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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-485-804]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Circular Welded Non-

Alloy Steel Pipe From Romania

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 30, 1995.

FOR FURTHER INFORMATION CONTACT: John Beck or Magd Zalok, Office of

Antidumping Investigations, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue NW., Washington, D.C. 20230; telephone: (202) 482-

3464 or (202) 482-4162, respectively.

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 Act by the Uruguay Round 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.

We preliminarily determine that circular welded non-alloy steel

pipe (pipe) from Romania 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 May 30, 1995, a letter of appearance was filed on behalf of

Tepro S.A. (Tepro), a producer of the subject merchandise, as well as

Metagrimex S.A. (Metagrimex), Metalexportimport S.A.

(Metalexportimport), and Metanef S.A. (Metanef), exporters of the

subject merchandise. On June 7, 1995, a cable was sent to the U.S.

Embassy in Romania requesting the identification of Romanian producers

and exporters of pipe exported to the United States. We received a

response on June 13, 1995, identifying the same companies named in the

May 30, 1995, letter of appearance.

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 Romanian

Embassy and counsel for Tepro, Metagrimex, Metalexportimport and

Metanef. Supplemental questionnaires were issued in August and

September 1995. Responses to the original and supplemental

questionnaires were received in August, September, and October 1995.

On September 14, 1995, the Department, at the request of the

petitioner, postponed the preliminary determination to November 15,

1995 (60 FR 48690, September 20, 1995).

Postponement of Final Determination

Pursuant to section 735(a)(2)(A) of the Act, on November 20, 1995,

the respondents requested that, in the event of an affirmative

preliminary determination in this investigation, the Department

postpone its final determination until 135 days after the date of

publication of an affirmative preliminary determination in the Federal

Register. Pursuant to 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

[[Page 61530]]

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 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 is October 1, 1994, through March 31,

1995.

Nonmarket Economy Country Status

The Department has treated Romania as a nonmarket economy country

(NME) in all past antidumping investigations (see, e.g., Final

Determination of Sales at Less Than Fair Value: Circular Welded Non-

Alloy Steel Pipe from Romania (57 FR 42957, September 17, 1992). Since

neither respondents nor petitioners have challenged such treatment, we

will continue to treat Romania as a NME in this investigation, in

accordance with section 771(18)(C) of the Act.

When the Department is investigating imports from a NME, section

773(c)(1) of the Act directs us to base normal value (NV) on the NME

producer's factors of production, valued in a comparable market economy

that is a significant producer of comparable merchandise. The sources

of individual factor prices are discussed under the NV section, below.

Surrogate Country

Section 773(c)(4) of the Act requires the Department to value the

NME producer's factors of production, to the extent possible, in one or

more market economy countries that: (1) are at a level of economic

development comparable to that of the NME country; and (2) are

significant producers of comparable merchandise. The Department has

determined that Algeria, Colombia, the Dominican Republic, Ecuador,

Morocco and Peru are the countries most comparable to Romania in terms

of overall economic development (see the July 25, 1995, memorandum from

David Mueller, Director, Office of Policy, to David L. Binder,

Director, Antidumping Investigations Division II). On July 28, 1995,

the Department issued a letter allowing all interested parties an

opportunity to comment on those countries and to provide the Department

with information to value Tepro's factors of production. Responses to

that letter were received in September, October and November, 1995.

According to the information on the record, we have determined that

Colombia is also a significant producer of pipe among these six

potential surrogate countries. Accordingly, where possible, we have

calculated NV using Colombian prices to value the Romanian producer's

factors of production. Where we did not have Colombian values, we used

values for inputs from: (1) Thailand, which was the surrogate country

in the first investigation of this product from Romania (see the Final

Determination of Sales at Less than Fair Value: Circular Welded Non-

Alloy Steel Pipe from Romania (Steel Pipe I) (57 FR 42957, September

17, 1992)), when no information was available from any other surrogate

countries listed in the July 25, 1995, memorandum referenced above; or

(2) U.S. import prices, when no current information was available from:

(a) any other surrogate countries listed in the July 25, 1995,

memorandum referenced above; or (b) Thailand. For a complete analysis

of the selection of the surrogate country, see the November 21, 1995,

memorandum from the team to Barbara R. Stafford, Deputy Assistant

Secretary for Investigations.

Separate Rates

To establish whether a firm is sufficiently independent from

government control to be entitled to a separate rate, the Department

analyzes each exporting entity under a test articulated in the Final

Determination of Sales at Less Than Fair Value: Sparklers from the

People's Republic of China (56 FR 20588, May 6, 1991) and amplified in

the Final Determination of Sales at Less Than Fair Value: Silicon

Carbide from the People's Republic of China (59 FR 22585, 22586, May 2,

1994) (Silicon Carbide). Under the separate rates criteria, the

Department assigns separate cash deposit rates in nonmarket economy

cases only if a respondent demonstrates the absence of both de jure and

de facto governmental control over export activities.

The Department typically considers three factors which support,

though do not require, a finding of de jure absence of central control.

These factors include: (1) an absence of restrictive stipulations

associated with an individual exporter's business and export licenses;

(2) any legislative enactments decentralizing control of companies; or

(3) any other formal measures by the government decentralizing control

of companies. The Department typically considers four factors in

evaluating whether each

[[Page 61531]]

respondent is subject to de facto governmental control of its export

functions: (1) whether the export prices are set by or subject to the

approval of a governmental authority; (2) whether the respondent has

authority to negotiate and sign contracts and other agreements; (3)

whether the respondent has autonomy from the government in making

decisions regarding the selection of management; and (4) whether the

respondent retains the proceeds of its export sales and makes

independent decisions regarding disposition of profits or financing of

losses (see Silicon Carbide).

Regarding the absence of de jure control, the three exporters of

the subject merchandise, Metagrimex, Metanef and Metalexportimport,

have provided their business licenses issued by the Romanian Chamber of

Commerce and Industry. According to each of the three exporters, this

license does not require renewal, does not impose any limitations on or

create any entitlements for the operations of these exporters, and can

only be revoked by the issuing authorities if the requirements of the

license are not fulfilled. The three exporters have also provided

copies of several laws which they claim provide for the elimination of

the state monopoly in the economy and foreign trade. We have reviewed

these laws and have found no evidence to contradict that claim.

The three exporters have also asserted absence of governmental

control based on all the de facto criteria. All three respondents have

stated that: (1) they establish their own export prices; (2) they

negotiate contracts, without guidance from any governmental entities or

organizations; and (3) there are no restrictions on the use of their

export revenues and they make independent decisions regarding

disposition of profits or financing of losses. Concerning autonomy from

the government in making decisions regarding the selection of

management, both Metagrimex and Metanef have each asserted that their

Council of Administration, which selects the management of the company

and is similar to a board of directors, is free from government control

and the companies are therefore able to make their own management

personnel decisions. Metalexportimport has asserted that its five

member Council of Administration includes one member appointed by the

state ownership fund 1 (SOF) and one member appointed by the

private ownership fund 2 (POF). The SOF and POF were created by

the Romanian government to help privatize Romanian companies.

Therefore, although Metalexportimport's Council of Administration

includes one member appointed by the SOF and one member appointed by

the POF, the council is made up of five members and, thus, the SOF and

POF have a minority representation. There is, therefore, no evidence

that the central government controls the selection of management for

Metalexportimport. All of these statements will be subject to

verification.

\1\ This fund holds the states shares in this company and all

other companies in which the state owns shares. The state is

required to privatize a certain number of the shares it holds every

year until it no longer holds any shares in any company.

\2\ This fund possesses the Certificates of Ownership which

were distributed to all qualified Romanian citizens and will become

actual shares of Romanian companies after five years.

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

Consequently, we preliminarily determine that the information

provided by these three companies supports a preliminary finding that

there is de jure and de facto absence of governmental control of export

functions. Therefore, these three companies have preliminarily met the

criteria for the application of separate rates. For a further

discussion of the Department's preliminary determination that these

three companies are entitled to separate rates, see the November 13,

1995, memorandum from the team to Gary Taverman, Acting Director,

Office of Antidumping Investigations.

Fair Value Comparisons

To determine whether sales of pipe from Romania to the United

States by Metagrimex, Metalexportimport and Metanef were made at less

than fair value, we compared the Export Price (EP) to the NV, as

specified in the ``Export Price'' and ``Normal Value'' sections of this

notice.

Export Price

For all three exporters, we calculated EP in accordance with

section 772(a) of the Act, because the subject merchandise was sold

directly to the first unaffiliated purchaser in the United States prior

to importation. The constructed export price under section 772(b) is

not otherwise warranted on the basis of the facts of this

investigation.

We calculated EP based on packed, FOB Romanian port or C&F U.S.

port prices to unaffiliated purchasers in the United States, as

appropriate. We made deductions from the starting price, where

appropriate, for foreign brokerage and handling, foreign inland freight

and ocean freight. Given that foreign brokerage and handling and

foreign inland freight were services provided by Romanian companies, we

valued these expenses in Thailand (see the Surrogate Country section

above).

Normal Value

In accordance with section 773(c) of the Act, we calculated NV

based on factors of production reported by Tepro, which produced the

pipe for Metagrimex, Metalexportimport and Metanef. To calculate NV,

the reported unit factor quantities were multiplied by publicly

available Colombian values, where possible. As stated above, we used

values from other countries for certain other factors where Colombian

values were not available. The selection of the surrogate values

applied in this determination was based on the quality and

contemporaneity of the data. As appropriate, we adjusted input prices

to make them delivered prices. For those values not contemporaneous

with the period of investigation (POI), we adjusted for inflation using

wholesale price indices or, in the case of labor rates, consumer price

indices, published in the International Monetary Fund's International

Financial Statistics.

In presenting their suggestions to the Department on the

appropriate values to use in this investigation, Tepro and the

petitioners have raised two issues. The first issue involves the

quality of steel to be valued. Tepro has stated that it uses secondary,

not prime, steel, in producing the subject merchandise. Furthermore,

Tepro claimed that the grade of steel it uses is different than that

contained in the steel valuation suggestions presented by the

petitioners. Thus, Tepro argued that the Department should discount any

value it uses to account for the difference between primary and

secondary steel. The petitioners refuted Tepro's arguments, claiming

that Tepro did not provide sufficient support for its claim that it

uses secondary steel in the production of the subject merchandise. The

Department agrees with the petitioners and has preliminarily denied

Tepro's claim for a discount on the value we have used for steel. This

decision was based on: (1) the fact that Tepro's reported scrap rates

do not appear to be indicative of a producer who's chief material input

is second quality; and (2) the results of a test submitted by the

petitioners which showed that the grade of steel used by Tepro is

identical to the grade of steel used by U.S. and other world producers

of the subject merchandise.

The second issue involves the different sources of information

presented to value the steel factor. Both Tepro and the petitioners

claimed that the information provided by the other was not appropriate.

We have

[[Page 61532]]

determined that the information provided by the petitioners was the

most appropriate source since it included prices for a greater range of

the steel thicknesses used by Tepro. For a complete analysis of these

issues, see the November 21, 1995, memorandum from the team to Barbara

R. Stafford, Deputy Assistant Secretary for Investigations.

Valuation of Factors

To value hot rolled steel coil, the major material input, we used a

steel price list for sheet and coil sold to industrial users in

Colombia published by Acerias Paz del Rio. S.A., a Colombian producer

of steel sheet and coil. We were unable to locate Colombian publicly

available published information (PAPI) for the other material inputs.

Thus, to value saleable steel scrap, we used the same percentage

difference between steel coil and steel scrap used in Steel Pipe I. For

lacquer and marking paint, we used the basket category data for both of

these values that were used in Steel Pipe I. For zinc, saleable zinc

scrap, hydrochloric acid, zinc chloride and ammonium chloride, we used

values based on U.S. import statistics (IM 145) from market economy

countries for the last quarter of 1994 and the first quarter of 1995.

We used U.S. import statistics for these five inputs because values for

these factors were not available from the other surrogate countries and

these factors were not used in Steel Pipe I.

To value unskilled, indirect and packing labor, we used the 1994

wage rate for the manufacturing sector published in the Economic Guide

for Investors by the Colombian government. Since we cannot determine if

the labor values in this case were for skilled or unskilled workers, we

are following the method established in the Preliminary Determination

of Sales at Less than Fair Value: Polyvinyl Alcohol from the PRC (60 FR

52647, October 10, 1995). In that investigation, we found no basis to

assume the skill level of the surrogate value, nor did we have

agreement among the parties regarding the skill level. Thus, we applied

a single wage rate to all reported labor factors. Since we have the

same situation here, we also applied a single wage rate to all reported

labor factors. Further, because this value was exclusive of benefits,

we increased the amount reported to include benefits.

To value electricity, we used electricity rates for Colombian

industrial users published quarterly by the Latin America Energy

Organization (Organizacion Latinoamericana de Energia, or OLADE). For

methane, because we were unable to find a Colombian value, we used the

value of natural gas because, according to the petitioners, it has

substantially the same end use as methane. Tepro also submitted values

for natural gas as well. We based the surrogate value for natural gas

on 1992 Colombian prices shown in a 1993 OLADE publication.

For the packing materials of cold rolled strip, PVC foil and thread

protectors, because we could find no Colombian PAPI, we used the values

in Steel Pipe I.

We were unable to locate Colombian PAPI for overhead and selling,

general and administrative (SG&A) expenses. Thus, for factory overhead

and SG&A expenses, we used the rates used in Steel Pipe I. These rates

showed overhead as a percentage of materials, exclusive of energy, and

SG&A as a percentage of the sum of materials, labor and overhead. For

both overhead and SG&A, we are using the percentages for black plain

end pipe as the percentages for galvanized plain end pipe and are using

the percentages for black threaded and coupled pipe as the percentages

for galvanized threaded and coupled pipe.

We were unable to locate Colombian PAPI for profit. In Steel Pipe

I, we used eight percent because it was the statutory minimum profit

percentage. The statutory minimum profit figure is no longer

applicable. We were able to obtain profit information for the pipe

industry in Thailand from the Preliminary Results of the 1992-93

Administrative Review of Pipe and Tube from Thailand (Pipe and Tube

from Thailand). That review contained public information indicating

that the profit for the pipe and tube industry in Thailand is greater

than eight percent (see the November 28, 1994, memorandum from the case

analyst to the file). Thus, we used eight percent as the profit margin

in this preliminary determination not because it was formerly the

statutory minimum profit figure, but because publicly available

information indicates that the profit figure is not less than eight

percent. If additional public information becomes available either as a

result of the final determination in Pipe and Tube from Thailand or

otherwise, we will consider that information in our final

determination.

We were also unable to locate Colombian PAPI for rail freight and

foreign brokerage and handling. Thus, for rail freight, we used the

rate contained in Steel Pipe I. This information was obtained from The

Investment Environment in Thailand for 1991. For foreign brokerage and

handling, we used the rate contained in the public version of a

questionnaire response submitted in the 1994 antidumping duty

investigation of Carbon Steel Butt Weld Pipe Fittings from Thailand. We

used the rate contained in the 1994 investigation because this figure

was more recent than the foreign brokerage and handling rate contained

in Steel Pipe I, which was based on an earlier Carbon Steel Butt Weld

Pipe Fittings from Thailand investigation. For a complete analysis of

surrogate values used in the calculation of NV, see the November 21,

1995, memorandum from the team to Barbara R. Stafford, Deputy Assistant

Secretary for Investigations.

Romania-Wide Rate

The U.S. Embassy in Romania identified what we believe to be the

only three Romanian exporters of the subject merchandise to the United

States during the POI. This information was confirmed by the Romanian

embassy in Washington. All three exporters have responded in this

investigation. We compared the respondents' sales data with U.S. import

statistics for time periods including the POI and found no indication

of unreported sales. Accordingly, we have based the Romania-wide rate

on the weighted-average of the margins calculated in this proceeding.

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 pipe from

Romania, 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 dumping margins 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

Manufacturer/producer/exporter margin

percentage

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

Metagrimex, S.A............................................. 46.12

Metalexportimport, S.A...................................... 41.96

[[Page 61533]]

Metanef, S.A................................................ 46.34

Romania-Wide Rate........................................... 44.69

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

The Romania-wide rate applies to all entries of subject merchandise

except for entries from exporters that are identified individually

above.

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 a summary of arguments made in the briefs should accompany

these briefs. Such summary should be limited to five pages total,

including footnotes. We will hold a public hearing, if requested, to

afford interested parties an opportunity to comment on arguments raised

in case or rebuttal briefs. At this time, the hearing is scheduled for

March 8, 1996, the 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. 95-29270 Filed 11-29-95; 8:45 am]

BILLING CODE 3510-DS-P