Oil Country Tubular Goods From Canada Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-122-506]

Oil Country Tubular Goods From Canada Preliminary Results of

Antidumping Duty Administrative Review

AGENCY: International Trade Administration/Import Administration/

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review.

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SUMMARY: In response to a request from the respondent, IPSCO Inc.

(IPSCO), the Department of Commerce (the Department) has conducted an

administrative review of the antidumping duty order on oil country

tubular goods (OCTG) from Canada. The review covers one manufacturer/

exporter, IPSCO, and exports of the subject merchandise to the United

States during the period June 1, 1992, through May 31, 1993.

We preliminarily determine the dumping margins for IPSCO to be zero

during this period. Interested parties are invited to comment on these

preliminary results.

EFFECTIVE DATE: April 20, 1994.

FOR FURTHER INFORMATION CONTACT: David Genovese or Michael Heaney,

Office of Antidumping Compliance, International Trade Administration,

U.S. Department of Commerce, Washington, DC 20230; telephone (202)482-

5254.

SUPPLEMENTARY INFORMATION:

Background

On June 7, 1993, the Department published a notice of ``Opportunity

to Request an Administrative Review'' (58 FR 31941) of the antidumping

duty order on OCTG from Canada (51 FR 21782; June 16, 1986). On June

25, 1993, IPSCO requested an administrative review. The Department

initiated the review on July 21, 1993 (58 FR 39007), covering the

period June 1, 1992, through May 31, 1993. The Department is conducting

this review in accordance with section 751 of the Tariff Act of 1930,

as amended (the Act).

Scope of the Review

The products covered by this review include shipments of OCTG from

Canada. This includes American Petroleum Institute (API) specification

OCTG and all other pipe with the following characteristics except

entries which the Department determined through its end use

certification procedure were not used in OCTG applications: Length of

at least 16 feet; outside diameter of standard sizes published in the

API or proprietary specifications for OCTG with tolerances of plus \1/

8\ inch for diameters less than or equal to 8\5/8\ inches and plus \1/

4\ inch for diameters greater than 8\5/8\ inches, minimum wall

thickness as identified for a given outer diameter as published in the

API or proprietary specifications for OCTG; a minimum of 40,000 PSI

yield strength and a minimum 60,000 PSI tensile strength; and if with

seams, must be electric resistance welded. Furthermore, imports covered

by this review include OCTG with non-standard size wall thickness

greater than the minimum identified for a given outer diameter as

published in the API or proprietary specifications for OCTG, with

surface scabs or slivers, irregularly cut ends, ID or OD weld flash, or

open seams; OCTG may be bent, flattened or oval, and may lack

certification because the pipe has not been mechanically tested or has

failed those tests.

This merchandise is currently classifiable under the Harmonized

Tariff Schedules (HTS) item numbers 7304.20, 7305.20, and 7306.20. The

HTS item numbers are provided for convenience and Customs purposes. The

written description remains dispositive.

United States Price

In calculating United States Price (USP), the Department used

purchase price, as defined in section 772(b) of the Act, because the

merchandise was sold to an unrelated purchaser in the United States

prior to its importation. The Department based USP on the packed,

delivered price to those unrelated purchasers.

The Department made deductions, where appropriate, for foreign

inland freight, U.S. duties, and U.S. brokerage fees.

On October 7, 1993, the United States Court of International Trade

(CIT), in Federal-Mogul Corporation and The Torrington Company v.

United States, Slip Op. 93-194 (CIT, October 7, 1993), rejected the

Department's methodology for calculating an addition to USP under

section 772(d)(1)(C) of the Act to account for taxes that the exporting

country would have assessed on the merchandise had it been sold in the

home market. The CIT held that the addition to USP under section

772(d)(1)(C) of the Act should be the result of applying the foreign

market tax rate to the price of the United States merchandise at the

same point in the chain of commerce that the foreign market tax was

applied to the foreign market sales. Federal-Mogul, Slip Op. 93-194 at

12.

The Department has changed its methodology in accordance with the

Federal-Mogul decision. The Department has added to USP the result of

multiplying the foreign market tax rate by the price of the merchandise

sold in the United States at the same point in the chain of commerce

that the foreign market tax was applied to foreign market sales. The

Department has also adjusted the USP tax adjustments and the amount of

tax included in FMV. These adjustments deduct the portions of the

foreign market tax and the USP tax adjustment that are the result of

expenses that are included in the foreign market price used to

calculate foreign market tax and are included in the United States

merchandise price used to calculate the USP tax adjustment and that are

later deducted to calculate FMV and USP. These adjustments to the

amount of the foreign market tax and the USP tax adjustment are

necessary to prevent our new methodology for calculating the USP tax

adjustment from creating antidumping duty margins where no margins

would exist if no taxes were levied upon foreign market sales.

This margin creation effect is due to the fact that the bases for

calculating both the amount of tax included in the price of the foreign

market merchandise and the amount of the USP tax adjustment include

many expenses that are later deducted when calculating USP and FMV.

After these deductions are made, the amount of tax included in FMV and

the USP tax adjustment still reflects the amounts of these expenses.

Thus, a margin may be created that is not dependent upon a difference

between USP and FMV, but is the result of the price of the United

States merchandise containing more expenses than the price of the

foreign market merchandise. The Department's policy to avoid the margin

creation effect is in accordance with the United States Court of

Appeals' holding that the application of the USP tax adjustment under

section 772(d)(1)(C) of the Act should not create an antidumping duty

margin if pre-tax FMV does not exceed USP. Zenith Electronics Corp. v.

United States, 988 F.2d 1573, 1581 (Fed. Cir. 1993). In addition, the

CIT has specifically held that an adjustment should be made to mitigate

the impact of expenses that are deducted from FMV and USP upon the USP

tax adjustment and the amount of tax included in FMV. Daewoo

Electronics Co., Ltd. v. United States, 760 F. Supp. 200, 208 (CIT,

1991). However, the mechanics of the Department's adjustments to the

USP tax adjustment and the foreign market tax amount as described above

are not identical to those suggested in Daewoo.

There were no other adjustments claimed or allowed.

Foreign Market Value

In calculating foreign market value (FMV), we used home market

price, as defined in section 773(a) of the Act, since sufficient

quantities of merchandise were sold in the home market to provide a

reasonable basis for comparison. Home market price was based on the FOB

stockyard or FOB mill price to unrelated purchasers in the home market.

Due to the existence of sales below the cost of production (COP) in

the original investigation, which is the last segment of the proceeding

on OCTG with which IPSCO has been involved, the Department had

reasonable grounds to believe or suspect that sales below the COP may

have occurred during this review. Accordingly, the Department initiated

a COP investigation for this review in accordance with section 773(b)

of the act. Because IPSCO had home market sales of models which were

identical to models it sold in the United States, we conducted our cost

test only on those identical models. We calculated COP based on IPSCO's

cost of materials, fabrications, and general expenses. The results of

our cost test showed that no sales of merchandise were made below the

COP during the period of review. Therefore, we have based FMV on sales

of merchandise in the home market.

The Department made adjustments, where applicable, for discounts,

rebates, warranty and servicing expenses, royalty fees, fees for

outside inspectors, and for differences in packing material and credit.

In addition, in accordance with the United States Court of Appeals for

the Federal Circuit's ruling in The Ad Hoc Committee of AZ-NM-TX-FL

Producers of Gray Portland Cement v. United States, Slip Op. 93-1239

(CAFC, January 5, 1994), the Department did not deduct pre-sale

transportation costs. The Department also made an adjustment to FMV for

imputed consumption taxes in accordance with the aforementioned

Federal-Mogul decision.

There were no other adjustments claimed or allowed.

Preliminary Results of Review

As a result of our comparison of USP to FMV, the Department

preliminarily determines that a margin of zero percent exists for IPSCO

for the period June 1, 1992, through May 31, 1993.

Interested parties may request disclosure within 5 days of the date

of publication of this notice and may request a hearing within 10 days

of publication. Any hearing, if requested, will be held 44 days after

the date of publication of this notice, or the first workday

thereafter. Case briefs and/or written comments from interested parties

may be submitted not later than 30 days after the date of publication.

Rebuttal briefs and rebuttals to written comments, limited to the

issues raised in the case briefs and comments, may be filed not later

than 37 days after the date of publication. The Department will publish

the final results of this administrative review, including the results

of its analysis of any such written comments or hearing.

The Department shall determine, and U.S. Customs shall assess,

antidumping duties on all appropriate entries. Individual differences

between USP and FMV may vary from the percentage stated above. The

Department will issue appraisement instructions directly to Customs.

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise, entered or withdrawn from

warehouse, for consumption on or after the publication date of the

final results of this administrative review, as provided by section

751(a)(1) of the Act: (1) The cash deposit rate for the reviewed

company will be that rate established in the final results of this

administrative review; (2) for merchandise exported by manufacturers or

exporters not covered in this review but covered in a previous review

or the original less-than-fair-value (LTFV) investigation, the cash

deposit rate will continue to be the rate published in the most recent

final results or determination for which the manufacturer or exporter

received a company-specific rate; (3) if the exporter is not a firm

covered in this review, earlier reviews, or the original investigation,

but the manufacturer is, the cash deposit rate will be that established

for the manufacturer of the merchandise in these final results of

review, earlier reviews, or the original investigation, whichever is

the most recent; and (4) the ``all others'' rate will be 16.65 percent,

as explained below.

On May 25, 1993, the CIT, in Floral Trade Council v. United States,

Slip Op. 93-79, and Federal-Mogul Corporation v. United States, Slip

Op. 93-83, decided that once an ``all others'' rate is established for

a company it can only be changed through an administrative review. The

Department has determined that in order to implement these decisions,

it is appropriate to reinstate the original ``all others'' rate from

the LTFV investigation (or that rate as amended for correction of

clerical errors or as a result of litigation) in proceedings governed

by antidumping duty orders. Accordingly, the cash deposit rate for any

future entries from all other manufacturers or exporters, who are not

covered in this or prior administrative reviews and who are unrelated

to the reviewed firm or any previously reviewed firm, will be the ``all

others'' rate established in the original LTFV investigation which is

16.65 percent.

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice also serves as a preliminary 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 notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

Dated: April 14, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-9552 Filed 4-19-94; 8:45 am]

BILLING CODE 3510-DS-P