Notice of Final Determination of Sales at Less than Fair Value: Small Diameter Circular Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe From Argentina

DEPARTMENT OF COMMERCE

[A-357-809]

Notice of Final Determination of Sales at Less than Fair Value:

Small Diameter Circular Seamless Carbon and Alloy Steel Standard, Line,

and Pressure Pipe From Argentina

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: June 19, 1995.

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FOR FURTHER INFORMATION CONTACT: Irene Darzenta or Fabian Rivelis,

Office of Antidumping Investigations, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone

(202) 482-6320 or (202) 482-3853.

Final Determination

The Department of Commerce (the Department) determines that small

diameter circular seamless carbon and alloy steel standard, line, and

pressure pipe (seamless pipe) from Argentina is being, or is likely to

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

section 735 of the Tariff Act of 1930, as amended (the Act) (1994). The

estimated margins are shown in the ``Suspension of Liquidation''

section of this notice.

Case History

Since our preliminary determination on January 19, 1995 (60 FR

5348, January 27, 1994), the following events have occurred.

In response to a request from respondent Siderca S.A.I.C.

(Siderca), we postponed the final determination until June 12, 1995,

pursuant to section 735(a)(2)(A) of the Act (60 FR 9012, February 16,

1995).

In our notice of preliminary determination we stated that we would

solicit further information on various scope-related issues, including

class or kind of merchandise. On February 10, 1995, we issued a

questionnaire to interested parties to request further information on

whether the scope of the investigation constitutes more than one class

or kind of merchandise. Responses to this questionnaire were submitted

on March 27, 1995.

On April, 27, 1995, Koppel Steel Corporation, a U.S. producer of

subject merchandise which appeared as an interested party from the

outset of this investigation, requested co-petitioner status.

On May 5, 1995, respondent submitted its case brief. Petitioner

1 submitted its rebuttal brief on May 15, 1995. In its rebuttal

brief, petitioner requested that the Department reject ``substantial

portions'' of Siderca's case brief because it allegedly constituted a

``new submission of factual information.'' Siderca objected to this

request on May 19, 1995. Petitioner responded to this letter on May 26,

1995. However, we determined that Siderca's case brief did not contain

new factual information. (See Comment 1 in the ``Interested Party

Comment'' section [[Page 31954]] of this notice.) In addition, on June

1, 1995, the Department returned Siderca's May 19, 1995, letter, as

well as petitioner's letter of May 26, 1995, because they constituted

unsolicited submissions untimely filed after the briefing period.

\1\ All references to ``petitioner'' in this notice include

Koppel Steel Corporation.

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Scope of Investigation

The following scope language reflects certain modifications made

for purposes of the final determination, where appropriate, as

discussed in the ``Scope Issues'' section below.

The scope of this investigation includes seamless pipes produced to

the ASTM A-335, ASTM A-106, ASTM A-53 and API 5L specifications and

meeting the physical parameters described below, regardless of

application. The scope of this investigation also includes all products

used in standard, line, or pressure pipe applications and meeting the

physical parameters below, regardless of specification.

For purposes of this investigation, seamless pipes are seamless

carbon and alloy (other than stainless) steel pipes, of circular cross-

section, not more than 114.3 mm (4.5 inches) in outside diameter,

regardless of wall thickness, manufacturing process (hot-finished or

cold-drawn), end finish (plain end, bevelled end, upset end, threaded,

or threaded and coupled), or surface finish. These pipes are commonly

known as standard pipe, line pipe or pressure pipe, depending upon the

application. They may also be used in structural applications. Pipes

produced in non-standard wall thicknesses are commonly referred to as

tubes.

The seamless pipes subject to these investigations are currently

classifiable under subheadings 7304.10.10.20, 7304.10.50.20,

7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 7304.39.00.24,

7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 7304.51.50.60,

7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 7304.59.80.20, and

7304.59.80.25 of the Harmonized Tariff Schedule of the United States

(HTSUS).

The following information further defines the scope of this

investigation, which covers pipes meeting the physical parameters

described above:

Specifications, Characteristics and Uses: Seamless pressure pipes

are intended for the conveyance of water, steam, petrochemicals,

chemicals, oil products, natural gas and other liquids and gasses in

industrial piping systems. They may carry these substances at elevated

pressures and temperatures and may be subject to the application of

external heat. Seamless carbon steel pressure pipe meeting the American

Society for Testing and Materials (ASTM) standard A-106 may be used in

temperatures of up to 1000 degrees fahrenheit, at various American

Society of Mechanical Engineers (ASME) code stress levels. Alloy pipes

made to ASTM standard A-335 must be used if temperatures and stress

levels exceed those allowed for A-106 and the ASME codes. Seamless

pressure pipes sold in the United States are commonly produced to the

ASTM A-106 standard.

Seamless standard pipes are most commonly produced to the ASTM A-53

specification and generally are not intended for high temperature

service. They are intended for the low temperature and pressure

conveyance of water, steam, natural gas, air and other liquids and

gasses in plumbing and heating systems, air conditioning units,

automatic sprinkler systems, and other related uses. Standard pipes

(depending on type and code) may carry liquids at elevated temperatures

but must not exceed relevant ASME code requirements.

Seamless line pipes are intended for the conveyance of oil and

natural gas or other fluids in pipe lines. Seamless line pipes are

produced to the API 5L specification.

Seamless pipes are commonly produced and certified to meet ASTM A-

106, ASTM A-53 and API 5L specifications. Such triple certification of

pipes is common because all pipes meeting the stringent A-106

specification necessarily meet the API 5L and ASTM A-53 specifications.

Pipes meeting the API 5L specification necessarily meet the ASTM A-53

specification. However, pipes meeting the A-53 or API 5L specifications

do not necessarily meet the A-106 specification. To avoid maintaining

separate production runs and separate inventories, manufacturers triple

certify the pipes. Since distributors sell the vast majority of this

product, they can thereby maintain a single inventory to service all

customers.

The primary application of ASTM A-106 pressure pipes and triple

certified pipes is in pressure piping systems by refineries,

petrochemical plants and chemical plants. Other applications are in

power generation plants (electrical-fossil fuel or nuclear), and in

some oil field uses (on shore and off shore) such as for separator

lines, gathering lines and metering runs. A minor application of this

product is for use as oil and gas distribution lines for commercial

applications. These applications constitute the majority of the market

for the subject seamless pipes. However, A-106 pipes may be used in

some boiler applications.

The scope of this investigation includes all seamless pipe meeting

the physical parameters described above and produced to one of the

specifications listed above, regardless of application, and whether or

not also certified to a non-covered specification. Standard, line and

pressure applications and the above-listed specifications are defining

characteristics of the scope of this investigation. Therefore, seamless

pipes meeting the physical description above, but not produced to the

A-335, A-106, A-53, or API 5L standards shall be covered if used in a

standard, line or pressure application.

For example, there are certain other ASTM specifications of pipe

which, because of overlapping characteristics, could potentially be

used in A-106 applications. These specifications generally include A-

162, A-192, A-210, A-333, and A-524. When such pipes are used in a

standard, line or pressure pipe application, such products are covered

by the scope of this investigation.

Specifically excluded from this investigation are boiler tubing and

mechanical tubing, if such products are not produced to A-335, A-106,

A-53 or API 5L specifications and are not used in standard, line or

pressure applications. In addition, finished and unfinished OCTG are

excluded from the scope of this investigation, if covered by the scope

of another antidumping duty order from the same country. If not covered

by such an OCTG order, finished and unfinished OCTG are included in

this scope when used in standard, line or pressure applications.

Finally, also excluded from this investigation are redraw hollows for

cold-drawing when used in the production of cold-drawn pipe or tube.

Although the HTSUS subheadings are provided for convenience and

customs purposes, our written description of the scope of this

investigation is dispositive.

Scope Issues

Interested parties in these investigations have raised several

issues related to the scope. We considered these issues in our

preliminary determination and invited additional comments from the

parties. These issues, which are discussed below, are: (A) Whether to

continue to include end use as a factor in defining the scope of these

investigations; (B) whether the seamless pipe subject to these

investigations constitutes more than one class or kind of merchandise;

and (C) miscellaneous scope clarification issues and scope exclusion

requests.

[[Page 31955]]

A. End Use

We stated in our preliminary determination that we agreed with

petitioner that pipe products identified as potential substitutes used

in the same applications as the four standard, line, and pressure pipe

specifications listed in the scope would fall within the class or kind

of subject merchandise and, therefore, within the scope of any orders

issued in these investigations. However, we acknowledged the

difficulties involved with requiring end-use certifications,

particularly the burdens placed on the Department, the U.S. Customs

Service, and the parties, and stated that we would strive to simplify

any procedures in this regard.

For purposes of these final determinations, we have considered

carefully additional comments submitted by the parties and have

determined that it is appropriate to continue to employ end use to

define the scope of these cases with respect to non-listed

specifications. We find that the generally accepted definition of

standard, line and pressure seamless pipes is based largely on end use,

and that end use is implicit in the description of the subject

merchandise. Thus, end use must be considered a significant defining

characteristic of the subject merchandise. Given our past experience

with substitution after the imposition of antidumping orders on steel

pipe products,2 we agree with petitioner that if products produced

to a non-listed specification (e.g., seamless pipe produced to A-162, a

non-listed specification in the scope) were actually used as standard,

line, or pressure pipe, then such product would fall within the same

class or kind of merchandise subject to these investigations.

\2\ See Preliminary Affirmative Determination of Scope Inquiry

on Antidumping Duty Orders on Certain Welded Non-Alloy Steel Pipes

from Brazil, the Republic of Korea, Mexico and Venezuela, 59 FR

1929, January 13, 1994.

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Furthermore, we disagree with respondents' general contention that

using end use for the scope of an antidumping case is beyond the

purview of the U.S. antidumping law. The Department has interpreted

scope language in other cases as including an end-use specification.

See Ipsco Inc. v. United States, 715 F.Supp. 1104 (CIT 1989) (Ipsco).

In Ipsco, the Department had clarified the scope of certain orders, in

particular the phrase, ``intended for use in drilling for oil and

gas,'' as covering not only API specification OCTG pipe but, `` `all

other pipe with [certain specified] characteristics used in OCTG

applications * * *.' '' Ipsco at 1105. In reaching this determination,

the Department also provided an additional description of the covered

merchandise, and initiated an end-use certification procedure.

Regarding implementation of the end use provision of the scope of

these investigations, and any orders which may be issued in these

investigations, we are well aware of the difficulty and burden

associated with such certifications. Therefore, in order to maintain

the effectiveness of any order that may be issued in light of actual

substitution in the future (which the end-use criterion is meant to

achieve), yet administer certification procedures in the least

problematic manner, we have developed an approach which simplifies

these procedures to the greatest extent possible.

First, we will not require end-use certification until such time as

petitioner or other interested parties provide a reasonable basis to

believe or suspect that substitution is occurring.3 Second, we

will require end-use certification only for the product(s) (or

specification(s)) for which evidence is provided that substitution is

occurring. For example, if, based on evidence provided by petitioner,

the Department finds a reasonable basis to believe or suspect that

seamless pipe produced to A-162 specification is being used as pressure

pipe, we will require end-use certifications for imports of A-162

specification. Third, normally we will require only the importer of

record to certify to the end use of the imported merchandise. If it

later proves necessary for adequate implementation, we may also require

producers who export such products to the United States to provide such

certification on invoices accompanying shipments to the United States.

For a complete discussion of interested party comments and the

Department's analysis on this topic, see June 12, 1995, End Use

Decision Memorandum from Deputy Assistant Secretary Barbara Stafford

(DAS) to Assistant Secretary Susan Esserman (AS).

\3\ This approach is consistent with petitioner's request.

B. Class or Kind

In the course of these investigations, certain respondents have

argued that the scope of the investigations should be divided into two

classes or kinds. Siderca S.A.I.C., the Argentine respondent, has

argued that the scope should be divided according to size: seamless

pipe with an outside diameter of 2 inches or less and pipe with an

outside diameter of greater than 2 inches constitute two classes or

kinds. Mannesmann S.A., the Brazilian respondent, and Mannesmannrohren-

Werke, A.G., the German respondent, argued that the scope should be

divided based upon material composition: carbon and alloy steel

seamless pipe constitute two classes or kinds.

In our preliminary determinations, we found insufficient evidence

on the record that the merchandise subject to these investigations

constitutes more than one class or kind. We also indicated that there

were a number of areas where clarification and additional comment were

needed. For purposes of the final determination, we considered a

significant amount of additional information submitted by the parties

on this issue, as well as information from other sources. This

information strongly supports a finding of one class or kind of

merchandise. As detailed in the June 12, 1995, Class or Kind Decision

Memorandum from DAS to AS, we analyzed this issue based on the criteria

set forth by the Court of International Trade in Diversified Products

v. United States, 6 CIT 155, 572 F. Supp. 883 (1983). These criteria

are as follows: (1) The general physical characteristics of the

merchandise; (2) expectations of the ultimate purchaser; (3) the

ultimate use of the merchandise; (4) the channels of trade in which the

merchandise moves; and (5) the cost of that merchandise.

In the past, the Department has divided a single class or kind in a

petition into multiple classes or kinds where analysis of the

Diversified Products criteria indicates that the subject merchandise

constitutes more than one class or kind. See, for example, Final

Determination of Sales at Less than Fair Value; Anti-Friction Bearings

(Apart from Tapered Roller Bearings) from Germany, 54 FR 18992, 18998

(May 3, 1989) (``AFBs from Germany''); Pure and Alloy Magnesium from

Canada: Final Affirmative Determination; Rescission of Investigation

and Partial Dismissal of Petition, 57 FR 30939 (July 13, 1992).

1. Physical Characteristics

We find little meaningful difference in physical characteristics

between seamless pipe above and below two inches. Both are covered by

the same technical specifications, which contains detailed

requirements.\4\ While we recognize that carbon and alloy pipe do have

some important physical [[Page 31956]] differences (primarily the

enhanced heat and pressure tolerances associated with alloy grade

steels), it is difficult to say where carbon steel ends and alloy steel

begins. As we have discussed in our Class or Kind Decision Memorandum

of June 12, 1995, carbon steel products themselves contain alloys, and

there is a range of percentages of alloy content present in merchandise

made of carbon steel. We find that alloy grade steels, and pipes made

therefrom, represent the upper end of a single continuum of steel

grades and associated attributes.\5\

\4\ The relevant ASTM specifications, as well as product

definitions from other independent sources (e.g., American Iron and

Steel Institute (AISI)), describe the sizes for standard, line, and

pressure pipe, as ranging from \1/2\ inch to 60 inches (depending on

application). None of these descriptions suggest a break point at

two inches.

\5\ The Department has had numerous cases where steel products

including carbon and alloy grades were considered to be within the

same class or kind. See, e.g., Preliminary Determination of Sales at

Less than Fair Value: Oil Country Tubular Goods from Austria, et

al., 60 FR 6512 (February 2, 1995); Final Determination of Sales at

Less than Fair Value: Certain Alloy and Carbon Hot-Rolled Bars,

Rods, and Semi-Finished Products of Special Bar Quality Engineered

Steel from Brazil, 58 FR 31496 (June 3, 1993); Final Determination

of Sales at Less than Fair Value: Forged Steel Crankshafts from the

United Kingdom, 60 FR 22045 (May 9, 1995).

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In those prior determinations where the Department divided a single

class or kind, the Department emphasized that differences in physical

characteristics also affected the capabilities of the merchandise

(either the mechanical capabilities, as in AFBs from Germany, 54 FR at

18999, 19002-03, or the chemical capabilities, as in Pure and Alloy

Magnesium from Canada, 57 FR at 30939), which in turn established the

boundaries of the ultimate use and customer expectations of the

products involved.

As the Department said in AFBs from Germany,

[t]he real question is whether the physical differences are so

material as to alter the essential nature of the product, and,

therefore, rise to the level of class or kind distinctions. We

believe that the physical differences between the five classes or

kinds of the subject merchandise are fundamental and are more than

simply minor variations on a theme.

54 FR at 19002. In the present cases, there is insufficient evidence to

conclude that the differences between pipe over 2 inches in outside

diameter and 2 inches or less in outside diameter, rise to the level of

a class or kind distinction.

Furthermore, with regard to Siderca's allegation that a two-inch

breakpoint is widely recognized in the U.S. market for seamless pipe,

the Department has found only one technical source of U.S. market data

for seamless pipe, the Preston Pipe Report. The Preston Pipe Report,

which routinely collects and publishes U.S. market data for this

merchandise, publishes shipment data for the size ranges \1/2\ to 4\1/

2\ inches: it does not recognize a break point at 2 inches.

Accordingly, the Department does not agree with Siderca that ``the U.S.

market'' recognizes 2 inches as a physical boundary line for the

subject merchandise.

In these present cases, therefore, the Department finds that there

is insufficient evidence that any physical differences between pipe

over 2 inches in outside diameter and 2 inches or less in outside

diameter, or between carbon and alloy steel, rise to the level of class

or kind distinctions.

2. Ultimate Use and Purchaser Expectations

We find no evidence that pipe above and below two inches is used

exclusively in any specific applications. Rather, the record indicates

that there are overlapping applications. For example, pipe above and

below two inches may both be used as line and pressure pipe. The

technical definitions for line and pressure pipe provided by ASTM,

AISI, and a variety of other sources do not recognize a distinction

between pipe over and under two inches.

Likewise, despite the fact that alloy grade steels are associated

with enhanced heat and pressure tolerances, there is no evidence that

the carbon or alloy content of the subject merchandise can be

differentiated in the ultimate use or expectations of the ultimate

purchaser of seamless pipe.

3. Channels of Trade

Based on information supplied by the parties, we determine that the

vast majority of the subject merchandise is sold through the same

channel of distribution in the United States and is triple-stenciled in

order to meet the greatest number of applications.

Accordingly, the channels of trade offer no basis for dividing the

subject merchandise into multiple classes or kinds based on either the

size of the outside diameter or on pipe having a carbon or alloy

content.

4. Cost

Based on the evidence on the record, we find that cost differences

between the various products do exist. However, the parties varied

considerably in the factors which they characterized as most

significant in terms of affecting cost. There is no evidence that the

size ranges above and below two inches, and the difference between

carbon and alloy grade steels, form a break point in cost which would

support a finding of separate classes or kinds.

In conclusion, while we recognize that certain differences do exist

between the products in the proposed class or kind of merchandise, we

find that the similarities significantly outweigh any differences.

Therefore, for purposes of the final determination, we will continue to

consider the scope as constituting one class or kind of merchandise.

C. Miscellaneous Scope Clarification Issues and Exclusion Requests

The miscellaneous scope issues include: (1) Whether OCTG and

unfinished OCTG are excluded from the scope of these investigations;

(2) whether pipes produced to non-standard wall thicknesses (commonly

referred to as ``tubes'') are covered by the scope; (3) whether certain

merchandise (e.g., boiler tubing, mechanical tubing) produced to a

specification listed in the scope but used in an application excluded

from the scope is covered by the scope; and (4) whether redraw hollows

used for cold drawing are excluded from the scope. For a complete

discussion of interested party comments and the Department's analysis

on these topics, see June 12, 1995, Additional Scope Clarifications

Decision Memorandum from DAS to AS.

Regarding OCTG, petitioner requested that OCTG and unfinished OCTG

be included within the scope of these investigations if used in a

standard, line or pressure pipe application. However, OCTG and

unfinished OCTG, even when used in a standard, line or pressure pipe

application, may come within the scope of certain separate, concurrent

investigations. We intend that merchandise from a particular country

not be classified simultaneously as subject to both an OCTG order and a

seamless pipe order. Thus, to eliminate any confusion, we have revised

the scope language above to exclude finished and unfinished OCTG, if

covered by the scope of another antidumping duty order from the same

country. If not covered by such an OCTG order, finished and unfinished

OCTG are included in this scope when used in a standard, line or

pressure pipe application, and, as with other non-listed

specifications, may be subject to end-use certification if there is

evidence of substitution.

Regarding pipe produced in non-standard wall thicknesses, we

determine that these products are clearly within the parameters of the

scope of these investigations. For clarification purposes, we note that

the physical parameters of the scope include all seamless carbon and

alloy steel pipes, of circular cross-section, not more than 4.5 inches

in outside diameter, regardless of [[Page 31957]] wall thickness.

Therefore, the fact that such products may be referred to as tubes by

some parties, and may be multiple-stenciled, does not render them

outside the scope.

Regarding pipe produced to a covered specification but used in a

non-covered application, we determine that these products are within

the scope. We agree with the petitioner that the scope of this

investigation includes all merchandise produced to the covered

specifications and meeting the physical parameters of the scope,

regardless of application. The end-use criteria included in the scope

is only applicable to products which can be substituted in the

applications to which the covered specifications are put i.e. standard,

line, and pressure applications.

It is apparent that at least one party in this case interpreted the

scope incorrectly. Therefore, we have clarified the scope to make it

more explicit that all products made to ASTM A-335, ASTM A-106, ASTM A-

53 and API 5L are covered, regardless of end use.

With respect to redraw hollows for cold drawing, the scope language

excludes such products specifically when used in the production of

cold-drawn pipe or tube. We understand that petitioner included this

exclusion language expressly and intentionally to ensure that hollows

imported into the United States are sold as intermediate products, not

as merchandise to be used in a covered application.

Standing

The Argentine, Brazilian, and German respondents have challenged

the standing of Gulf States Tube to file the petition with respect to

pipe and tube between 2.0 and 4.5 inches in outside diameter, arguing

that Gulf States Tube does not produce these products.

Pursuant to section 732(b)(1) of the Act, an interested party as

defined in section 771(9)(C) of the Act has standing to file a

petition. (See also 19 CFR 353.12(a).) Section 771(9)(C) of the Act

defines ``interested party,'' inter alia, as a producer of the like

product. For the reasons outlined in the ``Scope Issues'' section

above, we have determined that the subject merchandise constitutes a

single class or kind of merchandise. The International Trade Commission

(ITC) has also preliminarily determined that there is a single like

product consisting of circular seamless carbon and alloy steel

standard, line, and pressure pipe, and tubes not more than 4.5 inches

in outside diameter, and including redraw hollows. (See USITC

Publication 2734, August 1994 at 18). For purposes of determining

standing, the Department has determined to accept the ITC's definition

of like product, for the reasons set forth in the ITC's preliminary

determination. Because Gulf States is a producer of the like product,

it has standing to file a petition with respect to the class or kind of

merchandise under investigation. Further, as noted in the ``Case

History'' section of this notice, on April 27, 1995, Koppel, a U.S.

producer of the product size range at issue, filed a request for co-

petitioner status, which the Department granted. As a producer of the

like product, Koppel also has standing.

The Argentine respondent argues that Koppel's request was filed too

late to confer legality on the initiation of these proceedings with

regard to the products at issue. Gulf States Tube maintains that the

Department has discretion to permit the amendment of a petition for

purposes of adding co-petitioners who produce the domestic like

product, at such time and upon such circumstances as deemed appropriate

by the Department.

The Court of International Trade (CIT) has upheld in very broad

terms the Department's ability to allow amendments to petitions. For

example, in Citrosuco Paulista, S.A. v. United States, 704 F. Supp.

1075 (Ct. Int'l Trade 1988), the Court sustained the Department's

granting of requests for co-petitioner status filed by six domestic

producers on five different dates during an investigation. The Court

held that the addition of the co-petitioners cured any defect in the

petition, and that allowing the petition to be amended was within

Commerce's discretion:

[S]ince Commerce has statutory discretion to allow amendment of

a dumping petition at any time, and since Commerce may self-initiate

a dumping petition, any defect in a petition filed by [a domestic

party is] cured when domestic producers of the like product [are]

added as co-petitioners and Commerce [is] not required to start a

new investigation.

Citrosuco, 704 F. Supp. at 1079 (emphasis added). The Court reasoned

that if Commerce were to have dismissed the petition for lack of

standing, and to have required the co-petitioners to refile at a later

date, it ``would have elevated form over substance and fruitlessly

delayed the antidumping investigation * * * when Congress clearly

intended these cases to proceed expeditiously.'' Id. at 1083-84.

Koppel has been an interested party and a participant in these

investigations from the outset. The timing of Koppel's request for co-

petitioner status and the fact that it made its request in response to

Siderca's challenge to Gulf States's Tube's standing does not render

its request invalid. See Final Affirmative Countervailing Duty

Determination; Live Swine and Fresh, Chilled, and Frozen Pork Products

from Canada, 50 FR 25097 (June 17, 1985). The Department has rejected a

request to add a co-petitioner based on the untimeliness of the request

only where the Department determined that there was not adequate time

for opposing parties to submit comments and for the Department to

consider the relevant arguments. See Final Affirmative Countervailing

Duty Determination: Certain Stainless Steel Hollow Products from

Sweden, 52 FR 5794, 5795, 5803 (February 26, 1987). In this

investigation, the respondents have had an opportunity to comment on

Koppel's request for co-petitioner status, and the Argentine respondent

has done so in its case brief. Therefore, we have determined that,

because respondents would not be prejudiced or unduly burdened,

amendment of the petition to add Koppel as co-petitioner is

appropriate.

Period of Investigation

The period of investigation (POI) is January 1, through June 30,

1994.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute and to the

Department's regulations are in reference to the provisions as they

existed on December 31, 1994.

Best Information Available

In accordance with section 776(c) of the Act, we have determined

that the use of best information available (BIA) is appropriate for

Siderca, the only named respondent in this investigation. As stated in

our notice of preliminary determination, on September 12, 1994, Siderca

notified the Department that it would not participate in this

investigation. Because Siderca refused to answer the Department's

questionnaire, we find that it has not cooperated in this

investigation.

In determining what rate to use as BIA, the Department follows a

two-tiered BIA methodology, whereby the Department may impose the most

adverse rate upon those respondents who refuse to cooperate or

otherwise significantly impede the proceeding, or assign a lower rate

for those respondents who have cooperated in an investigation. The

Department's BIA methodology for uncooperative respondents is to assign

the higher of the highest margin alleged in the petition or the highest

rate calculated for another respondent. The Department's practice for

applying BIA to cooperative respondents is to use the higher of the

average of the margins alleged in the petition or the calculated

[[Page 31958]] margin for another firm for the same class or kind of

merchandise from the same country. See Final Determination of Sales at

Less than Fair Value: Antifriction Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof From the Federal Republic of Germany, 54 FR

18992, 19033 (May 3, 1989). The Department's two-tier methodology for

assigning BIA based on the degree of respondents' cooperation has been

upheld by the U.S. Court of Appeals for the Federal Circuit. (See

Allied-Signal Aerospace Co. v. the United States, 996 F2d 1185 (Fed

Cir. 1993); see also Krupp Stahl AG. et al v. the United States, 822 F.

Supp. 789 (CIT 1993).) Because there are no other respondents in this

investigation we are assigning to Siderca, as BIA, the highest margin

among the margins alleged in the petition.

Fair Value Comparisons

To determine whether sales of subject merchandise from Germany to

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

States price (USP) to foreign market value (FMV) as reported in the

petition. See Initiation of Antidumping Duty Investigation of Small

Diameter Circular Seamless Carbon and Alloy Steel Standard, Line and

Pressure Pipe from Argentina, Brazil, Germany, and Italy (59 FR 37025,

July 20, 1994).

Interested Party Comments

Comment 1

Petitioner contends that Siderca's submissions of factual

information made after its September 12, 1994, letter indicating that

it would not participate in the investigation, are untimely. As such,

they must be stricken from the record and not considered by the

Department in its final determination. In addition, petitioner states

that none of the factual information upon which Siderca relies in its

case brief has been verified by the Department, which is required under

the antidumping statute if it is to be utilized by the Department in

making a final determination. Also, petitioner states that some of

Siderca's later submissions (e.g., submissions on October 12, 1994, and

March 27, 1995) related to standing and class or kind issues did not

contain certifications of factual information.

DOC Position

We disagree with petitioner. Despite the fact that Siderca chose

not to respond to the Department's questionnaire, and thus not to

participate in this investigation, the Department cannot preclude it

from commenting as an interested party in this investigation.

Furthermore, all of the information contained in Siderca's brief was

submitted previously on the record, so that its case brief contained no

new factual information. In addition, the omission of certification

from earlier submissions was a clerical oversight which was cured

without prejudicing petitioner.

Comment 2

Siderca maintains that Gulf States is not a producer of standard,

line and pressure pipe between 2.0 and 4.5 inches in outer diameter

(OD) and, therefore, lacks standing as an ``interested party'' under

section 771(9)(C) of the Act to petition on behalf the U.S. industry

which produces this merchandise. Siderca also asserts that the request

of Koppel Steel Corporation for co-petitioner status does not remedy

Gulf States' lack of standing or cure the petitioner's defects.

Consequently, Siderca urges the Department to rescind the initiation of

the investigation with respect to seamless pipe in the OD size range

between 2.0 and 4.5.

Specifically, respondent states that Gulf States openly admits in

the petition that it neither manufactures or sells seamless pipe

greater than or equal to 2\3/8\ inches in OD, and that publicly

available evidence shows that Gulf States neither manufactures or sells

seamless pipe between 1.9 and 2\3/8\ inches in OD. Respondent also

maintains that Gulf States fails to meet the statutory test for

interested party status to file a petition under Section 771(9)(C) of

the Act, and has no legally-recognizable stake in the market for pipe

greater than 2.0 inches in OD, as provided for in the legislative

history of the standing requirement.

Furthermore, Siderca asserts that the ITC's one like product

preliminary determination does not change this analysis because the

like product determination made by the ITC when it considers the issue

of material injury is different from the like product determination

made by the Commerce Department when it considers the issue of

standing. The Commerce Department is not required to adopt the ITC's

like product definition for purposes of determining petitioner's

standing. Siderca adds that seamless carbon and alloy pipe is produced

in a continuum of sizes at least up to 36 inches in OD; there is no

``bright line'' at any point on that continuum above 2.0 inches, other

than a line that may be drawn where the facilities of producers impose

physical limitations. Thus, if the Department concludes that a producer

of seamless pipe up to 2.0 inches is an interested party with regard to

seamless pipe of greater OD, then there is no more of a justification

for a producer such as Gulf States to petition on pipe up to 4.5 inches

than there is for it to petition up to 36 inches. Once the Department

determines that a petitioner is an interested party for sizes beyond

its production capability, there is no reason for drawing the line at

4.5 inches or any other point along the continuum.

With respect to Koppel's request for co-petitioner status,

respondent states that this request was filed too late (almost 10

months after the June 23, 1994, filing of the petition) to confer

legality on the initiation of this proceeding with regard to seamless

pipe between 2.0 and 4.5 inches in OD. According to Siderca, this

action is unprecedented, and was precipitated by Gulf States' and

Koppel's realization that the petition and Department's subsequent

initiation are legally deficient with respect to seamless pipe over 2.0

inches. Siderca also points out that all of the information on which

the Department relied in making its initiation determination came from

Gulf States, not Koppel. If Koppel is not accepted as co-petitioner,

the initiation of these investigations with regard to pipe between 2.0

and 4.5 inches in OD must be rescinded because Gulf States is not an

interested party with respect to merchandise of this size range.

Siderca also asserts that if the Department does not reject the

petition or rescind the initiation with respect to seamless pipe of

this size range, it should determine that there are two classes or

kinds of merchandise, i.e., 2.0 inches and below; and between 2.0 and

4.5 inches, because these pipe size ranges differ in terms of physical

characteristics, purchaser expectations, end use and cost.

Gulf States contends that Siderca's objection to its standing is

without merit because: (1) There is no basis in law or in fact for

treating pipe larger than 2.0 inches in OD as a separate class or kind

of merchandise; and (2) in any event, Gulf States produces pipe in the

categories of merchandise proposed by Siderca. Contrary to respondent's

claim, petitioner points out that in its March 27, 1995, submission, it

provided extensive factual information concerning the stencilling,

sale, distribution, and cost of production for all sizes of subject

merchandise produced by Gulf States, including seamless pipe larger

than 2.0 inches in OD. Therefore, petitioner asserts that even if pipe

over 2.0 inches in OD were to constitute a separate class or kind of

merchandise, Gulf States would nonetheless have standing as a

[[Page 31959]] petitioner. Additionally, Gulf States maintains that

Siderca's claim that Koppel cannot be added as a co-petitioner at the

time it made its request on April 27, 1995, is legally incorrect.

Citing Citrosuco Paulista, S.A. v. United States (704 F. Supp. 1075

(CIT 1988)), petitioner asserts that the Department has discretion to

permit the amendment of a petition for the purposes of adding co-

petitioners who produce the like product, at such time and upon such

circumstances as deemed appropriate by the Department.

DOC Position

We agree with petitioner for reasons explained in our section on

``Standing'' in this notice.

Comment 3

Siderca argues that the Department should reject petitioner's end

use language in the scope of this investigation which includes products

not subject to this investigation if they are used in standard line

pipe applications.

Respondent maintains that such an end use requirement would result

in a disparate treatment between imported goods that have crossed the

border and domestic goods once they are competing in the U.S.

marketplace, which is contrary to Article III of the General Agreement

on Tariffs and Trade (GATT).

Respondent also argues that if an end use certification program

were implemented, it would be virtually unadministerable because

importers and producers normally do not know the end use of their

product. Moreover, respondent cites the Oil Country Tubular Goods from

Canada investigation, in which the Department abandoned its end use

program after two years, because the program was cumbersome and

difficult to administer.

Petitioner states that end use is an appropriate element of the

scope and that the Department has included end use has included end use

as an element of scope in other investigations. Furthermore, petitioner

maintains that because of overlapping properties, it is possible that

pipe made to other specifications than A-53, A-106, A-335, and API-5L

may be applied to uses for which those specifications are normally

used, creating the likelihood of substitution. Petitioner recognizes

that defining scope by end use presents more complications for the

enforcement of an order, but, for simplification, has suggested that

the Department employ a rebuttable presumption that specification is an

indication of use for pipe in non-listed specifications. Finally,

petitioner counters Siderca's assertion that an end use element in the

scope is contrary to GATT by stating that the GATT is not violated

unless the country imposing the duties has disregarded its obligations

under Article VI of the Antidumping Code; and that Siderca does not

allege that any provisions of relevant GATT antidumping law would be

violated if the Department, following established U.S. practice

continues to consider end use as a scope criterion.

DOC Position

We agree with petitioner for the reasons outlined in the ``Scope

Issues'' section of this notice.

Comment 4

Siderca argues that there are two classes or kinds of merchandise:

standard line pipe 2.0 inches in outside diameter and below; and

between 2.0 and 4.5 inches in outside diameter. Respondent maintains

that the criteria articulated in Diversified Products support its

assertion of two classes of kinds. Specifically, respondent argues that

the distinct size differences between steel pipe below 2.0 inches in

outside diameter and steel pipe between 2.0 and 4.5 inches are

recognized in the industry as differentiating physical characteristics.

Respondent maintains that line capacity, operating pressure,

temperature, stress level, and structural integrity will determine the

size of the pipe, and in turn, will determine the particular

application.

With respect to customer expectations, Siderca argues that

customers purchase pipe in specific sizes knowing that different sizes

have different applications. Respondent states that pipe under 2.0

inches is used almost exclusively as pressure pipe because of the

unique characteristics of pipe that size. Moreover, respondent claims

that a purchaser will expect pipe above 2.0 inches to be suitable for

line pipe applications.

Regarding channels of trade, respondent argues that although pipe

below 2.0 inches and pipe between 2.0 and 4.5 inches are sold though

distributors, this fact does not make these two groups a single class

or kind.

Siderca argues that the ultimate use of the product depends on the

size. Respondent states that pipe under 2.0 inches is used almost

exclusively as pressure pipe and most pipes between 2.0 and 4.5 inches

are sold as line pipe. Furthermore, respondent claims that seamless

pipe is almost never used in standard pipe applications.

Respondent contends that the cost of seamless pipe differs

significantly depending on size. Respondent states that smaller pipe

also costs more to manufacture because it requires more manufacturing

time, on a kilogram basis, than larger pipe. Furthermore, respondent

maintains that pipe in sizes under 2.0 inches is usually cold-drawn, a

more costly process than hot-finishing, which is the most common

production process for pipe above 2.0 inches.

Petitioner argues that an analysis of the five factors used in the

diversified products analysis supports a single class or kind of

merchandise. Regarding the physical characteristics, petitioner argues

that seamless standard, line, and pressure pipe each meet the same

physical characteristics described in the petition. Petitioner argues

that the use of different production facilities to make physically

identical merchandise does not constitute a difference in physical

characteristics. Petitioner also states the respondent's argument that

cold-drawn merchandise (pipe below 2.0 inches) and hot-finished

merchandise (pipe above 2.0 inches) indicated two classes or kinds is

contrary to the Department's decision not to create separate classes of

kinds based on cold-drawn and hot-rolled products in Stainless Steel

Bar from Italy. Petitioner asserts that respondent's suggestions that

end users have different expectations for pipe below 2.0 inches is

unfounded. Petitioner contends that the physical characteristics of

pipe are set forth in the ASTM and API specifications, which apply to

all subject pipe regardless of size. Petitioners contend that the sales

subject seamless pipes are made through the same channels of trade.

Petitioner maintains that the ultimate end use of the product is

largely dictated by the specification to which the pipe is produced.

Petitioner argues that since the majority of imported subject pipe is

triple certified, the pipe may be put to use in any of the uses that

either A-106, A-53, or API 5L may be applied.

Petitioner argues that all subject seamless pipe has sufficiently

similar costs to be considered a single class or kind of merchandise.

Petitioner contends that since the majority of the subject pipe is

triple certified, it has basically identical costs regardless of the

customer to whom it is sold and that there are only minimal differences

in production costs between pipe over 2.0 inches and pipe under 2.0

inches.

DOC Position

We agree with petitioner for the reasons outlined in the ``Scope

Issues'' section of this notice. [[Page 31960]]

Comment 5

In order to eliminate confusion and uncertainty of the scope,

respondent argues that the Department should clarify the language of

the scope and explicitly exclude products that are not intended to be

part of the investigation. Specifically, respondent argues that the

Department exclude unfinished oil country tubular goods and tubing

products made in non-pipe sizes. Furthermore, respondent contends that

language in the scope concerning ``redraw hollows for cold-drawing when

used in the production of cold-drawn pipe or tube,'' is confusing.

Respondent suggests the Department revise this language to simply state

that the scope excludes hollows for cold-drawing. This would eliminate

confusion, while not changing the intended scope of the exclusion.

Petitioner asserts that a modification of the scope to Siderca's

requests would be unsupported by substantial evidence on the record.

With respect to OCTG, petitioner notes that the scope explicitly

excludes OCTG when it is not used or intended for use in one of the

listed applications and that no further clarification is necessary.

Petitioner states that tubing in ``non-pipe'' sizes is expressly

covered by the scope of the investigation when produced to one of the

listed specifications or when used in a listed application. Petitioner

maintains that the language in the scope with respect to redraw hollows

was included expressly to ensure that hollows are actually cold-drawn

and not sold directly as A-106 pipe.

DOC Position

We agree with petitioner for the reasons outlined in the ``Scope

Issues'' section of this notice.

Continuation of Suspension of Liquidation

In accordance with section 733(d)(1) of the Act 19 USC 1673b(d)(1),

we directed the Customs Service to suspend liquidation of all entries

of seamless pipe from Argentina, as defined in the ``Scope of

Investigation'' section of this notice, that are entered, or withdrawn

from warehouse, for consumption on or after January 27, 1995.

Pursuant to the results of this final determination, we will

instruct the Customs Service to require a cash deposit or posting of a

bond equal to the estimated final dumping margin, as shown below, for

entries of seamless pipe from Argentina that are entered, or withdrawn

from warehouse, for consumption from the date of publication of this

notice in the Federal Register. The suspension of liquidation will

remain in effect until further notice.

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

Weighted

Manufacturer/producer/exporter average margin

percent

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

Siderca S.A.I.C......................................... 108.13

All Others.............................................. 108.13

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

ITC Notification

In accordance with section 735(d) of the Act, we have notified the

ITC of our determination. The ITC will makes its determination whether

these imports materially injure, or threaten injury to, a U.S. industry

within 45 days of the publication of this notice. If the ITC determines

that material injury or threat of material injury does not exist, the

proceeding will be terminated and all securities posted as a result of

the suspension of liquidation will be refunded or cancelled. However,

if the ITC determines that material injury or threat of material injury

does exist, the Department will issue an antidumping duty order.

Notification to Interested Parties

This notice serves as the only reminder to parties subject to

administrative protective order (APO) in these investigations of their

responsibility covering the return or destruction of proprietary

information disclosed under APO in accordance with 19 CFR 353.34(d).

Failure to comply is a violation of the APO.

This determination is published pursuant to section 735(d) of the

Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4).

Dated: June 12, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-14936 Filed 6-16-95; 8:45 am]

BILLING CODE 3510-DS-P