Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Circular Welded Non- Alloy Steel Pipe From South Africa

DEPARTMENT OF COMMERCE

[A-791-803]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Circular Welded Non-

Alloy Steel Pipe From South Africa

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 30, 1995.

FOR FURTHER INFORMATION CONTACT: Jennifer Stagner or John Beck, 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)

482-1673 or (202) 482-3464, respectively.

The Applicable Statute: Unless otherwise indicated, all citations to

the Tariff Act of 1930, as amended (the Act) are references to the

provisions effective January 1, 1995, the effective date of the

amendments made to the Act by the Uruguay Rounds Agreements Act.

Preliminary Determination: Because of the federal government shutdown,

the deadline for this preliminary determination has been extended by

the number of days of the shutdown, six days, to Tuesday, November 21,

1995.

[[Page 61534]]

We preliminarily determine that circular welded non-alloy steel

pipe (pipe) from South Africa is being, or is likely to be, sold in the

United States at less than fair value (LTFV), as provided in section

733 of the Act. The estimated margins are shown in the ``Suspension of

Liquidation'' section of this notice.

Case History

Since the initiation of this investigation on May 16, 1995 (60 FR

27078 (May 22, 1995)), the following events have occurred:

On June 12, 1995, the United States International Trade Commission

(ITC) notified the Department of Commerce (the Department) of its

affirmative preliminary determination.

On June 30, 1995, we presented questionnaires to the South African

embassy, counsel for RIH, and Steel Pipe Industries. On July 5, 1995,

Steel Pipe Industries informed the Department that it does not export

pipe to the United States. Supplemental questionnaires were issued to

RIH in August, September, and October 1995. Responses to the original

and supplemental questionnaires were received in July through October

1995.

On September 14, 1995, the Department postponed the preliminary

determination to November 15, 1995. See Notice of Postponement of

Preliminary Determinations: Antidumping Duty Investigations of Circular

Welded Non-Alloy Steel Pipe From Romania and South Africa (60 FR 48690,

September 20, 1995).

Respondent Selection

The producers named in the petition were Brollo Africa, Robor

Industrial Holding (Pty) Ltd., Trident Steel, and Tosa; the trading

companies named in the petition were Dorbyl, Circle Freight, Extram,

Firestone, Hall Longmore Equipment Service, MacSteel, Protea

International, and TISCO International.

On June 8, 1995, a cable was sent to the U.S. embassy in South

Africa requesting the identification of South African producers and

exporters of pipe which was exported to the United States. We received

a response to our cable on July 17, 1995, identifying the following

additional companies as producers and sellers of the subject

merchandise to the United States during the period of the

investigation: (1) Bartons Precision (Pty) Ltd.; (2) Bosal Marketing

(Pty) Ltd.; (3) Steel Pipe Industries (Pty) Ltd.; and (4) Trident

Sterling Tube.

Based on the petition and information contained in Iron and Steel

Works of the World (1994), we determined to send questionnaires to

Brollo Africa, Robor Industrial Holdings, Steel Pipe Industries, and

Tosa. At the time of that determination, we had not received a response

from the U.S. Embassy in South Africa, but indicated that we were

running a data inquiry with the U.S. Customs database. See Memorandum

to the file regarding the appropriate questionnaire recipients, dated

June 30, 1995. Based on the U.S. Customs database and pursuant to

section 777A(c)(2)(B) of the Act, we found that we had sent

questionnaires to the exporters and producers accounting for the

largest volume of exports of the subject merchandise from South Africa

that could be reasonably examined. Thus, we did not send any additional

questionnaires.

Postponement of Final Determination

Pursuant to section 735(a)(2)(A) of the Act, on October 24, 1995,

the respondents requested that, in the event of an affirmative

preliminary determination in this investigation, the Department

postpone its final determination until 60 days after the date of the

scheduled final determination, which is equivalent to 135 days after

the publication of an affirmative preliminary determination in the

Federal Register. In accordance with 19 CFR 353.20(b), because our

preliminary determination is affirmative, the respondents account for a

significant proportion of exports of the subject merchandise, and no

compelling reasons for denial exist, we are granting respondents'

request and postponing the final determination.

Scope of Investigation

The following scope language reflects certain modifications from

the notice of initiation. In the initiation notice, we indicated that

our scope language may change based on any final scope determination

regarding the antidumping duty orders on certain circular welded non-

alloy steel pipe from Brazil, the Republic of Korea, Mexico and

Venezuela. See Preliminary Affirmative Determination of Scope Inquiry

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

Pipe From Brazil, the Republic of Korea, Mexico, and Venezuela (59 FR

1929, January 13, 1994). However, the final determination has not yet

been made. Consequently, we have modified our scope language in an

effort to eliminate the need for use certification at this time.

For purpose of this investigation, circular welded non-alloy steel

pipes (standard pipes) are all pipes and tubes, of circular cross-

section, not more than 406.4 mm (16 inches) in outside diameter,

regardless of wall thickness, surface finish (black, galvanized, or

painted), end finish (plain end, bevelled end, threaded, or threaded

and coupled), or industry specification (ASTM, proprietary, or other)

used in standard or structural pipe applications.

The scope specifically includes, but is not limited to, all pipe

produced to the ASTM A-53, ASTM A-135, ASTM A-795, and BS-1387

specifications. It also includes any pipe multiple-stencilled or

multiple-certified to one of the above-listed specifications and to any

other specification. Pipe which meets the above physical parameters and

which is produced to proprietary specifications, the API-5L, the API-5L

X-42, or to any other non-listed specification is included within the

scope of this investigation if used in a standard or structural pipe

application, regardless of the Harmonized Tariff Schedule of the United

States (HTSUS) category into which it was classified. If the pipe does

not meet any of the above identified specifications, although it is

within the identified physical parameters described in the second

paragraph of this section, our presumption is that it is not used in a

standard pipe application.

Standard pipe uses include the low-pressure conveyance of water,

steam, natural gas, air, and other liquids and gases in plumbing and

heating systems, air conditioning units, automatic sprinkler systems,

and other related uses. Standard pipe may carry liquids at elevated

temperatures but may not be subject to the application of external

heat. Standard pipe uses also include load-bearing applications in

construction and residential and industrial fence systems. Standard

pipe uses also include shells for the production of finished conduit

and pipe used for the production of scaffolding.

Specifically excluded from this investigation are mechanical

tubing, tube and pipe hollows for redrawing, and finished electrical

conduit if such products are not certified to ASTM A-53, ASTM A-120,

ASTM A-135, ASTM A-795, and BS-1387 specifications and are not used in

standard pipe applications. Additionally, pipe meeting the

specifications for oil country tubular goods is not covered by the

scope of this investigation, unless also certified to a listed standard

pipe specification or used in a standard pipe application.

The merchandise under investigation is currently classifiable under

items 7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 7306.30.50.40,

7306.30.50.55, 7306.30.50.85, and 7306.30.50.90 of the HTSUS. Although

the HTSUS subheadings are provided

[[Page 61535]]

for convenience and customs purposes, our written description of the

scope of this investigation is dispositive.

Regarding implementation of the use provision of the scope of this

investigation, and any order which may be issued in this investigation,

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 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 use certification until such time as

petitioner or other interested parties provide the Department with a

reasonable basis to believe or suspect that substitution is occurring.

Second, we will require 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 pipe

produced to the API-5L specification is being used as standard pipe, we

will require use certifications for imports of API-5L specification

pipe. Third, normally we will require only the importer of record to

certify to the 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.

Period of Investigation

The period of investigation (POI) is April 1, 1994, through March

31, 1995.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all

products sold in the home market, fitting the description specified in

the ``Scope of Investigation'' section above, to be foreign like

products for purposes of determining appropriate product comparisons to

U.S. sales. Where there were no sales of identical merchandise in the

home market to compare to U.S. sales, we compared U.S. sales to the

next most similar foreign like product on the basis of the

characteristics listed in the Department's antidumping questionnaire.

RIH claimed that it sells to customers at two levels of trade in

the home market: distributors and end-users/fabricators. However, RIH

reported that there are no differences in the selling functions it

performed for the different customers. Thus, based on the absence of

distinct levels of trade, we did not make any distinctions between

levels of trade in our comparisons.

Fair Value Comparisons

To determine whether RIH's sales of pipe to the United States were

made at less than fair value, we compared Export Price (EP) to the

Normal Value (NV), as specified below.

Export Price

We calculated EP, in accordance with section 772(a) of the Act,

because the subject merchandise was sold to the first unaffiliated

purchaser in the United States prior to importation, and Constructed

Export Price (CEP) under section 772(b) is not otherwise warranted

based on the facts of this investigation.

We based EP on packed, FOB Port (U.S. or Durban, South Africa)

prices to unaffiliated customers in the United States. We made

deductions from the starting price (gross unit price), where

appropriate, for the following charges: inland freight in South Africa;

international freight; marine insurance; and brokerage and handling.

Normal 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 NV,

we compared the volume of RIH's home market sales of the subject

merchandise to the volume of RIH's U.S. sales of the subject

merchandise, in accordance with section 773(a)(1)(B) of the Act. Since

RIH's aggregate volume of home market sales of the subject merchandise

was greater than five percent of its aggregate volume of U.S. sales for

the foreign like product, we determined that the home market was

viable. Therefore, we have based NV on home market sales.

We based NV on FOB factory, delivered, or collected prices to

unaffiliated customers, or prices to affiliated customers which were

determined to be at arm's length (see discussion below regarding these

sales). We made deductions from the starting price for freight,

discounts, and rebates, and post-sale billing corrections. For certain

sales, we added freight revenue to the gross unit price. In accordance

with section 773(a)(6) of the Act, we deducted home market packing

costs and added U.S. packing costs.

In addition, we adjusted for differences in the circumstances of

sale, in accordance with section 773(a)(6)(C)(iii). These circumstances

included differences in imputed credit expenses and commissions. We

instructed RIH to report a sample of actual payment dates for purposes

of calculating credit expenses. Based on this sample, we have

calculated a weighted-average credit period to be used for those sales

without actual payment days. We then calculated credit expenses for all

home market sales using a POI-average interest rate.

RIH requested that we make a circumstance-of-sale adjustment for

rebates it receives from its steel suppliers for exported pipe. As

stated in Final Results of Antidumping Duty Administrative Review;

Light-Walled Welded Rectangular Carbon Steel Tubing from Taiwan (56 FR

26382, June 7, 1991) (Tubing from Taiwan), we will not make

circumstance of sale adjustments to account for differences in

production costs. In Tubing from Taiwan, the Department denied a

circumstance of sale adjustment for the same type of rebate involved

here. Although the rebate was paid on export, we found it to be a

delayed price adjustment on raw materials used in the production of the

exported merchandise. Thus, the rebate involved a difference in

production costs, not a difference in circumstances of sales, between

the exported and domestically consumed product. Similarly, as the

rebate received by RIH does not reflect a difference in the

circumstances of sales, we have made no adjustment for these rebates.

RIH paid commissions on some U.S. sales, but paid no commissions on

any home market sales. Thus, we deducted the lesser of either (1) the

amount of the weighted-average commission paid on the U.S. sales of a

product; or (2) the sum of the weighted average indirect selling

expenses paid on the home market sales, and then added the weighted-

averaged amount of the commission paid on the U.S. sales to NV in

accordance with 19 CFR 353.56(b)(1).

RIH reported that its sales to its affiliated resellers are made at

arm's length. In our October 13, 1995, supplemental questionnaire, we

instructed RIH to report all sales to the final customer, rather than

to its affiliated resellers. In its questionnaire response, RIH stated

that it was too burdensome to report this information due to the

difficulties involved in tracing these sales to the first unaffiliated

customer.

For purposes of the preliminary determination, we have accepted

RIH's argument regarding this burden. RIH has not, however, adequately

demonstrated

[[Page 61536]]

that the sales to the first unaffiliated customer would not provide

appropriate matches to U.S. sales for reasons of differences in product

characteristics, differences in level of trade, or other criteria

relevant to our analysis. Therefore, for purposes of our final

determination, we believe it is appropriate to require further

reporting of the sales to the first unaffiliated customer unless RIH

can provide additional reasoning to show that these sales are not

appropriate to use in our analysis. Thus, we will send an additional

questionnaire regarding these sales to RIH.

Accordingly, for purposes of the preliminary determination, we have

included only those sales to affiliated parties that passed the arm's

length test. See 19 CFR 353.45(a). To test whether these sales were

made at arm's length, we compared the gross unit prices of sales to

affiliated and unaffiliated customers net of all movement charges,

direct and indirect selling expenses, and packing. See Final

Determination of Sales at Less Than Fair Value; Certain Cold-Rolled

Carbon Steel Flat Products from Argentina (58 FR 37062, 37077, July 9,

1993).

Comparison Methodology

In accordance with section 777A(d)(1)(A)(i), we calculated

weighted-average EPs for comparisons to weighted average NVs. The

weighted-averages were calculated and compared by product

characteristics.

Currency Conversion

For the purpose of the preliminary determination, 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. We were

unable to obtain the official daily exchange rates as certified by the

Federal Reserve Bank of Chicago, according to section 773A(a) of the

Act, in time to use for the preliminary determination. However, we are

expecting to receive these rates in time to use for the final

determination.

Verification

As provided in section 782(i) of the Act, we will verify all

information used in making our final determination.

Suspension of Liquidation

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

Customs Service to suspend liquidation of all entries of circular

welded non-alloy steel pipe from South Africa, 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

will require a cash deposit or posting of a bond equal to the estimated

amount by which the normal value exceeds the export price as shown

below. These suspension of liquidation instructions will remain in

effect until further notice.

The weighted-average dumping margins are as follows:

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

Weighted-

average

Exporter/manufacturer margin

percentage

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

RIH Group, including Brollo Africa and Tosa................. 135.36

All Others.................................................. 135.36

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

The all others rate applies to all entries of subject merchandise

except for entries of merchandise produced by RIH Group and its

divisions: Brollo Africa and Tosa.

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 before the later of 120 days after the date of

this preliminary determination or 45 days after our final determination

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry.

Public Comment

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 for Import Administration no later than February 27, 1996,

and rebuttal briefs, no later than March 5, 1996. A list of authorities

used and an executive summary of issues should accompany any briefs

submitted to the Department. Such summary should be limited to five

pages total, including footnotes. In accordance with 19 CFR 353.38, we

will hold a public hearing, if requested, to afford interested parties

an opportunity to comment on arguments raised in case or rebuttal

briefs. Tentatively, the hearing will be held on March 8, 1996, time

and place to be determined, at the U.S. Department of Commerce, 14th

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

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

hours before the scheduled time.

Interested parties who wish to request a hearing, or to participate

if one is requested, 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(b), oral presentations will

be limited to issues raised in the briefs. If this investigation

proceeds normally, we will make our final determination by 135 days

after the publication of this notice in the Federal Register.

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

Act.

Dated: November 21, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-29269 Filed 11-29-95; 8:45 am]

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