Certain Welded Stainless Steel Pipe From Taiwan; Preliminary Results of Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-815]

Certain Welded Stainless Steel Pipe From Taiwan; Preliminary

Results of Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of administrative review.

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SUMMARY: In response to requests by petitioners 1 and

respondent Ta Chen Stainless Pipe Co., Ltd. (Ta Chen), the Department

of Commerce (the Department) is conducting an administrative review of

the antidumping duty order on certain welded stainless steel pipe from

Taiwan (A-583-815). This review covers one manufacturer/exporter of the

subject merchandise to the United States during the period December 1,

1995 through November 30, 1996.

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\1\ Avesta Sheffield, Inc., Damascus Tube Division, Damascus-

Bishop Tube Co., Trent Tube Division, Crucible Materials

Corporation, and the United Steelworkers of America (AFL-CIO/CLC).

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We preliminarily determine that a de minimis dumping margin exists

for Ta Chen's sales of welded stainless steel pipe (WSSP) in the United

States. If these preliminary results are adopted in our final results

of administrative review, we will instruct the U.S. Customs Service to

assess antidumping duties on entries of Ta Chen merchandise during the

period of review, in accordance with the Department's regulations (19

CFR 353.6). Interested parties are invited to

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comment on these preliminary results. Parties who submit comments are

requested to submit with the argument (1) a statement of the issues and

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(2) a brief summary of the argument.

EFFECTIVE DATE: January 9, 1998.

FOR FURTHER INFORMATION CONTACT: Robert James at (202) 482-5222 or John

Kugelman at (202) 482-0649, Antidumping and Countervailing Duty

Enforcement Group III, Import Administration, International Trade

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

Constitution Avenue, NW, Washington, DC 20230.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all

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

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

amendments made to the Tariff Act by the Uruguay Round Agreements Act.

In addition, unless otherwise indicated, all citations to the

Department's regulations are to the regulations codified at 19 CFR Part

353 (April 1, 1997).

SUPPLEMENTARY INFORMATION:

Background

On December 30, 1992, the Department published in the Federal

Register the antidumping duty order on WSSP from Taiwan (57 FR 62300).

On December 3, 1996, the Department published the notice of

``Opportunity to Request Administrative Review'' for the period

December 1, 1995 through November 30, 1996 (61 FR 64051). In accordance

with 19 CFR 353.22(a)(1) (1995), petitioners and Ta Chen requested that

we conduct a review of Ta Chen's sales. On January 17, 1997, we

published in the Federal Register a notice of initiation of this

antidumping duty administrative review covering the period December 1,

1995 through November 30, 1996 (62 FR 2647).

Because it was not practicable to complete this review within the

normal time frame, on July 24, 1997, we published in the Federal

Register our notice of extension of time limits for this review (62 FR

39824). As a result, we extended the deadline for these preliminary

results to December 31, 1997. The deadline for the final results of

this review will continue to be 120 days after publication of these

preliminary results.

Scope of the Review

The merchandise subject to this administrative review is certain

welded austenitic stainless steel pipe (WSSP) that meets the standards

and specifications set forth by the American Society for Testing and

Materials (ASTM) for the welded form of chromium-nickel pipe designated

ASTM A-312. The merchandise covered by the scope of the order also

includes austenitic welded stainless steel pipes made according to the

standards of other nations which are comparable to ASTM A-312.

WSSP is produced by forming stainless steel flat-rolled products

into a tubular configuration and welding along the seam. WSSP is a

commodity product generally used as a conduit to transmit liquids or

gases. Major applications for WSSP include, but are not limited to,

digester lines, blow lines, pharmaceutical lines, petrochemical stock

lines, brewery process and transport lines, general food processing

lines, automotive paint lines, and paper process machines.

Imports of WSSP are currently classifiable under the following

Harmonized Tariff Schedule of the United States (HTS) subheadings:

7306.40.5005, 7306.04.5015, 7306.40.5040, 7306.40.5065, and

7306.40.5085. Although these subheadings include both pipes and tubes,

the scope of this review is limited to welded austenitic stainless

steel pipes. Although the HTS subheadings are provided for convenience

and Customs purposes, our written description of the scope of this

order is dispositive.

The period for this review is December 1, 1995 through November 30,

1996. This review covers one manufacturer/exporter, Ta Chen.

Export Price

Ta Chen reported in its initial and supplemental questionnaire

responses that all of its U.S. sales were first sold to unaffiliated

purchasers prior to importation into the United States. Each of these

sales was made through Ta Chen's wholly-owned U.S. subsidiary, TCI. Ta

Chen claims that it ``sold'' the merchandise to TCI, which immediately

transferred the WSSP to the first unaffiliated U.S. customer. For each

of these sales, Ta Chen claims that TCI acted merely as a

``facilitator,'' handling sales- and Customs-related paper work; Ta

Chen states that at no time did TCI take physical possession of the

merchandise or enter it into TCI's warehouse. In each instance,

according to Ta Chen, the price and quantity of the U.S. sale to the

unaffiliated customer were determined prior to importation into the

United States. Therefore, in calculating U.S. price we used export

price (EP), as defined in section 772(a) of the Tariff Act, for all of

Ta Chen's sales. We calculated EP as the packed, delivered or ex-U.S.

port price to unaffiliated purchasers in the United States. In

accordance with section 772(c)(2)(A) of the Tariff Act, we reduced this

price by Taiwanese pre-sale inland freight, international ocean

freight, marine insurance, Taiwanese brokerage and handling, U.S.

brokerage and handling, U.S. duty, and U.S. inland freight. Where

appropriate, we also reduced the EP by Taiwanese and U.S. bank charges.

Normal Value

A. Viability

Based upon (i) our comparison of the aggregate quantity of home

market and U.S. sales, (ii) the absence of any information that a

particular market situation in Taiwan does not permit a proper

comparison, and (iii) the fact that Ta Chen's quantity of sales in the

home market exceeded five percent of its sales to the U.S. market, we

determined that the quantity of foreign like product Ta Chen sold in

Taiwan was sufficient to permit a proper comparison with the sales of

subject merchandise to the United States pursuant to section 773(a) of

the Tariff Act. Therefore, in accordance with section 773(a)(1)(B)(i)

of the Tariff Act, we based NV on the prices at which the foreign like

products were first sold for consumption in the exporting market, i.e.,

Taiwan.

B. Cost-of-Production Analysis

Because we disregarded sales below the cost of production in the

less-than-fair-value (LTFV) investigation (at the time of our

initiation of this administrative review, the most-recently completed

segment of these proceedings), we have reasonable grounds to believe or

suspect that sales of the foreign like product under consideration for

determining NV in this review may have been at prices below the cost of

production (COP), as provided in section 773(b)(2)(A)(ii) of the Tariff

Act (see Final Determination of Sales at Less Than Fair Value; Certain

Welded Stainless Steel Pipe from Taiwan, 57 FR 53705 (November 12,

1992)). Therefore, pursuant to section 773(b)(1) of the Tariff Act, we

initiated a COP investigation of sales by Ta Chen (see Memorandum to

the File, dated February 11, 1997, available in Room B-099 of the Main

Commerce Building).

In accordance with section 773(b)(3) of the Tariff Act, we

calculated COP based on the sum of materials and fabrication employed

in producing the foreign like product, plus selling, general, and

administrative expenses (SG&A) and the cost of all expenses incidental

to placing the foreign like product in condition packed ready for

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shipment. We relied on the home market sales and COP information Ta

Chen provided in its questionnaire responses.

After calculating COP, we tested whether home market sales of

subject WSSP were made at prices below COP within an extended period of

time in substantial quantities, and whether such prices permitted the

recovery of all costs within a reasonable period of time. We compared

model-specific COPs to the reported home market prices less any

applicable movement charges and post-sale price adjustments (reported

as discounts).

Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than

twenty percent of Ta Chen's home market sales for a model were at

prices less than the COP, we did not disregard any below-cost sales of

that model because we determined that the below-cost sales were not

made within an extended period of time in ``substantial quantities.''

Where twenty percent or more of Ta Chen's home market sales were at

prices less than the COP, we determined that such sales were made

within an extended period of time in substantial quantities in

accordance with section 773(b)(2) (B) and (C) of the Tariff Act. To

determine whether such sales were at prices which would not permit the

full recovery of all costs within a reasonable period of time, in

accordance with section 773(b)(2)(D) of the Tariff Act, we compared

home market prices to the weighted-average COPs for the POR.

The results of our cost test for Ta Chen indicated that for certain

home market models less than twenty percent of the sales of the model

were at prices below COP. We therefore retained all sales of these

models in our analysis and used them as the basis for determining NV.

Our cost test for Ta Chen also indicated that for certain other home

market models more than twenty percent of the home market sales within

an extended period of time were at prices below COP and would not

permit the full recovery of all costs within a reasonable period of

time. In accordance with section 773(b)(1) of the Tariff Act, we

therefore excluded the below-cost sales of these models from our

analysis and used the remaining above-cost sales as the basis for

determining NV.

C. Product Comparisons

We compared Ta Chen's U.S. sales with contemporaneous sales of the

foreign like product in the home market. We considered pipe identical

based on product nomenclature and considered specifications/alloy,

nominal pipe size, and wall thickness in determining the most similar

types of pipe. We used a twenty percent cap in reported differences in

merchandise as the maximum difference in cost allowable for similar

merchandise. For purposes of these preliminary results, we have used

the difference-in-merchandise information Ta Chen submitted with its

supplemental questionnaire response of October 30, 1997.

D. Level of Trade

As set forth in section 773(a)(1)(B)(i) of the Tariff Act, to the

extent practicable, the Department will calculate NV based on sales in

the comparison market at the same level of trade (LOT) as the EP

transaction. The NV LOT is that of the starting-price sales in the

comparison market or, when NV is based on constructed value, that of

the sales from which we derive SG&A expenses and profit. For EP, the

U.S. LOT is also the level of the starting-price sale, which is usually

from exporter to importer. In cases involving constructed export price

(CEP) sales, it is the level of the constructed sale from the exporter

to the importer.

To determine whether NV sales are at a different LOT than EP

transactions, we examine stages in the marketing process and selling

functions along the chain of distribution between the producer and the

unaffiliated customer. If the comparison-market sales are at a

different LOT, and the difference affects price comparability, as

manifested in a pattern of consistent price differences between the

sales on which NV is based and the comparison-market sales at the LOT

of the export transaction, we make an LOT adjustment under section

773(a)(7)(A) of the Tariff Act. Finally, for CEP sales, if the NV level

is more remote from the factory than the CEP level and there is no

basis for determining whether the difference in the levels between NV

and CEP affects price comparability, we adjust NV pursuant to section

773(a)(7)(B) of the Tariff Act (the CEP offset provision). See Notice

of Final Determination of Sales at Less Than Fair Value: Certain Cut-

to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November

19, 1997).

In its questionnaire responses Ta Chen stated that there were few

differences in its selling activities by customer categories within

each market. In order to confirm independently the absence of separate

levels of trade within or between the U.S. and home markets, we

examined Ta Chen's questionnaire responses for indications that Ta

Chen's functions as a seller differed qualitatively or quantitatively

among customer categories. Where possible, we further examined whether

each selling function was performed on a substantial portion of sales.

Ta Chen sold to distributors in the U.S. market. In the home

market, Ta Chen sold to local distributors and end users. With respect

to the home market, Ta Chen claimed that its two customer categories

constituted a single level of trade. Base upon our examination of

information supplied by Ta Chen in its original and supplemental

questionnaire responses, we agree that only one level of trade existed

for Ta Chen in the home market. According to Ta Chen, it provided no

strategic or economic planning services, market research, business-

development services, personnel training, engineering, advertising,

procurement services, inventory maintenance, or post-sale warehousing

for customers in either category. Customers in both categories received

the same degree of packing, after-sales services, and freight and

delivery arrangements. End-user customers did receive slightly higher

levels of research and development and technical assistance than did

distributors; however this one difference is not sufficient to

establish discrete levels of trade.

For its U.S. sales, Ta Chen reported a single customer category,

i.e., distributors. In determining whether, in fact, a single stage of

marketing existed, we examined the selling functions as reflected in

the starting price to the unaffiliated U.S. customer. TCI processed

paperwork and provided certain selling functions for all of Ta Chen's

U.S. sales which, in every instance, were to pipe distributors in the

United States. We find preliminarily that TCI provided very limited

selling functions for these sales and, therefore, find that no

significant differences in the selling functions between sales to

different customers. As a result, we preliminarily agree with Ta Chen

that Ta Chen's EP sales constitute a single level of trade.

When we compared Ta Chen's sales at its EP level of trade to its

home market level of trade, we found that Ta Chen provided little or no

strategic or economic planning, market research, engineering services,

advertising, after-sales services, or post-sale warehousing at either

the EP or home market level of trade. Ta Chen reported that it provided

moderate-to-low technical assistance at its home market level of trade,

while providing none at the EP level. All packing expenses at either

level of trade were borne by Ta Chen; freight and delivery arrangements

varied between the two markets in that U.S. movement

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expenses on certain U.S. sales were incurred by TCI, while other sales

were made on ``FOB U.S. port'' terms. Our analysis of the selling

functions performed by Ta Chen in both markets leads us to conclude

that sales within or between each market are not made at different

levels of trade. Accordingly, we preliminarily find that all sales in

the home market and the U.S. market were made at the same level of

trade. We have not, therefore, made a level-of-trade adjustment because

all price comparisons are at the same level of trade and an adjustment

pursuant to section 773(a)(7)(A) of the Tariff Act is not appropriate.

E. Home Market Price

While we found below-cost home market sales for Ta Chen in this

review, Ta Chen's remaining home market sales at or above cost were

sufficient to serve as the basis for NV.

We based home market prices on the packed, ex-factory or delivered

prices to unaffiliated purchasers in the home market. We made

adjustments for differences in packing and for movement expenses in

accordance with sections 773(a)(6)(A) and (B) of the Tariff Act. In

addition, we made adjustments for differences in cost attributable to

differences in physical characteristics of the merchandise pursuant to

section 773(a)(6)(C)(ii) of the Tariff Act, and for differences in

circumstances of sale (COS) in accordance with section

773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 353.56. We made COS

adjustments by deducting home market direct selling expenses and adding

U.S. direct selling expenses. Finally, where the comparison EP sale

involved a commission, we increased home market price by the amount of

this commission and subtracted home market indirect selling expenses up

to the amount of the U.S. commission, as provided at 19 CFR 353.56(b).

In accordance with section 773(a)(4) of the Tariff Act, we based NV

on constructed value (CV) if (i) a sale of a U.S. model matched to a

home market model for which no sales were above cost, or (ii) we were

unable to find a contemporaneous home market match for the U.S. sale.

We calculated CV based on the costs of materials and fabrication

employed in producing the subject merchandise, SG&A, and profit. In

accordance with section 773(e)(2)(A) of the Tariff Act, we based SG&A

expenses and profit on the amounts incurred and realized by the

respondent in connection with the production and sale of the foreign

like product in the ordinary course of trade for consumption in Taiwan.

For selling expenses, we used the weighted-average home market selling

expenses. Where appropriate, we made adjustments to CV in accordance

with section 773(a)(8) of the Tariff Act and 19 CFR 353.56 for COS

adjustments. For comparisons to EP, we made COS adjustments by

deducting home market direct selling expenses and adding U.S. direct

selling expenses. We also made adjustments, where applicable, for home

market indirect selling expenses to offset U.S. commissions.

Fair-Value Comparisons

To determine whether Ta Chen made sales of subject WSSP in the

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

EP to NV, as described in the ``Export Price'' and ``Normal Value''

sections of this notice. In accordance with section 777A(d)(2) of the

Tariff Act, we calculated monthly weighted-average prices for NV and

compared these monthly averages to individual U.S. sales transactions.

Preliminary Results of Review

As a result of our review, we preliminarily determine the weighted-

average margin for Ta Chen for the period December 1, 1995 through

November 30, 1996 is 0.07 percent.

Parties to these proceedings may request disclosure within five

days of the date of publication of this notice and may request a

hearing within ten 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 the case briefs and comments, may be submitted no

later than 37 days after the date of publication of this notice.

Parties who submit arguments in these proceedings are requested to

submit with the argument (1) a statement of the issues and (2) a brief

summary of the argument. The Department will issue final results of

this administrative review, including the results of our analysis of

the issues in any such written comments or at a hearing, within 120

days of publication of these preliminary results.

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between U.S. price and NV may vary from the percentage

stated above. The Department will issue appraisement instructions

directly to Customs. The final results of this review shall be the

basis for the assessment of antidumping duties on entries of

merchandise during this period of review, and for future deposits of

estimated duties.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of this administrative review for

all shipments of WSSP from Taiwan entered, or withdrawn from warehouse,

for consumption on or after the publication of the final results of

this administrative review, as provided in section 751(a)(1) of the

Tariff Act:

(1) The cash deposit rate for Ta Chen will be zero percent, in

light of its de minimis weighted-average margin;

(2) For previously reviewed or investigated companies other than Ta

Chen, 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, a prior

review, or the 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 or any previous review conducted by the Department, the cash

deposit rate will be 19.84 percent. See Amended Final Determination and

Antidumping Duty Order; Certain Welded Stainless Steel Pipe From

Taiwan, 57 FR 62300 (December 30, 1992).

This notice serves as preliminary reminder to importers of their

responsibility 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 Secretary's presumption that reimbursement of the

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: December 30, 1997.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-489 Filed 1-8-98; 8:45 am]

BILLING CODE 3510-DS-P