Preliminary Determination of Sales at Less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe Fittings From France

DEPARTMENT OF COMMERCE

[A-427-813]

Preliminary Determination of Sales at Less Than Fair Value:

Certain Carbon Steel Butt-Weld Pipe Fittings From France

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: October 4, 1994.

FOR FURTHER INFORMATION CONTACT:

Gary Bettger or Penelope Naas, Office of Countervailing Investigations,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, NW,

Washington, DC 20230; telephone (202) 482-2239 or 482-3534,

respectively.

Preliminary Determination: We have preliminarily determined that

certain carbon steel butt-weld pipe fittings from France are being sold

in the United States at less than fair value, as provided in section

733 of the Tariff Act of 1930 (``the Act''), as amended. The estimated

margins of sales at less than fair value are shown in the ``Suspension

of Liquidation'' section of this notice.

Case History

Since the initiation of this investigation on March 21, 1994 (59 FR

14148, March 25, 1994), the following events have occurred:

On April 11, 1994, the United States International Trade Commission

(``ITC'') issued an affirmative preliminary injury determination (see,

ITC Investigation No. 731-TA-688, 59 FR 18825 (April 20, 1994)).

In accordance with 19 CFR 353.42(b), the Department of Commerce

(``the Department'') issued its antidumping duty questionnaire to

Interfit, S.A. (``interfit'') and its related U.S. company, Vallourec,

Inc. (``Vallourec''), on April 29, 1994. Interfit is the only company

named in the petition as a producer and exporter to the United States

of the subject merchandise.

On June 14, 1994, petitioner alleged that Interfit was selling the

subject merchandise in France at less than its cost of production

(``COP''). We found reasonable grounds to believe or suspect that sales

in the home market were being made at less than COP and thus initiated

a COP investigation.

On June 30, 1994, petitioner requested a 50-day postponement of the

preliminary determination. The request was granted by the Department on

July 19, 1994 (59 FR 37961, July 26, 1994).

On August 4, 1994, petitioner alleged critical circumstances with

regard to imports of certain carbon steel butt-weld pipe fittings from

France.

On September 6, 1994, Interfit submitted constructed value (``CV'')

data for models reflecting a large percentage of sales made in the

United States during the period of investigation (``POI''). On

September 23, 1994, Interfit provided CV information for the remaining

models sold in the United States.

Scope of the Investigation

The products covered by this investigation are certain carbon steel

butt-weld pipe fittings having an inside diameter of less than fourteen

inches (355 millimeters), imported in either finished or unfinished

condition. Pipe fittings are formed or forged steel products used to

join pipe sections in piping systems where conditions require permanent

welded connections, as distinguished from fittings based on other

methods of fastening (e.g. threaded, grooved, or bolted fittings).

Butt-weld fittings come in a variety of shapes which include

``elbows,'' ``tees,'' ``caps,'' and ``reducers.'' The edges of finished

pipe fittings are beveled, so that when a fitting is placed against the

end of a pipe (the ends of which have also been beveled), a shallow

channel is created to accommodate the ``bead'' of the weld which joins

the fitting to the pipe. These pipe fittings are currently classifiable

under subheading 7307.93.3000 of the Harmonized Tariff Schedule of the

United States (``HTSUS'').

Although the HTSUS subheading is provided for convenience and

customs purposes, our written description of the scope of this

investigation is dispositive.

Period of Investigation

The POI is September 1, 1993, through February 28, 1994.

Fair Value Comparisons

To determine whether Interfit's sales for export to the Untied

States were made at less than fair value, we compared the United States

price (``USP'') to the foreign market value (``FMV''), as specified in

the ``United States Price'' and ``Foreign Market Value'' sections of

this notice.

United States Price

Because Interfit's U.S. sales of certain carbon steel butt-weld

pipe fittings were made to an unrelated distributor in the United

States prior to importation, and the exporter's sales price methodology

was not indicated by other circumstances, we based USP on the purchase

price (``PP'') sales methodology in accordance with section 772(b) of

the Act.

We calculated Interfit's PP sales based on packed, c.i.f., duty

paid, landed prices to unrelated customers in the United States. We

made deductions to the U.S. price, where appropriate, for foreign

inland freight, foreign brokerage, marine insurance, ocean freight,

U.S. brokerage, U.S. duties, and rebates.

No commissions were paid to unrelated distributors in the United

States or home market, and we do not have an appropriate benchmark

against which to test whether the commission arrangements between

Interfit and its related party are at arm's length. Therefore, we did

not make an adjustment for commissions claimed by Interfit that were

paid to its U.S. subsidiary for various charges incurred in selling the

subject merchandise. (See Final Determination of Sales at Less than

Fair Value: Coated Groundwood Paper from Belgium, Finland, France,

Germany and the United Kingdom, 56 FR 56359, November 4, 1992.)

Foreign Market Value

In order to determine whether Interfit had a sufficient volume of

sales in the home market to serve as a viable basis for calculating

FMV, we compared the volume of home market sales of subject merchandise

to the volume of third country sales of subject merchandise, in

accordance with section 773(a)(1)(B) of the Act. On this basis, we

determined that the home market was viable. For purposes of calculating

FMV, we used reported CV for products sold by Interfit in the United

States during the POI.

Cost of Production

Interfit provided incomplete and inappropriate cost data for home

market sales. Specifically, Interfit did not provide COP information

for all comparison models sold in France during the POI. Furthermore,

Interfit provided transfer prices for the main input into its pipe

fittings. As this input was purchased from related parties, it is the

Department's practice to use the cost of producing the input, rather

than the transfer price. See Final Determination of Sales at Less than

Fair Value: Ferrosilicon from Venezuela (58 FR 27522; 1993). Finally,

the costs reported by Interfit did not reflect the specific time period

requested by the Department.

Accordingly, we do not have the information necessary to make a

determination whether Interfit's home market sales are being sold below

the COP. In accordance with section 776(c) of the Act as best

information available (``BIA'') we have determined that all sales in

the home market were made at less than the COP and, in accordance with

section 773(b) of the Act, we have based foreign market value on CV.

Constructed Value

We calculated CV based on the sum of the cost of materials,

fabrication, general expenses, U.S. packing costs and profit. In

accordance with section 773(e)(1)(B)(i) and (ii) of the Act, we (1)

included the greater of Interfit's reported general expenses or the

statutory minimum of ten percent of the COM, as appropriate, and (2)

used the statutory minimum of eight percent of the sum of COM and

general expenses for profit.

For comparisons to CV, we made circumstance-of-sale adjustments for

differences in credit expenses between the two markets, pursuant to 19

CFR 353.56(a)(2). In calculating U.S. credit expense, we used the rate

respondent reported at which it could borrow in U.S. dollars during the

POI. (For further discussions regarding the Department's treatment of

credit in this investigation, please see September 26, 1994, Memorandum

to Susan G. Esserman from Barbara R. Stafford on file in Room B-099 of

the Department of Commerce.) We have not made a deduction for the

direct selling expenses reported by respondent. We have determined that

these expenses (product liability premiums and inventory carrying

costs) are, in fact, indirect selling expenses.

Because of the deficiencies in the cost data described above, we

are requesting further information from Interfit. We also intend to

verify that the prices paid by Interfit to its related suppliers are,

in fact, at arms-length.

The CV data originally provided by Interfit did not cover all of

the models sold by the company in the United States during the POI. On

September 23, 1994, Interfit supplied the CV data for the remaining

models. Because this information was not received in time to be used in

this preliminary determination, we have used BIA for sales involving

these models. As BIA, we have imputed the highest non-aberrational

margin calculated from the CV information that Interfit submitted on

September 6, 1994. (See Final Determination of Sales at Less than Fair

Value: Certain Hot-Rolled Carbon Steel Flat Products and Certain Cold-

Rolled Carbon Steel Flat Products from the Netherlands, 58 FR 37199;

July 9, 1993). In our final determination, we intend to use all the CV

data submitted by Interfit so long as it can be verified.

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 of New York.

Critical Circumstances

Petitioner alleges that critical circumstances exist with respect

to imports of the subject merchandise from France. Section 733(e)(1) of

the Act provides that the Department will determine that critical

circumstances exist if:

(A)(i) There is a history of dumping in the United States or

elsewhere of the class or kind of merchandise which is the subject of

this investigation, or

(ii) The person by whom, or for whose account, the merchandise was

imported knew or should have known that the exporter was selling the

merchandise which is the subject of the investigation at less than its

fair value, and

(B) There have been massive imports of the class or kind of

merchandise which is the subject of this investigation over a

relatively short period.

Regarding A(i) above, in determining whether there has been a

history of dumping, we normally consider whether there has been an

antidumping order in the United States or elsewhere on such or similar

merchandise. Regarding (A)(ii) above, we normally consider margins of

25 percent or more for purchase price sales sufficient to impute

knowledge of dumping. (See, Final Determination of Sales at Less Than

Fair Value; Tapered Roller Bearings and Parts Thereof, Finished or

Unfinished, from Italy, 52 FR 24198, June 29, 1987.)

Pursuant to section 733(e)(1)(B), we generally consider the

following factors in determining whether imports have been massive over

a short period of time: (1) The volume and value of the imports; (2)

seasonal trends (if applicable); and (3) the share of domestic

consumption accounted for by imports. If imports during the period

immediately following the filing of the petition increase by at least

fifteen percent over imports during a comparable period immediately

preceding the filing of a petition, we normally consider them massive.

In order to determine whether imports have been massive over a

relatively short period of time, we compared the reported shipments of

butt-weld pipe fittings by Interfit to the United States in the seven

months after the petition was filed to the seven months immediately

before this period. Our analysis showed that the volume of imports of

subject merchandise to the United States by Interfit had actually

decreased over that period of time. (See, 19 CFR 353.16(f)(2).) Based

on this analysis, we determine that imports of butt-weld pipe fittings

from Interfit were not massive over a relatively short period of time.

Accordingly, as one of the criteria enumerated in Section 733(A)(3) of

the Act is not met, we preliminarily determine that critical

circumstances does not exist for imports of butt-weld pipe fittings

from France.

Verification

As provided in section 776(b) of the Act, we will verify

information used in making our final determination.

Suspension of Liquidation

In accordance with section 733(d)(1) of the Act, we are directing

the U.S. Customs Service to suspend liquidation of all entries of

certain carbon steel butt-weld pipe fittings from France, as defined in

the ``Scope of Investigation'' section of this notice, that are

entered, or withdrawn from warehouse, for consumption on or after the

date of publication of this notice in the Federal Register. The Customs

Service shall require a cash deposit or posting of a bond equal to the

estimated dumping margin, as shown below. This suspension of

liquidation will remain in effect until further notice. The weighted-

average dumping margins are as follows:

------------------------------------------------------------------------

Margin

Manufacturer/producer/exporter percent

------------------------------------------------------------------------

Interfit..................................................... 12.04

All others................................................... 12.04

------------------------------------------------------------------------

ITC Notification

In accordance with section 733(f) of this Act, we have notified the

ITC of our determination. If our final determination is affirmative,

the ITC will determine whether these imports are materially injuring,

or threaten material injury to, the U.S. industry within 75 days after

our final determination.

Public Comment

Interested parties who wish to request a hearing must submit a

written request to the Assistant Secretary for Import Administration,

U.S. Department of Commerce, Room B-099, within ten days of the

publication of this notice. Requests should contain: (1) The party's

name, address, and telephone number; (2) the number of participants;

and (3) a list of the issues to be discussed.

In accordance with 19 CFR 353.38, case briefs or other written

comments in at least ten copies must be submitted to the Assistant

Secretary no later than November 16, 1994, and rebuttal briefs no later

than November 23, 1994. A hearing, if requested, will be held on

November 28, 1994, at the Department of Commerce in Room 1414. Parties

should confirm by telephone the time, date, and place of the hearing 48

hours prior to the scheduled time. In accordance with 19 CFR 353.3(b),

oral presentations will be limited to issues raised in the briefs.

We will make our final determination not later than 75 days after

of this preliminary determination.

This determination is published pursuant to section 733(f) of the

Act and 19 CFR 353.15(a)(4).

Dated: September 26, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-24535 Filed 10-3-94; 8:45 am]

BILLING CODE 3510-DS-M