Certain Welded Carbon Steel Pipe and Tube From Turkey: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-489-501]

Certain Welded Carbon Steel Pipe and Tube From Turkey:

Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review.

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SUMMARY: In response to a request by petitioner and one respondent, the

Department of Commerce (the Department) is conducting an administrative

review of the antidumping duty order on certain welded carbon steel

pipe and tube from Turkey(A-489-501). This review covers two

manufacturers/exporters of the subject merchandise to the United States

during the period of review (POR): May 1, 1993, through April 30, 1994.

We have preliminarily determined that sales have been made below

the foreign market value (FMV) for Borusan. We preliminarily determine

no dumping margin exists for Yucelboru during the POR. If these

preliminary results are adopted in our final results of administrative

review, we will instruct U.S. Customs to assess antidumping duties

equal to the difference between the United States price (USP) and the

FMV.

Interested parties are invited to comment on these preliminary

results. Parties who submit argument in this proceeding are requested

to submit with the argument: (1) A statement of the issue; and (2) a

brief summary of the argument.

EFFECTIVE DATE: May 13, 1997.

FOR FURTHER INFORMATION CONTACT: Ilissa Kabak, Nancy Decker, Robin Gray

or Linda Ludwig, Enforcement Group III-Office 8, Import Administration,

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

Street and Constitution Avenue, N.W., Room 7866, Washington, D.C.

20230; telephone (202) 482-0182 (Kabak), (202) 482-1324 (Decker), (202)

482-0196 (Gray), or (202) 482-3833 (Ludwig).

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

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

Department's regulations are references to the provisions as they

existed on December 31, 1994.

Background

The Department published an antidumping duty order on certain

welded carbon steel pipe and tube from Turkey on May 15, 1986 (51 FR

17784). The Department published a notice of ``Opportunity to Request

an Administrative Review'' of the antidumping duty order on May 4, 1994

(59 FR 23051). On May 31, 1994, the petitioners, Allied Tube & Conduit

Corporation (``Allied'') and Wheatland Tube Co. (``Wheatland'')

requested an administrative review of Borusan Group (``Borusan'') and

all related entities (including, but not limited to, Borusan Holding

A.S., Borusan Gemlik Boru Tesisleri A.S., Borusan Boru Sanayii A.S.,

Istikbal Ticaret A.S., Borusan Ihracat Ithalat ve Dagitim A.S., and

Tubeco Pipe and Steel Corporation) and of Mannesmann-Sumerbank Boru

Endustrisi T.A.S. (``Mannesmann''). On May 31, 1994, respondent

Yucelboru Ihracat, Ithalat ve Pazarlama A.S. (``Yucelboru'') requested

an administrative review. We initiated this review on June 15, 1994.

See 59 FR 30770. On April 20, 1995, Mannesmann stated that they did not

have any shipments during the POR.

The Department is conducting this administrative review in

accordance with section 751 of the Act.

Scope of the Review

Imports covered by this review are shipments of certain welded

carbon steel standard pipe and tube products with an outside diameter

of 0.375 inch or more but not over 16 inches, of any wall thickness,

currently classifiable under the following Harmonized Tariff Schedule

(HTS) subheadings: 7306.3010.00, 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. These

products commonly referred to in the industry as standard pipe and

tube, are produced to various American Society for Testing and

Materials (ASTM) specifications, most notably A-120, A-53 or A-135.

These HTS item numbers are provided for convenience and customs

purposes. The written descriptions remain dispositive.

The POR is May 1, 1993 through April 30, 1994. This review covers

sales of certain welded carbon steel pipe and tube by Borusan and

Yucelboru.

Verification

As provided in section 782(i)(3) of the Act, we verified

information provided by the respondents using standard verification

procedures, including on-site inspection of the manufacturer's

[[Page 26287]]

facilities, the examination of relevant sales, cost of production and

financial records, and selection of original documentation containing

relevant information. Our verification results are outlined in the

public versions of the verification reports.

Product Comparisons

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

welded carbon steel pipe and tube product produced by Borusan or

Yucelboru, covered by the descriptions in the ``Scope of the Review''

section of this notice, supra, and sold in the home market during the

POR, to be a foreign like product for purposes of determining

appropriate product comparisons to U.S. sales of certain welded carbon

steel pipe and tube. For each of the products produced by Borusan or

Yucelboru within the scope of the A-489-501 order, we examined the

categories of merchandise listed in section 771 (16) of the Act for

purposes of model matching. 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 Appendix V of the Department's

February 24, 1995 antidumping questionnaire. In making the product

comparisons, we matched each foreign like product based on the physical

characteristics and level of trade reported by the respondent. For

Borusan, we determined that there is one U.S. level of trade and three

home market levels of trade: wholesaler/distributor, retailer, end-

user. Yucelboru had no level of trade distinctions in either market.

Where sales were made in the home market on a different weight

basis from the U.S. market (e.g., theoretical versus actual weight), we

converted all quantities to the same weight basis, using the conversion

factors supplied by the company, before making our fair-value

comparisons. We compared individual U.S. transactions to monthly

weighted average FMVs.

Date of Sale

For Borusan, in the home market we treated the date of invoice,

which is generally the same as the date of shipment, as the date of

sale. In the United States, Borusan reported the date of the purchase

order or sales contract, whenever the terms are firmly set, as date of

the sale. Yucelboru reported date of invoice (which is also date of

shipment) as the date of sale in both markets.

Fair Value Comparisons

To determine whether sales of pipe and tube to the United States

were made at less than fair value, we compared the U.S. price to the

FMV, as described in the ``United States Price'' and ``Foreign Market

Value'' sections of this notice.

Turkey experienced a significant inflation rate of over 125

percent, as measured by the wholesale price index published in the

International Financial Statistics, during the POR. In accordance with

our practice, to avoid the distortions caused by the effects of this

level of inflation on prices, we limited our comparisons to sales in

the same month. See Notice of Final Determination of Sales at Less Than

Fair Value: Certain Steel Concrete Reinforcing Bars from Turkey, 62 FR

9737,9738 (March 4, 1997) (``Steel Bars''). When the rate of home

market inflation is significant, as it is in this case, it is important

that we use as a basis for FMV home market prices that are as

contemporaneous as possible with the date of the U.S. sale. This is to

minimize the extent to which calculated dumping margins are overstated

or understated due solely to price inflation that occurred in the

intervening time period between the U.S. and home market sales. For

this reason, we have used the daily exchange rates for currency

conversion purposes.

The Department's preferred source for daily exchange rates is the

Federal Reserve Bank. However, the Federal Reserve Bank does not track

or publish exchange rates for the Turkish lira. Therefore, we made

currency conversions based on the daily exchange rates from the Dow

Jones Service, as published in the Wall Street Journal. (Steel Bars, at

9741).

United States Price

All of Borusan's sales were based on the price to the first

unrelated purchaser in the United States. The Department determined

that purchase price, as defined in section 772 of the Tariff Act, was

the appropriate basis for calculating USP. We made adjustments to

purchase price, where appropriate, for foreign inland freight and

insurance, international freight and charges, credit, and other direct

selling expenses including bank commissions. We added the amount of

countervailing duties related to export subsidies and the amount for

duty drawback. Additionally, we deducted payments made by Borusan to

its U.S. customers equal to the amount of countervailing duties. We

disallowed Borusan's claimed value-added tax drawback because no

statutory authority exists for such an adjustment.

All of Yucelboru's sales were based on the price to the first

unrelated purchaser in the United States. The Department determined

that purchase price, as defined in section 772 of the Tariff Act, was

the appropriate basis for calculating USP. We made adjustments to

purchase price, where appropriate, for foreign inland freight, foreign

and U.S. brokerage and handling, ocean freight, and U.S. duties. We

relied on Yucelboru's reported data except for foreign brokerage and

handling, which was revised as a result of verification.

Foreign Market Value

For both Borusan and Yucelboru we determined that the home market

was viable, based on a comparison of the volume of home market and

third country sales. Therefore, in accordance with section 773(a)(1)(A)

of the Tariff Act, we based FMV on the packed, delivered price to

unrelated purchasers in the home market.

We made adjustments to FMV for differences in cost attributable to

differences in physical characteristics of the merchandise, pursuant to

section 773(a)(6)(C)(ii) of the Act.

Cost-of-Production Analysis

Petitioners alleged, on January 11, 1996, that Borusan sold certain

welded carbon steel pipe and tube in the home market at prices below

COP. Based on this allegation, in accordance with section 773(b) of the

Act, the Department determined, on December 4, 1996, that it had

reasonable grounds to believe or suspect that Borusan had sold the

subject merchandise in the home market at prices below COP. See Letter

to Dickstein, Shapiro, Morin & Oshinsky and Decision Memorandum

(December 4, 1996). We therefore initiated a cost investigation with

regard to Borusan in order to determine whether the respondent made

home-market sales at prices below its COP within the meaning of section

773(b) of the Act.

We requested Yucelboru to respond to our cost questionnaire, dated

February 24, 1995, in order to determine whether the respondent made

home-market sales at prices below its COP within the meaning of section

773(b) of the Act.

In accordance with 19 CFR 353.51(c), we calculated COP for Borusan

and Yucelboru as the sum of reported cost of manufacturing (COM) and

general expenses. We compared COP to home market prices, net of price

adjustments, discounts and rebates, and movement expenses.

In accordance with section 773(b) of the Tariff Act, in determining

whether

[[Page 26288]]

to disregard home market sales made at prices below the COP, we

examined whether such sales were made in substantial quantities over an

extended period of time, and whether such sales were made at prices

which permitted recovery of all costs within a reasonable period of

time in the normal course of trade.

As noted above, we determined that the Turkish economy experienced

significant inflation during the POR. Therefore, in order to avoid the

distortive effect of inflation on our comparison of costs and prices,

in accordance with our practice in such cases we requested that Borusan

and Yucelboru submit monthly production costs incurred during each

month of the POR. Notice of Preliminary Results of Antidumping Duty

Administrative Review: Certain Welded Carbon Steel Pipe and Tube from

Turkey (61 FR 35188, 35191 (July 5, 1996)). We used the companies'

adjusted monthly COP amounts and the wholesale price index to calculate

a weighted-average cost for each product for each company. The

weighted-average COM was then restated in the currency value of each

respective month and used to calculate monthly COP and CV for each

product.

In accordance with our normal practice, for each model for which

less than 10 percent, by quantity, of the home market sales during the

POR were made at prices below COP, we included all sales of that model

in the computation of FMV. For each model for which 10 percent or more,

but less than 90 percent, of the home market sales during the POR were

priced below COP, we excluded those sales priced below COP, provided

that they were made over an extended period of time. For each model for

which 90 percent or more of the home market sales during the POR were

priced below COP and were made over an extended period of time, we

disregarded all sales of that model in our calculation and, in

accordance with section 773(b) of the Tariff Act, we used the

constructed value (CV) of those models, as described below. See, e.g.,

Mechanical Transfer Presses from Japan, Final Results of Antidumping

Duty Administrative Review, 59 FR 9958 (March 2, 1994).

In accordance with section 773(b)(1) of the Tariff Act, to

determine whether sales below cost had been made over an extended

period of time, we compared the number of months in which sales below

cost occurred for a particular model to the number of months in which

that model was sold. If the model was sold in fewer than three months,

we did not disregard below-cost sales unless there were below-cost

sales of that model in each month. If a model was sold in three or more

months, we did not disregard below-cost sales unless there were sales

below cost in at least three of the months. See Tapered Roller Bearings

and Parts Thereof, Finished and Unfinished, From Japan and Tapered

Roller Bearings, Four Inches or Less in Outside Diameter, and

Components Thereof, From Japan-Final Results of Antidumping Duty

Administrative Reviews, 58 FR 64720, 64729 (December 8, 1993).

Because Borusan and Yucelboru provided no indication that their

below-cost sales of models within the ``greater than 90 percent'' and

the ``between 10 and 90 percent'' categories were at prices that would

permit recovery of all costs within a reasonable period of time and in

the normal course of trade, we disregarded those sales of models within

the ``10 to 90 percent'' category which were made below cost over an

extended period of time. In addition, as a result of our COP test for

home market sales of models within the ``greater than 90 percent''

category, we based FMV on CV for all U.S. sales for which more than 90

percent of sales of the comparison home market model occurred below

COP. Finally, where we found, for certain of Borusan's and Yucelboru's

models, home market sales for which less than 10 percent were made

below COP, we used all home market sales of these models in our

comparisons.

We also used CV as FMV for those U.S. sales for which there was no

sale of such or similar merchandise in the home market. In accordance

with section 773(e) of the Tariff Act, we calculated CV as the sum of

the COM, general expenses and profit. Where the general expenses were

less than the statutory minimum of 10 percent of COM, we calculated

general expenses as 10 percent of the COM. Where the actual profits

were less than the statutory minimum of 8 percent of the COM plus

general expenses, we calculated profit as 8 percent of the sum of COM

plus general expenses.

Based on our verification of Yucelboru's cost response, we adjusted

Yucelboru's reported COP and CV to reflect certain adjustments to

general and administrative expenses, indirect selling expenses, and

interest expenses. Based on our verification of Borusan's cost

response, we adjusted Borusan's reported COP and CV to reflect certain

adjustments to general and administrative expenses and interest

expenses.

In accordance with section 773 of the Tariff Act, for Borusan's

U.S. models for which we were able to find a home market such or

similar match that had sufficient above-cost sales, we calculated FMV

based on the packed, F.O.B., ex-factory, or delivered prices to

unrelated purchasers in the home market or prices to affiliated

customers which were determined to be at arm's length (See discussion

below regarding these sales). We made adjustments, where applicable,

for inland freight, pre-sale warehouse expense, discounts and rebates,

post-sale inland freight and for home market direct expenses. We added

collection of late payment charges. We also adjusted FMV for

differences in circumstances of sale, including physical

characteristics, direct selling expenses, credit, advertising,

warranty, packing costs, and the Turkish value added tax. Where

merchandise exported to the United States is exempt from home market

consumption tax, in comparing FMV to USP, we added to U.S. price the

absolute amount of such taxes charged on the comparison sales in the

home market.

For Yucelboru's U.S. models for which we were able to find a home

market such or similar match that had sufficient above-cost sales, we

calculated FMV based on the packed, F.O.B., ex-factory, or delivered

prices to unrelated purchasers in the home market. We made adjustments,

where applicable, for discounts and rebates. We disallowed Yucelboru's

claimed credit adjustment (See the Department's April 15, 1997,

Analysis Memorandum). We also adjusted FMV for differences in

circumstances of sale, including physical characteristics, packing

costs, and the Turkish value added tax. Where merchandise exported to

the United States is exempt from home market consumption tax, in

comparing FMV to USP, we added to U.S. price the absolute amount of

such taxes charged on the comparison sales in the home market.

In calculating for physical differences in merchandise we

calculated simple average variable and total costs of manufacturing by

product after indexing the reported monthly costs using the wholesale

price index for Turkey. We then indexed the average variable and total

costs of manufacturing to restate them in the currency value of each

respective month. The adjusted monthly variable costs of manufacturing

for U.S. and home market products were then compared to arrive at the

difference in merchandise adjustment.

To determine whether Borusan and Yucelboru's sales were made at

arm's length, we compared the gross unit prices of sales to related and

unrelated customers net of all movement charges, direct and indirect

selling expenses, and

[[Page 26289]]

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)). We included those sales that passed the

arm's length test in our analysis (see 19 CFR 353.45(a)).

Reimbursement

Section 353.26 of the regulations states that ``[I]n calculating

the United States price, the Secretary will deduct the amount of any

antidumping duty which the producer or reseller: (i) Paid directly on

behalf of the importer; or (ii) reimbursed to the importer.'' The

Statement of Administrative Action of the Uruguay Round Agreements Act,

in addressing the issue of reimbursement, states that ``[C]ommerce has

the full authority under its current regulations (19 CFR 353.26) to

increase the duty when an exporter directly pays the duties due, or

reimburses the importer, whether independent or affiliated, for the

importer's payment of duties.'' In Color Television Receivers from the

Republic of Korea: Final Results of Antidumping Duty Administrative

Reviews, 61 FR 4408, 4410 (February 6, 1996), Commerce stated the

following:

In effect, antidumping duties raise prices of subject

merchandise to importers, thereby providing a level playing field

upon which injured U.S. industries can compete. The remedial effect

of the law is defeated, however, where exporters themselves pay

antidumping duties, or reimburse importers for such duties.

Since we found no evidence that the conditions mentioned above

exist with respect to these companies, we did not apply Sec. 353.26 of

our regulations.

Preliminary Results of Review

As a result of our comparison of USP to FMV we preliminarily

determine that the following margin exists:

Certain Welded Carbon Steel Pipe and Tube from Turkey

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

Weighted-

Producer/manufacturer/exporter average

margin

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

Borusan.................................................... 8.55%

Yucelboru.................................................. 0%

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Interested parties may request disclosure within 5 days of the date

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

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

the date of publication or the first business day thereafter. Case

briefs and/or written comments from interested parties may be submitted

no later than 30 days after the date of publication. Rebuttal briefs

and rebuttals to written comments, limited to issues raised in those

comments, may be filed not later than 37 days after the date of

publication of this notice. The Department will publish the final

results of these administrative reviews including the results of its

analysis of issues raised in any such written comments or at a hearing.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between the USP and FMV may vary from the percentages

stated above.

Furthermore, the following deposit requirements will be effective

for all of Yucelboru's shipments of the subject merchandise entered, or

withdrawn from warehouse, for consumption on or after the publication

date of the final results of this administrative review, as provided

for by section 751(a)(1) of the Tariff Act. A cash deposit of estimated

antidumping duties shall be required on shipments of review of the

antidumping duty order on certain welded carbon steel pipe and tube

from Turkey as follows: (1) The cash deposit rate for Yucelboru will be

the rate established in the final results of this review; (2) for

Borusan and previously reviewed or investigated companies not listed

above, the cash deposit rate will continue to be the company-specific

rate published for the most recent period; (3) if the exporter is not a

firm covered in this review, or the original LTFV investigation, but

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

for the most recent period for the manufacturer of the merchandise; and

(4) if neither the exporter nor the manufacturer is a firm covered in

this review, the cash deposit rate will be 14.74 percent. This is the

``all others'' rate from the LTFV investigation. See Antidumping Duty

Order; Welded Carbon Steel Standard Pipe and Tube from Turkey, 51 FR

17784 (May 15, 1986).

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 353.26 to file a certificate

regarding the reimbursement of antidumping duties prior to liquidation

of the relevant entries during this review period. Failure to comply

with this requirement could result in the Department's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and this notice are in accordance with

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

353.22.

Dated: May 5, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-12507 Filed 5-12-97; 8:45 am]

BILLING CODE 3510-DS-P