[Federal Register Volume 64, Number 203 (Thursday, October 21, 1999)]
[Notices]
[Pages 56759-56771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27569]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[A-549-502]
Certain Welded Carbon Steel Pipes and Tubes From Thailand: 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.
-----------------------------------------------------------------------
SUMMARY: On April 13, 1999, the Department of Commerce published the
preliminary results of the administrative review of the antidumping
duty order on certain welded carbon steel pipes and tubes from
Thailand. This review covers one producer/exporter, Saha Thai Steel
Pipe Co., Ltd. (``Saha Thai'') and the period March 1, 1997 through
February 28, 1998.
We gave interested parties an opportunity to comment on the
preliminary results as discussed in the ``Analysis of Comments''
section below. Based on our analysis of comments received, we have made
certain changes for the final results. The final weighted-average
dumping margin is listed below in the section ``Final Results of the
Review.''
EFFECTIVE DATE: October 21, 1999.
FOR FURTHER INFORMATION CONTACT: John Totaro, AD/CVD Enforcement Group
III, Office VII, Room 7866, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
1374.
APPLICABLE STATUTE: Unless otherwise indicated, all citations to the
statute are references to the provisions effective January 1, 1995, the
effective date of the amendments made to the Tariff Act of 1930 (``the
Act'') by the Uruguay Round Agreements Act (``URAA''). In addition,
unless otherwise indicated, all citations to the Department's
regulations are to those codified at 19 CFR Part 351 (1998).
SUPPLEMENTARY INFORMATION:
Background
On March 11, 1986, the Department published in the Federal Register
an antidumping duty order on welded carbon steel pipes and tubes from
Thailand (51 FR 8341). On March 11, 1998, the Department published a
notice of opportunity to request an administrative review of this order
covering the period March 1, 1997
[[Page 56760]]
through February 28, 1998 (63 FR 11868). In response to requests by two
importers, Ferro Union Inc. (``Ferro Union'') and ASOMA Corp.
(``ASOMA''), and four domestic producers, Allied Tube and Conduit
Corporation, Sawhill Tubular Division--Armco, Inc., Wheatland Tube
Company, and Laclede Steel Company (collectively, the ``domestic
producers'' or ``petitioners''), the Department of Commerce (``the
Department'') is conducting an administrative review of the antidumping
duty order on certain welded carbon steel pipes and tubes from
Thailand. This review covers Saha Thai, a Thai manufacturer and
exporter of subject merchandise to the United States. The period of
review (``POR'') is March 1, 1997 through February 28, 1998. The
Department published a notice of initiation of this antidumping duty
administrative review on April 24, 1998 (63 FR 20378). Because the
Department determined that it was not practicable to complete this
review within statutory time limits, on November 27, 1998, we published
in the Federal Register our notice of extension of time limits for the
preliminary results of this review (63 FR 65573). On April 13, 1999,
the Department published in the Federal Register the preliminary
results of its administrative review of this antidumping order covering
the period March 1, 1997 through February 28, 1998 (64 FR 17998).
Because the Department determined that it was not practicable to
complete this review within statutory time limits, on August 18, 1999,
we published in the Federal Register our notice of extension of time
limits for the final results of this review (64 FR 44892) The
Department has now completed this review in accordance with section
751(a) of the Act.
Changes From the Preliminary Results
We modified our preliminary position with respect to Saha Thai's
claim for duty drawback to allow Saha Thai a partial duty drawback
adjustment. This change is explained in our response to Comment 1. We
also changed our method of determining exchange rate fluctuations in
this case, as described in our response to comment 2. As detailed in
our response to Comment 6 and in our final results Analysis Memorandum,
we modified the weights assigned to certain of the physical
characteristics used in our model match program. Also, as explained in
our response to Comment 7, in the preliminary results we incorrectly
excluded a deduction for imputed credit from our calculation of
constructed value. We agree that imputed credit should be deducted from
constructed value and have done this for the final results. Finally, as
discussed in our response to Comment 8, our preliminary results
incorrectly stated that we verified only sales data, when, in fact, we
examined sales and cost of production data.
Scope of the Review
The products covered by this administrative review are certain
welded carbon steel pipes and tubes from Thailand. The subject
merchandise has an outside diameter of 0.375 inches or more, but not
exceeding 16 inches. These products, which are commonly referred to in
the industry as ``standard pipe'' or ``structural tubing,'' are
hereinafter designated as ``pipe and tube.'' The merchandise is
classifiable under the Harmonized Tariff Schedule (HTS) item numbers
7306.30.1000, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055,
7306.30.5085, and 7306.30.5090. Although the HTS subheadings are
provided for convenience and Customs purposes, our written description
of the scope of the order is dispositive.
Verification
As provided in section 782(i) of the Act, from January 25 through
January 29, 1999 we verified sales and cost of production information
provided by the respondent, Saha Thai, using standard verification
procedures, including examination of relevant financial records and
analysis of original documentation used by Saha Thai to prepare
responses to requests for information from the Department. Our
verification results are outlined in the public version of the
verification report (See Memorandum to the File from Steve Bezirganian
and Marlene Hewitt, February 24, 1999) (``Saha Thai Verification
Report''), on file in the Central Records Unit, Room B-099 of the
Department (``CRU'').
Analysis of Comments
Saha Thai, Ferro Union and ASOMA (collectively ``Saha Thai'') and
the petitioners submitted case briefs on May 13, 1999, and rebuttal
briefs on May 18, 1999.
Comment 1: Duty Drawback Adjustment
Saha Thai requests that the Department increase export price by the
amount of duties imposed by the Government of Thailand on raw material
imports used in the production of subject merchandise, which were
rebated or not collected because subject merchandise incorporating
those raw materials was subsequently exported to the United States.
Saha Thai asserts that documents on the record from Thai Customs
authorities demonstrate the existence of import duty rebates received
from the Government of Thailand for every reported U.S. sale.
Saha Thai claims that it benefitted from Thailand's duty drawback
system in three ways: (1) By receiving a cash rebate for duties paid
when importing hot rolled coil or zinc used in the production of
subject merchandise subsequently exported to the U.S. (``cash duty
drawback''); (2) by receiving a credit against a bank guarantee that it
was obligated to post with Thai Customs instead of actually paying
duties on imported coil or zinc (``guaranteed duty drawback''); and (3)
by receiving an exemption from duties that would have normally been
imposed on coil and zinc imports, but which were neither collected nor
guaranteed at the time of importation because Saha Thai had entered the
subject merchandise into a bonded warehouse, processed it and exported
it to the U.S. (``suspended duties''). Saha Thai maintains that it has
complete documentation on the record to justify the granting of its
claimed duty drawback adjustment. Saha Thai argues that the Department
rejected its claim because either it incorrectly believed, based on
verification, that all of Saha Thai's drawback claims were based on
cash payments and refunds of import duties, or it believed that a duty
drawback is only warranted under the law if duties are paid in cash.
Saha Thai suggests that the Department examined one ``randomly chosen''
import entry of raw materials and because it could not verify that
duties were paid as opposed to guaranteed, determined that this finding
undermined Saha Thai's entire claim. See Saha Thai case brief at 5-6.
Saha Thai cites the Department's two-prong test to determine, in
cases in which import duties on raw materials are paid and then
rebated, whether to grant a duty drawback adjustment: (1) Whether the
import duty and rebate are directly linked to, and are dependent upon,
one another, and (2) whether imported raw materials are sufficient to
account for the duty drawback received on the exports of the
manufactured products. Saha Thai states that in cases in which the
import duties are not paid, but are suspended, the first prong of this
test then becomes whether the import duties are actually not collected
because the subject merchandise is exported to the United States. In no
instance, Saha Thai asserts, does the Department require either that
the specific input be traced from importation through exportation or
that duties actually be paid and cash rebated before granting an
adjustment for drawback. Citing Carbon Steel Wire Ropes from Mexico, 63
FR
[[Page 56761]]
46753, 46755-56 (September 2, 1998); Certain Welded Carbon Standard
Steel Pipes and Tubes from India, 62 FR 47632, 47634 (September 10,
1997); The Torrington Company v. United States, 881 F. Supp. 622 (CIT
1995); and Far East Machinery Co. v. United States, 12 CIT 972, 974
(1988).
With regard to the first prong of the test, Saha Thai argues that
the Thai law administered by Thai Customs: (1) Makes entitlement to
cash duty drawback contingent upon both the payment of import duties
and the subsequent exportation of the subject merchandise; (2) makes
entitlement to guaranteed duty drawback contingent upon both the
posting of a bank guarantee and the subsequent exportation of the
subject merchandise; and (3) makes entitlement to the suspension of
duties contingent upon establishing a bonded warehouse according to
Thai law, entering the imported materials into that bonded warehouse
and subsequently exporting merchandise incorporating such materials.
Saha Thai argues that if the Department has denied duty drawback based
upon a determination that the duties were not paid or properly
suspended, then such a finding is ``a general indictment of Thailand's
duty drawback system.''
Saha Thai points out that the Department had already accepted duty
drawback claims under Thailand's duty drawback system in previous
cases. Citing Antifriction Bearings (Other Than Tapered Roller
Bearings) and Parts Thereof From Japan, 56 FR 31765 (July 11, 1991) and
The Torrington Company v. United States, 881 F. Supp. 622 (CIT 1995).
Moreover, Saha Thai argues that in past administrative reviews of this
same order, the Department verified and accepted Saha Thai's duty
drawback claim. Citing Certain Welded Carbon Steel Pipes and Tubes from
Thailand, 63 FR 55578, 55588 (October 16, 1998) (final results);
Certain Welded Carbon Steel Pipes and Tubes from Thailand, 61 FR 56515,
56518 (November 1, 1996) (final results); Certain Welded Carbon Steel
Pipes and Tubes from Thailand, 61 FR 1328, 1333 (January 19, 1996)
(final results); Certain Welded Carbon Steel Pipes and Tubes from
Thailand, 56 FR 26648 (June 10, 1991) (preliminary results); and
Certain Welded Carbon Steel Pipes and Tubes from Thailand, 55 FR
42596,42597 (October 22, 1990) (preliminary results).
With regard to the second prong of the test, Saha Thai stated that
it imported sufficient raw materials to account for the duty drawback
received and duties suspended. Saha Thai asserts that each duty
drawback claim granted by Thai customs enumerates the imported goods by
entry which were subsequently used for the production of exported
products. Thus, Saha Thai argues that it has met the requirements of
the Department's two-prong test. Saha Thai also stated that it based
part of its claim for a duty drawback adjustment upon import duties
that were not paid, guaranteed or collected because the imported raw
materials entered its bonded warehouse, and subject merchandise made
from those materials was subsequently exported. Saha Thai argues that
it remained liable for payment of duties on coil and zinc imports
entered into its bonded warehouse if such raw materials were not used
in production which was then exported. Saha Thai stated that it failed
to claim in its questionnaire responses a duty drawback adjustment
related to its bonded warehouse entries, but that this omission was an
oversight. Saha Thai stated that it included this claim in its March
11, 1999 submission to the Department.
Petitioners argue that none of respondent's claims for duty
drawback adjustments are justified because Saha Thai failed to
substantiate its claims during verification. According to petitioners,
Saha Thai failed to produce documents to support its cash-based duty
drawback claim, and failed to describe either its bank guarantee-based
or its bonded warehouse-based drawback adjustment claims. Therefore,
petitioners contend, these drawback claims could not be accurately
substantiated or verified. Petitioners also argue that Saha Thai has
placed no data on the record regarding the fees Saha Thai paid for bank
guarantees and has not indicated any offset to its claims for drawback
adjustments for such fees. Similarly, petitioners allege that nothing
on the record describes, or even mentions, Saha Thai's bonded warehouse
operation as a basis for a drawback adjustment claim.
Petitioners argue that Saha Thai's claims for bank guarantee-based
and bonded warehouse-based duty drawback adjustments do not meet the
first prong of the Department's test for linking the drawback to the
export of merchandise. According to petitioners, Saha Thai failed to
give a detailed explanation of these programs. Citing the Department's
determination in Certain Welded Carbon Steel Pipes and Tubes from
India, 63 FR 32825, 32829 (June 16, 1998), petitioners assert that when
a respondent fails to provide an explanation of the direct link between
drawback claimed and exports as well as the details of the drawback
program, the claimed drawback adjustment should be denied. Moreover,
petitioners note that in this review, the deadline for the submission
of factual information was 140 days from the last day of the
anniversary month. However, petitioners argue, Saha Thai's first
mention of bank guarantee and bonded warehouse operations was at
verification, after the deadline. Consequently, petitioners argue that
Saha Thai's submissions after the deadline are untimely and the
Department should exclude them from the record of this review.
Department's Position: Pursuant to section 772 (c)(1)(B) of the
Act, export price shall be increased by the amount of any import duties
imposed by the country of exportation which have been rebated, or which
have not been collected, by reason of the exportation of the subject
merchandise to the United States. We have recognized, in previous
segments of this proceeding as well as in other proceedings, that
Thailand operates a duty drawback system and that valid claims for
adjustment to U.S. price may be allowed in administrative reviews
pursuant to this system. See Certain Welded Carbon Steel Pipes and
Tubes from Thailand: Final Results of Antidumping Duty Administrative
Review, 63 FR 55578, 55588-89 (October 16, 1998); Certain Welded Carbon
Steel Pipes and Tubes From Thailand: Final Results of Antidumping Duty
Administrative Review, 61 FR 56515, 56518 (November 1, 1996); Certain
Textile Mill Products From Thailand: Final Results of Countervailing
Duty Administrative Review, 61 FR 2797, 2799 (January 29, 1996).
Therefore, recognition of Thailand's duty drawback system is not the
issue in this review.
However, the Department must analyze the facts presented in each
segment of a proceeding to determine the accuracy and completeness of
the duty drawback adjustment claim made by each respondent in each
segment of a proceeding. The Department will grant a duty drawback
adjustment if we determine: (1) That the import duty and rebate are
directly linked to, and dependent upon, one another; and (2) that
imported raw materials are sufficient to account for the duty drawback
received on the exports of the manufactured product. See Carbon Steel
Wire Rope From Mexico; Final Results of Antidumping Duty Administrative
Review, (``Wire Rope From Mexico'') 63 FR 46753, 46756 (September 2,
1998) (citing Far East Machinery Co. v. United States, 12 CIT 972, 974
(1988)).
In the preliminary results of this review, we rejected Saha Thai's
claim for a duty drawback adjustment to export price, both cash-and
guarantee-
[[Page 56762]]
based drawback, because we were ``unable to verify that the claimed
adjustment accurately reflects the actual amount of duty drawback
received.'' See Certain Welded Carbon Steel Pipes and Tubes from
Thailand; Preliminary Results of Antidumping Duty Administrative Review
64 FR 17998, 18000 (April 13, 1999). In the most recently completed
administrative review, the Department examined information similar to
that provided by Saha Thai in its questionnaire responses in this
review regarding cash-and guarantee-based duty drawback, and allowed
Saha Thai's claimed drawback adjustment because the Department found
that both information on the record and the verification supported the
accuracy of Saha Thai's claimed duty drawback adjustment. See Certain
Welded Carbon Steel Pipes and Tubes from Thailand: Final Results of
Antidumping Duty Administrative Review, 63 FR 55578, 55588-89.
In this review as well, certain information in Saha Thai's
questionnaire responses and certain information examined at
verification indicate that Saha Thai participates in cash-and
guarantee-based duty drawback programs with Thai customs authorities,
and that it received the claimed amount of drawback. Although certain
documents appeared to support Saha Thai's claim, other information
examined at verification, as well as the inconsistent explanations of
Saha Thai's participation in the various drawback programs provided at
verification, undermine the apparent completeness of the documentation
Saha Thai submitted in its questionnaire responses. For example, as
petitioners note, Saha Thai stated at verification that it pays banks a
fee for taking on the risk of guaranteeing payment of the duties on
Saha Thai's imports of hot-rolled coil and zinc. Payment of this fee,
which would decrease the amount of Saha Thai's duty drawback adjustment
claim, was not incorporated into Saha Thai's claim for a duty drawback
adjustment.
In addition, at verification, we asked Saha Thai to provide support
for its duty drawback claims related to a purchase of imported hot-
rolled coil that was managed by one of Saha Thai's brokers. As shown in
the verification report, Saha Thai's explanation was far from clear.
For this one transaction, we asked for proof that duties had been paid
for the coils in question. At various points in the verification, Saha
Thai stated: (1) That it paid its broker the amount of import duties on
this entry, (2) that these coils were delivered to Saha Thai's bonded
warehouse and thus Saha Thai was not required to pay import duties, (3)
that the line item for import duties on the broker's statement
represented VAT tax, not import duties, and (4) that neither Saha Thai
nor its broker had paid import duties on this merchandise, because Saha
Thai had arranged for a bank guarantee which would permit Saha Thai to
be exempt from paying import duties, pending export of Saha Thai
merchandise containing the imported coil. Verification Report at 14-15.
Saha Thai stated in its case brief that the Department examined
only one import entry at verification, and that this entry was not part
of Saha Thai's claimed cash/guarantee duty drawback calculation. Saha
Thai Case Brief, fn. 9. As an initial matter, the Department examined
two import entries, the different quantities of which can be seen in
Verification Exhibit 9, (pages 1-4 and pages 5-9). Contrary to Saha
Thai's statement, one of these entries does relate to the claimed
drawback amount, though the relationship between those documents and
the claimed amount was only partially explained. Our examination of the
other entry, though not a part of Saha Thai's claimed amount, is
nonetheless illustrative as an import of raw material on which Saha
Thai either paid duty or posted a bank guarantee in anticipation of
receiving some form of drawback. See Memorandum to the File from John
Totaro: Analysis of the Claim for a Duty Drawback Adjustment Made by
Saha Thai Steel Pipe Co., Ltd. (August 11, 1999) (``Duty Drawback
Memorandum'') at 3-4, on file in the CRU.
Therefore, we find that although there is enough record evidence to
indicate that Saha Thai participates in cash-and guarantee-based duty
drawback programs and thus to allow an adjustment for cash-and
guaranteed-based duty drawbacks, Saha Thai failed at verification to
describe and document the accuracy of its claimed duty drawback
adjustment. As a result, we cannot allow the duty drawback adjustment
as claimed by Saha Thai. Therefore, for purposes of these final
results, we determine, in accordance with section 776(a)(2)(D) of the
Act, that the use of facts available is appropriate as the basis of our
adjustment to U.S. price for duty drawback. As facts available, on
those sales for which Saha Thai claimed a cash-or guarantee-based duty
drawback adjustment, we are allowing an adjustment to export price
equal to the simple average of the reported per-ton duty drawback
amounts that Saha Thai had calculated by export invoice. See August 3,
1998 QR at Exhibit 3 (public version on file in the CRU).
With regard to Saha Thai's claimed adjustment for suspended duties,
Saha Thai argues that, under the laws of Thailand, a manufacturer may
establish a bonded warehouse and, if certain conditions are met, be
exempt from paying import duties on materials entered into that
warehouse. See Saha Thai Case Brief at 9. In cases where the import
duty is not collected, the first prong in the test for granting a duty
drawback adjustment then becomes whether ``import duties were actually
not collected by reason of the exportation of the subject merchandise
to the United States.'' See Wire Rope From Mexico, 63 FR at 46756.
In this review, Saha Thai provided no records of any of the import
entries of coil or zinc that it claims were exempted from duties
because they were entered into Saha Thai's bonded warehouse and later
exported as pipe products. Therefore, because there is no record of
these imports on the record of this review, or of any import and export
clearance documents related to the entry of imported raw materials into
a bonded warehouse or export of pipes made from those raw materials, we
cannot establish that ``import duties were actually not collected by
reason of the exportation of the subject merchandise to the United
States.'' Id. Therefore, we are not allowing Saha Thai to now claim
duty drawback for these sales that were purportedly produced from
inputs imported into a bonded warehouse. See Stainless Steel Bar From
Japan: Preliminary Results of Antidumping Administrative Review, 64 FR
64 FR 10445 at 10445-46 (March 4, 1999); Duty Drawback Memorandum at 4-
5.
Petitioners assert that Saha Thai failed to describe the bank
guarantee duty drawback program until verification. However, we
consider the information first submitted in Saha Thai's initial section
C questionnaire response (August 3, 1998) and supplemental sections A,
B, and C questionnaire response (September 23, 1998) to be sufficient
to determine that Saha Thai participated in the guarantee-based duty
drawback program. In particular, Saha Thai's September 23, 1998
supplemental questionnaire response indicates that Saha Thai
participated in two duty drawback programs with Thai customs
authorities: ``the documents in the exhibit [Exhibit 23] show the duty
drawback amounts refunded to Saha Thai as well as the duties exempted.
* * * The export report details the duty drawback calculation for each
export transaction. * * * The preceding column shows whether the duty
was
[[Page 56763]]
refunded by check `C' or as a credit `G.' '' September 23, 1998 QR at
27-28 (public version on file in the CRU). At verification, Saha Thai
explained that these two programs were the cash-based and bank
guarantee-based duty drawback systems discussed above. In addition, we
believe that our choice of facts available appropriately accounts for
any fees associated with the bank guarantee duty drawback process that
may have offset Saha Thai's claimed duty drawback adjustment.
Finally, with regard to petitioners' assertion that the information
Saha Thai provided on its bonded warehouse operation was untimely, as
discussed above, we made our determination to not allow Saha Thai's
claim for a duty drawback adjustment for import entries into a bonded
warehouse because there was insufficient evidence on the record to meet
the first prong of our test to grant such an adjustment when the import
duty is not collected. Therefore, the Department did not consider the
issue of timeliness.
Comment 2: Currency Conversion
Saha Thai argues that the Department should use actual daily
exchange rates for the entire period of the baht's precipitous
decline--which Saha Thai defines as July 2, 1997 to January 31, 1998--
to convert the Thai baht to the U.S. dollars. The respondent argues
that while the Department, in its preliminary results, correctly found
that the rapid and unprecedented decline of the Thai baht on July 2,
1997 justified the suspension of its normal practice of applying a
forty-day rolling average, or ``benchmark'' rate, for converting
foreign currencies to U.S. dollars, it nonetheless failed to apply the
actual daily exchange rates during the entire period of the baht's
decline. Instead, Saha Thai states that the Department converted baht-
denominated prices and costs to their U.S. dollar equivalents using its
normal methodology, but utilized as a benchmark the stationary average
of the baht to dollar exchange rate for the forty day period from July
2, 1997 to August 27, 1997. For the period after August 27, 1997, the
Department reverted to using its normal methodology with the standard,
rolling forty-day average benchmark. However, Saha Thai argues that the
Thai baht continued to fall precipitously even after the August 27,
1997 cut-off date used by the Department to mark the end of the baht's
decline. Because there was a continued decline in the baht even after
August 27, 1997, Saha Thai contends that the Department should extend
the period during which the baht is considered to be in a sustained
decline through January 31, 1998, and that the Department should use
actual daily exchange rates for that period.
Moreover, Saha Thai maintains that the methodology the Department
used in this review is inconsistent with that used in other recent
investigations involving countries which have experienced rapid,
sustained devaluations. Saha Thai cites two investigations completed by
the Department involving Korea, in which the Department found that a
forty percent decline in the value of the Korean won amounted to more
than a temporary fluctuation, and in which the Department used actual
daily exchange rates to convert home market prices to U.S. dollars.
Citing Emulsion Styrene-Butadiene Rubber from the Republic of Korea
(``Rubber from Korea''), 64 FR 14865 (March 29, 1999) (final
determination) and Stainless Steel Plate in Coils from the Republic of
Korea, 64 FR 15444 (March 31, 1999) (final determination).
Petitioners maintain that the respondent's suggestion that the
Department use daily exchange rates, notwithstanding fluctuations in
the daily rates, would violate the statute. See 19 U.S.C. 1677b-1(a)
(section 773A(a) of the Act). See also Statement of Administrative
Action (at 171), House Doc. 316, 103rd Cong. 2d Sess. 841 (1994).
Petitioners argue that the Department's currency conversion methodology
utilized in this review recognizes the rapid devaluation of the Thai
currency by establishing a separate benchmark for the period when such
rapid devaluation was occurring. Petitioners emphasize that from July 2
through August 27, 1997, the Department used a stationary benchmark of
average daily rates, which recognized the precipitous drop in exchange
rates, but ``avoided undue daily fluctuations in exchange rates.''
Certain Welded Carbon Steel Pipes and Tubes from Thailand; Preliminary
Results of Antidumping Duty Review, 64 FR 17998 (April 13, 1999).
Petitioners contend that the Department was correct in using the
standard benchmark (a rolling forty-day average) for the period in
which fluctuation was still occurring.
Department's Position: We do not agree with Saha Thai's request for
the use of actual daily exchange rates to convert Thai Baht to U.S.
dollars for the entire period of the baht's decline from July 2, 1997
to January 31, 1998.
As stated in the preliminary results, we made currency conversions
into U.S. dollars in accordance with section 773A of the Act, based on
exchange rates in effect on the dates of the U.S. sales as certified by
the Federal Reserve Bank. Section 773A(a) of the Act directs the
Department to use a daily exchange rate in order to convert foreign
currencies into U.S. dollars unless the daily rate involves a
fluctuation. It is the Department's practice to find that a fluctuation
exists when the daily exchange rate differs from the benchmark rate by
2.25 percent. The benchmark is defined as the moving average of rates
for the past 40 business days. When we determine a fluctuation to have
existed, we substitute the benchmark rate for the daily rate, in
accordance with established practice. See Change in Policy Regarding
Currency Conversions, 61 FR 9434 (March 8, 1996); see also Preliminary
Results of Antidumping Duty Administrative Review; Aramid Fiber Formed
of Poly Para-Phenylene Terephthalamide From the Netherlands, 64 FR
36841, 36843 (July 8, 1999), Notice of Preliminary Results and Partial
Rescission of Antidumping Duty Administrative Review: Canned Pineapple
Fruit From Thailand, 64 FR 30476, 30480 (June 8, 1999).
Effective July 2, 1997, the Thai government ended its restrictions
on the movement of the dollar-baht exchange rate and allowed the rate
to be determined by market supply and demand. Our analysis of Federal
Reserve exchange rate data shows that the value of the Thai baht in
relation to the U.S. dollar fell on July 2, 1997, by more than 18
percent from the previous day, a decline which was many times more
severe than any single-day decline during several years prior to that
date, and did not rebound significantly in a short time. As such, we
determine that the decline in the baht from July 1 to July 2 following
the change in the Thai government's exchange rate policy was of such a
magnitude that the dollar-baht exchange rate cannot reasonably be
viewed as having simply fluctuated at that time, i.e., as having
experienced only a momentary drop in value, relative to the normal
benchmark. While we previously found a large and precipitous decline
where the Korean won declined more than 40 percent, that decline
occurred over a two-month period. Here, the decline was smaller, but
occurred in a single day. Therefore, for these final results, we
continue to find that there was a large, precipitous drop in the value
of the baht in relation to the U.S. dollar on July 2, 1997.
We disagree with Saha Thai's claim that the baht continued to fall
precipitously after August 27, 1997, and that only daily rates should
be used through January 31, 1998. In its 1996 Policy Bulletin (61 FR
9434; March 8, 1996) on exchange rate methodology,
[[Page 56764]]
the Department defined an exchange rate ``fluctuation'' but also stated
that it would use daily rates when ``the decline in the value of a
foreign currency is so precipitous and large as to reasonably preclude
the possibility that it is merely fluctuating.'' The Policy Bulletin
did not define a ``precipitous and large'' decline in the value of a
foreign currency but left this determination to be made in future
cases. In Rubber from Korea and other Korean cases, the Department
found that a decline of more than 40 percent within a two-month period
was sufficiently large and precipitous that use of daily rates was
warranted during this two-month period. In contrast, in Extruded Rubber
Thread from Indonesia, the Department found that a decline of some 50
percent over five months was not precipitous and large and continued to
employ its normal exchange rate methodology. See 64 FR 14693.
While we have concluded that the drop of more than 18 percent in
the dollar-baht exchange rate on July 2, 1997, constitutes a
``precipitous and large'' decline, we do not find that the gradual
decline that occurred over nearly seven months, from July 2, 1997, to
January 31, 1998, qualifies as a ``large and precipitous'' drop for
purposes of our exchange rate methodology.
We have, however, reexamined our methodology for addressing
exchange rates following the large and precipitous decline on July 2,
1997. In the preliminary determination, we determined that, because a
large and precipitous drop occurred on that one day, it was appropriate
simply to begin on that day to use a new benchmark in order to avoid
using pre-precipitous drop daily rates in calculating the benchmark for
daily rates after the precipitous drop. Accordingly, for exchange rates
between July 2 and August 27, 1997, the Department relied on the
standard exchange rate model, but used as the benchmark rate a
(stationary) average of the daily rates over this period.
As noted above, the gradual decline in the value of the baht over
several months after July 2 was not so large and precipitous as to
reasonably preclude the possibility that the exchange rate fluctuated
from time to time during that period. Therefore, it is appropriate for
the Department to use its standard methodology so as to ``ignore''
those fluctuations in accordance with section 773A of the Act. However,
we also recognize that, following a large and precipitous decline in
the value of a currency, a period may exist during which exchange rate
expectations are revised and thus it is unclear whether further
declines are a continuation of the large and precipitous decline or
merely fluctuations. Under the circumstances of this case, such
uncertainty may have existed following the large, precipitous drop on
July 2, 1997. Thus, we devised a simple test for identifying a point
following a precipitous drop at which it is reasonable to think that
exchange rate expectations have been sufficiently revised that it is
appropriate to resume using the normal methodology. Beginning on July
2, 1997, we used only actual daily rates until the daily rates were not
more than 2.25 percent below the average of the 20 previous daily rates
for five consecutive days. At that point, we determined that the
pattern of daily rates no longer reasonably precluded the possibility
that they were merely ``fluctuating.'' (Using a 20-day average for this
purpose provides a reasonable indication that it is no longer necessary
to refrain from using the normal methodology, while avoiding the use of
daily rates exclusively for an excessive period of time.) Accordingly,
from the first of these five days, we resumed classifying daily rates
as ``fluctuating'' or ``normal'' in accordance with our standard
practice, except that we began with a 20-day benchmark and on each
succeeding day added a daily rate to the average until the normal 40-
day average was restored as the benchmark.
Applying this methodology in the instant case, we used daily rates
from July 2, 1997 through August 4, 1997. We then resumed the use of
our normal methodology, starting with a benchmark based on the average
of the 20 reported daily rates from July 8 through August 4.
Comment 3: Exchange Losses
Saha Thai maintains that it incurred unanticipated and
unprecedented exchange losses in 1997 which fit the definition of
``extraordinary'' established by Department precedent and U.S. GAAP.
According to Saha Thai, U.S. GAAP defines: (1) ``Extraordinary'' as
``events and transactions that are distinguished by their unusual
nature and by the infrequency of their occurrence'', (2) ``unusual
nature'' as ``the underlying event or transaction possesses a high
degree of abnormality and is of a type clearly unrelated to the
ordinary and typical activities of the enterprise, taking into account
the environment in which the enterprise operates'', and (3)
``environment in which the enterprise operates'' as including ``such
factors as the characteristics of the industry or industries in which
it operates, the geographical location of its operations, and the
nature and extent of governmental regulation.'' Saha Thai describes the
Government of Thailand's decision to float the baht as ``highly
abnormal (it can only be taken once),'' as an event which ``would not
reasonably be expected to recur in the foreseeable future'' and as a
``one-time irrevocable * * * government * * * decision to change the
fundamental nature of the nation's exchange rate regime,'' and
therefore argues that it is consistent with the definition of
``extraordinary'' under U.S. GAAP. Saha Thai asserts that contrary to
the Department's memorandum to the file (citing Foreign Exchange Loss
Memorandum to The File from Marlene Hewitt, dated March 31, 1999), the
decision to float the baht was not a ``usual'' or ``frequent'' move on
the part of the Thai Government that could easily be reversed, because
prior to the decision to float the baht, the exchange rate was fixed by
the Thai government.
Given their extraordinary nature, Saha Thai requests that the
Department amortize these exchange losses over a five-year period. The
respondent argues that failure to do so distorts the margins for
antidumping purposes. Saha Thai cites the following cases in which the
Department either excluded entirely or has amortized extraordinary
costs over a reasonable period of time: Stainless Steel Wire Rod from
Taiwan, 63 FR 40467 (July 29, 1998); Large Newspaper Printing Presses
and Components Thereof, Whether Assembled or Unassembled from Japan, 61
FR 38153 (July 23, 1996 ); Fresh Cut Roses from Ecuador, 60 FR 7038
(February 6, 1995); and Fresh Cut Roses from Colombia, 60 FR 7001
(February 6, 1995). Saha Thai argues that according to Thai GAAP, Thai
companies are permitted to calculate losses based on the difference in
the baht value of foreign-currency denominated assets and liabilities
between July 2, 1997 and the end of the first accounting period in
which the baht was floated, and to report such costs as extraordinary
in their financial statements.
Saha Thai argues that, if the Department includes all exchange
losses in interest expense or G&A expense, it should allow an offset to
cost of production for exchange gains earned on accounts receivable.
Saha Thai states that the Department's treatment of exchange rate gains
and losses in cost of production calculations should reflect economic
and business reality, and that for companies buying and selling in
foreign currencies the overall currency position should be
determinative of actual costs. Saha Thai asserts that
[[Page 56765]]
currency gains on sales are just as much a part of financing costs as
currency losses on purchases. Saha Thai believes that the Department's
treatment of exchange gains and losses--denying an offset for currency
gains on sales on the basis that these gains are sales-related income
and not a cost of production, and also denying a circumstance of sale
adjustment for foreign currency gains--violates the WTO Antidumping
Agreement, which states that price comparisons should be conducted in a
fair manner. See WTO Antidumping Agreement at Article 2.4.
Saha Thai also argues that it ``self-hedges'' its currency exposure
in that its purchases of raw materials in dollars are offset by its
sales in dollars, and therefore that the Department should not ascribe
to the period of material purchases a ``paper cost''--the exchange rate
losses--which is reversed in the following year. Saha Thai argues that
to do so would be unreasonable and distortive, and that the Department
should exercise its discretion under section 773(f)(1)(A) of the Act in
determining the proper allocation of costs.
Finally, Saha Thai argues that, if the Department decides not to
treat its 1997 exchange losses as extraordinary and therefore does not
amortize these losses over a reasonable period of time, it should
follow its past precedent of treating the portion of the loss incurred
on raw materials purchases in the same manner as other costs associated
with current period raw material purchases. Saha Thai cites several
cases in which the Department has treated foreign exchange transaction
costs associated with raw materials purchases as a cost of
manufacturing. See Stainless Steel Round Wire from Taiwan, 64 FR 17336,
17338 (April 9, 1999) (final determination); Emulsion Styrene-Butadiene
Rubber from the Republic of Korea, 64 FR 14871 (March 29, 1999); Steel
Wire Rod from Trinidad and Tobago, 63 FR 9181 (February 24, 1998); and
Canned Pineapple Fruit from Thailand, 63 FR 7392, 7401 (February 13,
1998). Saha Thai argues that the appropriate method for expensing
exchange losses on raw materials is to transfer all purchase expenses
to current costs.
Petitioners argue that the Department's refusal to amortize Saha
Thai's 1997 foreign exchange losses as 1997 losses, which were
expressed in Saha Thai's financial statements in accordance with Thai
GAAP as a normal business expense, was reasonable and consistent with
Department practice because these losses were not extraordinary. Citing
Fresh Chilled Atlantic Salmon from Norway, 58 FR 37912, 37915 (July 14,
1993); Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-
Rolled Carbon Steel Flat Products and Certain Cut-to-Length Carbon
Steel Plate from the Netherlands, 58 FR 37199, 37204 (July 9, 1993).
Petitioners assert that 19 U.S.C. 1677b(f)(1)(A) (section
773(f)(1)(A) of the Act) requires that the Department calculate costs
on the basis of a respondent's financial records, provided that such
records are maintained in accordance with GAAP and reasonably reflect
costs. Citing Asociacion Colombiana de Exportadores de Flores v. United
States, 6 F. Supp. 2d 865 (CIT 1998). Petitioners note that Saha Thai
characterized its losses on exchange transactions as a normal business
expense during verification, and stated in its case brief that 1997
exchange losses were expensed in the company's financial statements in
accordance with Thai GAAP. Consequently, petitioners assert that the
Department should treat exchange losses in the same manner they were
booked by Saha Thai, because this treatment conforms with the home
market's GAAP and represents consistent treatment of these expenses.
Citing Certain Welded Carbon Steel Pipe and Tube from Turkey, 63 FR
35190, 35199 (June 29, 1998) and Certain Steel Concrete Reinforcing
Bars from Turkey, 62 FR 9737, 9743 (March 4, 1997).
In response to Saha Thai's request that losses associated with raw
material purchases be assessed as a cost of manufacturing, the
petitioners argue that Saha Thai's internal bookkeeping on raw material
inventories cannot override the treatment of the exchange losses in
Saha Thai's audited financial statements. Citing DRAMS of One Megabit
and Above from Korea, 58 FR 15467, 15464 (March 23, 1993).
Petitioners also argue that the Department should not change its
established practice of denying circumstance of sale adjustments for
exchange gains on accounts receivable, as Saha Thai requests.
Petitioners argue that 19 CFR 351.410 (c) and (d) provide that such an
adjustment will be granted for ``direct selling expenses and assumed
expenses,'' such as ``commissions, credit terms, guarantees, and
warranties.'' Petitioners argue that the Department's ``regulations for
such an adjustment require that reason for the circumstance of sale
adjustment have an effect on the prices charged. * * *'' Quoting FAG
U.K., Ltd. v. United States, 945 F. Supp. 260 (CIT 1996). Petitioners
argue that because Saha Thai failed to demonstrate that its export
prices are directly affected by exchange rate gains resulting from the
conversion of U.S. dollars into local currency, its circumstance of
sale claim should be denied. Citing Cold-Rolled Carbon Steel Flat
Products from Argentina, 49 FR 48588 (December 13, 1984); Certain Hot-
Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel
Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products
and Certain Cut-to-Length Carbon Steel Plate from Germany, 58 FR 37136,
37149 (July 9, 1993).
Petitioners further argue that in calculating COP and CV, it is the
Department's normal practice to ``distinguish between exchange gains
and losses realized or incurred in connection with sales transactions
and those associated with purchase transactions.'' Quoting Stainless
Steel Round Wire from Canada, 64 FR 17324, 17334 (April 9, 1999);
citing Steel Wire Rod from Trinidad and Tobago, 63 FR 9177, 9181
(February 24, 1998); Stainless Steel Wire Rod from Japan, 63 FR 40434,
40441 (July 29, 1998); Certain Welded Carbon Steel Pipe and Tube from
Turkey, 63 FR 35190, 35198 (June 19, 1998); Certain Steel Concrete
Reinforcing Bars from Turkey, 62 FR 9737, 9741 (March 4, 1997); and
Certain Pasta from Turkey, 61 FR 30309, 30324 (June 14, 1996).
Petitioners argue that it has been Commerce's long-standing analysis
that exchange gains and losses from sales transactions are not related
to the manufacturing activities of the company. Petitioners cite the
following cases to support their argument: Stainless Steel Round Wire
from Canada, 64 FR 17334 (April 9, 1999); Steel Wire Rod from Trinidad
and Tobago, 63 FR 9181 (February 24, 1998); Fresh Atlantic Salmon from
Chile, 63 FR 31411, 31430 (June 9, 1998); Circular Welded Non-Alloy
Pipe and Tube from Mexico, 62 FR 37014, 37026 (July 10, 1997);
Polyethylene Tenephthalate Film, Sheet, and Strip from the Republic of
Korea, 56 FR 16305, 16313 (April 22, 1991). According to petitioners,
this policy is not inconsistent with the Department's treatment of
exchange gains in the context of a circumstance of sale adjustment, and
petitioners argue that the Department should maintain such a policy in
this review.
Department's Position: We disagree with the respondent that the
Thai Government's monetary policy to alter currency regimes has any
bearing on the case. Changes in exchange rates, even large ones, are
neither unusual in nature nor infrequent events. Additionally, the
company did not treat the effect of this event as an extraordinary item
in its financial statements.
[[Page 56766]]
In addition, we have not amortized certain portions of its POR
exchange rate losses over five years, because these losses were
incurred on current debt as opposed to long-term foreign currency debt.
The Department's practice is to allow the respondent to amortize
foreign exchange losses over the remaining life of the loans to which
they relate. See Final Determination of Sales at less than Fair Value:
Fresh Cut Roses from Ecuador, 60 FR 7019, 7039 (February 6, 1995)
(losses amortized on a straight-line basis over the life of the loan
and included in the net interest expense calculation); and Final
Results and Partial Rescission of Antidumping Duty Administrative
Review: Canned Pineapple from Thailand, 63 FR 43661, 43669 (August 14,
1998).
Furthermore, the Department normally includes in its calculation of
COP and CV foreign exchange gains and losses resulting from
transactions related to a company's manufacturing operations (e.g.,
purchases of inputs). See Final Determination of Sales Less Than Fair
Value: Polyethylene Terephthalate Film, Sheet, and Strip From the
Republic of Korea, 56 FR 16305, 16313 (April 22, 1991) (comment 16),
and Notice of Final Determination of Sales at Less Than Fair Value:
Steel Wire Rod From Trinidad & Tobago, 63 FR 9177, 9181-82 (February
24, 1998). Saha Thai's foreign exchange losses, which are included in
its COP and CV, are for losses resulting from raw materials purchase
transactions or borrowing money to support its production operations.
Since these activities giving rise to the foreign exchange gains and
losses directly relate to the company's production operations, we
included them in the COP and CV.
In accordance with section 773 (f)(1)(A) of the Act, the Department
normally calculates costs based on the records of the company, ``if
such records are kept in accordance with the generally accepted
accounting principles of the exporting country * * * and reasonably
reflect the costs associated with the production and sale of the
merchandise.'' In the instant case, in accordance with Thai GAAP,
respondent wrote off the entire amount of the foreign exchange loss
associated with foreign debt in the current year. Thus, consistent with
Department practice, the Department has not amortized the exchange
losses. Rather, for calculating COP and CV, we treated these losses as
Saha Thai treated them in its financial statement--as losses expensed
in the current financial period--and included all exchange rate losses
in G&A or interest expense. Accordingly, there is no justification to
grant a COP offset.
In addition, petitioners correctly argue that Saha Thai is not
entitled to a circumstance of sale adjustment for foreign currency
gains related to its sales transactions. Moreover, we disagree with
Saha Thai's assertion that the Department's treatment of exchange gains
and losses in the preliminary results violates the requirement of the
WTO Antidumping Agreement that price comparisons be conducted in a fair
manner. We included Saha Thai's exchange gains and losses in our
calculation of COP and CV in a manner consistent with the Act, which is
consistent with the WTO Antidumping Agreement.
Comment 4: Date of Sale
In their case brief, petitioners argue that purchase order date,
rather than invoice date, better reflects the date upon which Saha Thai
established the material terms of sale for export of subject
merchandise to the United States. Petitioners note that the
Department's regulations establish that date of sale will normally be
the invoice date as recorded in the ordinary course of business.
Nonetheless, petitioners argue, the record in the instant case supports
the Department's use of purchase order date as the date of sale.
Petitioners claim that the Department's continued reliance upon invoice
date is not an accurate reflection of the facts of the case and that
the Department's practice has been to determine the date on which price
and quantity for a sale are finalized and establish this as the date of
sale. Citing 19 CFR section 351.401(i); Al Tech Speciality Steel Corp.
v. United States, Consol. Court No. 97-08-01328, Slip Op. 98-136 (Sept.
24, 1998) citing Silicon Metal from Brazil, 61 FR 46763, 46766
(September 5, 1996), and Titanium Sponge from Japan, 54 FR 13403, 13404
(April 3, 1989).
Petitioners assert that the Department's regulations establish that
the date of sale will normally be the invoice date unless ``a different
date better reflects the date on which the exporter or producer
establishes the material terms of sale.'' See 19 CFR Section 351.401(i)
and Standard Line and Pressure Pipe from Germany, 63 FR 13217, 13226
(March 18, 1998). Petitioners argue that the standard of ``better
reflects,'' as laid out in the Department's new regulations, is valid
and applicable if the material terms of a sale are usually established
on a date other than invoice date. See Antidumping Duties;
Countervailing Duties; Final Rule (``Final Rule''), 62 FR 27296, 27348
(May 19, 1997) (Preamble), and Circular Welded Non-alloy Steel Pipe
from Korea, 62 FR 64559, 64560 (December 8, 1997) (preliminary
results). Petitioners cite to a recent final determination in which the
Department emphasized that the regulations allow for flexibility in
identifying the appropriate date of sale if the facts of the case show
that a date other than invoice date is the date upon which the material
terms of a sale are established. See Circular Welded Non-Alloy Steel
Pipe from Korea, 63 FR 32833, 32835 (June 16, 1998). Petitioners state
that the Department can select a date of sale other than the date on
which an agreement on the material terms of a sale has been reached if
changes to the material terms of the sale are common to the extent that
the initial agreement is not binding or definite. See Stainless Steel
Plate in Coils from the Republic of Korea, 64 FR 15444, 15449-15450
(March 31, 1999).
Petitioners assert that evidence of the usual date for establishing
terms of sale must be ``satisfactory.'' See Final Rule 62 FR at 27348;
Certain Corrosion-Resistant Carbon Steel Flat Products from Japan, 64
FR 12951, 12957 (March 16, 1999); Canned Pineapple Fruit from Thailand,
63 FR 43661, 43668 (August 14, 1998). Petitioners argue that evidence
in the instant case establishes that the material terms of Saha Thai's
U.S. sales are usually set at purchase order date and that the specific
evidence to support this is more than satisfactory. Finally,
petitioners argue that the record in the case clearly shows that a date
other than commercial invoice date better reflects the date on which
the material terms of sale for U.S. export transactions are
established.
Petitioners contend that during the 1996-1997 administrative review
Saha Thai did not respond to the Department's request for information
related to date of sale but, instead, argued that the Department's
regulations called for the use of invoice date and, therefore, it would
not be relevant for Saha Thai to respond to questions related to date
of sale. See Certain Welded Carbon Pipes and Tubes from Thailand; Final
Results of Antidumping Duty Administrative Review, (``1996-1997 Final
Results'') 63 FR 55578 (October 16, 1998). Petitioners argue that the
Department, despite the facts on the record in the 1996-1997 review,
incorrectly chose invoice date as the date of sale because of the
Department's analysis that sample contracts and invoices demonstrated
that changes occurred beyond tolerance levels established in an initial
contract, between purchase order and invoice
[[Page 56767]]
date. Citing 1996-1997 Final Results, 63 FR at 55587 and current
litigation contesting the Department's determination in Allied Tube and
Conduit Corp. v. United States, Court No. 98-11-03135. Petitioners
argue that the facts on the record in the instant review are more
definitive than the 1996-1997 administrative review in supporting the
use of purchase order date as the date of sale.
Petitioners argue that after Saha Thai and its U.S. customers enter
a contract agreement, the customer submits purchase orders for specific
products. See Memorandum to File from Steve Bezirganian and Marlene
Hewitt, Verification of Saha Thai Steel Pipe Co., Ltd., 1997-1998,
February 25, 1999 (``Verification Report'') at 20. Petitioners argue
further that Saha Thai sells specific, custom lengths to U.S. customers
and, therefore, it can be assumed that the purchase orders submitted by
U.S. customers initiate a made-to-order transaction. Petitioners argue
that the Department's conclusions reached through conducting sales
traces at verification support the use of purchase order date as the
date of sale.
However, petitioners argue that the Department, for purposes of
administrative convenience, chose to use invoice date as date of sale
despite overwhelming evidence to the contrary. See Verification Report
at 37, and Preliminary Results, 64 FR at 17999. Petitioners argue that
the Department cannot go against its own regulations for the sake of
administrative convenience. See Ferro Union, Inc. v. United States,
Slip Op. 99-27, March 23, 1999 at 9-10, n.9 citing Voge v. United
States, 844 F. 2d 776, 779 (Fed. Cir. 1988); Reuters Ltd. v. FCC, 781
F. 2d 946, 950 (D.C. Cir. 1986).
With regard to matching sales if purchase order date is used as the
date of sale, petitioners assert that Saha Thai was well aware during
the 1997-1998 administrative review that the material terms of its U.S.
sales did not change after the purchase order date and that,
accordingly, the Department should apply adverse facts available where
sales matching data is inadequate.
The respondent rebuts petitioners' argument that purchase order
date is the date upon which the material terms of Saha Thai's sales to
the United States are established and asserts that the Department
should continue to use invoice date, consistent with the Department's
statutory and regulatory framework, for the final determination in the
instant case. Furthermore, the respondent argues that the facts on the
record demonstrate that the material terms of Saha Thai's sales to the
United States are not confirmed until invoice date. Finally, the
respondent argues that if the Department changes its date of sale
methodology in the instant review, the use of supplemental verified
data from the previous review--rather than the application of adverse
facts available--would be the only appropriate course of action.
The respondent argues the presumption for the Department to
consider invoice date as the date of sale is well established. Citing
19 CFR section 351.401(i) (1998) and 62 FR at 27348-49. Given the
presumption for the use of invoice date as date of sale, Saha Thai
further argues that in a recent antidumping proceeding, the Department
also favored the use of a single date of sale for each respondent for
purposes of making more efficient use of the Department's resources and
enhancing the predictability of outcomes. Citing Hot-Rolled Flat-Rolled
Carbon-Quality Steel Products from Japan, 64 FR 24329, 24335 (May 6,
1999) (final determination). In the context of a recent antidumping
proceeding and decision by the Department to use invoice date as date
of sale, the respondent argues that for Saha Thai there is no uniform
event prior to invoice date that can be used as date of sale because
the price and quantity of merchandise may change until the invoice is
issued to the customer. See Stainless Steel Plate in Coils (``SSPC'')
from the Republic of Korea, 64 FR 15444, 15449-15450 (March 31, 1999)
(final results).
The respondent cites to a large number of recent cases in which the
Department used invoice date as the date of sale even where petitioners
argue that another date was more appropriate: See Certain Cold-Rolled
and Corrosion Resistant Carbon Steel Flat Products from Korea, 64 FR
12927, 12933-12935 (March 16, 1999) (final results); Hot-Rolled Flat-
Rolled Carbon-Quality Steel Products from Japan, 64 FR 24329, 24331-
24335 (May 6, 1999) (final determination); Stainless Steel Plate in
Coils from Belgium, 64 FR 15476, 15478-15482 (March 31, 1999) (final
determination); Certain Corrosion-Resistant Carbon Steel Flat Products
and Certain Cut-to-Length Carbon Steel Plate from Canada, 64 FR 2173,
2178 (January 13, 1999) (final results); Stainless Steel Plate in Coils
from South Africa, 64 FR 15459, 15463-15465 (March 31, 1999) (final
determination); and Emulsion Styrene-Butadiene Rubber from the Republic
of Korea, 64 FR 14865, 14869 (March 29, 1999) (final determination).
The respondent argues that petitioners' reliance on Corrosion-Resistant
Flat Products from Japan as an example of the Department's use of order
confirmation date as date of sale is not relevant and is based on facts
not present in the instant case. See Petitioners Case Brief at 5-6 and
Certain Corrosion-Resistant Carbon Steel Flat Products from Japan, 64
FR 12951, 12957-12958 (March 16, 1999) (final results). Finally, the
respondent argues that the Department, in a recent case, rejected a
petitioner's request for use of order confirmation date as date of sale
in order to avoid using different dates of sale in the home and U.S.
markets. See Small Diameter Circular Seamless Carbon and Alloy Steel
Standard, Line and Pressure Pipe from Germany, 63 FR 13217, 13226
(March 18, 1998) (final results).
The respondent rebuts petitioners' argument that purchase order
date should be used rather than invoice date because evidence on the
record shows that the material terms of sales do in fact change between
the purchase order and invoice date. Citing to the Department's
preliminary results, the respondent argues that the Department has
already recognized that while price and quantity for sales to the
United States may be established at the date of the purchase order,
price and quantity may not be set until invoice date. Citing
Preliminary Results, 64 FR at 17999.
Saha Thai also rebuts petitioners' argument that the Department's
analysis in the preliminary results was based on administrative
convenience. The respondent agrees with petitioners' assertion that
Saha Thai ships merchandise to customers in the United States under
umbrella contracts which establish price and general quantity. However,
the respondent argues that a number of the sales traces examined by the
Department at verification demonstrate that changes to price and
quantity after the purchase order do occur. Furthermore, the respondent
argues, the Department noted at verification that Saha Thai utilizes
invoice date as its date of sale in its own accounting system. The
respondent notes that the Department has found that a respondent's use
of invoice date as date of sale in its internal records and financial
statements is one reason for the Department to select invoice date,
rather than purchase order or order confirmation date, as the date of
sale. See Stainless Steel Plate in Coils from South Africa, 64 FR
15459, 15464 (March 31, 1999) (final determination).
Finally, the respondent rebuts petitioners' assertion that the
Department should apply adverse facts available if the Department
chooses to change its date of sale methodology for the final
determination. The respondent
[[Page 56768]]
argues that it fully complied with the Department's instructions and
that it reported all U.S. entries during the POR according to these
instructions. Saha Thai argues that, if the Department chooses purchase
order date as the date of sale, the Department may request to
incorporate a few additional months of home market sales from the
previous period of review in order to match home market sales with
contemporaneous U.S. market sales. The respondent argues that these
sales were verified by the Department in the previous administrative
review and, therefore, application of adverse facts available would be
unwarranted.
Department's Position: To determine the date of sale for this
review, we evaluated, pursuant to section 351.401(i) of the
Department's regulations, whether ``a date other than the date of
invoice * * * better reflects the date on which the exporter or
producer establishes the material terms of sale.''
Saha Thai reported invoice date as the date of sale in its
questionnaire responses. August 3, 1998 QR at C-17. The response also
provided information that supports the use of invoice date as the date
of sale. For example, Saha Thai stated that, ``* * * for sales to Ferro
Union (accounting for two-thirds of the quantity sold to the U.S.) the
contract notes only the total quantity to be ordered. The specific
quantity for each product is set subsequently. The exact quantity for
each sale is not determined until the merchandise is shipped.''
September 23, 1998 QR at 13 (emphasis added).
At verification, Saha Thai stated that the contracts it enters into
with U.S. customers bind the parties to the quantities agreed upon in
the contract, within a tolerance. See Verification Report at 20. Saha
Thai further stated that after a contract is made, it consults with the
customer on a production and shipping schedule, after which the
customer submits purchase orders to Saha Thai that indicate the
specific quantities to be supplied for each product. Id. According to
Saha Thai, the quantity tolerance in its sales contracts applies to the
total quantity on a purchase order (including all products), not to the
quantity for each individual product ordered. Id.
Saha Thai stated at verification that it typically meets the
quantity tolerances (both per purchase order and per the underlying
contract), and that between the purchase order and the invoice, neither
the agreed upon quantity nor the price itself would change. Id.
However, Saha Thai also stated at verification that ``between the
contract and invoice dates, it is still an open question as to what the
quantities will be for a specific product.'' Id. In addition, we noted
at verification that, for accounting purposes, Saha Thai considers the
date of invoice to be the date of sale, and records sales in its
accounting system on this basis.
Despite the apparent contradictions presented by the explanations
Saha Thai offered in its questionnaire responses and at verification,
the facts on the record, namely the actual sales documents, establish
invoice date as the most appropriate date of sale. In situations such
as this, where an agreement on the material terms of sale has been
reached, but is nevertheless subject to change, our practice, as
properly cited by petitioners, is to focus our analysis ``on whether
changes are sufficiently common to allow us to conclude that initial
agreements should not be considered to finally establish the material
terms of sale.'' See Stainless Steel Plate in Coils from the Republic
of Korea, 64 FR 15449-50 (March 31, 1999) We have analyzed five sets of
contracts, purchase orders and invoices contained in the record: Saha
Thai's July 1, 1998 Sales Documents supplement to its June 29, 1998
Section A questionnaire, and Verification Exhibits 21, 22 and 23. These
documents establish a pattern of material changes in quantity occurring
in a significant number of sales when purchase order quantity is
compared to invoice quantity. We noted that the frequency and degree of
the changes in quantity between invoice and purchase order were not
identical to that observed in the previous review. Nonetheless, the
sales documents in this review reflect the same pattern evident in the
previous review: that the quantity in Saha Thai's U.S. sales is not
commonly established until the invoice. Therefore we find that the
facts support our decision to maintain our date of sale methodology for
Saha Thai in this review. A detailed discussion of our analysis is
contained in the Memorandum to the File from John Totaro: Determination
of the Date of Sale for Saha Thai Steel Pipe Co., Ltd. (August 11,
1999) (``Date of Sale Memorandum''), on file in the CRU.
Given that the record evidence indicates that the quantity of
subject merchandise invoiced to Saha Thai's U.S. customers varies from
the quantities requested in the customers' purchase orders, we find
that invoice date is the appropriate date of sale. See Preamble to the
Final Rule, 62 FR at 27348-49. Therefore, our preliminary determination
on date of sale is unchanged for these final results.
Comment 5: Duty Reimbursement
Petitioners assert that, as expressed in the Department's
Verification Report, Saha Thai assumed the obligation of paying
antidumping duties for entries in the U.S. during the POR. Petitioners
argue that Saha Thai's assumption of responsibility for the payment of
antidumping duties constitutes a nullification of the relief these
duties were intended to provide. Citing Verification Report at 21 and
34.
Petitioners argue that Saha Thai's actions should be addressed by
the Department according to the Department's regulations related to
duty reimbursement. Citing to 19 CFR section 351.402(f)(1)(A),
petitioners urge the Department to deduct the amount of antidumping
duties paid directly by Saha Thai on its entries of subject merchandise
into the United States.
The respondent rebuts petitioners' assertion that the Department
should deduct the amount of antidumping duties paid directly by Saha
Thai on its U.S. entries. The respondent asserts that petitioners, in
referring to U.S. entries, are referring only to those U.S.
transactions in which Saha Thai acted as the importer-of-record and for
which Saha Thai posted antidumping duty deposits. See Petitioners Case
Brief at 11. The respondent argues that the Department's regulations do
not support petitioners' argument. The respondent asserts that the
plain language of the Department's regulations pertaining to deduction
of antidumping or countervailing duty payments from export price or
constructed export price clearly establishes that this deduction should
only take place if there are two entities--i.e., if an exporter or
producer pays duties on behalf of a separate importer. Citing 19 CFR
section 351.402(f)(1)(A). The respondent claims that, because Saha Thai
is the producer, the exporter, and the importer of its U.S. entries in
the instant case, the reimbursement section of the Department's
regulations is not applicable.
The respondent also rebuts petitioners' argument on the grounds
that petitioners do not cite any administrative precedent prior to the
completion of the URAA. The respondent points out that the SAA
establishes that the Department has no intention of changing its
methodology related to the finding of reimbursement. Citing SAA at 216.
The respondent further argues that the Department has, in recent
antidumping proceedings, reaffirmed its interpretation of the
regulatory language related to reimbursement. The respondent argues
[[Page 56769]]
that in recent cases the Department has not applied its reimbursement
regulation to a single entity. See Circular Welded Non-Alloy Steel Pipe
and Tube from Mexico, 63 FR 33041 (June 17, 1998) (final results) and
Certain Cold-Rolled Carbon Steel Flat Products from the Netherlands, 64
FR 11825 (March 10, 1999) (final results). The respondent argues, in
summary, that the regulation cited by petitioners to support the
argument that antidumping duties paid by Saha Thai for U.S. entries
should be deducted from export price is not applicable in the instant
case.
Department's Position: Section 351.402(f) of the Department's
regulations addresses reimbursement of antidumping duties. The section
states, in relevant part, that, ``[i]n calculating the export price (or
the constructed export price), the Secretary will deduct the amount of
any antidumping duty or countervailing duty which the exporter or
producer: (A) Paid directly on behalf of the importer; or (B)
Reimbursed to the importer.'' 19 CFR section 351.402(f)(1).
The Department recently addressed an allegation of reimbursement
that involved similar facts in Certain Cold-rolled Carbon Steel Flat
Products from the Netherlands: Final Results of Antidumping Duty
Administrative Review, 64 FR 11825 (March 10, 1999). In that case, the
manufacturer/exporter was also the importer of record during the
remaining part of the period of review. On the issue whether the
Department's reimbursement regulation is applicable whenever the
foreign producer is also the importer of record, we stated that ``we
disagree with petitioners that the reimbursement regulation is
applicable where the importer and exporter are the same corporate
entity. Our decision as to reimbursement is based upon our regulatory
interpretation of 19 CFR 351.401(f) [sic], which is that two separate
corporate entities must exist in order for the Department to invoke the
reimbursement regulation.'' 64 FR at 11833, citing Circular Welded Non-
Alloy Steel Pipe and Tube from Mexico; Final Results of Antidumping
Duty Administrative Review, 63 FR 33041, 33044 (June 17, 1998) (``Pipe
from Mexico'').
In Pipe from Mexico, the Department was applying the reimbursement
provision from its old regulations, 19 CFR section 353.26, which is
substantially the same as the current section 351.402(f). In that case,
the Department also examined a factual situation in which the
respondent was the producer, exporter, and importer of record for U.S.
sales of subject merchandise. The Department found that two separate
corporate entities must exist to invoke the reimbursement regulation,
and that therefore, the reimbursement regulation does not apply where
the producer/exporter and the importer are one and the same entity. See
63 FR at 33044.
Saha Thai explained at verification that at a certain point in the
POR, it became responsible for U.S. Customs clearance, which meant that
Saha Thai would pay the import duties on its U.S. sales after that
point, including antidumping duties. See Verification Report at 34.
This statement, as well as other facts on the record of the instant
review which cannot be discussed in a public notice due to their
proprietary nature, indicate that, like the respondent in Pipe from
Mexico, Saha Thai is the importer as defined in 19 CFR 351.102(b)
because it is ``the person by whom * * * the subject merchandise is
imported.'' See Memorandum to the File from John Totaro: Analysis of
Saha Thai Steel Pipe Company, Ltd for the Final Results of the
Administrative Review of Certain Welded Carbon Steel Pipes and Tubes
from Thailand for the Period March 1, 1997 Through February 28, 1998
(August 11, 1999) (``Final Results Analysis Memorandum'') at 9, on file
in the CRU. Because the facts on the record indicate that Saha Thai has
neither paid antidumping duties directly on behalf of another entity,
nor reimbursed another entity, we find that section 351.402(f) of the
Department's regulations is inapplicable. Therefore, we did not deduct
the amount of antidumping duties Saha Thai paid on certain U.S. sales
from our calculation of Export Price for those sales.
Comment 6: Weighting of Physical Characteristics for Model Match
The respondent argues that the Department incorrectly revised the
values for Saha Thai's product characteristics for the preliminary
determination and that these revisions do not accurately reflect
physical characteristic differences in a number of instances. The
respondent requests that the Department, for the final determination,
abandon its methodology of grouping all sizes of Saha Thai merchandise
into three distinct groups. The respondent argues that the Department's
consolidation of its various product sizes into three groups is highly
arbitrary and distorts product matching criteria. The respondent
proposes that the Department use a methodology for converting actual
pipe diameter to a code to be used in product matching by multiplying
the actual diameter by a thousand, i.e., \3/4\ inch pipe would be coded
as 750, 1 inch pipe would be coded as 1000.
In addition, the respondent argues that the Department also
incorrectly assigned general matching codes to a variety of subject
merchandise's wall thicknesses. The respondent argues that, for
example, the Department in its preliminary determination identified
fence tube as being closer in grade and wall thickness to one grade
but, in its analysis, assigned fence tube a GRADEH/U value which ranks
it for matching purposes to a different grade of pipe. See Verification
Report at 23 and Saha Thai product brochure attached to original
response as exhibit SR1-A19. The respondent argues that the Department
should use the numerical coding for wall thickness/grade that it used
in previous administrative reviews. The respondent proposes in its case
brief that the Department apply the following numeric designations that
it used in previous segments of this proceeding: ``ASTM=10; BS-S=100;
BS-L=110; BS-M=120; BS-L=130; fence tube=20.''
Petitioners argue that Saha Thai's suggestion to match wall
thickness based on numerical assignments should not be adopted.
Petitioners assert that the respondent's suggestion is confusing and
does not result in better product matches. Petitioners note that fence
tube should not be matched to ASTM specifications because fence tube
typically has a light wall appropriately matched to BS light. Hence,
matching should continue to be on a wall thickness basis.
Petitioners also reject Saha Thai's comments on matching by size as
a way to improve the Department's ability to match products.
Department's Position: The respondent is correct in noting that our
product weighting for the size characteristic differed from that in the
previous administrative review. A change was necessary because Saha
Thai sold its products in a wider array of sizes than in the previous
review. However, in reexamining the weights we assigned in the
preliminary results, we determined that some of our changes could
result in anomalous matches. Therefore, for the final results, we
assigned the same weights to the size characteristics as we had
assigned in the previous review where possible, but multiplied the
previously assigned weight by five. For example, in the 1996-1997
review, we assigned one-inch pipe a weight of 20; in the final results
of this review, we assigned one-inch pipe a weight of 100. For the
sizes of pipe sold in this review but not in the
[[Page 56770]]
previous review, we assigned weights proportionate to the weights
derived from the previous review weights. The result is an array of
size characteristic weights which is consistent with those assigned in
the most recently completed administrative review, and which avoids the
possibility of anomalous results presented by the preliminary results
size weights. We have modified our preliminary results model match
program to reflect this weighting method.
We agree with petitioners that fence tube should not be matched to
ASTM specifications because the wall thickness of fence tube is most
similar to that of Saha Thai's BS light pipes. Saha Thai incorrectly
states in its case brief that ``[i]n its preliminary results, the
Department found fence tube to be closer in wall thickness (and
therefore grade) to'' a particular grade of pipe. Saha Thai Case Brief
at 23. Our preliminary results Analysis Memorandum stated that ``Saha
Thai categorized its Galvanized Fence Tube (``GFT'') product as
belonging to a `grade' distinct from ASTM and British Standards * * *
Saha Thai's arguments justify our classifying GFT as a separate ``grade
* * *' '' Preliminary Results Analysis Memorandum from John Totaro to
the File, (March 31, 1999) at 7. In addition to Saha Thai's arguments,
evidence on the record indicates that Saha Thai's fence tube products
are not manufactured to the physical requirements of the grade cited by
respondent in its case brief. See Final Results Analysis Memorandum at
7-8. We did not discuss the wall thickness of fence tube in our
preliminary results. Moreover, contrary to Saha Thai's suggestion, our
weighting in terms of wall thickness (WALLS/WALLM) relates strictly to
the dimensions of the walls of the subject pipes, without
differentiation by grade. Our model match program incorporates a
separate weighting variable which provides different weights for each
grade of pipe (GRADES/GRADEM). See Final Results Analysis Memorandum at
2.
However, Saha Thai's case brief is instructive in that it sets out
the wall thicknesses, in millimeters, of Saha Thai's one-inch diameter
pipe products. In order of wall thickness (thinnest to thickest), these
products are: BS-L (2.6mm), BS-M (3.2mm), ASTM (3.38mm), and BS-H
(4.0mm). Saha Thai Case Brief at 23. We have revised our weighting
hierarchy of these products in terms of wall thickness to follow this
pattern, and we ranked Saha Thai's fence tube in this hierarchy
consistent with the wall thickness information contained in Saha Thai's
product brochure, and BS-S pipe consistent with the wall thickness
description in Saha Thai's questionnaire response. See Saha Thai June
29, 1998 QR at 27 and Exhibit 18. We revised the weighting of these
products to reflect their relative wall thicknesses. This is a change
both from the preliminary results and the 1996-1997 review. In our
view, this change will result in a more logical product matching
process in that the weighting of Saha Thai's products by wall thickness
will relate solely to the physical dimensions of walls of the products,
without regard to grade. This characteristic, in combination with the
characteristic based on grade, ensures that we select the most similar
merchandise for purposes of model matching.
Comment 7: Constructed Value Calculation
The respondent argues that the Department incorrectly omitted the
deduction of imputed credit from constructed value despite the
Department's recognition that credit should be deducted from
constructed value. Saha Thai cites to Dynamic Random Access Memory
Semiconductors from Korea, 63 FR 50874 (September 23, 1998) (final
results) and Carbon Steel Flat Products from Korea, 63 FR 13192 (March
18, 1998) (final results) in support of their positions. The respondent
requests in its case brief that the Department correct this error by
subtracting imputed credit from constructed value.
Department's Position: The Department agrees that imputed credit
should be deducted from constructed value and has done this for the
final results.
Comment 8: Description of Verification
The respondent argues in its case brief that, in the preliminary
results, the Department failed to mention that Saha Thai's cost
responses were also verified, despite the fact that the Department's
verification report suggests that the Department did in fact verify
significant portions of Saha Thai's constructed value and cost of
production information. See Preliminary Results, 64 FR at 17999 and
Verification Report at 16-20, 22-24 and 34-36. The respondent argues
that the Department should state in its final results that it verified
both sales and cost of production information submitted by Saha Thai in
order to ensure the accuracy of the public record and establish a
foundation on which to decide the need for verifying cost issues in
future reviews.
Department's Position: We agree with the respondent that the
Department should have stated in the preliminary results that our
verification addressed both sales and cost of production issues. We did
not intend to imply that cost of production issues were not addressed
at verification.
Final Results of the Review
As a result of this review, we have determined that the following
weighted-average dumping margin exists for the period March 1, 1997
through February 28, 1998:
------------------------------------------------------------------------
Manufacturer/exporter Period Margin
------------------------------------------------------------------------
Saha Thai................................. 3/1/97-2/28/98 9.65
------------------------------------------------------------------------
The Department shall determine, and the U.S. Customs Service shall
assess, antidumping duties on all appropriate entries. The Department
shall issue appraisement instructions directly to the Customs Service.
For assessment purposes, we have calculated importer-specific duty
assessment rates for the merchandise based on the ratio of the total
amount of antidumping duties calculated for the examined sales to the
total entered value of sales examined.
Furthermore, the following deposit requirements shall be effective
upon publication of this notice of final results of review for all
shipments of certain welded carbon steel pipes and tubes from Thailand,
entered, or withdrawn from warehouse, for consumption on or after the
publication date, as provided for by section 751(a)(1) of the Tariff
Act: (1) The cash deposit rate for the reviewed company will be the
rate stated above; (2) for previously investigated or reviewed
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 a prior review, or
the original 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 these reviews, the
cash deposit rate will continue to be 15.67 percent, the ``All Others''
rate made effective by the LTFV investigation. See 51 FR 3384, 3387
(January 27, 1986). These deposit requirements 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
[[Page 56771]]
under 19 CFR 351.402(f)(2) 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 the only reminder to parties subject to
administrative protective order (``APO'') of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with sections 351.305 and 351.306 of the Department's
regulations. Timely 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 notice are in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: October 12, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-27569 Filed 10-20-99; 8:45 am]
BILLING CODE 3510-DS-P
