Certain Carbon Steel Butt-Weld Pipe Fittings From Thailand; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-549-807]

Certain Carbon Steel Butt-Weld Pipe Fittings From Thailand;

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 timely request by Thai Benkan Corporation,

Ltd., (TBC), the Department of Commerce (the Department) is conducting

an administrative review of the antidumping duty order on certain

carbon steel butt-weld pipe fittings (pipe fittings) from Thailand.

This review covers TCB, a manufacturer/exporter of this merchandise to

the United States, during the period July 1, 1997, through June 30,

1998. We have preliminarily determined that sales of the subject

merchandise have been made below normal value. 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

based on the difference between the export price and the normal value.

Interested parties are invited to comment on these preliminary results.

Parties who submit arguments in this proceeding are requested to submit

with the arguments: (1) a statement of the issues; and (2) a brief

summary of the arguments.

EFFECTIVE DATE: August 6, 1999.

FOR FURTHER INFORMATION CONTACT: Zev Primor or Wendy Frankel,

Antidumping/Countervailing Duty Enforcement, Office 4 Group II, Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, NW., Washington, DC

20230; telephone: (202) 482-4114 or 482-5849, respectively.

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

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

of the amendments made to the Tariff Act of 1930, (the Act) as amended,

by the Uruguay Round Agreements Act (URAA). In addition, unless

otherwise indicated, all citations to the Department's regulations

refer to the regulations codified at 19 CFR Part 351 (April 1998).

SUPPLEMENTARY INFORMATION:

Background

On July 6, 1992, the Department published in the Federal Register

an antidumping duty order on pipe fittings from Thailand (57 FR 29702).

On July 30, 1998, the respondent requested, in accordance with section

351.213(b) of the Department's regulations, an administrative review of

the antidumping duty order on pipe fittings from Thailand covering the

period July 1, 1997, through June 30, 1998. We published a notice of

initiation of the review on August 27, 1998 (63 FR 45796). On September

15, 1998, the Department sent an antidumping questionnaire to TBC. The

Department received questionnaire responses in October and November of

1998. On May 7, 1999, we issued a supplemental questionnaire and

received a response to that questionnaire on May 27, 1999. The

Department is conducting this review in accordance with section 751 of

the Act.

Extension of Deadlines

Under section 751(a)(3)(A) of the Act, the Department may extend

the deadline for completion of preliminary review results if it

determines that it is not practicable to complete the review within the

statutory time limit. On March 10, 1999, the Department extended the

time limit for the preliminary results of this case (Notice of

Extension of Time Limits for Preliminary Results of Antidumping Duty

Administrative Review, 64 FR 11824).

Scope of the Review

The product covered by this order is certain carbon steel butt-weld

pipe

[[Page 42903]]

fittings, having an inside diameter of less than 14 inches, imported in

either finished or unfinished form. These formed or forged pipe

fittings are used to join sections in piping systems where conditions

require permanent, welded connections, as distinguished from fittings

based on other fastening methods (e.g., threaded, grooved, or bolted

fittings.) Carbon steel pipe fittings are currently classified under

subheading 7307.93.30 of the Harmonized Tariff Schedule (HTS). Although

the HTS subheadings are provided for convenience and customs purposes,

our written description of the scope of this proceeding is dispositive.

The review covers TBC and the period of review (POR) July 1, 1997,

through June 30, 1998.

Verification

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

provided by TBC. We used standard verification procedures, including

on-site inspection of the respondent's facilities, the examination of

relevant sales, financial, and/or cost records, and selection of

original documentation containing relevant information. Our

verification results are outlined in the verification reports placed on

file in the Central Records Unit (CRU).

Product Comparisons

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

products within the scope of this review that were produced by the

respondent, and sold in the ordinary course of trade in the comparison

market during the POR, to be foreign like products for purposes of

determining the appropriate product comparisons to U.S. sales.

Fair Value Comparisons

With respect to TBC, in determining whether this respondent's sales

of pipe fittings to customers in the United States were made at less

than fair value, we compared export price (EP) to normal value (NV), as

described in the ``Export Price,'' and ``Normal Value'' sections of

this notice. In accordance with section 777A(d)(2) of the Act, we

calculated monthly weighted-average prices for NV and compared these to

the prices of individual U.S. transactions.

During the POR, TBC reported that it made all of its sales to the

United States through its affiliate, Benkan America, Inc. (BA), which

is the importer of record for the subject merchandise. When sales are

made prior to the date of importation through an affiliate in the

United States, the Department uses the following criteria to determine

whether U.S. sales should be classified as EP sales: (1) whether the

merchandise in question is shipped directly from the manufacturer to

the unaffiliated buyer without being introduced into the physical

inventory of the selling agent; (2) whether direct shipment from the

manufacturer to the unaffiliated buyer is the customary channel for

sales of the subject merchandise between the parties involved; and (3)

whether the affiliate in the United States acts only as a processor of

sales-related documentation and a communication link with the

unaffiliated U.S. buyer. Where the factors indicate that the activities

of the selling entity in the United States are ancillary to the sale

(e.g., arranging transportation or customs clearance), we treat the

transactions as EP sales. Where the U.S. selling agent is substantially

involved in the sales process (e.g., negotiating prices and key sales

terms), we treat the transactions as CEP sales. See Notice of Final

Determination of Sales at Less Than Fair Value: Stainless Steel Wire

Rod From Korea, 63 FR 40404, 40417-19 (July 29, 1998).

According to TBC, the imported merchandise was delivered directly

to the unaffiliated customers' warehouses without being moved into BA's

inventory. See TBC's October 22, 1998, questionnaire response at A-12.

Additionally, in its supplemental questionnaire response, dated May 27,

1999, TBC reiterated that BA never moved the subject merchandise into

its inventory or otherwise took possession of the merchandise.

Furthermore, TBC states that BA merely acted as a processor of paper

and a communication link between the foreign producer and unaffiliated

U.S. customers. At no point, according to TBC, was BA involved in any

pricing decisions; rather BA served only as a paper facilitator

ensuring that purchasing orders from the unrelated U.S. customers were

transferred to TBC and that TBC's sales invoices were properly

delivered to U.S. customers. Finally, TBC stated that the above method

of transaction represents BA's normal practice of facilitating the sale

of merchandise produced by foreign affiliates. Accordingly, TBC

reported these sales as EP sales. See TBC's supplemental questionnaire

response, dated May 27, 1999, at S-5.

Based on our review of the record information concerning TBC's

sales to the United States and after conducting a sales verification,

we determined that BA does not maintain warehousing facilities in the

United States. Thus it is not able to store TBC's merchandise prior to

a sale in the United States. Moreover, our verification of the sales

transaction methods indicates that BA was not involved in any part of

the price negotiation process nor did it provide any additional

services to the U.S. customers. See Memorandum to the File regarding

Verification of the Sales Questionnaire Responses of Thai Benkan, Ltd.,

Certain Carbon Steel Butt-Weld Pipe Fittings from Thailand,

Administrative Review (1997-1998) (TBC Verification Report) dated July

31, 1999. As such, we have concluded that the subject merchandise was

sold prior to importation (outside of the United States) to the

unaffiliated U.S. purchaser. Consequently, we preliminary determine

that these sales are EP transactions.

Export Price

We calculated EP in accordance with sections 772(a) and (c) of the

Act where the respondents sold the subject merchandise directly to the

first unaffiliated purchasers in the United States prior to

importation. Specifically, we calculated EP based on the packed prices

to unaffiliated customers in the United States. We made deductions,

where appropriate, for foreign inland freight from the plant to the

port, foreign inland insurance, foreign brokerage and handling,

international freight, marine insurance, U.S. customs brokerage and

duties, and U.S. inland freight because these expenses were incident to

bringing the subject merchandise from the original place of shipment in

the exporting country to the place of delivery. We also increased EP by

the allocated amount of duty drawback.

Normal Value

1. Viability

In accordance with section 773(a)(1)(C)(ii) of the Act, we

determine that the home market for the respondent serves as a viable

basis for calculating normal value (NV) because the aggregate volume of

the respondent's home market sales of the foreign like product was

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

the subject merchandise.

2. Arm's-Length Transactions

A significant number of home market sales was made through TBC's

affiliates: Marubeni Thailand Co., Ltd., Benkan Corporation of Japan

and Bensho Corporation, Ltd. However, in all cases, TBC reported home

market sales from its affiliates to the first unrelated home market

customer. Consequently, no sales to affiliated parties were considered

in our analysis.

[[Page 42904]]

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the comparison market at

the same level of trade (LOT) as the EP or the CEP transaction. The NV

LOT for EP sales is that of the starting-price sales in the comparison

market, or when NV is based on constructed value (CV), that of the

sales from which we derive selling, general and administrative expenses

and profit. For EP sales, the U.S. LOT is also the level of the

starting-price sale, which is usually from the exporter to the

importer.

To determine whether NV sales are at a different LOT than EP, 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 different affects price comparability, as manifested in a pattern

of consistent price differences between the sales on which NV is based

and comparison-market sales at the LOT of the export transaction, we

make an LOT adjustment under section 773(a)(7)(A) of the Act. 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, 61732

(November 19, 1997).

Based on our analysis of these factors, we found that for TBC no

LOT difference existed between its respective U.S. and home market

sales. Therefore, we have made no LOT adjustment under section

773(a)(7)(A) of the Act. For a detailed discussion of these LOT issues,

see Memorandum to the File regarding Level of Trade Analysis of Thai

Benkan, Ltd.; Certain Carbon Steel Butt-Weld Pipe Fittings from

Thailand, Administrative Review (1997-1998) (TBC LOT Analysis), dated

July 30, 1999.

Constructed Value

In this case, we preliminarily determined NV for all U.S. sales

based on contemporaneous home market sales. Consequently, we did not

use CV in our analysis.

Price-to-Price Comparisons

In accordance with section 773(a)(1)(B)(i) of the Act, we based NV

on the price at which the foreign like product was first sold for

consumption in the exporting country in the usual commercial quantities

and in the ordinary course of trade and at the same level of trade as

the EP sale. In accordance with section 773(a)(6) of the Act, where

applicable, we made adjustments to home market prices for movement

expenses (inland freight) and billing adjustments. To adjust for

differences in circumstances of sales (COS) between the home market and

the EP transactions in the United States, we reduced home market prices

by an amount for home market imputed credit expenses, where applicable,

and made an upward adjustment for U.S. credit, where appropriate. To

adjust for differences in packing between the two markets, we deducted

HM packing costs and added U.S. packing costs. In addition, we made

adjustments, where appropriate, for differences in costs attributable

to physical differences of the merchandise (DIFMER) pursuant to section

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

Currency Conversion

Pursuant to section 773A(a) of the Act, for purposes of the

preliminary results, we converted foreign currencies into the U.S.

dollars using the official exchange rates in effect on the date of the

U.S. sales. These official exchange rates are based on the daily rates

identified by the Federal Reserve Bank. Section 773A(a) of the Act

directs the Department to use a daily exchange rate to convert foreign

currencies into U.S. dollars unless the daily rate involves a

``fluctuation'' It is our practice to find that a fluctuation exists

when the daily exchange rate differs from a benchmark rate by 2.25

percent. See Preliminary Results of Antidumping Duty Administrative

Review: Certain Welded Carbon Steel Pipe and Tube from Turkey, 61 FR

35188, 35192 (July 5, 1996). The benchmark rate is defined as the

moving average of the rates for the past 40 business days. Where we

determined that the daily rates applicable to this review fluctuated,

as defined above, we converted foreign currencies into U.S. dollars

using the benchmark exchange rate.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that the

following weighted-averaged dumping margins exist for the period July

1, 1997 through June 20, 1998:

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

Weighted-

average

Manufacturer/exporter margin

(percent)

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

Thai Benkan Corporation, Ltd............................... 0.94

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Pursuant to 19 CFR 351.224(b), the Department will disclose to

parties to the proceeding any calculations performed in connection with

these preliminary results within 5 days of the date of publication of

this notice. Any interested party may request a hearing within 30 days

of the date of publication of this notice. Any interested party may

request a hearing within 30 days of the date of publication of this

notice. Parties who submit arguments in this proceeding are requested

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

brief summary of the argument. All case briefs must be submitted within

30 days of the date of publication of this notice. Rebuttal briefs,

which are limited to issues raised in the case briefs, may be filed not

later than seven days after the case briefs are filed. A hearing, if

requested, will be held two days after the date the rebuttal briefs are

filed or the first business day thereafter.

The Department will publish a notice of the final results of this

administrative review, which will include the results of its analysis

of the issues raised in any written comments or at the hearing, within

120 days from the publication of these preliminary results.

The Department shall determine, and Customs shall assess,

antidumping duties on all appropriate entries. Upon completion of this

review, 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 covered by

the determination and for future deposits of estimated duties. For

assessment of EP sales we calculated a per-unit customer or importer-

specific assessment rate by aggregating the dumping margins calculated

for all U.S. sales to each customer/importer and dividing this amount

by the total quantity of those sales.

Furthermore, the following cash deposit requirements will be

effective upon completion of the final results of this administrative

review for all shipments of pipe fittings from Thailand entered, or

withdrawn from warehouse, for consumption on or after the publication

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

section 751(a)(1) of the Act: The cash deposit rate for the reviewed

company will be the rate established in the final results of this

administrative review, except if the rate is less than 0.5 percent ad

valorem and, therefore, de minimis, no cash deposit will be required;

(2) for exporters not covered in this review, but covered in the

original less than fair value (LTFV) investigation or a previous

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

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

firm covered in this review, a previous review, or the

[[Page 42905]]

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 or any previous reviews or

the original LTFV investigation, the cash deposit rate will be 39.10

percent, the ``All Others'' rate which is based on the LTFV

investigation (57 FR 29702, July 6, 1992). These requirements, when

imposed, shall remain in effect until publication of the final results

of the next administrative review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 351.402(f) 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 antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) and

1677f(i)(1)).

Dated: July 30, 1999.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-20344 Filed 8-5-99; 8:45 am]

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