Certain Welded Stainless Steel Pipe From Taiwan; Preliminary Results of Changed Circumstances Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-815]

Certain Welded Stainless Steel Pipe From Taiwan; Preliminary

Results of Changed Circumstances Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

[[Page 16983]]

ACTION: Notice of preliminary results of changed circumstances

antidumping duty administrative review.

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SUMMARY: Pursuant to a request from Chang Mien Industries Co., Ltd.

(Chang Mien), the Department of Commerce (the Department) initiated a

changed circumstances administrative review of the antidumping duty

order on certain welded stainless steel pipe from Taiwan, 62 FR 30567,

(June 4, 1997). Chang Mien requested that the Department determine that

Chang Mien is the successor firm to Chang Tieh Industry, Co., Ltd.

(Chang Tieh), a respondent excluded from the order in the less-than-

fair-value (LTFV) investigation. See Notice of Amended Final

Determination and Antidumping Duty Order; Certain Welded Stainless

Steel Pipes From Taiwan, 59 FR 6619, (February 11, 1994); see also

Amended Final Determination and Antidumping Duty Order; Certain Welded

Stainless Steel Pipe From Taiwan, 57 FR 62300 (December 30, 1992).

Based on the information Chang Mien provided in its responses to the

Department's questionnaires and on the data obtained at verification,

we have preliminarily determined that Chang Mien is the successor-in-

interest to Chang Tieh.

EFFECTIVE DATE: April 7, 1998.

FOR FURTHER INFORMATION CONTACT:

Maureen McPhillips at (202) 482-0193, or Linda Ludwig at (202) 482-

3383, AD/CVD Enforcement Group III, Office 8, Import Administration,

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

Street and Constitution Avenue, NW., Washington, DC 20230.

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act. In addition, unless otherwise indicated,

all references to the Department's regulations are to 19 CFR Part 353

(April 1, 1997).

Verification

As provided in section 776(b) of the Act, we verified information

provided by Chang Mien using standard verification procedures,

including the examination of relevant sales and financial records, and

the selection of original source documentation containing relevant

information.

SUPPLEMENTARY INFORMATION:

Background

On September 11, 1996, Chang Mien requested that the Department

conduct a changed circumstances administrative review pursuant to

section 751(b) of the Act to determine whether Chang Mien should

properly be considered the successor firm to Chang Tieh. In the LTFV

investigation, the Department excluded Chang Tieh from the antidumping

duty order on certain welded stainless steel pipe from Taiwan after

calculating a margin of zero for Chang Tieh. Chang Mien maintains that,

as Chang Mien and Chang Tieh were related at the time of the LTFV

investigation, Chang Mien is entitled to Chang Tieh's exclusion from

the order ab initio. Chang Mien further states that, since publication

of the antidumping duty order on this product, Chang Mien has absorbed

Chang Tieh, and asks that the Department issue a determination that

Chang Mien is the successor firm to Chang Tieh and as such is entitled

to Chang Tieh's exclusion from the antidumping duty order. Pursuant to

Chang Mien's request, the Department initiated a changed circumstance

review on June 4, 1997. See Certain Welded Stainless Steel Pipe from

Taiwan; Invitation of Changed Circumstances Antidumping Duty

Administrative Review, 62 FR 30567.

Scope of the Review

The merchandise subject to this antidumping duty order is 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 this 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 include, but are not limited to, digester

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, 7306.40.5015,

7306.40.5040, 7306.40.5065 and 7306.40.5085. Although these subheadings

include both pipes and tubes, the scope of this antidumping duty order

is limited to welded austenitic stainless steel pipes. Although the HTS

subheadings are provided for convenience and Customs purposes, the

written description of the scope of this order is dispositive.

Preliminary Results of Changed Circumstances Antidumping Duty

Administrative Review

In accordance with section 751(b) of the Act, the Department

initiated a changed circumstances administrative review on June 4,

1997, to determine whether Chang Mien is the successor company to Chang

Tieh.

In determining whether a merged company is the successor to another

for purposes of the antidumping duty law, the Department examines a

number of factors including, but not limited to, changes in (1)

management, (2) production facilities, (3) supplier relationships, and

(4) customer base. See e.g., Brass Sheet and Strip from Canada; Final

Results of Antidumping Duty Administrative Review, 57 FR 20460 (May 13,

1992). While no one or several of these factors will necessarily

provide a dispositive indication, the Department will generally

consider the company that merged with another company to be a successor

to the previous company if its resulting operation is substantially

similar to that of the predecessor. See e.g., Industrial Phosphoric

Acid from Israel; Final Results of Changed Circumstances Review, 59 FR

6944 (February 14, 1994). Thus, if evidence demonstrates that, with

respect to the production and sale of the subject merchandise, the

successor company operates as the same business entity as the former

company, the Department will treat the successor company the same as

the predecessor for purposes of antidumping duty liability.

To determine whether Change Mien is the successor-in-interest to

Chang Tieh, we examined Chang Mein's initial request for a changed

circumstances review, and Chang Mien's responses to the Department's

supplemental questionnaires of October 27, 1997, and December 5, 1997.

In addition, from January 21 through January 23, 1997, we verified

Chang Mien's responses at its facilities in Kaoshung, Taiwan.

Chang Mien, founded in 1972, began sales operations in 1977,

originally as a carbon steel coil center. In early 1984, Chang Mien

formed a subsidiary, Chang Tieh, to produce and market stainless steel

pipe. In 1989 Chang Mien acquired land adjacent to its steel coil

centers for construction of its stainless steel pipe mill. Chang Tieh

began producing non-

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annealed pipe in 1990; the following year, Chang Tieh purchased and

installed an annealing furnace permitting it to produce ASTM A312 heat-

treated pipe, the subject merchandise of the antidumping duty order.

While the non-annealed pipe was intended almost exclusively for

domestic consumption, the addition of the annealing furnace allowed

Chang Tieh to target export markets.

In 1993 Chang Mien sought to merge Chang Tieh and another firm,

Jumbo Stainless Steel Corporation (Jumbo), into a single entity bearing

the Chang Mien name. The merger was prompted by Chang Mien's desire to

become a publicly-traded company on Taiwain's stock exchange. The

merger of the affiliated companies into one larger, consolidated entity

would make Chang Mien more attractive to investors in the market. Chang

Mien's 1991-1992 audited financial statements noted that a resolution

to absorb Chang Tieh and Jumbo with Chang Mien was adopted by the

stockholders on October 16, 1992. The Company (i.e. Chang Mien) would

be the continuing company, while Chang Tieh and Jumbo would be the

merged companies and cease to exist. The merger of Chang Tieh and Jumbo

was approved by the Fair Trade Commission of the Executive Yuan on

March 16, 1993.

Chang Mien maintains that it was related to or affiliated with

respondent Chang Tieh, since both companies were owned by the same

individual. As such, Chang Mien asserts in its request for review that

it should have been excluded from the antidumping duty order ab initio

(see Chang Mien's Request for Sec. 751(b) Review, September 11, 1996,

Public Version, p. 2). Therefore, Chang Mien maintains that when it

absorbed Chang Tieh, it assumed Chang Tieh's exclusion from the

antidumping duty order.

Basing our analysis on the four criteria cited above and evidence

on the record, we have preliminarily determined that Chang Mien is the

successor-in-interest to Chang Tieh. First, during the LTFV

investigation, the Department established Chang Tieh's relationship

with Chang Mien by virtue of common ownership by the same individual.

In addition, the management and organizational structure of the former

Chang Tieh, while undergoing some changes since the Department's 1991

period of investigation, remained essentially intact in the time

following the March 1993 merger. The production facilities, although

upgraded to some extent, are virtually the same, maintaining the same

production capacity. Although Chang Mien has recently added new

suppliers as the business environment changed, for the years

immediately following the merger, Chang Mien continued to deal with

essentially the same steel suppliers as those used by Chang Tieh prior

to the merger. Chang Mien's customer base has changed considerably from

the customers served by Chang Tieh, due to customer name changes,

bankruptcy, new customers, etc. However, given that Chang Mien absorbed

Chang Tieh more than four years ago we would expect change in the

customer base. Moreover, changes in the U.S. customer base are

understandable, given that Chang Tieh was a first-time entrant into the

U.S. pipe market during the 1991 POI. Therefore, factors other than the

merger of Chang Tieh with Chang Mien, contributed to the evolution to

customer base.

As stated previously, we do not consider any one factor

dispositive; our decision is based on the totality of the evidence. Our

analysis of the evidence on the record leads us to preliminarily

determine that Chang Mien is the successor-in-interest to Chang Tieh,

since it essentially operates as the same entity as the former company,

maintaining the same management, production facilities, and supplier

relationships as did Chang Tieh prior to its merger with Chang Mien.

Interested parties may submit case briefs and/or written comments

no later than 30 days after the date of publication of these

preliminary results. Rebuttal briefs and rebuttals to written comments,

limited to issues raise din such briefs or comments, may be filed no

later than 37 days after the date of publication. The Department will

publish the final results of this changed circumstances review which

will include its analysis of any such written comments.

This notice is in accordance with section 751(b) of the Act, as

amended (19 U.S.C. 1675(b)), and section 353.22(f) of the Department's

regulations.

Dated: March 31, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-9099 Filed 4-6-98; 8:45 am]

BILLING CODE 3510-DS-M