Initiation of Antidumping Duty Investigation: Light-Walled Rectangular Pipe and Tube From Mexico

DEPARTMENT OF COMMERCE

[A-201-819]

Initiation of Antidumping Duty Investigation: Light-Walled

Rectangular Pipe and Tube From Mexico

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: April 28, 1995.

FOR FURTHER INFORMATION CONTACT: Dorothy Tomaszewski or Erik Warga at

(202) 482-0631 or (202) 482-0922, Office of Antidumping Investigations,

Import Administration, International Trade Administration, U.S.

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

Washington, D.C. 20230.

INITIATION OF INVESTIGATION:

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of 1930

(``the Act'') are references to the provisions effective January 1,

1995, the effective date of the amendments made to the Statute by the

Uruguay Round Agreements Act (URAA).

The Petition

On March 31, 1995, the Department of Commerce (the Department)

received a petition filed in proper form by Southwestern Pipe, Inc.

(the petitioner), one of two regional producers of light-walled

rectangular (``LWR'') pipe and tube in Texas. A supplement to the

petition was filed on April 13, 1995.

In accordance with section 732(b) of the Act, the petitioner

alleges that imports of LWR pipe and tube from Mexico are being, or are

likely to be, sold in the United States in the region of Texas at less

than fair value within the meaning of section 731 of the Act, and that

such imports are materially injuring, or threatening material injury

to, the regional industry in Texas.

Since petitioner is an interested party as defined under section

771(9)(C) of the Act, petitioner has standing to file a petition for

the imposition of antidumping duties.

On April 17, 1995, a Mexican producer of subject merchandise named

in the petition, Hylsa S.A. de C.V. (``HYLSA''), submitted a request

that the Department poll all domestic producers of subject merchandise

in the United States. According to HYLSA, the relevant industry for

purposes of determining petitioner's standing should be defined as the

national industry producing the subject merchandise (see following

Section for details on this issue).

Determination of Industry Support for the Petition

The petition contains an adequate allegation that Texas is a

regional industry for the domestic like product; this allegation

includes data on both factors required by section 771(4)(C) of the Act.

Under section 732(c)(4)(C), if the petitioner properly alleges that the

industry is a regional industry, the Department shall determine whether

the petition has been filed by or on behalf of the industry by applying

the requirements set forth in the Act on the basis of the production in

the region. Therefore, the Department has evaluated industry support

for the petition based upon production in the region.

Section 732(c)(4)(A) of the Act requires that the Department's

industry support determination, which is to be made before the

initiation of the investigation, be based on whether a minimum

percentage of the relevant industry supports the petition. A petition

meets the minimum requirements if (1) domestic producers or workers who

support the petition account for at least 25 percent of the total

production of the domestic like product; and (2) those domestic

producers or workers expressing support account for more than 50

percent of the production of the domestic like product produced by that

portion of the industry expressing support for, or opposition to, the

petition.

The petitioner, one of two known regional producers of the domestic

like product, accounts for more than 50 percent of the total production

of the domestic like product in the region as defined in the petition.

The other known producer in the region has informed the Department that

it supports this antidumping petition. Accordingly, the Department

determines that this petition is supported by the regional industry in

Texas.

Scope of the Investigation

The merchandise subject to this investigation is certain light-

walled welded non-alloy steel pipes and tubes, of rectangular

(including square) cross section, having a wall thickness of less than

4mm (``LWR''), regardless of specification (ASTM, proprietary, or

other). These LWR pipes and tubes are supplied with rectangular cross

sections ranging from 0.375 x 0.625 inch to 2 x 6 inches or with square

sections ranging from 0.375 to 4 inches.

The LWR pipe and tube that are the subject of this petition are

currently classifiable in the Harmonized Tariff Schedule of the United

States (HTSUS) heading 7306.60.50.00. Although the HTSUS subheading is

provided for convenience and customs purposes, our written description

of the scope of this investigation is dispositive.

Export Price and Normal Value

Export price was based on fourth quarter 1994 (1) average c.i.f.

unit value of U.S. imports from Mexico, and (2) prices from a

salesman's call sheets recording sales lost to Mexican competitors. The

unit values based on U.S. imports from Mexico were reduced for foreign

inland freight to derive ex-factory prices. The prices based on

``lost'' sales were reduced for the following costs: exporter's mark-up

costs, broker commissions, U.S. import [[Page 20964]] duties, foreign

inland freight and U.S. freight.

The home market price was based on tax-inclusive price quotations

from Mexican producers to a home market customer in December 1994. The

petitioner adjusted the FOB warehouse prices for Mexico's value added

tax.

The petitioner based the normal value on constructed value (``CV'')

in accordance with section 773(a)(4) because it asserts that the

Mexican home market price provided in the petition represented sales

that were made below the cost of production (``COP'') and, therefore,

was not an appropriate basis for calculating normal value.

The components of COP are cost of manufacture (``COM'') and

selling, general and administrative expenses (``SG&A''). The petitioner

calculated COM based on its own production experience, adjusted for

known differences between costs incurred to produce LWR pipe and tube

in the United States and production costs incurred for the merchandise

in Mexico. To calculate SG&A expenses, including interest expense, the

petitioner relied on data from the 1993 financial statement of a

Mexican pipe and tube producer not named as a respondent in the

petition. Petitioner maintained in its allegation that Mexican

producers named as respondents in the petition did not publish

financial statements and that the financial statements used to

calculate SG&A expense provided the only available data for this

expense.

The allegation that the Mexican producers are selling the foreign

like product in their home market at prices below COP is based upon a

comparison of the adjusted home market price with the calculated COP.

Based on this information, we find reasonable grounds to believe or

suspect that sales of the foreign like product were made at prices

below COP in accordance with section 773(b)(2)(A)(i) of the Act.

Accordingly, the Department will initiate a cost of production

investigation.

Therefore, for the purposes of this initiation, we are accepting

the petitioner's estimate of CV, as adjusted by the Department for

profit, as the appropriate basis for Mexican normal value. The

petitioner based CV on its COP methodology, described above, adding an

amount for profit to arrive at a total CV. Rather than use the Mexican

pipe and tube producer's 1993 financial statements to compute profit,

the petitioner calculated profit on the basis of public financial data

for a Mexican steel producer. It did so because the Mexican pipe

producer had incurred a loss in that year. Consistent with section

773(e) of the Act, the Department revised the profit figure included in

the CV to be zero, the actual profit for the one Mexican company whose

operations were limited to the production of the foreign-like product.

Based on comparisons of export prices to CV, the recalculated

dumping margins range from 14.08 to 23.38 percent.

Fair Value Comparisons

Based on the data provided by the petitioner, there is reason to

believe that imports of LWR pipe and tube from Mexico are being, or

likely to be, sold at less than fair value. If it becomes necessary at

a later date to consider the petition as a source of facts available

under section 776 of the Act, we may further review the calculations.

Initiation of Investigation

We have examined the petition on LWR pipe and tube and have found

that it meets the requirements of section 732 of the Act, including the

requirements concerning allegations of material injury or threat of

material injury to a regional industry in a domestic-like product by

reason of the complained-of imports, allegedly sold at less than fair

value. Therefore, we are initiating an antidumping duty investigation

to determine whether imports of LWR pipe and tube from Mexico are

being, or are likely to be, sold at less than fair value on a regional

basis. Unless extended, we will make our preliminary determination by

September 7, 1995.

Distribution of Copies of the Petition

In accordance with section 732(b)(3)(A) of the Act, copies of the

public version of the petition have been provided to the

representatives of the government of Mexico. We will attempt to provide

copies of the public version of the petition to all the exporters named

in the petition.

ITC Notification

We have notified the International Trade Commission (ITC) of our

initiation, as required by section 732(d) of the Act.

Preliminary Determination by the ITC

The ITC will determine by May 15, 1995, whether there is a

reasonable indication that imports of LWR pipe and tube from Mexico are

causing material injury, or threaten to cause material injury to the

regional industry. A negative ITC determination will result in the

investigation being terminated; otherwise, this investigation will

proceed according to statutory and regulatory time limits.

This notice is published pursuant to section 732(c)(2) of the Act.

Dated: April 20, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-10524 Filed 4-27-95; 8:45 am]

BILLING CODE 3510-DS-M