Standard pipe is currently classified under Harmonized Tariff Schedule of the United States (HTSUS) item numbers 7306.30.5025, 7306.30.5032, 7306.30.5040, and 7306.30.5055. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise under the order is dispositive.

Analysis

In the context of the 2002 - 2003 administrative review, Yieh Hsing had notified the Department that one its affiliated companies, Yieh Phui, had acquired its pipe production facilities in March of 2003. See Buy/Sell Agreement at Exhibit 1 of Yieh Hsing's September 11, 2003 submission. Yieh Phui also indicated in its official request for the changed circumstance review and its subsequent supplemental questionnaire responses (SQR) that, as of March 1, 2003, it assumed control with respect to both sales and production of Yieh Hsing's steel pipe operations. According to Yieh Phui, since the sale of the production facilities to Yieh Phui in March of 2003, Yieh Hsing has been engaged only in the production and sales of stainless steel wire rod. After reviewing information received from U.S. Customs and Border Patrol, it appears that Yieh Phui, after March of 2003 and Yieh Hsing were exporting subject merchandise to the United States under their appropriate cash deposit rates. See Memorandum for Robert James from Angela Strom dated September 26, 2005.

In making a successor-in-interest determination, the Department examines several factors, including, but not limited to, changes in: (1) management; (2) production facilities; (3) supplier relationships; and (4) customer base. See Notice of Final Results of Changed Circumstances Review: Polychloroprene Rubber from Japan, 69 FR 67890 (November 22, 2004) citing, Brass Sheet and Strip from Canada: Notice of Final Results of Antidumping Duty Administrative Review, 57 FR 20460 (May 13, 1992) (Canadian Brass). While no single factor or a combination of these factors will necessarily provide a dispositive indication, the Department will generally consider the new company to be the successor to the previous company if its resulting operation is not materially dissimilar to that of its predecessor. See e.g., Industrial Phosphoric Acid from Israel: Final Results of Changed Circumstances Review, 59 FR 6944 (February 14, 1994), Canadian Brass, and Certain Preserved Mushrooms from India: Final Results of Changed-Circumstances Review, 68 FR 6884 (February 11, 2003). If evidence demonstrates that, with respect to the production and sale of the subject merchandise, the new company operates as the same entity as the former company, the Department will treat the successor company the same as the predecessor for antidumping purposes. See Fresh and Chilled Atlantic Salmon from Norway: Final Results of Changed Circumstance Antidumping Administrative Review, 64 FR 9979 (March 1, 1999).

In terms of the overall legal structure and management, Yieh Phui is virtually identical to Yieh Hsing. Since the same family serves as a controlling party and primary shareholder for both companies, Yieh Phui states that the transfer of pipe facilities did not change the ultimate ownership of the two entities. One family member in particular served and currently serves as a chairman for Yieh Phui and a board member for Yieh Hsing; thus, all major company strategy and policy decisions are primarily set, influenced and approved by the same person for both companies. The management for the sales and marketing divisions are also similar. This is evidenced by Yieh Hsing's previous deputy manager of “Pipe, Plate and Sheet” serving as the section manager of “Pipe Marketing and Sales” for Yieh Phui. Furthermore, Yieh Phui maintains the same order processing, distribution channels and sales correspondence as Yieh Hsing did prior to the transfer of the pipe facilities. See SQR dated April 29, 2005, at pages 4-11 and Exhibits 3-6.

The record evidence establishes that the pipe production facilities under Yieh Phui's control have remained largely unchanged since the transfer of assets from Yieh Hsing. Although Yieh Phui appointed a new general manager of its pipe operations, Yieh Phui hired the vast majority of former Yieh Hsing employees and supervisors to operate the facility. The Buy/Sell Agreement between Yieh Hsing and Yieh Phui provides a detailed description of the production facilities that were transferred to Yieh Phui, indicating that the identical processes and facilities were used to produce steel pipe products prior to and after the transfer. See SQR dated February 15, 2005, at 3 and Exhibits 1 and 3.

Regarding suppliers, Yieh Phui and Yieh Hsing did not purchase major raw material inputs (i.e. hot rolled coils) from identical suppliers. Prior to the transfer of the pipe facilities in 2003, Yieh Hsing had purchased hot rolled coils from certain suppliers at a fixed price pursuant to an annual purchase agreement. This annual purchase agreement expired at the end of 2002 and the associated suppliers refused to renew the agreement as a result of the rapid variation of market prices at that time. Yieh Phui provided price statistics published by the Taiwan Steel and Iron Industrial Association to illustrate this upward market trend in hot rolled coil prices throughout 2002 and early 2003. See questionnaire response (QR) dated April 29, 2005, at Exhibit 7. Since Yieh Hsing's suppliers refused to renew the purchase agreement, Yieh Phui opted to purchase the hot rolled coils necessary for its newly-acquired pipe operations through one of its established supplier lines. As Yieh Phui had already been purchasing hot rolled coils for its galvanizing operations prior to 2003, it sought to maintain its business relationships with its major supplier of hot rolled coils at that time. Thus, the record shows that Yieh Phui was not in a position to establish the same supply channels as Yieh Hsing and reasonably maintained its relationship with an existing supplier. The difference in suppliers, therefore, does not demonstrate that the companies are materially dissimilar in this particular case.

With respect to customers, Yieh Phui indicated it assumed the same customer base and sales practices that Yieh Hsing had maintained prior to the transfer of assets. Yieh Phui provided charts and sale documentation illustrating that the same customers, importers and negotiating parties were involved in the sales of pipes as when Yieh Hsing was selling subject pipes. See SQR dated April 29, 2005, at 17-19 and Exhibits 9-10 and SQR dated June 13, 2005, at Exhibits 2 and 3. The majority of the persons responsible for negotiating sales of pipe and tubes for Yieh Hsing were hired and assigned such tasks by Yieh Phui after the transfer took place. See SQR dated April 29, 2005, at 7-8.

Preliminary Results of the Review

In analyzing the totality of the factors on the record, we preliminarily conclude that Yieh Phui operates in essentially the same manner in terms of production, management, and customer base as Yieh Hsing prior to the transfer of Yieh Hsing's pipe facilities to Yieh Phui. The change in supplier relationships does not demonstrate that the companies are materially dissimilar in this case. Morever, the current structure of Yieh Phui and the previous structure of Yieh Hsing are sufficiently similar to support a finding that Yieh Phui is the successor-in-interest to Yieh Hsing. As a result, we have preliminarily determined, in fact, that Yieh Phui is the successor-in-interest to Yieh Hsing and ought to be accorded the same antidumping duty treatment as its predecessor. Should these preliminary results be adopted in our final results of this changed circumstance review, Yieh Hsing's cash deposit rate (i.e., 1.61 percent) will be applied to Yieh Phui's entries of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results. Until that time, the cash deposit rate assigned to Yieh Phui's entries is the rate in effect at the time of entry (i.e., the “all-others” rate).

Public Comment

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 issue, (2) a brief summary of the argument. Any interested party may request a hearing within 10 days of the date of publication of this notice. Any hearing, if requested, will be held no later than 25 days after the date of publication of this notice, or the first workday thereafter. Case briefs may be submitted by interested parties not later than 15 days after the date of publication of this notice. Rebuttal briefs, limited to the issues raised in the case briefs, may be filed not later than 20 days after the date of publication of this notice. All written comments shall be submitted in accordance with 19 CFR § 351.303.

Consistent with 19 CFR § 351.216(e), the Department will publish the final results of this changed circumstance review, including its analysis of issues raised in any written comments, no later than 270 days after the date of publication of the Initiation Notice. This notice is in accordance with sections 751(b) and 777(i)(1) of the Tariff Act of 1930, as amended, and 19 C.F.R. § 351.221(c)(3)(i) of the Department's regulations.

Dated: October 3, 2005.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.