[Federal Register Volume 62, Number 131 (Wednesday, July 9, 1997)]
[Notices]
[Pages 36761-36764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17953]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-809]
Preliminary Results of Antidumping Duty Administrative Review:
Circular Welded Non-Alloy Steel Pipe From the Republic of Korea
AGENCY: International Trade Administration, Import Administration,
Department of Commerce.
ACTION: Preliminary results of antidumping duty administrative review:
circular welded non-alloy steel pipe from the Republic of Korea.
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SUMMARY: In response to requests from interested parties, the
Department of Commerce (the Department) is conducting an administrative
review of the antidumping duty order on circular welded non-alloy steel
pipe from the Republic of Korea. The review covers five manufacturers/
exporters: Dongbu Steel Co., Ltd. (Dongbu), Korea Iron Steel Company
(KISCO), Korea Steel Pipe Co., Ltd. (KSP), Pusan Steel Pipe Co., Ltd.
(PSP), and Union Steel Co., Ltd. (Union). The period of review (the
POR) is April 28, 1992, through October 31, 1993.
We have preliminarily determined that sales have been made below
foreign market value (FMV) by various companies subject to this review.
If these preliminary results are adopted in our final results of this
administrative review, we will instruct U.S. Customs to assess
antidumping duties equal to the difference between the purchase price
(PP) or exporter's sales price (ESP) and the FMV.
We invite interested parties to comment on these preliminary
results. Parties who submit comments in this proceeding are requested
to submit with each argument (1) a statement of the issue and (2) a
brief summary of the argument.
EFFECTIVE DATE: July 9, 1997.
FOR FURTHER INFORMATION CONTACT: Michael Panfeld, Mark Ross, Thomas
Schauer, or Richard Rimlinger, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)
482-4733; facsimile: (202) 482-1290.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act), are references to the provisions in effect
as of December 31, 1994. In addition, unless otherwise indicated, all
citations to the Department's regulations are to the current
regulations, as codified at 19 CFR part 353 (April 1, 1996).
Background
On November 2, 1992, the Department published in the Federal
Register (57 FR 49,453) the antidumping duty order on circular welded
non-alloy steel pipe from the Republic of Korea. On December 17, 1993,
in accordance with 19 CFR 353.22(c), we initiated an administrative
review of this order for the period April 28, 1992, through October 31,
1993 (58 FR 65,964). The Department is now conducting this
administrative review in accordance with section 751 of the Act.
Scope of Review
The merchandise subject to this review is circular welded non-alloy
steel pipes and tubes, of circular cross-section, not more than 406.4mm
(16 inches) in outside diameter, regardless of wall thickness, surface
finish (black, galvanized, or painted), or end finish (plain end,
bevelled end, threaded, or threaded and coupled). These 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-conditioning 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 within the scope of this
review, except 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. Standard
pipe that is dual or triple certified/stenciled that enters the United
States as line pipe of a kind used for oil or gas pipelines is also not
included in this review.
Imports of these products are currently classifiable under the
following Harmonized Tariff Schedule (HTS) subheadings: 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 this proceeding is dispositive.
Product Comparisons
We calculated transaction-specific U.S. prices (USPs) for
comparison to either weighted-average FMVs or constructed values. The
USPs and FMVs were calculated and compared by product characteristics.
For price-to-price comparisons, we compared identical merchandise,
where possible. Where there were no sales of identical merchandise in
the home market to compare to U.S. sales, we made similar comparisons
based on the characteristics listed in our memorandum to file dated
June 24, 1994. If there were no sales of identical or similar
merchandise in the home market to compare to U.S. sales, we compared
USP to constructed value.
United States Price
For all respondents, we based USP on purchase price, in accordance
with section 772(b) of the Act, when the subject merchandise was sold
to
[[Page 36762]]
unrelated purchasers in the United States prior to importation and
because exporter's sale price (ESP) methodology, in those instances,
was not otherwise indicated.
In addition, for KSP and PSP, where certain sales to the first
unrelated purchaser took place after importation into the United
States, we based USP on ESP, in accordance with section 772(c) of the
Act.
USP was based on the packed f.o.b., c.i.f., or delivered prices to
unrelated purchasers in, or for exportation to, the United States. We
made adjustments, as appropriate, to PP and ESP for movement expenses,
discounts, rebates, and duty drawback.
We made additional deductions from ESP for direct selling expenses
and indirect selling expenses.
For all respondents, we have adjusted for VAT in accordance with
the tax-neutral methodology approved by the Court of Appeals for the
Federal Circuit in Federal-Mogul Corp. v. United States, 63 F.3d 1572
(CAFC 1995). The approved tax-neutral adjustment methodology is based
on the amounts of foreign taxes, rather than the tax rates. We have
thus returned to the Zenith Electronics Corp. v. United States, 900
F.2d 1573 (CAFC 1993) footnote-4 methodology of adding the absolute
amount of the consumption taxes on home market sales to the USP.
Consistent with this methodology, when merchandise exported to the
United States is exempt from the VAT, we have added to USP the absolute
amount of such taxes charged on the comparison sales in the home
market.
With respect to subject merchandise to which value was added in the
United States prior to sale to unrelated U.S. customers, e.g., pipe
that was imported and further processed by U.S. affiliates, we deducted
any increased value in accordance with section 772(e)(3) of the Tariff
Act.
Foreign Market Value
In order to determine whether there were sufficient sales of
standard pipe in the home market to serve as a viable basis for
calculating FMV, we compared the volume of home market sales of
standard pipe to the volume of third-country sales of the same product
in accordance with section 773(a)(1)(B) of the Act. We found that the
home market was viable for sales of standard pipe by all respondents.
Home market prices were based on the packed, ex-factory or
delivered prices to related or unrelated purchasers in the home market.
Where applicable, we made adjustments for movement expenses,
differences in cost attributable to differences in physical
characteristics of the merchandise, and differences in packing. We also
made adjustments for differences in circumstances of sale in accordance
with 19 CFR 353.56. For comparisons to PP sales, we deducted home
market direct selling expenses and added U.S. direct selling expenses.
For comparisons to ESP sales, we deducted home market direct selling
expenses. We also made adjustments, where applicable, for home market
indirect selling expenses to offset U.S. commissions in PP and ESP
calculations and to offset U.S. indirect selling expenses deducted in
ESP calculations, but not exceeding the amount of U.S. indirect
expenses. For comparisons to both ESP and PP sales, we adjusted for VAT
using the methodology detailed in the ``United States Price'' section
of this notice.
We used sales to related customers only where we determined such
sales were made at arm's length (i.e., at prices comparable to prices
at which respondents sold identical merchandise to unrelated
customers). See 19 CFR 353.45(a). To test whether these sales were made
at arm's length, we compared the gross unit prices of sales to
affiliated and unaffiliated customers net of all movement charges,
direct and indirect selling expenses, and packing. See Final
Determination of Sales at Less Than Fair Value; Certain Cold-Rolled
Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9,
1993).
PSP and Dongbu reported sales in the home market of ``overrun''
merchandise (i.e., sales of a greater quantity of pipe than the
customer ordered due to overproduction). Respondents claimed that we
should disregard ``overrun'' sales in the home market as outside the
ordinary course of trade. Section 773(a)(1)(A) of the Act and 19 CFR
353.46(a) provide that FMV shall be based on the price at which such or
similar merchandise is sold in the exporting country in the ordinary
course of trade for home consumption. Section 771(15) of the Act
defines ``ordinary course of trade'' as ``the conditions and practices
which, for a reasonable time prior to the exportation of the
merchandise which is the subject of an investigation, have been normal
in the trade under consideration with respect to merchandise of the
same class or kind.'' See also 19 CFR 353.46(b).
We analyzed the following criteria to determine whether ``overrun''
sales differ from other sales of commercial pipe: (1) Ratio of overrun
sales to total home market sales; (2) number of overrun customers
compared to total number of home market customers; (3) average price of
an overrun sale compared to average price of a commercial sale; (4)
profitability of overrun sales compared to profitability of commercial
sales; and (5) average quantity of an overrun sale compared to the
average quantity of a commercial sale. Based on our analysis of these
criteria and on an analysis of the terms of sales, we found certain
overrun sales to be outside the ordinary course of trade. This analysis
is consistent with the analysis sustained by the Court of International
Trade in Laclede Steel Co. v. United States, Slip. Op. 94-144 (1995).
For a more detailed description of our analysis, see the preliminary
results analysis memoranda which are on file in the Central Records
Unit (room B-099 of the Main Commerce Building).
Petitioners have contended that political contributions or other
monetary payments (known as ttuk kap) are a normal part of doing
business in Korea and can account for large sums. Petitioners have
urged that the Department determine whether respondents or their
affiliates made such payments and how such payments were treated in the
companies' accounting systems.
We have completed a limited number of verifications and have found
that none of the firms we verified maintained accounts identified
specifically for either so-called ttuk kap payments or for political
contributions. Moreover, based on the accounting and financial records
that we examined, we found no evidence of incomplete expense reporting
from the firms in question.
Cost of Production
Because we found home market sales below the cost of production by
KSP and PSP in the less-than-fair-value (LTFV) investigation, we
concluded that reasonable grounds exist to believe or suspect that
these companies made home market sales during the POR at prices below
the cost of production, and we therefore initiated cost investigations.
See Import Administration Policy Bulletin Number 94.1 dated March 25,
1994. In addition, based on allegations submitted by petitioners in
connection with this administrative review, we have decided to
investigate whether sales of subject merchandise made by Dongbu and
Union were made at prices below the cost of production. See Memorandum
to Marie Parker dated April 22, 1994, and Memorandum to Marie Parker
dated April 25, 1994.
[[Page 36763]]
A. Calculation of COP
We calculated the COP based on the sum of the costs of materials
and fabrication employed in producing the subject merchandise, plus
amounts for selling, general and administrative expenses and packing
costs in accordance with section 773(b) of the Act. We relied on the
home market sales and COP information provided by respondents in their
questionnaire and supplemental responses.
As in the LTFV investigation of this case, we requested that all
sales and cost data be reported on a weight basis. In the LTFV segment
of this proceeding, respondents reported various per-unit prices and
costs on several bases: actual weight, theoretical weight, and standard
actual weight. In this review, we requested that respondents report all
costs, prices, and adjustments on a theoretical-weight basis because
that is the basis on which U.S. sales were made. We did this in order
to ensure that we calculated costs and expenses in a consistent manner.
The petitioners have contended that information used by the respondents
to derive all three weight bases is inaccurate and systematically
understates the cost of production of subject merchandise.
In response to the petitioners' arguments, we requested sale and
cost data on a length basis rather than a weight basis for each 1'',
2'', and 4'' diameter pipe. These sizes represent the largest-volume
U.S. sales made by the respondents during the POR. Respondents did not
report actual length for these items but simply calculated length by
applying a factor based on the reported weight, contending that they do
not maintain records on an actual-length basis. Petitioners continue to
object to respondents' methodology.
For these preliminary results, we have used the weight figures
supplied by respondents for our dumping comparisons because we have no
evidence that the weight figures respondents supplied result in
understated cost figures. Furthermore, through the cost verification we
have conducted thus far, we have not found understated costs. See Union
Steel Co., Ltd., cost verification report dated June 2, 1997. This
issue will also be examined at the cost verifications of KSP and PSP
which, as discussed below, will be conducted after publication of these
preliminary results.
B. Test of Home Market Prices
To determine if sales below cost had been made over an extended
period of time, we compared the number of months in which sales below
cost had occurred for a particular model to the number of months in
which the model was sold. If the model was sold in three or fewer
months, we did not find that below-cost sales were made over an
extended period of time unless there were sales below cost of that
model in each month. If a model was sold in more than three months, we
did not find that below-cost sales were made over an extended period of
time unless there were sales below cost in at least three of the months
in which the models were sold.
Since none of the respondents has submitted information indicating
that any of its sales below cost were at prices which would have
permitted ``recovery of all costs within a reasonable period of time in
the normal course of trade,'' within the meaning of section 773(b)(2)
of the Act, we cannot reasonably conclude that the costs of production
of such sales were recovered within a reasonable period.
C. Results of COP Test
In accordance with section 773(b) of the Act, in determining
whether to disregard home market sales made at prices below the cost of
production, we examined whether such sales were made in substantial
quantities over an extended period of time. When less than 10 percent
of the home market sales of a particular model were at prices below the
cost of production, we found that substantial quantities of such sales
were not made and did not disregard any sales of that model. When 10
percent or more, but not more than 90 percent, of the home market sales
of a particular model were determined to be below cost, we determined
that substantial quantities of such sales were made and excluded the
below-cost home market sales from our calculation of FMV, provided that
these below-cost sales were made over an extended period of time. When
more than 90 percent of the home market sales of a particular model
were made below cost over an extended period of time, we disregarded
all home market sales of that model from our calculation of FMV and
used CV. As a result, we disregarded below-cost sales when the
conditions described above were met.
We found that KSP, PSP, Dongbu, and Union all made sales below cost
in substantial quantities over an extended period of time. We therefore
excluded these sales from our analysis and used the remaining sales as
the basis for determining FMV in accordance with section 773(b) of the
Act.
Constructed Value
We calculated CV in accordance with section 773(e) of the Act. We
included the cost of materials, fabrication, general expenses, profit,
and packing. To calculate CV we used: (1) Actual general expenses, or
the statutory minimum of ten percent of the cost of materials and
fabrication, whichever was greater; (2) actual profit or the statutory
minimum of eight percent of the cost of materials, fabrication, and
general expenses, whichever was greater; and (3) packing costs for
merchandise exported to the United States. Where appropriate, we made
adjustments to CV, in accordance with 19 CFR 353.56, for differences in
circumstances of sale. For comparisons to PP sales, we deducted home
market direct selling expenses and added U.S. direct selling expenses.
For comparisons to ESP sales, we deducted home market direct selling
expenses. We also made adjustments, where applicable, for home market
indirect selling expenses to offset U.S. commissions in PP and ESP
calculations. For comparisons involving ESP transactions, we made
further deductions for CV for indirect selling expenses in the home
market, capped by the indirect selling expenses incurred on ESP sales
in accordance with 19 CFR 353.56(b)(2).
Currency Conversion
We made currency conversions based on the official exchange rates
in effect on the dates of the U.S. sales as certified by the Federal
Reserve Bank.
Verification
As provided in section 776(b) of the Act, we verified information
provided by certain respondents using standard verification procedures,
including on-site inspection of the manufacturer's facilities, the
examination of relevant sales and financial records, and selection of
original documentation containing relevant information. Our
verification results are outlined in the public versions of the
verification reports. Though we have not yet verified the sales data
reported by KSP nor the cost data reported by either KSP or PSP we will
verify this data prior to completion of the final results. Because we
will not verify this information until after the preliminary results
are issued, we have extended the comment period for KSP-specific and
PSP-specific comments from interested parties to July 25, 1997.
Rebuttals to these comments will be due on August 1, 1997. We are doing
this so that all parties will have the opportunity to comment on these
verifications.
[[Page 36764]]
Preliminary Results of Review
As a result of our review, we preliminarily determine the weighted-
average dumping margins (in percent) for the period April 28, 1992,
through October 31, 1993 to be as follows:
------------------------------------------------------------------------
Margin
Company (percent)
------------------------------------------------------------------------
Dongbu Steel Co., Ltd....................................... 3.37
Korea Iron Steel Company.................................... 8.20
Korea Steel Pipe Co., Ltd................................... 14.13
Pusan Steel Pipe Co., Ltd................................... 11.21
Union Steel Co., Ltd........................................ 0.76
------------------------------------------------------------------------
Parties to this proceeding may request disclosure within 5 days of
the date of publication of this notice. Any interested party may
request a hearing within 10 days of the date of publication of this
notice. A hearing, if requested, will be held at 10 AM on August 4,
1997 in room 1412 in the main Commerce Department building.
Issues raised in the hearing will be limited to those raised in the
respective briefs and rebuttal briefs. Briefs from interested parties
regarding Dongbu, KISCO, Union, and general comments may be submitted
not later than 30 days from the date of publication of these
preliminary results, and rebuttal briefs, limited to the issues raised
in the respective case briefs, may be submitted not later than 37 days
from the date of publication of these preliminary results. As noted
above, KSP-specific and PSP-specific comments and rebuttals are due on
July 25, 1997 and August 1, 1997, respectively. Parties who submit
briefs or rebuttal briefs in this proceeding are requested to submit
with each argument (1) a statement of the issue and (2) a brief summary
of the argument. The Department will subsequently publish the final
results of this administrative review, including the results of its
analysis of issues raised in any written briefs or hearings.
Furthermore, the following deposit requirements will be effective
upon publication of the final results of review for all shipments of
subject merchandise entered, or withdrawn from warehouse, for
consumption on or after the date of publication, as provided by section
751(a)(1) of the Tariff Act: (1) The cash deposit rates for the
reviewed companies will be the rates determined in the final results of
review; (2) for previously 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 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)
the cash deposit rate for all other manufacturers or exporters will
continue to be 4.80 percent, the ``All Others'' rate made effective by
the amended final determination of the LTFV investigation published on
November 3, 1995 (see Circular Welded Non-Alloy Steel Pipe from Korea:
Notice of Final Court Decision and Amended Final Determination, 60 FR
55833 (November 3, 1995)).
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Because the
inability to link sales with specific entries prevents entry-by-entry
assessments, we will calculate wherever possible an exporter/importer-
specific assessment rate.
With respect to PP sales for these preliminary results, we divided
the total dumping margins for the reviewed sales (calculated as the
difference between FMV and USP) for each importer by the total volume
sold to that importer during the POR. We will direct Customs to assess
the resulting per-ton dollar amount against each ton of merchandise in
each of that importer's entries during the review period. Although this
will result in assessing different percentage margins for individual
entries, the total antidumping duties collected for each importer for
the review period will approximately equal the total dumping margins.
For ESP sales, we divided the total dumping margins for the
reviewed sales by the total entered value of those reviewed sales for
each importer. We will direct Customs to assess the resulting
percentage margin against the entered Customs values for the subject
merchandise on each of that importer's entries during the review
period. While the Department is aware that the entered value of sales
during the POR is not necessarily equal to the entered value of entries
during the POR, use of entered value of sales as the basis of the
assessment rate permits the Department to collect a reasonable
approximation of the antidumping duties which would have been
determined if the Department had reviewed those sales of merchandise
actually entered during the POR. See Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy,
Japan, Singapore, Sweden, and the United Kingdom; Final Results of
Antidumping Duty Administrative Reviews and Partial Termination of
Administrative Reviews, 61 FR 66,472 (December 17, 1996).
This notice also serves as a reminder to importers of their
responsibility under 19 CFR 353.26 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 this notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: June 16, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-17953 Filed 7-8-97; 8:45 am]
BILLING CODE 3510-DS-P
