Certain Welded Carbon Steel Pipes and Tubes and Welded Carbon Steel Line Pipe from Turkey; Final Results of Countervailing Duty Administrative Reviews

DEPARTMENT OF COMMERCE

International Trade Administration

[C-489-502]

Certain Welded Carbon Steel Pipes and Tubes and Welded Carbon

Steel Line Pipe from Turkey; Final Results of Countervailing Duty

Administrative Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

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

SUMMARY: On April 7, 1999, the Department of Commerce (the Department)

published in the Federal Register its preliminary results of

administrative reviews of the countervailing duty orders on certain

welded carbon steel pipes and tubes (pipe and tube) and welded carbon

steel line pipe (line pipe) from Turkey for the period January 1, 1997

through December 31, 1997 (64 FR 16924). The Department has now

completed these administrative reviews in accordance with section

751(a) of the Tariff Act of 1930, as amended. For information on the

net subsidy for each reviewed company, and for all non-reviewed

companies, please see the Final Results of Review section of this

notice. We will instruct the U.S. Customs Service to assess

countervailing duties as detailed in the Final Results of Review

section of this notice.

EFFECTIVE DATE: August 16, 1999.

FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Eric Greynolds,

Office of CVD/AD Enforcement VI, Import Administration, International

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

Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)

482-3692 or (202) 482-6071, respectively.

SUPPLEMENTARY INFORMATION:

Background

Pursuant to 19 CFR 351.213(b), these reviews cover only those

producers or exporters of the subject merchandise for which a review

was specifically requested. Accordingly, the review on pipe and tube

covers Yucel Boru ve Profil Endustrisi A.S., and its affiliated

companies, Cayirova Boru Sanayi ve Ticaret A.S., and Yucelboru Ihracat

Ithalat ve Pazarlama A.S. (Yucel Boru Group), and the review on line

pipe covers Mannesmann--Sumerbank Boru Endustrisi T.A.S. (Mannesmann).

These reviews also cover 21 programs during the period January 1, 1997

through December 31, 1997.

Since the publication of the preliminary results on April 7, 1999

(64 FR 16924), the following events have occurred. We invited

interested parties to comment on the preliminary results. On May 7,

1999, case briefs were submitted by the Yucel Boru Group, which

exported pipe and tube, and Mannesmann, which exported line pipe, to

the United States during the review period (respondents). On May 12,

1999, a rebuttal brief was submitted by Maverick Tube Corporation and

Wheatland Tube Company (petitioners).

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions of the Tariff Act of 1930, as amended by

the Uruguay Round Agreements Act (URAA) effective January 1, 1995 (the

Act). The Department is conducting these administrative reviews in

accordance with section 751(a) of the Act. Because these administrative

reviews were initiated in April 1998, 19 CFR part 355 is applicable.

Scope of the Reviews

Imports covered by these reviews are shipments from Turkey of two

classes or kinds of merchandise: (1) Certain welded carbon steel pipe

and tube, having an outside diameter of 0.375 inch or more, but not

more than 16 inches, of any wall thickness. These products, commonly

referred to in the industry as standard pipe and tube or structural

tubing, are produced to various American Society for Testing and

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

500, or A-501; and (2) certain welded carbon steel line pipe with an

outside diameter of 0.375 inch or more, but not more than 16 inches,

and with a wall thickness of not less than .065 inch. These products

are produced to various American Petroleum Institute (API)

specifications for line pipe, most notably API-L or API-LX. These

products are classifiable under the Harmonized Tariff Schedule of the

United States (HTSUS) as item numbers 7306.30.10 and 7306.30.50. The

HTSUS item numbers are provided for convenience and Customs purposes.

The written descriptions remain dispositive.

[[Page 44497]]

Analysis of Programs

Based upon the responses to our questionnaires and written comments

from the interested parties, we determine the following:

I. Programs Conferring Subsidies

A. Programs Previously Determined To Confer Subsidies

1. Pre-Shipment Export Credit

In the preliminary results we found that this program conferred

countervailable subsidies on the subject merchandise. Our review of the

record and our analysis of the comments submitted by the interested

parties, summarized below, has not led us to change our findings from

the preliminary results. Accordingly, the net subsidies for this

program remain unchanged from the preliminary results and are as

follows:

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

Rate

Manufacturer/exporter of pipe and tube (percent)

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

Yucel Boru Group............................................ 0.84

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

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

Rate

Manufacturer/exporter of line pipe (percent)

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

Mannesmann.................................................. 0.19

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

2. Foreign Exchange Loan Assistance

In the preliminary results we found that this program conferred

countervailable subsidies on the subject merchandise. We did not

receive any comments on this program from the interested parties. In

the preliminary results, we stated that Mannesmann received foreign

currency loans that were used for shipments to the United States and

Germany. For the denominator, we used the indexed monthly total exports

of the subject merchandise to the United States, and the company's

total export sales (unindexed) of the subject merchandise to Germany.

We subsequently requested the monthly total export sales of the subject

merchandise to Germany so that we could index for inflation, as we had

indexed sales of subject merchandise to the United States. We have now

indexed the monthly total exports of the subject merchandise to the

United States and to Germany to account for Turkey's high rate of

inflation. See Preliminary Results, 64 FR 16924, 16926, where we found

that Turkey experienced an inflation rate of 81 percent during the POR.

Accordingly, the net subsidies for this program changed from the

preliminary results and are as follows:

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

Rate

Manufacturer/exporter of pipe and tube (percent)

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

Yucel Boru Group............................................ 0.00

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

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

Rate

Manufacturer/exporter of line pipe (percent)

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

Mannesmann.................................................. 0.58

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

3. Freight Program

In the preliminary results we found that this program conferred

countervailable subsidies on the subject merchandise. Our review of the

record and our analysis of the comments submitted by the interested

parties, summarized below, has not led us to change our findings from

the preliminary results. Accordingly, the net subsidies for this

program remain unchanged from the preliminary results and are as

follows:

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

Rate

Manufacturer/exporter of pipe and tube (percent)

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

Yucel Boru Group............................................ 0.00

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

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

Rate

Manufacturer/exporter of line pipe (percent)

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

Mannesmann.................................................. 3.43

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

II. Program Found Not To Confer Subsidies Special Importance Sector

Under Investment Allowances

In the preliminary results we found this program did not confer

subsidies during the POR. We did not receive any comments on this

program from the interested parties, and our review of the record has

not led us to change any findings from the preliminary results.

III. Programs Found To Be Not Used

In the preliminary results we found that the producers and/or

exporters of the subject merchandise did not apply for or receive

benefits under the following programs:

A. Resource Utilization Support Fund

B. State Aid for Exports Program

C. Advance Refunds of Tax Savings

D. Export Credit Through the Foreign Trade Corporate Companies

Rediscount Credit Facility (Eximbank)

E. Past Performance Related Foreign Currency Export Loans (Eximbank)

F. Export Credit Insurance (Eximbank)

G. Subsidized Turkish Lira Credit Facilities

H. Subsidized Credit for Proportion of Fixed Expenditures

I. Fund Based Credit

J. Investment Allowances (in excess of 30% minimum)

K. Resource Utilization Support Premium

L. Incentive Premium on Domestically Obtained Goods

M. Deduction from Taxable Income for Export Revenues

N. Regional Subsidies

1. Additional Refunds of VAT (VAT + 10%)

2. Postponement of VAT on Imported Goods

3. Land Allocation (GIP)

4. Taxes, Fees (Duties), Charge Exemption (GIP)

We did not receive any comments on these programs from the

interested parties, and our review of the record has not led us to

change our findings from the preliminary results.

IV. Program Found To Be Terminated

In the preliminary results we found the following program to be

terminated and that no residual benefits were being provided:

Export Incentive Certificate Customs Duty & Other Tax Exemptions

We did not receive any comments on this program from the interested

parties, and our review of the record has not led us to change our

findings from the preliminary results.

Analysis of Comments

Comment 1: Appropriate Benchmark Interest Rates

The Yucel Boru Group argues that the Department's use of monthly-

average interest rates is inconsistent with the Department's policies

and practices in antidumping cases. They argue that it is the

Department's policy, in high inflation economies, to require

contemporaneity for measurements that are affected by inflation. In

support of their argument, they cite the Final Determination of Sales

at Less than Fair Value: Certain Pasta from Turkey, 61 FR 30309, (June

14, 1996), in which the Department used daily exchange rates for

currency conversion. Therefore, according to the Yucel Boru Group,

because currency exchange rates and interest rates reflect the degree

of inflation in the economy, they both should be treated the same way

under the principle of contemporaneity in antidumping cases, as well as

countervailing duty cases, as provided for under 19 CFR 351.415

(Currency Conversion). Thus, they argue that the Department should use,

as a benchmark, the weekly short-term interest rates rather than the

monthly average short-term interest rates based on a simple average of

the weekly figures corresponding for that month.

The Yucel Boru Group also argues that the Department selected the

[[Page 44498]]

incorrect short-term weekly rates from The Economist. Therefore, they

argue that if the Department elects to retain the monthly average

methodology, the Department should select the correct short-term weekly

rates from The Economist.

Department's Position: We disagree with the Yucel Boru Group's

contention that the Department should use the weekly short-term

interest rate rather than the average monthly rate in calculating the

benefit from the pre-shipment export credit program. First, the Group

is incorrect in equating antidumping duty practice and the currency

conversion regulation (351.415) (only applicable in antidumping duty

cases) with countervailing duty practice. In antidumping duty cases

because we are comparing costs and prices in different markets,

contemporaneous comparisons are necessary to ensure that the

comparisons are appropriate and not unduly influenced by exchange rate

fluctuations. With regard to prices, our regulation on currency

conversion effectuates this purpose. See 19 CFR 351.415. In

countervailing duty cases we are not comparing prices or costs, rather,

in choosing a benchmark interest rate, we are determining whether a

benefit exists to the extent that the amount a firm pays on a

government-provided loan is less than the amount the firm would pay on

a comparable commercial loan obtained during the year in which the

government-provided loan was given, in accordance with section

771(5)(E(ii) of the Act. If the government-provided loan is a short-

term loan, the Department calculates a single, annual average benchmark

interest rate, unless short-term interest rates in the country in

question fluctuated significantly during the year in question. Because

we determine that Turkey continued to experience a high rate of

inflation, based on a Wholesale Price Index rate of approximately 81

percent during the POR, we find that using an average monthly rate as

the short-term benchmark interest rate sufficiently accounts for such

inflation. It has been the Department's practice in countervailing duty

cases to use the average monthly interest rate for purposes of deriving

a benchmark interest rate in an inflationary economy. See e.g., Final

Affirmative Countervailing Duty Determination: Certain Pasta from

Turkey, 61 FR 30366, 30367 (June 14, 1996). In prior countervailing

duty reviews of subject merchandise, the Department has consistently

used, as the benchmark interest rates, the monthly average interest

rates. See Certain Welded Carbon Steel Pipes and Tubes and Welded

Carbon Steel Line Pipe from Turkey; Preliminary Results of

Countervailing Duty Administrative Reviews, 62 FR 16782,16783 (April 8,

1997) and Final Results, 62 FR 43984 (August 18, 1997) (1995 Pipe and

Tubes and Line Pipe), and Certain Welded Carbon Steel Pipes and Tubes

and Welded Carbon Steel Line Pipe from Turkey; Preliminary Results and

Partial Recission of Countervailing Duty Administrative Reviews, 62 FR

64808, 64809 (December 9, 1997) and Final Results, 63 FR 18885 (April

16, 19998) (1996 Pipes and Tubes and Line Pipe). Moreover, we note that

Mannesmann, the other producer of subject merchandise in the instant

reviews, supplied the Department with the monthly average cost of its

company-specific borrowing rates during the POR.

We also disagree with the Yucel Boru Group's contention that the

Department used the incorrect benchmark interest rate. The Group's

contention appears to stem from their argument that interest rate

benchmarks should be contemporaneous with when the interest payments

are made. As discussed above, in selecting an appropriate benchmark, we

are not comparing prices or costs. Instead, we are determining what the

interest rate would have been had the company obtained a commercial

loan comparable to the government-provided loan. Therefore, the

Department bases its benchmark interest rate on the date the

government-provided loan is taken out because the interest rate on a

comparable commercial loan would have been established at the time the

loan is given, and not on the date the interest payment is made, as

argued by the Yucel Boru Group. See 1996 Pipes and Tubes and Line Pipe,

62 FR 64308, 64809.

Comment 2: Countervailability of Exempted Loan Fees

The Yucel Boru Group argues that the Department's inclusion of loan

fees in the benchmark interest rate used to calculate the benefit of

the pre-shipment loan program is contrary to both the World Trade

Organization (WTO) Agreement and section 771 of the Tariff Act of 1930.

Specifically, they argue that while section 771(5)(E)(iii) of the Act

and Part V, Article 14(c) of the Agreement on Subsidies and

Countervailing Measures (SCM), dealing with loan guarantees, include

provisions for adjusting for fees, the statutory provisions addressing

loans in section 771(5)(E)(ii) of the Act and part V, Article 14(c) of

the SCM contain no such provision with respect to fees incurred on

direct loans. Thus, they argue that because the statute and the WTO do

not explicitly include a provision for adjusting for fees in the case

of loans, the Department should not include fees in benchmark interest

rate used to calculate the benefit under the pre-shipment export credit

program.

Petitioners counter that the Yucel Boru Group's contention is not

tenable. Rather, according to petitioners, the waived fees are export

promotion subsidies and are prohibited. Petitioners also counter that

the adjustment for loan guarantee fees is necessary to prevent a

finding of a subsidy where the net effect of the guarantee transaction

provides no interest benefit to the loan recipient. However, the waiver

of fees, which would otherwise be applicable to a loan, but for the

fact the loan finances export sales, is an export subsidy in its own

right. Therefore, to exclude the fee from the benchmark interest rates

would ignore the subsidy benefit.

Department's Position: We disagree with the Yucel Boru Group's

contention that the Department's inclusion of loan fees in the

benchmark interest rate used to calculate the benefit under the pre-

shipment export credit program is contrary to law. Although there is no

explicit reference to adjusting for fees on direct loans in either

Articles 14(b) and 14(c) of the SCM, and sections 771(5)(E)(ii) and

771(5)(E)(iii) of the Act, the Department has interpreted language

contained in both provisions as permitting the Department to add

exempted fees to benchmark interest rates used to calculate the benefit

in appropriate circumstances. Section 771(5)(E)(ii) of the Act defines

the benefit in the case of loans as,

``* * * [the] difference between the amount the recipient of the

loan pays on the loan and the amount the recipient would pay on a

comparable commercial loan that the recipient could actually obtain

on the market.''

The Department believes that this interpretation is in compliance

with the SCM and the Act because the inclusion of loan fees in the

benchmark interest rate to calculate the benefit accurately derives the

amount that the recipient would pay on a comparable commercial loan.

While section 351.505 of the Department's regulations are not in

effect for the instant reviews, the Preamble restates the Department's

practice of using the ``effective interest rate'' rather than the

``nominal interest rate'' because effective interest rates are intended

to take account of the actual cost of the loan, including the amount

[[Page 44499]]

of any fees, commissions, compensating balances, government charges or

penalties paid in addition to the nominal interest. See section

351.505(a)(1); Preamble to the Regulations, 63 FR 65362 (November 25,

1998).

As explained in the Preliminary Results at 16926, the pre-shipment

export credit program allows for the exemption of certain fees that are

normally charged on loans, provided that the loans are used in

financing exportation and other foreign exchange earning activities. In

light of the exemption granted under this program, the only way to

determine the amount that the recipient would normally pay on a

comparable commercial loan would be to factor in the fees a recipient

would incur on this type of transaction. For this reason, consistent

with the Department's practice, we compare effective rates rather than

nominal rates. See e.g., Certain Iron-Metal Castings from India: Final

Results of Countervailing Duty Administrative Review, 60 FR 44843

(August 29, 1995) (Castings from India).

Comment 4: Measurement of Countervailable Benefit: Earned Versus

Receipt Basis

Mannesmann argues that the Department deviated from its long-

standing practice of measuring benefits on an earned basis, i.e., on

the date of export where the benefit is earned, either as a fixed

percentage of the f.o.b. value or as a fixed amount per ton, on a

shipment-by-shipment basis, and the exporter knows the total amount of

the benefit at the time of export. Mannesmann cites several cases,

which they claim demonstrates that the Department has taken this

approach even in cases where the benefit was denominated in local

currency, in high inflationary economies, and in cases where there were

long delays between the date of exportation and the date of actual

receipt of the benefit.

They argue that the Department measured the benefits on an earned

basis in Brazilian, as well as Mexican cases in the 1980's, a period in

which both countries experienced high inflation, although the benefits

could not have been known at the time of export because of the ongoing

currency devaluations. Further, Mannesmann argues that because the

Department is not applying its long-standing practice in the instant

case, it is arbitrarily changing its methodology without an

explanation, which is contrary to the principle of administrative law.

According to Mannesmann, the fact that the benefit was fixed for a

period of time in U.S. dollars before being converted into local

currency means that the value of the benefit was more stable during

that period in the Turkish case than it was in the Brazilian and

Mexican cases. In the Brazilian and Mexican cases, the value of the

benefit was converted into local currency at the time of exportation

and began immediately to lose value during the period between the date

of export and the date of receipt of the benefit because of the effects

of inflation. Furthermore, Mannesmann argues that in the Turkish,

Brazilian and Mexican cases, the ``real'' value of the benefit that

would ultimately be received by the exporters was not known at the time

of export. Thus, the benefits from the Freight Rebate program should be

measured on the same basis as the Brazilian and Mexican cases.

Mannesmann states that in 1995 Pipe and Tube and Line Pipe, the

Department countervailed benefits received under the Export Performance

Credit program on the date they were earned, and not when they were

received. Mannesmann argues that despite the Department's attempts to

distinguish the Freight Rebate program from the Export Performance

Credit program, the two programs were virtually identical. Mannesmann

also argues that the exporters did not know, at the time of export, the

exact exchange rate that would be used to convert the dollar amount to

Turkish Lira (TL) in either program; therefore, the exporters did not

know the ``precise'' amount of the benefit in TL on the date of export.

On the other hand, they argue that under both programs, the exporters

knew the exact U.S. dollar amount of the benefit on the date of export,

and the exporters expected to receive the equivalent value in TL at a

later date. Therefore, they argue that the price effect and the volume

effect of the benefit were exerted at the time of export and not at a

later date.

Petitioners counter that the Brazilian cases cited by Mannesmann do

not contradict the Department's finding in the instant case. In the

Brazilian cases, the respondents knew the exact amount of local

currency they would receive as a benefit at the time of exportation.

However, in the instant case, the amount of local currency to be

received was not known at the time of export. Petitioners also contend

that the focus on local currency is critical because this is how the

benefit was paid. According to petitioners, in inflationary economies,

valuing a benefit at the time it is earned, where conversion from U.S.

dollars to local currency will occur at some future date, understates

the value of the benefit received. Furthermore, because the conversion

to local currency occurred at a future date renders the value of the

benefit uncertain at the time it is earned.

Department's Position: The Department has previously addressed the

arguments raised by Mannesmann. See 1996 Pipe and Tube and Line Pipe,

63 FR at 18887-88. No new information has been presented that would

warrant reconsideration of the Department's prior findings. Our normal

practice is to countervail benefits when they affect the firm's cash

flow, usually when the company receives the benefit. See e.g.,

Ferrochrome from South Africa, Final Results of Countervailing Duty

Administrative Review, 56 FR 33254, 33255 (July 19, 1991) (Ferrochrome

from South Africa). However, the Department has deviated from its long-

standing practice to countervail an export subsidy on the date the

benefit is received on an ``earned basis'' where the benefit is

provided as a percentage of the value of the exported merchandise on a

shipment-by-shipment basis, and the exact amount of the countervailable

subsidy is known at the time of export. See e.g., Castings from India,

60 FR at 44844. As stated in 1995 Pipe and Tube and Line Pipe, and in

1996 Pipe and Tube and Line Pipe, the exporter could not have known at

the time of export the exact amount of the countervailable benefit from

the Freight Rebate program because the freight payments were only

stated in U.S. dollars per ton, but the benefit was not tied to the

U.S. dollar. The Government of Turkey (GRT) did not initially commit to

use the exchange rate existing on the date of export. Therefore,

because of the high rate of inflation in Turkey, the exporters could

not have known the amount of the benefit ultimately to be received at

the time of export. See 1996 Pipe and Tube and Line Pipe, 63 FR at

18888. In the Brazilian and Mexican cases cited by Mannesmann, the

benefits in these high inflationary economies were paid at the time of

export, thus exporters knew with certainty the benefit to be received

in the local currency at the time of export. See e.g., Final

Affirmative Countervailing Duty Determinations: Certain Stainless Steel

Products from Brazil, 48 FR 21610, 21612 (May 13, 1983) and Toy

Balloons (Including Punchballs) and Playballs from Mexico: Final

Results of Administrative Review of Countervailing Duty Order, 49 FR

45039, 45040 (November 14, 1984).

We also disagree with Mannesmann's arguments that the Freight

Rebate program is indistinguishable from the Export Performance Credit

program. We previously determined that the

[[Page 44500]]

programs are distinguishable. See 1995 Pipe and Tube and Line Pipe, 62

FR at 43991, and 1996 Pipe and Tube and Line Pipe, 63 FR at 18888.

Under the Export Performance Credit program, because the value of the

benefit was tied to the U.S. dollar, the benefit remained the same in

U.S. dollar terms. Therefore, the value of the benefit from the Export

Performance Credit program was known at the time of export, and could

be calculated on an earned basis.

Comment 5: Policy Considerations for Measurement of Benefits

Mannesmann argues that policy considerations and the Department's

Regulations require the Freight Rebate program be countervailed on the

date the benefit was earned because the benefits should be

countervailed when they will have the greatest potential effect on a

company's export volumes or pricing to the United States. Mannesmann

states that since the Freight Rebate program was terminated at the end

of 1994, there were no longer any incentive for companies to export.

Therefore, they argue that because the countervailing duty law is

intended to offset export subsidies, it makes little sense for the

Department to countervail a benefit once a program has been terminated.

In support of its policy argument, Mannesmann points to section

351.514 of the Department's regulations, which deals with freight

charges. Mannesmann states that although this provision relates to

domestic freight charges on export shipments, it is instructive in that

it specifically recognizes that freight-related benefits should be

countervailed on the date that the subsidies were actually used to

encourage shipments to the United States. Therefore, they argue that

the Department should follow this policy when countervailing benefits

from the Freight Rebate program.

Petitioners counter that regardless of whether a countervailable

program has been terminated, the Department should not ignore the

residual benefits received under the program.

Department's Position: The Department has previously addressed the

arguments raised by Mannesmann. See 1996 Pipe and Tube and Line Pipe,

63 FR at 18888. No new information has been presented that would

warrant reconsideration of the Department's prior findings. We continue

to disagree with Mannesmann's argument that it makes little sense for

the Department to countervail a benefit once a program has been

terminated. As we stated, under section 771(5)(C), we are not required

to consider the potential effect of a subsidy. Moreover, under the Act,

a benefit that is contingent upon export is an export subsidy and thus

countervailable. See Section 771(5A)(B). Finally, under the logic of

respondents argument, we could never countervail export subsidies

unless the benefit could be measured at the time of shipment. This

clearly conflicts with the Act and our long-standing practice to

countervail benefits at the time the subsidy affects the company's cash

flow, which includes residual benefits from a terminated program. See

e.g., Ferrochrome from South Africa, 56 FR 33254, 33255 (July 19,

1991).

Mannesmann's citation to section 351.514 is not applicable to the

instant reviews. However, Mannesmann's argument that this section of

the regulations is instructive is flawed. We previously determined that

the Freight Rebate program was a freight bonus, i.e., a benefit

contingent upon export. Therefore, we continue to follow our normal

practice and countervail this benefit at the time the financial

contribution affects the cash flow of the company, which is when the

company receives the payment of the subsidy to which it is entitled as

a result of prior exportations. See 1996 Pipe and Tube and Line Pipe,

63 FR at 18889.

Comment 6: Treatment of Foreign Exchange Difference (Kur Farki)

The Yucel Boru Group argues that the Department's statement that

``we find that foreign exchange differences are not viewed as sales

income generated by a company's main operations,'' is contrary to

Turkish accounting principles, as well as the Turkish government's own

Standard Accounting Plan. The Yucel Boru Group also argues that the

Department's quote from Price Waterhouse's publication, Doing Business

in Turkey (1992, as amended July 31, 1995) that ``the lack of clearly

defined commercial accounting principles and the predominance of tax

law mean that Turkish law should be treated with extreme caution, and

international accounting standards are preferred'' has nothing to do

with income classification issues. The Group claims that the same

article directly addresses the treatment of exchange gains and losses,

and states that ``exchange gains and losses are part of normal trading

income and expense to be taken into account when realized.'' Thus, they

argue that kur farki should be considered as trading revenue for

purposes of the denominator of subsidy calculations (total net sales).

The Yucel Boru Group also discusses the Department's treatment of

costs, interest expense, and price adjustment in the context of two

antidumping cases that involve cost issues, both in a high inflationary

economy (Turkey) and a non-high inflationary economy (Germany). The

Group argues that in those cases, the Department treated the foreign

exchange gain as sales income, and that the Department should do

likewise in the instant case.

Petitioners counter that the Yucel Boru Group points to one source

cited by the Department. However, the Group does not address the

extensive citations the Department provided from other publications

regarding the treatment of income obtained from foreign exchange gains

and losses. Petitioners also counter that there is overwhelming support

in the record that foreign exchange gain or loss is not related to

sales activities, and is therefore ``other income.''

Department's Position: The Yucel Boru Group mistakenly argues that

the Department excluded foreign exchange gains and losses from the

total sales figure used as the denominator for the calculation of the

subsidy. However, we note that we used the total sales denominator

reported by the companies. In addition, as stated in the preliminary

results, the Department departed from how it had treated such gains and

losses in earlier reviews of subject merchandise, and in the instant

reviews the Department has indexed both the subsidy benefits

(numerator) and sales revenue (denominator), as reported in the

questionnaire responses. See Preliminary Results at 16925-26. Thus, the

Group's argument regarding whether foreign exchange gains or losses

constitute sales revenue or other income and should be included in the

sales denominator is not germane to the Department's calculation of the

net subsides in the instant reviews.

The Group's discussion of the antidumping cases also lacks merit.

In the instant case, we are examining neither cost issues nor price

adjustments. However, as discussed above, to account for high inflation

in Turkey, the Department has used indexation in the instant case, as

well as in the Notice of Final Results and Partial Recission of

Antidumping Duty Administrative Review: Certain Pasta from Turkey, 63

FR 68429, 68435.

Final Results of Review

In accordance with 19 CFR 355.22(c)(4)(ii), we calculated an

individual subsidy rate for each producer/exporter subject to these

administrative reviews. For the period January 1, 1997 through December

31, 1997, we determine the net subsidy to be as follows:

[[Page 44501]]

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

Rate

Manufacturer/exporter of pipe and tube (percent)

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

Yucel Boru Group............................................ 0.84

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

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

Rate

Manufacturer/exporter of line pipe (percent)

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

Mannesmann.................................................. 4.20

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

We will instruct the U.S. Customs Service (``Customs'') to assess

countervailing duties as indicated above. The Department will also

instruct Customs to collect cash deposits of estimated countervailing

duties in the percentages detailed above of the f.o.b. invoice price on

all shipments of each class or kind of merchandise from reviewed

companies, entered, or withdrawn from warehouse for consumption on or

after the date of publication of the final results of these reviews.

Because the URAA replaced the general rule in favor of a country-

wide rate with a general rule in favor of individual rates for

investigated and reviewed companies, the procedures for establishing

countervailing duty rates, including those for non-reviewed companies,

are now essentially the same as those in antidumping cases, except as

provided for in Sec. 777A(e)(2)(B) of the Act. The requested review

will normally cover only those companies specifically named. See 19 CFR

355.22(a). Pursuant to 19 CFR 355.22(g), for all companies for which a

review was not requested, duties must be assessed at the cash deposit

rate, and cash deposits must continue to be collected at the rate

previously ordered. As such, the countervailing duty cash deposit rate

applicable to a company can no longer change, except pursuant to a

request for a review of that company. See Federal-Mogul Corporation and

The Torrington Company v. United States, 822 F.Supp. 782 (CIT 1993) and

Floral Trade Council v. United States, 822 F.Supp. 766 (CIT 1993).

Therefore, the cash deposit rates for all companies except those

covered by these reviews will be unchanged by the results of these

reviews.

We will instruct Customs to continue to collect cash deposits for

non-reviewed companies at the most recent company-specific or country-

wide rate applicable to the company. Accordingly, the cash deposit

rates that will be applied to non-reviewed companies covered by this

order will be the rate for that company established in the most

recently completed administrative proceeding conducted under the URAA.

If such a review has not been conducted, the rate established in the

most recently completed administrative proceeding pursuant to the

statutory provisions that were in effect prior to the URAA amendments

is applicable. See Certain Welded Carbon Steel Pipe and Tube Products

from Turkey; Final Results of Countervailing Duty Administrative

Reviews, 53 FR 9791. These rates shall apply to all non-reviewed

companies until a review of a company assigned these rates is

requested. In addition, for the period January 1, 1997 through December

31, 1997, the assessment rates applicable to all non-reviewed companies

covered by this order are the cash deposit rates in effect at the time

of entry.

This notice serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 C.F.R. Sec. 355.34(d). Timely written

notification of return/destruction of APO materials or conversion to

judicial protective order is hereby requested. Failure to comply with

the regulations and the terms of an APO is a sanctionable violation.

These administrative reviews and notice are issued and published in

accordance with section 751(a)(1) and 777(i)(1) of the Act (19 U.S.C.

1675(a)(1) and 19 U.S.C. 1677f(i)(7)).

Dated: August 5, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-21198 Filed 8-13-99; 8:45 am]

BILLING CODE 3510-DS-P