E8-7200. Circular Welded Carbon Steel Pipes and Tubes from Thailand: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on circular welded carbon steel pipes and tubes from Thailand, in response to a request from Allied Tube and Conduit Corporation and Wheatland Tube Company (collectively, petitioners). This review covers the period March 1, 2006 through February 28, 2007. We preliminarily determine that U.S. sales of subject merchandise have been made by Saha Thai Steel Pipe (Public) Company, Ltd. 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. Interested parties are invited to comment on these preliminary results. See the “Preliminary Results of Review” section of this notice.

EFFECTIVE DATE:

April 7, 2008

FOR FURTHER INFORMATION CONTACT:

Jacqueline Arrowsmith or Myrna Lobo, AD/CVD Operations, Office 6, Import Administration, International Trade Administration, Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230.; telephone: [phone] OR [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On March 11, 1986, the Department published in the Federal Register an antidumping duty order on circular welded carbon steel pipes and tubes from Thailand. See Antidumping Duty Order: Circular Welded Carbon Steel Pipes and Tubes from Thailand. 51 FR 8341 (March 11, 1986). On March 2, 2007, the Department published a notice of opportunity to request an administrative review of this order covering the period March 1, 2006 through February 28, 2007. See Antidumping or Countervailing Duty Order, Finding or Suspended Investigation; Opportunity to Request Administrative Review 72 FR 9505 (March 2, 2007). The petitioners filed a timely request for an administrative review of the antidumping order with respect to exports by Saha Thai Steel Pipe (Public) Company, Ltd. (Saha Thai) during the period of review (POR). The Department published a notice of initiation of this antidumping duty administrative review on April 27, 2007. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 72 FR 92086. We received timely responses to our questionnaires on July 23, 2007, February 19, 2008, and March 5, 2008. The Department intends to request further clarification from Saha Thai on a few minor issues for which the information on the record of this administrative review is not completely clear.

Scope of the Order

The products covered by this antidumping order 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 “pipes and tubes.” The merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) 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 HTSUS subheadings are provided for the convenience and purposes of CBP, our written description of the scope is dispositive.

Analysis

Date of Sale

Saha Thai reported contract date as the date of sale for U.S. sales. The Department considers invoice date to be the presumptive date of sale (see section 351.401(i)) of the Department's regulations). For purposes of this review, we examined whether invoice date or another date better represents the date on which the material terms of sale were established. The Department examined sales documentation, including contracts and invoices, provided by Saha Thai for its U.S. sales and found that the material terms of sale are set on the contract date and that there are no changes outside the parameters set forth in the contract between contract date and invoice date. We preliminarily determine that contract date is the appropriate date of sale for U.S. sales in this administrative review because it better represents the date upon which the material terms of sale were established. This is consistent with the most recently completed administrative reviews of this order. See CircularWelded Carbon Steel Pipes and Tubes from Thailand: Final Results of Antidumping Duty Administrative Review, 71 54266 FR (September 14, 2006) (2004-2005 AR Final Results).

In the home market, the date of invoice is when the material terms of sale are established. Therefore, we are using the invoice date as the date of sale for home market sales.

Export Price

In accordance with section 772(a) of the Tariff Act of 1930, as amended (the Act), export price is the price at which the subject merchandise is first sold (or agreed to be sold) by the producer or exporter of subject merchandise outside of the United States to an unaffiliated purchaser prior to the date of importation. We classified all of Saha Thai's sales to its U.S. customers as EP sales because, as in previous segments of the proceeding, we found that Saha Thai is not affiliated with its distributors, which are the first purchasers in the United States. See, e.g., 2004-2005 AR Final Results.

In accordance with section 772(c)(2) of the Act, we made deductions from the gross unit price for foreign inland freight, foreign brokerage and handling, foreign inland insurance, ocean freight, lighterage charges, bill of lading fees, U.S. brokerage and handling charges, and U.S. duties.

Section 772(c)(1)(B) of the Act states that EP should 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...” Saha Thai claimed an adjustment to EP for the amount of duties exempted on its imports of inputs into a bonded warehouse. In determining whether an adjustment should be made to EP for this exemption, we look for a reasonable link between the duties imposed and those rebated or exempted. We do not require that the imported input be traced directly from importation through exportation. We do require, however, that the company meet our “two-pronged” test in order for this addition to be made to EP. The first element is that the import duty and its rebate or exemption be directly linked to, and dependent upon, one another; the second element is that the company must demonstrate that there were sufficient imports of the imported material to account for the duty drawback or exemption granted for the export of the manufactured product. See, e.g., 2004-2005 AR Final Results and Certain Welded Carbon Steel Pipes and Tubes from Thailand: Final Results of Antidumping Duty Administrative Review, 69 FR 61649 (October 20, 2004); see also Mittal Steel USA Inc. v. United States, Slip Op. 07-117 (CIT 2007); and Rajinder Pipes Ltd. v. United States, 70 F. Supp. 2d 1350, 1358 (CIT 1999).

For these preliminary results, we are not making an upward adjustment to export price for duty drawback or exemption, because Saha Thai has not clearly demonstrated how it met the second prong of our “two-pronged” test. While Saha Thai provided data regarding imports into its bonded warehouse, its questionnaire response did not demonstrate that this imported material was sufficient to account for the total of the import duties exempted for the export of the manufactured product. However, the Department intends to provide Saha Thai with an opportunity to explain why the documentation it has already provided satisfies the second prong of our “two-pronged” test and is sufficient to allow this adjustment for the final results of this review.

Normal Value

Home Market Viability: In accordance with section 773(a)(1) of the Act, to determine whether there was sufficient volume of sales in the home market and/or a third country market to serve as a viable basis for calculating NV, we compared Saha Thai's volume of home market sales of foreign like product to the volume of U.S. sales of subject merchandise. Pursuant to section 773(a)(1) of the Act and section 351.404(b) of the Department's regulations, because the volume of Saha Thai's home market sales of foreign like product was greater than five percent of the volume of U.S. sales of the subject merchandise, we determine that the home market is viable. Therefore, we used home market sales as the basis for NV in accordance with section 773(a)(1).

Affiliated Party Transactions and Arm's-Length Test: The Department's practice with respect to the use of home market sales to affiliated parties for NV is to determine whether such sales are at arm's-length prices. To examine whether home market sales were made at arm's length, we compared the starting price of sales to affiliated customers to the starting price of sales to unaffiliated customers, net of all movement charges, direct selling expenses, discounts and packing. Where the price to the affiliated party was, on average, within a range of 98 to 102 percent of the same or comparable merchandise to the unaffiliated parties, we determined that the sales made to the affiliated parties were at arm's length. See Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186 (November 15, 2002). In accordance with the Department's practice, in our margin analysis, we included only those sales to affiliated parties that were made at arm's length. Where the affiliated party transactions did not pass the arm's-length test, these sales were excluded from the NV calculation.

For each affiliated reseller, we requested Saha Thai to report the first sale to an unaffiliated customer. When the affiliated reseller did not pass the arm's-length test, we included the sale by the affiliated reseller to the first unaffiliated customer in our margin analysis instead of the Saha Thai sales to the affiliated reseller that were not made at arm's-length.

COP Analysis: In accordance with section 773(b)(2)(A)(ii) of the Act, in this POR, there were reasonable grounds to believe or suspect that Saha Thai had made home market sales at prices below its cost of production (COP) because in the 2004-2005 administrative review (the most recently completed administrative review) there were sufficient Saha Thai sales that failed the cost test that the Department disregarded them in accordance with section 773(b)(1) of the Act. See 2004-2005 AR Final Results.

In accordance with section 773(b)(3) of the Act, we calculated COP based on the sum of Saha Thai's cost of materials and fabrication for the foreign like product, plus administrative expenses, and interest expenses. We made some minor adjustments to Saha Thai's COP data as reported in its March 3, 2008 section D supplemental questionnaire response. For our complete analysis, see “Analysis Memorandum of Saha Thai Steel Pipe (Public) Company, Ltd. for the Preliminary Results of the Antidumping Duty Administrative Review of Circular Welded Carbon Steel Pipes and Tubes from Thailand for the period 03/01/2006 through 02/28/2007,” (Preliminary Analysis Memorandum) dated concurrently with this notice.

Cost Test: In accordance with section 773(b) of the Act, we compared the COP to the home market sales price (less any applicable movement charges and discounts) of the foreign like product on a product-specific basis in order to determine whether home market sales had been made at prices below COP.

In determining whether to disregard sales below COP, the Department examined whether such sales were (1) in substantial quantities and (2) not at prices which permitted the recovery of all costs within a reasonable period of time in the ordinary course of trade. In accordance with section 773(b)(2)(C) of the Act, when less than 20 percent of the respondent's sales of a given product were at prices below the COP, we do not disregard any below-cost sales of that product that were not made in “substantial quantities.” When 20 percent or more of the respondent's sales of a given product during the period of review were at prices less than COP, in accordance with sections 773(b)(2)(B) and (C) of the Act, we determined such sales to have been made in substantial quantities within an extended period of time. In such cases, based on weighted-average costs in the cost reference period, we determined that these sales were made at prices which would not permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. Based on this test, we disregarded sales below cost.

Home Market Price: To calculate Saha Thai's home market net price, we deducted discounts, inland freight, and warehousing where appropriate. Pursuant to section 773(a)(6)(C)(iii) and section 351.410(c) of the Department's regulations, we made a circumstance of sale adjustment for home market and U.S. credit expenses, as well as U.S. bank fees. In addition, pursuant to section 773(a)(6)(A) of the Act, we deducted home market packing costs and added U.S. packing costs. In addition, where applicable, we made adjustments for differences in costs attributable to physical characteristics pursuant to section 773(a)(6)(C)(ii) of the Act and section 351.410 of the Department's regulations.

Level of Trade

Pursuant to section 773(a)(1)(B)(i) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same level of trade (LOT) as the EP. The NV LOT is that of the starting-price sale in the comparison market, or when NV is based on CV, that of the sales from which we derive SG&A and profit. For EP, the U.S. LOT is the level of the starting-price sale, which is usually from exporter to importer. To determine whether NV sales are at a different LOT than EP sales, we examine stages in the marketing and selling functions along the chain of distribution between the producer and unaffiliated customer. If the comparison market sales are at a different LOT, and the difference affects the price comparability, as manifested in a pattern of consistent price differences between sales at different levels of trade in the country in which NV is determined, we make an LOT adjustment under section 773(a)(7)(A) of the Act and under section 351.410(c) of the Department's regulations. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).

For the U.S. market, Saha Thai reported only one LOT for its EP sales. For its home market sales, Saha Thai reported that its sales to unaffiliated customers were at the same level of trade as its U.S. sales. However, Saha Thai reported that, if the Department used the downstream sales of any of its affiliated resellers, these sales were made at a distinct level of trade, and Saha Thai's home market would consist of two levels of trade.

For Saha Thai's sales made through affiliated resellers, we consider the relevant functions to be the selling functions of both the producer and the reseller (i.e., the cumulative selling functions along the chain of distribution) for purposes of comparing the selling activities related to each affiliate's sale with those related to the producer's sale to its unaffiliated customers. If the reseller performs selling functions that add substantial selling activity in making the sale, we may find that sales by the reseller are made at a different LOT than the sales made by the producer.

Saha Thai provided information about the affiliated resellers' marketing and selling functions performed for its sales to unaffiliated customers. This information is sufficient to conduct an analysis of whether Saha Thai's sales in the home market were made at more than one LOT. For those affiliated resellers whose sales did not pass the arm's length test, we have analyzed the information that Saha Thai provided regarding the marketing and selling functions for both Saha Thai and the affiliated resellers. Based on this analysis, we have concluded that Saha Thai's home market sales were made at two distinct levels of trade: sales directly from Saha Thai to its unaffiliated customers and sales from Saha Thai through its affiliated resellers to unaffiliated customers. For our complete analysis, see Preliminary Analysis Memorandum; see also Circular Welded Steel Pipes and Tubes from Thailand: Notice of Final Results of Antidumping Duty Administrative Review, 71 FR 54266 (September 14, 2006).

We also find that all U.S. sales are made at one LOT. Furthermore, we find that the U.S. sales are at the same LOT as Saha Thai's home market sales to unaffiliated customers. See “Level of Trade” section in the Preliminary Analysis Memorandum.

Because we have preliminarily determined that there are two distinct levels of trade in the home market (LOT 1 and LOT 2) and that the LOT in the U.S. market matches LOT 1 in the home market, we examined whether an LOT adjustment is warranted for those U.S. sales for which there might not be a match in the home market at LOT 1. In accordance with section 773(a)(7)(ii) of the Act, such an adjustment is warranted when the difference in LOT is demonstrated to affect price comparability, based on a pattern of consistent price differences between sales at different levels of trade in the home market (the basis for NV). Our comparison of the prices at the two LOTs in the home market (the basis for NV) shows that there is a pattern of price differences and an LOT adjustment is warranted where there are no matches for U.S. sales at the same LOT in the home market. See id. Therefore, we made an LOT adjustment in instances when U.S. sales are being matched with home market sales at LOT 2.

Currency Conversion

We made currency conversions pursuant to section 351.415 of the Department's regulations based on rates certified by the Federal Reserve.

Preliminary Results of Review

Manufacturer/Exporter	Margin (percent)
Saha Thai Steel Pipe (Public) Company, Ltd.	3.87

Assessment

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries in accordance with section 351.212 of the Department's regulations. The Department intends to issue assessment instructions for Saha Thai directly to CBP 15 days after the date of publication of the final results of this administrative review.

The Department clarified its “automatic assessment” regulation on May 6, 2003 (68 FR 23954). This clarification will apply to entries of subject merchandise during the POR produced by companies included in these final 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 any intermediate company involved in the transaction. For a full discussion of this clarification, see Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 239254

(May 6, 2003).

Cash Deposit Requirements

The following cash deposit rates will be effective with respect to all shipments of subject merchandise from Saha Thai entered, or withdrawn from warehouse for consumption, on or after the publication date of the final results, as provided for by section 751(a)(1) of the Act: (1) for Saha Thai, the cash deposit rate 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 be the company-specific rate established for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the 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 subject merchandise; and (4) if neither the exporter nor the manufacturer of the subject merchandise is a firm covered by this review, a prior review, or the LTFV investigation, the cash deposit rate shall be the “all other” rate established in the LTFV investigated, which is 15.67 percent. These deposit rates, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Public Comment

Pursuant to section 351.224(b) of the Department's regulations, the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within five days after the date of publication of this notice. Pursuant to section 351.309 of the Department's regulations, interested parties may submit written comments in response to those preliminary results. Unless extended by the Department, case briefs are to be submitted within 30 days after the date of publication of this notice, and rebuttal briefs, limited to arguments raised in case briefs, are to be submitted no later than five days after the time limit for filing case briefs. Parties who submit arguments in this proceeding are requested to submit with the argument: (1) statement of the issues; and (2) a brief summary of the argument. Case and rebuttal briefs must be served on interested parties in accordance with section 351.303(f) of the Department's regulations.

Also, pursuant to section 351.310(c) of the Department's regulations, within 30 days of the date of publication of this notice, interested parties may request a public hearing on arguments raised in the case and rebuttal briefs. Unless the Secretary specifies otherwise, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs. Parties will be notified of the time and location.

The Department will publish the final results of the administrative review, including the results of its analysis of issues raised in any case or rebuttal brief, no later than 120 days after publication of the preliminary results, unless extended. See section 351.213(h) of the Department's regulations.

Notification to Importers

This notice serves as a preliminary reminder to importers of their responsibility under section 351.402(f) of the Department's regulations to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

This administrative review and notice are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: March 31, 2008.

Stephen J. Claeys,

Acting Assistant Secretary for Import Administration.