E6-6676. Notice of Preliminary Results of Antidumping Duty New Shipper Review: Certain Welded Carbon Steel Pipe and Tube from Turkey

AGENCY:

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

SUMMARY:

In response to a request by the respondent, Toscelik Profil ve Sac Endustrisi A.S., Toscelik Metal Ticaret A.S., and its affiliated export trading company, Tosyali Dis Ticaret A.S., (collectively, “Toscelik”), the Department of Commerce (“the Department”) is conducting a new shipper review of the antidumping duty order on certain welded carbon steel pipe and tube (“welded pipe and tube”) from Turkey. This review covers one producer/exporter of the subject merchandise, Toscelik. We preliminarily determine that Toscelik did not make 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:

May 3, 2006.

FOR FURTHER INFORMATION CONTACT:

Victoria Cho or George McMahon, 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; Welded Carbon Steel Standard Pipe and Tube from Turkey, 51 FR 17784 (May 15, 1986). On May 2, 2005, 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, 70 FR 22631 (May 2, 2005). On May 31, 2005, in accordance with 19 CFR 351.214 and section 751(a)(2)(B) of the Tariff Act of 1930, as amended (“the Act”), and of the antidumping order on welded carbon steel pipe and tube from Turkey, Toscelik requested a new shipper review.

On June 30, 2005, the Department published a notice of initiation of antidumping duty new shipper review for the period May 1, 2004, through April 30, 2005. See Certain Welded Carbon Steel Pipe and Tube from Turkey: Notice of Initiation of Antidumping Duty New Shipper Review for the Period May 1, 2004, through April 30, 2005, 70 FR 39487 (June 30, 2005). On December 5, 2005, the Department extended the deadline for the preliminary results until no later than April 26, 2006. See Certain Welded Carbon Steel Pipe and Tube From Turkey: Extension of the Time Limit for the Preliminary Results of Antidumping Duty New Shipper Review, 70 FR 72426 (December 5, 2005).

On July 5, 2005, the Department sent an antidumping duty administrative review questionnaire for Sections A-C to Toscelik.^[1] The Department received Toscelik's Section A-C questionnaire response on August 29, 2005. On September 19, 2005, domestic interested parties ^[2] submitted an allegation that Toscelik's home market sales were made at prices below the cost of production (“COP”). The Department analyzed the information referenced in petitioners' letter of September 19, 2005, and determined that the COP allegation was company-specific, employed a reasonable methodology, provided evidence of below-cost sales, and included models which are representative of the broader range of pipe and tube sold by Toscelik. Therefore, we determined that the petitioners' COP allegation provided a reasonable basis to initiate a new shipper COP review. See Memorandum from LaVonne Clark to Neal Halper entitled “Petitioners' Allegation of Sales Below the COP for Toscelik Profil ve Sac Endustrisi A.S.” (“COP Memo”), dated September 28, 2005, on file in Import Administration's Central Records Unit, Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230 (“CRU”).

As a result, the Department issued a Section D questionnaire to Toscelik on September 28, 2005. The Department granted an extension to Toscelik and subsequently received Toscelik's Section D questionnaire response on November 9, 2005. The Department subsequently issued three supplemental questionnaires regarding Sections A-C of the Department's initial questionnaire to Toscelik on October 7, 2005, January 6, 2006, and February 10, 2006, respectively. The Department also issued two supplemental questionnaires regarding Section D of the Department's initial questionnaire on November 30, 2005, and January 19, 2006, respectively. The Department received Toscelik's three supplemental questionnaire responses for Sections A-C on November 4, 2005, February 6, 2006, and February 21, 2006, respectively. The Department received Toscelik's two supplemental questionnaire responses for Section D on December 7, 2005, and February 2, 2006, respectively. The Department conducted a verification of Toscelik's cost of production from March 6 through March 10, 2006, and a verification of Toscelik's sales from March 13 through March 17, 2006.

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.

Verification

As provided in section 782(i)(3) of the Act, we verified the information provided by Toscelik. We used standard verification procedures, including an examination of the relevant sales and financial records. Our verification results are detailed in the company-specific verification report placed in the case file in the CRU. See Toscelik's Sales Verification Report and Toscelik's Cost Verification Report, dated April 26, 2006, and Calculation Memorandum, dated April 26, 2006, in the CRU.

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 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 the U.S. sale, we compared the U.S. sale with the most similar merchandise based on the characteristics listed above in the order of priority listed.

Export Price

Toscelik sold subject merchandise directly to the first unaffiliated purchaser in the United States prior to importation, and constructed export price methodology was not otherwise warranted based on the record facts of this review. Therefore, in accordance with section 772(a) of the Act, we applied the Department's EP methodology for all of Toscelik's sales.

We calculated EP using, as starting price, the packed, delivered price to the unaffiliated purchaser 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 warehouse to port, foreign brokerage and handling, international freight, marine insurance, and other related charges. In addition, in accordance with section 772(c)(1)(B) of the Act, we added duty drawback to the starting price, having found preliminarily that such an adjustment was warranted under the standard two-prong test. See Allied Tube and Conduit Corp. v. United States, 374 F. Supp 2d 1257 (CIT May 12, 2005).

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 Toscelik's volume of home-market sales of the foreign like product to its respective volume of the U.S. sale of the subject merchandise, in accordance with section 773(a)(1)(C) of the Act. Toscelik's aggregate volume of home-market sales of the foreign like product was greater than five percent of its respective aggregate volume of U.S. sales of the subject merchandise. Therefore, we determined that Toscelik's home market was viable. We calculated NV as noted in the “Calculation of NV Based on Comparison Market Prices” and “Calculation of NV Based on Constructed Value” sections of this notice.

B. Cost of Production (“COP”) Analysis

As referenced in the background section, the Department conducted an analysis of the domestic interested parties' allegation that Toscelik's home market sales were made below the COP. We found that there were reasonable grounds to believe or suspect that Toscelik's sales of the foreign like product in the HM were made at prices below their respective COP. Accordingly, pursuant to section 773(b)(1) of the Act, we initiated a new shipper COP review to determine whether Toscelik's sales were made at prices below their COP. See COP Memo.

1. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated the COP based on the sum of Toscelik's costs of materials and fabrication employed in producing the foreign like product, plus selling, general, and administrative expenses (“SG&A”) and the cost of all expenses incidental to packing and preparing the foreign like product for shipment. We relied on the COP data submitted by Toscelik except for the following adjustments. We adjusted Toscelik's fixed overhead (“FOH”) costs to differentiate each product's depreciation expenses based on the equipment and machinery used to manufacture the product (i.e., the hydro-static testing, galvanizing, and threading processes). For each reported product, we determined the applicable manufacturing processes (e.g., galvanizing process is applicable to all galvanized products) and adjusted that product's FOH accordingly. We also increased the reported product-specific cost of manufacturing (“COM”) (i.e., materials and fabrication) to account for an inflation adjustment made to finished goods inventory at the end of fiscal year (“FY”) 2004. We calculated this adjustment independently of the FOH adjustment. Finally, we revised Toscelik's reported general and administrative (“G&A”) expense ratio to exclude the G&A expenses of Toscelik's affiliated resellers and include other ordinary expenses and losses incurred by Toscelik in FY 2004. We then applied this ratio to the product-specific COM plus packing to determine the product-specific G&A expenses.

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 the respondent's sales of a given product were at prices less than the COP, we do not disregard any below-cost sales of that product because we determine that the below-cost sales were not made in “substantial quantities.” We found that, for certain products, more than 20 percent of Toscelik's home-market sales were sold at prices below the COP. Further, we found that the prices for these sales did not permit the recovery of all costs within a reasonable period of time. We therefore excluded these sales from our analysis and used the remaining sales as the basis for determining NV, in accordance with section 773(b)(1) of the Act.

C. Calculation of NV Based on Comparison Market Prices

For Toscelik, for those comparison products for which there were sales at prices above the COP, we based NV on home-market prices. We were able to match the U.S. sale to contemporaneous sales, made in the ordinary course of trade, of a similar foreign like product, based on the product matching characteristics. For Toscelik, we calculated NV based on ex-works mill/warehouse 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 discounts, rebates, inland freight, and pre-sale warehouse expense. Additionally, we added billing adjustments because these adjustments were reported as negative values in Toscelik's home market database. In accordance with section 773(a)(6) of the Act, we deducted home-market packing costs and added U.S. packing costs.

Arm's-Length Sales

We included in our analysis Toscelik'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 Toscelik sold identical merchandise to their unaffiliated customers. Toscelik'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 (“URAA”), 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 of 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. 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 pursuant to section 773(a)(7)(A) of the Act.

In implementing these principles, we examined information from Toscelik regarding the marketing stages involved in the reported home-market and EP sales, including a description of the selling activities performed for each channel of distribution. In the home market, Toscelik reported one LOT and two channels of distribution. In the U.S. market, Toscelik reported one LOT and one channel of distribution. We found that there is very little distinction in the selling functions performed for each channel of distribution, and therefore, we determine there is one LOT for the home market and the U.S. market.

For home-market sales, we found that Toscelik Profil ve Sac A.S. (“Toscelik Profil”), the producer of subject merchandise, sells directly to distributors and Tosyali Metal Ticaret A.S. (“Tosyali Metal,” Toscelik Profil's domestic trading partner), sells to retailers and end-users. In both instances, the sales are made mill-direct, ex-works without the use of a selling agent. In some cases, Tosyali Metal arranged for freight; however, the purchaser took possession of the merchandise upon loading in all cases. There were no additional services undertaken by Toscelik Profil.

Tosyali Dis Ticaret A.S.'s (“Tosyali Foreign Trade Co.”) one U.S. sale was made at only one LOT. Tosyali Foreign Trade Co. handles the direct communication with the customer, organizes logistics and the exportation of the merchandise. The merchandise for export is moved from Toscelik Profil's production facility to the port for loading and Tosyali Foreign Trade Co. arranged for ocean freight. Therefore, Tosyali Foreign Trade Co. does not take physical possession of exported pipes. Toscelik's one sale to the U.S. was made on a cost and freight (“CFR”) basis³ without the use of a selling agent. According to the terms of this sale, the seller is responsible for ocean freight, but not for inland freight in the country of destination. There were no other sales activities undertaken by Tosyali Foreign Trade Co.

Because Toscelik's sales functions in each market were nearly identical and do not vary by customer category, we have determined that the LOT in each market is the same and, therefore, have made no LOT adjustments in comparing its U.S. and home-market sales.

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 exists, we generally utilize the benchmark rate instead of the daily rate, in accordance with established practice.

Date of Sale

Toscelik reported the date of sale as the invoice date, which is generated for its sale to the United States. During the sales verification of Toscelik, the Department reviewed the U.S. sales processes with company officials to establish that Toscelik's reporting of invoice date as the date of sale was appropriate. Toscelik sells from inventory in the home market and its U.S. sale was produced to order. We reviewed sample order fax confirmations and invoices, which support Toscelik's report of the sales date based on invoice date in the home market. We confirmed that the invoice date is the date when Toscelik's sales are registered into its accounting system.⁴

However, we note that for some observations in the home market database, the invoice date is later than the ship date. Therefore, in order to correct the reporting, we programmed the date of sale based on the shipment date rather than the invoice date. The Department uses shipment date as date of sale where shipment date occurred prior to the invoice date, as it is the Department's practice to use the date of shipment as the date of sale where the date of shipment precedes invoice date. See Honey from Argentina: Preliminary Results of Antidumping Duty Administrative Review, 69 FR 623 (January 6, 2004). See also Notice of Final Determinations of Sales at Less than Fair Value: Certain Durum Wheat and Hard Red Spring Wheat from Canada, 68 FR 52741 (September 5, 2003), and accompanying Decision Memorandum at Comment 3.

In addition, the Department confirms that the invoice date reflects the date of sale for Toscelik's sale to the United States. At verification, the Department confirmed that the final quantity amount of the U.S. sale was not known until Turkish Customs weighed the shipment.⁵ Therefore, the final terms of the U.S. sale were not finalized until the shipment was officially weighed and invoiced upon shipment to the customer.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the following margin exists for the period May 1, 2004, through April 30, 2005:

Manufacturer/Exporter	Margin (percent)
Toscelik	0.00 percent

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 19 CFR 351.310(c). 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

Pursuant to 19 CFR 351.212(b), the Department calculated an assessment rate for each importer of subject merchandise. Upon completion of this review, the Department will instruct CBP to assess antidumping duties on all entries of subject merchandise by those importers. We have calculated each importer's duty assessment rate based on the ratio of the total amount of antidumping duties calculated for the examined sales to the total calculated entered value of examined sales. Where the assessment rate is above de minimis, the importer-specific rate will be assessed uniformly on all entries made during the POR.

Cash Deposit Requirements

Bonding is no longer permitted to fulfill security requirements for shipments from Toscelik of certain welded carbon steel pipe and tube from Turkey entered, or withdrawn from warehouse, for consumption on or after the publication date of these final results of new shipper review. The following cash-deposit requirements will be effective upon publication of the final results of this new shipper review for all shipments of subject merchandise, entered or withdrawn from warehouse, for consumption on or after the publication date as provided for by sections 751(a)(1) and 751 (a)(2)(C) of the Act:

• for subject merchandise manufactured and exported by Toscelik, the cash deposit rate shall be 0.00 percent;
• for subject merchandise exported by Toscelik but not manufactured by Toscelik, the cash-deposit rate will continue to be the “All Others” rate or the rate applicable to the manufacturer, if so established;
• the cash deposit rate for exporters who received a rate in a prior segment of the proceeding will continue to be the rate assigned in that segment of the proceeding;
• if the exporter is not a firm covered in this review or in any previous segment of this proceeding, but the manufacturer is, the cash deposit rate will be that established for the manufacturer in the most recent segment of this proceeding in which that manufacturer participated;
• if neither the exporter nor the manufacturer is a firm covered in this review or in any previous segment of this proceeding, the cash deposit rate will be 14.74 percent, the All Others rate established in the less-than-fair-value investigation.

These deposit requirements shall remain in effect until publication of the final results of the next administrative review.

This notice also serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely written notification of return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a sanctionable violation.

We are issuing and publishing these preliminary results of new shipper review and notice in accordance with sections 751(a)(2)(B) and 777(i) of the Act.

Dated: April 26, 2006.

David M. Spooner,

Assistant Secretary for Import Administration.

Footnotes

1.  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).

2.  The domestic interested parties are Allied Tube and Conduit Corp., IPSCO Tubulars, Inc., Sharon Tube Company and Wheatland Tube Company.

3.  The International Chamber of Commerce's (“ICC”) Incoterms defines the shipping contract term, “CFR,” as “cost and freight” and indicates that the seller must pay the cost and freight necessary to bring the goods to the named port of destination. See http://www.iccwbo.org/​incoterms/​preambles/​pdf/​CFR.pdf.

4.  See Verification Report of the Sales Response of Toscelik Profil ve Sac A.S., Tosyali Metal Ticaret A.S., and Tosyali Dis Ticaret A.S. (collectively, Tosçelik) in the Antidumping Review of Certain Welded Pipe and Tube from Turkey, dated April 26, 2006.

5.  See Id. at 9-10.