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

DEPARTMENT OF COMMERCE

[A-549-809]

Notice of Preliminary Determination of Sales at Less Than Fair

Value: Certain Carbon Steel Butt-Weld Pipe Fittings From Thailand

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: October 4, 1994.

FOR FURTHER INFORMATION CONTACT:

Vincent Kane or Julie Anne Osgood, 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-

2815 or 482-0167, respectively.

Preliminary Determination: We have preliminary determined that

certain carbon steel butt-Weld pipe fittings from Thailand are being

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

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

estimated margin is 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-689, 59 FR 18825 (April 20, 1994)).

The Department issued its antidumping duty questionnaire to Asahi

Sangyo (Thailand) Co., Ltd. (AST), on April 29, 1994. AST was the only

Thai producer and exporter to be excluded from the antidumping duty

order on butt-weld pipe fittings from Thailand published on July 6,

1992 (57 FR 29702). All other producers and exporters of the subject

merchandise to the United States are subject to the antidumping duty

order currently in effect. AST was excluded from the original order

because we found its margin of sales at less than fair value at that

time to be de minimis.

On June 18, 1994, petitioner alleged that AST was selling the

subject merchandise in Thailand at less than its cost of production.

On August 12, 1994, we found, in accordance with section 773(b),

that reasonable grounds exist to believe or suspect that sales in the

home market were being made at less than the cost of production based

on information contained in the record, including petitioner's

allegation. On August 15, 1994, we issued a cost of production and

constructed value questionnaire to AST. We received a response from AST

on September 9, 1994.

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 period of investigation (``POI'') is September 1, 1993, through

February 28, 1994.

Such or Similar Comparisons

In making our fair value comparisons, in accordance with the

Department's standard methodology, we first compared sales of

merchandise identical in all respects. If no identical merchandise was

sold, we compared sales of the most similar merchandise, as determined

by the model-matching criteria contained in Appendix V of the

questionnaire (``Appendix V'') (on file in room B-099 of the main

building of the Department of Commerce (``Public File'')).

Regarding level of trade, AST reported that it sells to an

importer/distributor in the United States and directly to distributors,

end users, and a commissionaire agent in Thailand. AST negotiates

prices on a sale-by-sale basis and states that it is unable to discern

any correlation between selling prices and customer categories.

Further, AST states that its selling expenses do not vary by customer

category. Therefore, in keeping with past practice (see, e.g., Final

Results of Administrative Review: Antifriction Bearings and Parts

Thereof from the Federal Republic of Germany, et al. (56 FR 31692,

31709-11; July 11, 1991) and Import Administration Policy Bulletin 92/

1, Matching at Levels of Trade, issued on July 29, 1992)), and in

accordance with 19 CFR 353.58, we have compared AST's U.S. sales to its

home market sales to all customers.

Fair Value Comparisons

To determine whether AST's sales for export to the United 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 AST'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 PP based on packed, c.i.f. port of import prices to

an unrelated customer in the United States. We made deductions to the

U.S. price for foreign brokerage, foreign inland freight, ocean freight

and marine insurance.

We made an adjustment to U.S. price for the consumption tax paid on

the comparison sales in Thailand, in accordance with our practice,

pursuant to the Court of International Trade (CIT) decision in Federal-

Mogul, et al v. United States, 834 F. Supp. 1291. See Preliminary

Antidumping Duty Determination and Postponement of Final Determination;

Color Negative Photographic Paper and Chemical Components Thereof from

Japan, 59 FR 16177, 16179, April 6, 1994, for an explanation of this

tax methodology.

Foreign Market Value

In order to determine whether there was 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 AST's sales to its home market customers and CV, as

described below.

Cost of Production

In order to determine whether home market prices were below the COP

within the meaning of section 773(b) of the Act, we calculated COP

based on the sum of AST's cost of materials, fabrication, general

expenses and home market packing costs. We compared individual home

market prices net of inland freight and commission with model-specific

COPs.

We performed a product-specific COP test, in which we examined

whether each home market sale was priced below that product's COP. The

Department defines COP as the sum of direct material, direct labor,

variable and fixed factory overhead, general expenses, and packing. For

each product, we compared this sum to the home market unit price, net

of movement expenses and commission. In accordance with section 733(b)

of the Act, we also examined whether the home market sales of each

product were made at prices below their COP in substantial quantities

over an extended period of time, and whether such sales were made at

prices that would permit recovery of all costs within a reasonable

period of time in the normal course of trade.

For each product where less than ten percent, by quantity, of the

home market sales during the POI were made at prices below the COP, we

included all sales of that model for the computation of FMV. For each

product where ten percent of more, but less than 90 percent, of the

home market sales during the POI were prices below the COP, we excluded

from the calculation of FMV those home market sales which were prices

below the COP, provided that the below-cost sales of that product were

made over an extended period of time. Where we found that more than 90

percent of respondent's sales were at prices below the COP, and such

sales were over an extended period of time, we disregarded all sales of

that product and calculated FMV based on CV, in accordance with section

773(b) of the Act.

In order to determine whether below-cost sales had been made over

an extended period of time, we compared the number of months in which

below-cost sales occurred for each product to the number of months in

the POI in which that product was sold. If a product was sold in fewer

than three months during the POI, we did not exclude sales unless there

were below cost sales in each month of sale. If a product was sold in

three or more months, we did not exclude the below-cost sales unless

there were below-cost sales in at least three months during the POI.

If sales below cost occurred in three or more months of the POI,

they are considered to be made over an extended period of time. When

items are sold in just two or three months of the POI, we would

consider below cost sales of these items to be over an extended period

of time, if they occurred in at least two months of the three months.

When items are sold in just one month of the POI, we would consider any

below cost sales of these items to be over an extended period of time.

AST provided no indication that the disregarded sales were at

prices that would permit recovery of all costs within a reasonable

period of time and in the normal course of trade. (See, Section

773(b)(2); 19 U.S.C. 1677b(b)(2)).

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 AST's reported general expenses or the

statutory minimum of ten percent of the cost of manufacture (COM), as

appropriate and; 2) for profit, we used the statutory minimum of eight

percent of the sum of COM and general expenses.

Price-to-Price Comparisons

For price-to-price comparisons, we calculated FMV based on ex-

factory or delivered prices, inclusive of packing to home market

customers. From these prices, we deducted commission, where

appropriate. We deducted home market packing costs and added U.S.

packing costs in accordance with section 773(a)(1) of the Act. We also

made adjustments, where appropriate, for differences in the physical

characteristics of the merchandise in accordance with section 773(a)(1)

of the Act.

In light of the Court of Appeals for the Federal Circuit's decision

in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v.

United States, 13 F. 3d 398 (Fed. Cir., January 5, 1994), the

Department no longer can deduct home market movement charges from FMV

pursuant to its inherent power to fill in gaps in the antidumping

statute. Instead, we adjust for those expenses under the circumstance-

of-sale provision of 19 CFR 353.56(a) and the exporter's sales price

offset provision of 19 CFR 353.56(b)(2), as appropriate. Accordingly,

in the present case, we deducted post-sale home market movement charges

from the FMV under the circumstance-of-sale provision of 19 CFR

353.56(a). This adjustment included home market inland freight.

For both price-to-price comparisons and comparisons to CV, we also

made circumstance-of-sale adjustments, where appropriate, for

differences in credit expenses, pursuant to 19 CFR 353.56(a)(2). For

U.S. sales with unreported payment dates, we based AST's credit expense

on the average number of days outstanding between shipment and payment

for AST's U.S. sales with reported payment dates. For a discussion of

the Department's treatment of credit in this investigation, please see

Memorandum from Barbara R. Stafford to Susan G. Esserman (September 26,

1994) on file in room B-099 of the U.S. Department of Commerce. In

accordance with 19 CFR 353.56(b)(1), we added U.S. indirect selling

expenses as an offset to the home market commission, but capped this

addition by the amount of the home market commission.

We adjusted for a consumption tax collected in the Thai home

market. (See, the United States Price section of this notice, above.)

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.

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 Customs Service to suspend liquidation of all entries of butt-weld

pipe fittings from Thailand, as defined in the ``Scope of

Investigation'' section of this notice, that are produced and sold by

AST and 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 the posting of

a bond equal to the estimated preliminary dumping margins, as shown

below. The suspension of liquidation will remain in effect until

further notice. The weighted-average dumping margins are as follows:

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

Margin

Manufacturer/Producer/Exporter percent

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

Asahi Sangyo (Thailand) Co., Ltd............................. 10.37

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

Adjustment of Deposit Rate for Countervailing Duties

Article VI, paragraph 5 of the General Agreement on Tariffs and

Trade provides that ``[no] product . . . shall be subject to both

antidumping and countervailing duties to compensate for the same

situation for dumping or export subsidization.'' This provision is

implemented by section 772(d)(1)(D) of the Act. Since antidumping

duties cannot be assessed on the portion of the margin attributable to

export subsidies, there is no basis to require a cash deposit or bond

for that amount.

Accordingly, the level of export subsidies as determined in the

most recent administrative review of the countervailing duty order,

Carbon Steel Butt-Weld Pipe Fittings From Thailand; Final Results of

Countervailing Duty Administrative Review, (57 FR 5248, February 13,

1992), which was 0.74 percent, will be subtracted from the margin for

cash deposit or bonding purposes. This results in a deposit rate of

9.63 percent for AST. We did not determine an ``all others'' rate in

this investigation, because all other producers and exporters of butt-

weld pipe fittings from Thailand are already subject to an antidumpting

duty order on this merchandise, which was published in the Federal

Register on July 6, 1992 (57 FR 29702).

ITC Notification

In accordance with section 733(f) of the 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 U.S. 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 day. In accordance with 19 CFR

353.38(b), oral presentations will be limited to issues raised in the

briefs.

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

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. 94-24539 Filed 10-3-94; 8:45 am]

BILLING CODE 3510-DS-M