E9-2644. Certain Welded Carbon Steel Pipe and Tube from Turkey: Notice of Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, U.S. Department of Commerce.

SUMMARY:

In response to a request by domestic interested party, Allied Tube and Conduit Corporation (“Allied Tube”), the Department of Commerce (“the Department”) is conducting an administrative review of the antidumping duty order on certain welded carbon steel pipe and tube (“welded pipe and tube”) from Turkey. See Antidumping Duty Order; Welded Carbon Steel Standard Pipe and Tube Products From Turkey, 51 FR 17784 (May 15, 1986) (“Antidumping Duty Order”). This review covers the Borusan Group¹ (“Borusan”) and Toscelik Profil ve Sac Endustrisi A.S. (“Toscelik”), each a producer and exporter of the subject merchandise. We preliminarily determine that Borusan made sales below normal value (“NV”). If these preliminary results are adopted in our final results, we will instruct U.S. Customs and Border Protection (“CBP”) to assess antidumping duties based on the difference between the export price (“EP”) and the NV.

EFFECTIVE DATE:

February 9, 2009.

FOR FURTHER INFORMATION CONTACT:

Dennis McClure or Christopher Hargett, at [phone] or [phone], respectively; AD/CVD Operations, Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

On May 15, 1986, the Department published in the Federal Register the antidumping duty order on welded pipe and tube from Turkey. See Antidumping Duty Order. On May 5, 2008, the Department published a notice of opportunity to request an administrative review of this order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 73 FR 24532 (May 5, 2008). On May 30, 2008, in accordance with 19 CFR 351.213(b), domestic interested parties Allied Tube requested a review of Borusan and Toscelik.

On July 1, 2008, the Department published a notice of initiation of administrative review of the antidumping duty order on welded pipe and tube from Turkey, covering the period May 1, 2007, through April 30, 2008. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 73 FR 37409 (July 1, 2008).

On July 1, 2008, the Department sent an antidumping duty administrative review questionnaire to Borusan and Toscelik.² On July 8, 2008, Toscelik informed the Department that it had no sales, shipments or entries of subject merchandise in or to the United States, during the period of review (“POR”). On October 10, 2008, the Department published a notice of intent to rescind the administrative review in part. See Welded Carbon Steel Pipe and Tube from Turkey: Notice of Intent to Rescind Antidumping Duty Administrative Review, In Part, 73 FR 60240 (October 10, 2008).

On August 29, 2008, the Department received Borusan's Sections A-D questionnaire response. On October 23, 2008, and November 3, 2008, the Department issued supplemental Section D and Sections A-C questionnaires, respectively, to Borusan. On November 14, 2008, Borusan file a supplemental response to the Department's supplemental Section D questionnaire. On December 8, 2008, the Department received Borusan's supplemental response to the Department's supplemental Sections A-C questionnaire. On December 10, 2008, the Department issued additional questions regarding Section D of the questionnaire. On December 11, 2008, the Department issued additional questions concerning Sections A-C of the questionnaire. The Department received Borusan's supplemental response to the Departments supplemental questions issued on December 10 and December 11, 2008, on January 7, 2009.

Scope of the Order

The products covered by this order include circular welded non-alloy steel pipes and tubes, of circular cross-section, not more than 406.4 millimeters (16 inches) in outside diameter, regardless of wall thickness, surface finish (black, or galvanized, painted), or end finish (plain end, beveled end, threaded and coupled). Those pipes and tubes are generally known as standard pipe, though they may also be called structural or mechanical tubing in certain applications. Standard pipes and tubes are intended for the low pressure conveyance of water, steam, natural gas, air, and other liquids and gases in plumbing and heating systems, air conditioner units, automatic sprinkler systems, and other related uses. Standard pipe may also be used for light load-bearing and mechanical applications, such as for fence tubing, and for protection of electrical wiring, such as conduit shells.

The scope is not limited to standard pipe and fence tubing, or those types of mechanical and structural pipe that are used in standard pipe applications. All carbon steel pipes and tubes within the physical description outlined above are included in the scope of this order, except for line pipe, oil country tubular goods, boiler tubing, cold-drawn or cold-rolled mechanical tubing, pipe and tube hollows for redraws, finished scaffolding, and finished rigid conduit.

Imports of these products are currently classifiable under the following Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings: 7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 7306.30.50.40, 7306.30.50.55, 7306.30.50.85, and 7306.30.50.90. Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this proceeding is dispositive.

Product Comparisons

We compared the EP to the NV, as described in the Export Price and Normal Value sections of this notice. In accordance with section 771(16) of the Tariff Act of 1930, as amended (“the Act”), we first attempted to match contemporaneous sales of products sold in the United States and comparison market that were identical with respect to the following characteristics: (1) grade; (2) nominal pipe size; (3) wall thickness; (4) surface finish; and (5) end finish. When there were no sales of identical merchandise in the home market to compare with U.S. sales, we compared U.S. sales with the most similar merchandise based on the characteristics listed above in order of priority listed.

Export Price

Because Borusan sold subject merchandise directly to the first unaffiliated purchaser in the United States prior to importation, and constructed export price (“CEP”) methodology was not otherwise warranted based on the record facts of this review, in accordance with section 772(a) of the Act, we used EP as the basis for all of Borusan's sales.

We calculated EP using, as starting price, the packed, delivered price to unaffiliated purchasers in the United States. In accordance with section 772(c)(2)(A) of the Act, we made the following deductions from the starting price (gross unit price), where appropriate: foreign inland freight from the mill to port, foreign brokerage and handling, international freight, marine insurance, U.S. brokerage, U.S. duty, and other related movement charges.

In addition, Borusan reported an amount for duty drawback which represents the amount of duties on imported raw materials associated with a particular shipment of subject merchandise to the United States that is exempted upon export. Borusan requested that we add the amount to the starting price. See page C-34 of Borusan's August 29, 2009, original response. To determine if a duty drawback adjustment is warranted, the Department has employed a two-prong test which determines whether: (1) the rebate and import duties are dependent upon one another, or in the context of an exemption from import duties, if the exemption is linked to the exportation of the subject merchandise; and (2) the respondent has demonstrated that there are sufficient imports of the raw material to account for the duty drawback on the exports of the subject merchandise. See Allied Tube and Conduit Corp. v. United States, Slip Op. 05-56 (May 12, 2005).

Borusan provided specific documents to demonstrate that its exemption from import duties is linked to the exportation of subject merchandise, such as a table linking the consumption of hot-rolled steel sheet to the exportation of welded pipe and tube. See Exhibit C-8 of Borusan's August 29, 2009, original response. Furthermore, Borusan provided documentation to demonstrate that there are sufficient imports of the raw material to account for the duty drawback on the exports of the subject merchandise. See id. Therefore, in accordance with our practice and determination in prior reviews, we are adding duty drawback to the starting price. See Notice of Final Results of Antidumping Duty Administrative Review: Certain Welded Carbon Steel Pipe and Tube From Turkey, 70 FR 73447 (December 12, 2005) (“2003-04 Administrative Review”). See also the Department's “Analysis Memorandum for the Borusan Group” (“Borusan's calculation memo”), dated February 2, 2009, available in the Central Records Unit in Room 1117 of the Main Commerce Building.

Normal Value

A. Selection of Comparison Market

In order to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating NV, we compared Borusan's volume of home market sales of the foreign like product to the volume of its U.S. sales of the subject merchandise, in accordance with section 773(a)(1)(C) of the Act. Because Borusan's aggregate volume of home market sales of the foreign like product was greater than five percent of its aggregate volume of U.S. sales of the subject merchandise, we determined that the home market was viable. We calculated NV as noted in the “Calculation of NV Based on Comparison Market Prices” section of this notice. See also Borusan's calculation memo.

Cost of Production Analysis

Because the Department disregarded sales below the cost of production (“COP”) in the last completed review of Borusan, we have reasonable grounds to believe or suspect that sales of the foreign like product under consideration for the determination of NV in this review may have been made at prices below the COP as provided by section 773(b)(2)(A)(ii) of the Act. Therefore, pursuant to section 773(b)(1) of the Act, we initiated a COP investigation of sales by Borusan in the home market. See 2003-04 Administrative Review.

1. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated the COP based on the sum of Borusan's costs of materials and fabrication employed in producing the foreign like product, plus selling, general, and administrative expenses and the cost of all expenses incidental to packing and preparing the foreign like product for shipment.

2. Test of Comparison Market Sales Prices

We compared the weighted-average COP figures to home market sales of the foreign like product as required by section 773(b) of the Act, in order to determine whether these sales had been made at prices below the COP. On a product-specific basis, we compared the COP to the home market prices, less any applicable movement charges, rebates, discounts, packing, and direct selling expenses.

3. Results of the COP Test

Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 percent of sales of a given product were at prices less than the COP, we did not disregard any below-cost sales of that product because we determined that the below-cost sales were not made in “substantial quantities.” Where 20 percent or more of sales of a given product during the POR were at prices less than the COP we determined such sales to have been made in “substantial quantities.” See section 773(b)(2)(C) of the Act. Further, we determined that the sales were made within an extended period of time, in accordance with section 773(b)(2)(B) of the Act, because they were made over the course of the POR. In such cases, because we compared prices to POR-average costs, we also determined that such sales were not made at prices which would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. Therefore, we disregarded below-cost sales of a given product where more than 20 percent were sold at prices below the COP and used the remaining sales as the basis for determining NV, in accordance with section 773(b)(1) of the Act. See Borusan's calculation memo.

Calculation of NV Based on Comparison Market Prices

For Borusan, for those comparison products for which there were sales at prices above the COP, we based NV on home market prices. In these preliminary results, we were able to match all U.S. sales to contemporaneous sales, made in the ordinary course of trade, of either an identical or a similar foreign like product, based on matching characteristics. In accordance with section 773(a)(1)(B)(i) of the Act, we have excluded certain sales sold in the comparison market which were exported to a third country.³ We calculated NV based on free on board (“FOB”) mill or delivered prices to unaffiliated customers, or prices to affiliated customers which were determined to be at arm's length (see discussion below regarding these sales). We made deductions, where appropriate, from the starting price for billing adjustments, discounts, rebates, and inland freight. Additionally, we added interest revenue. In accordance with section 773(a)(6) of the Act, we deducted home market packing costs and added U.S. packing costs.

In accordance with section 773(a)(6)(C)(iii) of the Act, we adjusted for differences in the circumstances of sale. These circumstances included differences in imputed credit expenses and other direct selling expenses, such as the expense related to bank charges and factoring.⁴ We also made adjustments, where appropriate, for physical differences in the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.

Calculation of Arm's-Length Sales

We included in our analysis Borusan's home market sales to affiliated customers only where we determined that such sales were made at arm's-length prices, i.e., at prices comparable to prices at which Borusan sold identical merchandise to their unaffiliated customers. Borusan's sales to affiliates constituted less than five percent of overall home market sales. To test whether the sales to affiliates were made at arm's-length prices, we compared the starting prices of sales to affiliated and unaffiliated customers net of all movement charges, direct selling expenses, discounts, and packing. Where the price to that affiliated party was, on average, within a range of 98 to 102 percent of the price of the same or comparable merchandise sold to the unaffiliated parties, we determined that the sales made to the affiliated party were at arm's length. See Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186 (November 15, 2002).

Level of Trade

As set forth in section 773(a)(1)(B)(i) of the Act and in the Statement of Administrative Action (“SAA”) accompanying the Uruguay Round Agreements Act, at 829-831 (see H.R. Doc. No. 316, 103d Cong., 2d Sess. 829-831 (1994)), to the extent practicable, the Department calculates NV based on sales at the same level of trade (“LOT”) as U.S. sales, either EP or CEP. When the Department is unable to find sale(s) in the comparison market at the same LOT as the U.S. sale(s), the Department may compare sales in the U.S. and foreign markets at different LOTs. The NV LOT is that of the starting-price sales in the home market. To determine whether home market sales are at a different LOT than U.S. sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. See Honey from Argentina: Preliminary Results of Antidumping Duty Administrative Review and Intent to Revoke Order in Part, 73 FR 79802, 79805 (December 30, 2008) (“Honey from Argentina”). If the comparison-market sales are at a different LOT and the differences affect price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison-market sales at the LOT of the export transaction, we make an LOT adjustment under section 773(a)(7)(A) of the Act. See Honey from Argentina, 73 FR at 79805.

In implementing these principles, we examined information from Borusan regarding the marketing stages involved in the reported home market and EP sales, including a description of the selling functions performed by Borusan for the channels of distribution in the home market and U.S. market. In our analysis, we grouped the reported selling functions into the following sales function category: sales process and marketing support, freight and delivery, inventory maintenance, and quality assurance/warranty service.

For home market sales, we found that Borusan's mill-direct sales comprised one LOT. Furthermore, Borusan provided similar selling functions to each type of customer (i.e. trading companies/distributors and industrial end-users/construction companies), with the exception of rebates grouped into the sales process and marketing category which were given to trading companies/distributors. See pages A-18 and A-21 of Borusan's August 29, 2008, response.

We found that Borusan's U.S. sales were also made at only one LOT. Borusan reports one channel of distribution, and sales are negotiated on an order-by-order basis with an unaffiliated trading company. See page A-17 of Borusan's August 29, 2008, response.

We then compared Borusan's home market LOT and with the U.S. LOT. We note the selling functions do not differ for the activities falling under inventory maintenance (i.e., forward inventory maintenance and sales from warehouse), quality assurance/warranty service (i.e., provide warranty service), and freight and delivery (i.e., act as agent or coordinate production/delivery for customer with mill and coordinate freight and delivery arrangement). Furthermore, we note that the selling functions grouped under sales process and marketing, such as customer advice/product information, discounts, advertising, and rebates only differ somewhat between the home market LOT and U.S. LOT. See page A-20 of Borusan's August 29, 2008, response. Therefore, we compared all U.S. sales to an identical home market LOT and did not find it necessary to make an LOT adjustment.

Currency Conversion

The Department's preferred source for daily exchange rates is the Federal Reserve Bank. However, the Federal Reserve Bank does not track or publish exchange rates for the Turkish lira. Therefore, we made currency conversions based on the daily exchange rates from the Dow Jones Business Information Services.

Section 773A(a) 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 a benchmark rate by 2.25 percent. The benchmark rate is defined as the rolling average of the rates for the past 40 business days. When we determine that a fluctuation existed, we generally utilize the benchmark rate instead of the daily rate, in accordance with established practice.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the following margin exists for the period May 1, 2007, through April 30, 2008:

Manufacturer/Exporter	Margin (percent)
Borusan5	7.64
5 The cash deposit rate calculated for Borusan applies to The Borusan Group, Borusan Mannesmann Boru Sanayi Ve Ticaret, A.S. and Borusan Istikbal Ticaret T.A.S. for CBP purposes. The Department formerly referred to Borusan Istikbal Ticaret T.A.S. as Istikbal Ticaret T.A.S. See Notice of Final Results of Antidumping Duty Administrative Review: Certain Welded Carbon Steel Pipe and Tube from Turkey, 70 FR 73447 (December 12, 2005). We note that Borusan's response does not identify a company by the name Istikbal Ticaret T.A.S. Instead, Borusan's response identified their affiliate, Borusan Istikbal Ticaret T.A.S., which was not involved in sales of subject merchandise to the United States during the POR. See Borusan's August 29, 2008, response at 33. Borusan also explained in its August 29, 2008, response at 5, that Borusan Birlesik Boru Fabrikalari San ve Tic. (“BBBF”) was renamed Borusan Mannesmann Boru Sanayi Ve Ticaret, A.S. prior to BBBF's name change.

We will disclose the calculations used in our analysis to parties to this proceeding within five days of the publication date of this notice. See section 351.224(b) of the Department's regulations. Interested parties are invited to comment on the preliminary results. Interested parties may submit case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed no later than 37 days after the date of publication of this notice. Parties who submit arguments are requested to submit with each argument: (1) a statement of the issue, (2) a brief summary of the argument, and (3) a table of authorities. Further, parties submitting written comments should provide the Department with an additional copy of the public version of any such comments on a diskette. Any interested party may request a hearing within 30 days of publication of this notice. See section 351.310(c) of the Department's regulations. If requested, a hearing will be held 44 days after the publication of this notice, or the first workday thereafter. The Department will publish a notice of the final results of this administrative review, which will include the results of its analysis of issues raised in any written comments or hearing, within 120 days from publication of this notice.

Assessment

The Department will determine, and CBP shall assess, antidumping duties on all appropriate entries, pursuant to section 751(a)(1)(B) of the Act and 19 CFR 351.212(b). The Department calculated importer-specific duty assessment rates on the basis of the ratio of the total antidumping duties calculated for the examined sales to the total entered value of the examined sales for that importer. Where the assessment rate is above de minimis, we will instruct CBP to assess duties on all entries of subject merchandise by that importer. The Department intends to issue assessment instructions to CBP 15 days after the date of publication of the final results of review.

The Department clarified its “automatic assessment” regulation on May 6, 2003. See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This clarification will apply to entries of subject merchandise during the period of review produced by companies included in these preliminary results of review for which the reviewed companies did not know their merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. For a full discussion of this clarification, see Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).

Cash Deposit Requirements

The following cash deposit rates will be effective upon publication of the final results of this administrative review for all shipments of welded pipe and tube from Turkey entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(1) of the Act: (1) the cash deposit rate for the company listed above will be the rate established in the final results of this review; (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will 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, a prior review, or the less-than-fair-value (“LTFV”) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) if neither the exporter nor the manufacturer is a firm covered in this or any previous review or the LTFV investigation conducted by the Department, the cash deposit rate will be 14.74 percent, the “All Others” rate established in the LTFV investigation. These cash deposit requirements, when imposed, shall remain in effect until further notice.

This notice serves as a preliminary reminder to importers of their responsibility under section 351.402(f)(2) of the Department's regulations to file a certificate regarding the reimbursement of antidumping and/or countervailing 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 and/or countervailing duties occurred and the subsequent assessment of double antidumping duties.

This determination is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: February 2, 2009.

Ronald K. Lorentzen,

Acting Assistant Secretary for Import Administration.

Footnotes

1.  The Borusan Group includes Borusan Mannesmann Boru Sanayi ve Ticaret A.S. and Borusan Istikbal Ticaret T.A.S. and other affiliated companies.

2.  The questionnaire consists of sections A (general information), B (sales in the home market or to third countries), C (sales to the United States), D (cost of production/constructed value), and E (cost of further manufacturing or assembly performed in the United States).

3. In Borusan's original response submitted on August 29, 2008, Borusan explained that it knows its domestic customer is going to export the foreign like product without modification. In the Department's November 3, 2008, supplemental questionnaire, the Department requested Borusan to identify these sales.

4.  In the Department's November 3, 2008, supplemental questionnaire the Department requested Borusan to explain how it accounted for all expenses related to factoring. On pages 20 and 21 of Borusan's December 8, 2008, supplemental response, Borusan explained that it revised the database to account for the difference between the invoice value and the funds received from the factoring institution. Borusan also explained that it adjusted the payment date and recalculated credit expense for these particular sales, since it reported a separate field for factoring expenses.