Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-549-502]

Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final

Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative

review.

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SUMMARY: On April 13, 1999, the Department of Commerce published the

preliminary results of the administrative review of the antidumping

duty order on certain welded carbon steel pipes and tubes from

Thailand. This review covers one producer/exporter, Saha Thai Steel

Pipe Co., Ltd. (``Saha Thai'') and the period March 1, 1997 through

February 28, 1998.

We gave interested parties an opportunity to comment on the

preliminary results as discussed in the ``Analysis of Comments''

section below. Based on our analysis of comments received, we have made

certain changes for the final results. The final weighted-average

dumping margin is listed below in the section ``Final Results of the

Review.''

EFFECTIVE DATE: October 21, 1999.

FOR FURTHER INFORMATION CONTACT: John Totaro, AD/CVD Enforcement Group

III, Office VII, Room 7866, Import Administration, International Trade

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

Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-

1374.

APPLICABLE STATUTE: 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 (``URAA''). In addition,

unless otherwise indicated, all citations to the Department's

regulations are to those codified at 19 CFR Part 351 (1998).

SUPPLEMENTARY INFORMATION:

Background

On March 11, 1986, the Department published in the Federal Register

an antidumping duty order on welded carbon steel pipes and tubes from

Thailand (51 FR 8341). On March 11, 1998, the Department published a

notice of opportunity to request an administrative review of this order

covering the period March 1, 1997

[[Page 56760]]

through February 28, 1998 (63 FR 11868). In response to requests by two

importers, Ferro Union Inc. (``Ferro Union'') and ASOMA Corp.

(``ASOMA''), and four domestic producers, Allied Tube and Conduit

Corporation, Sawhill Tubular Division--Armco, Inc., Wheatland Tube

Company, and Laclede Steel Company (collectively, the ``domestic

producers'' or ``petitioners''), the Department of Commerce (``the

Department'') is conducting an administrative review of the antidumping

duty order on certain welded carbon steel pipes and tubes from

Thailand. This review covers Saha Thai, a Thai manufacturer and

exporter of subject merchandise to the United States. The period of

review (``POR'') is March 1, 1997 through February 28, 1998. The

Department published a notice of initiation of this antidumping duty

administrative review on April 24, 1998 (63 FR 20378). Because the

Department determined that it was not practicable to complete this

review within statutory time limits, on November 27, 1998, we published

in the Federal Register our notice of extension of time limits for the

preliminary results of this review (63 FR 65573). On April 13, 1999,

the Department published in the Federal Register the preliminary

results of its administrative review of this antidumping order covering

the period March 1, 1997 through February 28, 1998 (64 FR 17998).

Because the Department determined that it was not practicable to

complete this review within statutory time limits, on August 18, 1999,

we published in the Federal Register our notice of extension of time

limits for the final results of this review (64 FR 44892) The

Department has now completed this review in accordance with section

751(a) of the Act.

Changes From the Preliminary Results

We modified our preliminary position with respect to Saha Thai's

claim for duty drawback to allow Saha Thai a partial duty drawback

adjustment. This change is explained in our response to Comment 1. We

also changed our method of determining exchange rate fluctuations in

this case, as described in our response to comment 2. As detailed in

our response to Comment 6 and in our final results Analysis Memorandum,

we modified the weights assigned to certain of the physical

characteristics used in our model match program. Also, as explained in

our response to Comment 7, in the preliminary results we incorrectly

excluded a deduction for imputed credit from our calculation of

constructed value. We agree that imputed credit should be deducted from

constructed value and have done this for the final results. Finally, as

discussed in our response to Comment 8, our preliminary results

incorrectly stated that we verified only sales data, when, in fact, we

examined sales and cost of production data.

Scope of the Review

The products covered by this administrative review are certain

welded carbon steel pipes and tubes from Thailand. The subject

merchandise has an outside diameter of 0.375 inches or more, but not

exceeding 16 inches. These products, which are commonly referred to in

the industry as ``standard pipe'' or ``structural tubing,'' are

hereinafter designated as ``pipe and tube.'' The merchandise is

classifiable under the Harmonized Tariff Schedule (HTS) item numbers

7306.30.1000, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055,

7306.30.5085, and 7306.30.5090. Although the HTS subheadings are

provided for convenience and Customs purposes, our written description

of the scope of the order is dispositive.

Verification

As provided in section 782(i) of the Act, from January 25 through

January 29, 1999 we verified sales and cost of production information

provided by the respondent, Saha Thai, using standard verification

procedures, including examination of relevant financial records and

analysis of original documentation used by Saha Thai to prepare

responses to requests for information from the Department. Our

verification results are outlined in the public version of the

verification report (See Memorandum to the File from Steve Bezirganian

and Marlene Hewitt, February 24, 1999) (``Saha Thai Verification

Report''), on file in the Central Records Unit, Room B-099 of the

Department (``CRU'').

Analysis of Comments

Saha Thai, Ferro Union and ASOMA (collectively ``Saha Thai'') and

the petitioners submitted case briefs on May 13, 1999, and rebuttal

briefs on May 18, 1999.

Comment 1: Duty Drawback Adjustment

Saha Thai requests that the Department increase export price by the

amount of duties imposed by the Government of Thailand on raw material

imports used in the production of subject merchandise, which were

rebated or not collected because subject merchandise incorporating

those raw materials was subsequently exported to the United States.

Saha Thai asserts that documents on the record from Thai Customs

authorities demonstrate the existence of import duty rebates received

from the Government of Thailand for every reported U.S. sale.

Saha Thai claims that it benefitted from Thailand's duty drawback

system in three ways: (1) By receiving a cash rebate for duties paid

when importing hot rolled coil or zinc used in the production of

subject merchandise subsequently exported to the U.S. (``cash duty

drawback''); (2) by receiving a credit against a bank guarantee that it

was obligated to post with Thai Customs instead of actually paying

duties on imported coil or zinc (``guaranteed duty drawback''); and (3)

by receiving an exemption from duties that would have normally been

imposed on coil and zinc imports, but which were neither collected nor

guaranteed at the time of importation because Saha Thai had entered the

subject merchandise into a bonded warehouse, processed it and exported

it to the U.S. (``suspended duties''). Saha Thai maintains that it has

complete documentation on the record to justify the granting of its

claimed duty drawback adjustment. Saha Thai argues that the Department

rejected its claim because either it incorrectly believed, based on

verification, that all of Saha Thai's drawback claims were based on

cash payments and refunds of import duties, or it believed that a duty

drawback is only warranted under the law if duties are paid in cash.

Saha Thai suggests that the Department examined one ``randomly chosen''

import entry of raw materials and because it could not verify that

duties were paid as opposed to guaranteed, determined that this finding

undermined Saha Thai's entire claim. See Saha Thai case brief at 5-6.

Saha Thai cites the Department's two-prong test to determine, in

cases in which import duties on raw materials are paid and then

rebated, whether to grant a duty drawback adjustment: (1) Whether the

import duty and rebate are directly linked to, and are dependent upon,

one another, and (2) whether imported raw materials are sufficient to

account for the duty drawback received on the exports of the

manufactured products. Saha Thai states that in cases in which the

import duties are not paid, but are suspended, the first prong of this

test then becomes whether the import duties are actually not collected

because the subject merchandise is exported to the United States. In no

instance, Saha Thai asserts, does the Department require either that

the specific input be traced from importation through exportation or

that duties actually be paid and cash rebated before granting an

adjustment for drawback. Citing Carbon Steel Wire Ropes from Mexico, 63

FR

[[Page 56761]]

46753, 46755-56 (September 2, 1998); Certain Welded Carbon Standard

Steel Pipes and Tubes from India, 62 FR 47632, 47634 (September 10,

1997); The Torrington Company v. United States, 881 F. Supp. 622 (CIT

1995); and Far East Machinery Co. v. United States, 12 CIT 972, 974

(1988).

With regard to the first prong of the test, Saha Thai argues that

the Thai law administered by Thai Customs: (1) Makes entitlement to

cash duty drawback contingent upon both the payment of import duties

and the subsequent exportation of the subject merchandise; (2) makes

entitlement to guaranteed duty drawback contingent upon both the

posting of a bank guarantee and the subsequent exportation of the

subject merchandise; and (3) makes entitlement to the suspension of

duties contingent upon establishing a bonded warehouse according to

Thai law, entering the imported materials into that bonded warehouse

and subsequently exporting merchandise incorporating such materials.

Saha Thai argues that if the Department has denied duty drawback based

upon a determination that the duties were not paid or properly

suspended, then such a finding is ``a general indictment of Thailand's

duty drawback system.''

Saha Thai points out that the Department had already accepted duty

drawback claims under Thailand's duty drawback system in previous

cases. Citing Antifriction Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof From Japan, 56 FR 31765 (July 11, 1991) and

The Torrington Company v. United States, 881 F. Supp. 622 (CIT 1995).

Moreover, Saha Thai argues that in past administrative reviews of this

same order, the Department verified and accepted Saha Thai's duty

drawback claim. Citing Certain Welded Carbon Steel Pipes and Tubes from

Thailand, 63 FR 55578, 55588 (October 16, 1998) (final results);

Certain Welded Carbon Steel Pipes and Tubes from Thailand, 61 FR 56515,

56518 (November 1, 1996) (final results); Certain Welded Carbon Steel

Pipes and Tubes from Thailand, 61 FR 1328, 1333 (January 19, 1996)

(final results); Certain Welded Carbon Steel Pipes and Tubes from

Thailand, 56 FR 26648 (June 10, 1991) (preliminary results); and

Certain Welded Carbon Steel Pipes and Tubes from Thailand, 55 FR

42596,42597 (October 22, 1990) (preliminary results).

With regard to the second prong of the test, Saha Thai stated that

it imported sufficient raw materials to account for the duty drawback

received and duties suspended. Saha Thai asserts that each duty

drawback claim granted by Thai customs enumerates the imported goods by

entry which were subsequently used for the production of exported

products. Thus, Saha Thai argues that it has met the requirements of

the Department's two-prong test. Saha Thai also stated that it based

part of its claim for a duty drawback adjustment upon import duties

that were not paid, guaranteed or collected because the imported raw

materials entered its bonded warehouse, and subject merchandise made

from those materials was subsequently exported. Saha Thai argues that

it remained liable for payment of duties on coil and zinc imports

entered into its bonded warehouse if such raw materials were not used

in production which was then exported. Saha Thai stated that it failed

to claim in its questionnaire responses a duty drawback adjustment

related to its bonded warehouse entries, but that this omission was an

oversight. Saha Thai stated that it included this claim in its March

11, 1999 submission to the Department.

Petitioners argue that none of respondent's claims for duty

drawback adjustments are justified because Saha Thai failed to

substantiate its claims during verification. According to petitioners,

Saha Thai failed to produce documents to support its cash-based duty

drawback claim, and failed to describe either its bank guarantee-based

or its bonded warehouse-based drawback adjustment claims. Therefore,

petitioners contend, these drawback claims could not be accurately

substantiated or verified. Petitioners also argue that Saha Thai has

placed no data on the record regarding the fees Saha Thai paid for bank

guarantees and has not indicated any offset to its claims for drawback

adjustments for such fees. Similarly, petitioners allege that nothing

on the record describes, or even mentions, Saha Thai's bonded warehouse

operation as a basis for a drawback adjustment claim.

Petitioners argue that Saha Thai's claims for bank guarantee-based

and bonded warehouse-based duty drawback adjustments do not meet the

first prong of the Department's test for linking the drawback to the

export of merchandise. According to petitioners, Saha Thai failed to

give a detailed explanation of these programs. Citing the Department's

determination in Certain Welded Carbon Steel Pipes and Tubes from

India, 63 FR 32825, 32829 (June 16, 1998), petitioners assert that when

a respondent fails to provide an explanation of the direct link between

drawback claimed and exports as well as the details of the drawback

program, the claimed drawback adjustment should be denied. Moreover,

petitioners note that in this review, the deadline for the submission

of factual information was 140 days from the last day of the

anniversary month. However, petitioners argue, Saha Thai's first

mention of bank guarantee and bonded warehouse operations was at

verification, after the deadline. Consequently, petitioners argue that

Saha Thai's submissions after the deadline are untimely and the

Department should exclude them from the record of this review.

Department's Position: Pursuant to section 772 (c)(1)(B) of the

Act, export price shall be increased by the amount of any import duties

imposed by the country of exportation which have been rebated, or which

have not been collected, by reason of the exportation of the subject

merchandise to the United States. We have recognized, in previous

segments of this proceeding as well as in other proceedings, that

Thailand operates a duty drawback system and that valid claims for

adjustment to U.S. price may be allowed in administrative reviews

pursuant to this system. See Certain Welded Carbon Steel Pipes and

Tubes from Thailand: Final Results of Antidumping Duty Administrative

Review, 63 FR 55578, 55588-89 (October 16, 1998); Certain Welded Carbon

Steel Pipes and Tubes From Thailand: Final Results of Antidumping Duty

Administrative Review, 61 FR 56515, 56518 (November 1, 1996); Certain

Textile Mill Products From Thailand: Final Results of Countervailing

Duty Administrative Review, 61 FR 2797, 2799 (January 29, 1996).

Therefore, recognition of Thailand's duty drawback system is not the

issue in this review.

However, the Department must analyze the facts presented in each

segment of a proceeding to determine the accuracy and completeness of

the duty drawback adjustment claim made by each respondent in each

segment of a proceeding. The Department will grant a duty drawback

adjustment if we determine: (1) That the import duty and rebate are

directly linked to, and dependent upon, one another; and (2) that

imported raw materials are sufficient to account for the duty drawback

received on the exports of the manufactured product. See Carbon Steel

Wire Rope From Mexico; Final Results of Antidumping Duty Administrative

Review, (``Wire Rope From Mexico'') 63 FR 46753, 46756 (September 2,

1998) (citing Far East Machinery Co. v. United States, 12 CIT 972, 974

(1988)).

In the preliminary results of this review, we rejected Saha Thai's

claim for a duty drawback adjustment to export price, both cash-and

guarantee-

[[Page 56762]]

based drawback, because we were ``unable to verify that the claimed

adjustment accurately reflects the actual amount of duty drawback

received.'' See Certain Welded Carbon Steel Pipes and Tubes from

Thailand; Preliminary Results of Antidumping Duty Administrative Review

64 FR 17998, 18000 (April 13, 1999). In the most recently completed

administrative review, the Department examined information similar to

that provided by Saha Thai in its questionnaire responses in this

review regarding cash-and guarantee-based duty drawback, and allowed

Saha Thai's claimed drawback adjustment because the Department found

that both information on the record and the verification supported the

accuracy of Saha Thai's claimed duty drawback adjustment. See Certain

Welded Carbon Steel Pipes and Tubes from Thailand: Final Results of

Antidumping Duty Administrative Review, 63 FR 55578, 55588-89.

In this review as well, certain information in Saha Thai's

questionnaire responses and certain information examined at

verification indicate that Saha Thai participates in cash-and

guarantee-based duty drawback programs with Thai customs authorities,

and that it received the claimed amount of drawback. Although certain

documents appeared to support Saha Thai's claim, other information

examined at verification, as well as the inconsistent explanations of

Saha Thai's participation in the various drawback programs provided at

verification, undermine the apparent completeness of the documentation

Saha Thai submitted in its questionnaire responses. For example, as

petitioners note, Saha Thai stated at verification that it pays banks a

fee for taking on the risk of guaranteeing payment of the duties on

Saha Thai's imports of hot-rolled coil and zinc. Payment of this fee,

which would decrease the amount of Saha Thai's duty drawback adjustment

claim, was not incorporated into Saha Thai's claim for a duty drawback

adjustment.

In addition, at verification, we asked Saha Thai to provide support

for its duty drawback claims related to a purchase of imported hot-

rolled coil that was managed by one of Saha Thai's brokers. As shown in

the verification report, Saha Thai's explanation was far from clear.

For this one transaction, we asked for proof that duties had been paid

for the coils in question. At various points in the verification, Saha

Thai stated: (1) That it paid its broker the amount of import duties on

this entry, (2) that these coils were delivered to Saha Thai's bonded

warehouse and thus Saha Thai was not required to pay import duties, (3)

that the line item for import duties on the broker's statement

represented VAT tax, not import duties, and (4) that neither Saha Thai

nor its broker had paid import duties on this merchandise, because Saha

Thai had arranged for a bank guarantee which would permit Saha Thai to

be exempt from paying import duties, pending export of Saha Thai

merchandise containing the imported coil. Verification Report at 14-15.

Saha Thai stated in its case brief that the Department examined

only one import entry at verification, and that this entry was not part

of Saha Thai's claimed cash/guarantee duty drawback calculation. Saha

Thai Case Brief, fn. 9. As an initial matter, the Department examined

two import entries, the different quantities of which can be seen in

Verification Exhibit 9, (pages 1-4 and pages 5-9). Contrary to Saha

Thai's statement, one of these entries does relate to the claimed

drawback amount, though the relationship between those documents and

the claimed amount was only partially explained. Our examination of the

other entry, though not a part of Saha Thai's claimed amount, is

nonetheless illustrative as an import of raw material on which Saha

Thai either paid duty or posted a bank guarantee in anticipation of

receiving some form of drawback. See Memorandum to the File from John

Totaro: Analysis of the Claim for a Duty Drawback Adjustment Made by

Saha Thai Steel Pipe Co., Ltd. (August 11, 1999) (``Duty Drawback

Memorandum'') at 3-4, on file in the CRU.

Therefore, we find that although there is enough record evidence to

indicate that Saha Thai participates in cash-and guarantee-based duty

drawback programs and thus to allow an adjustment for cash-and

guaranteed-based duty drawbacks, Saha Thai failed at verification to

describe and document the accuracy of its claimed duty drawback

adjustment. As a result, we cannot allow the duty drawback adjustment

as claimed by Saha Thai. Therefore, for purposes of these final

results, we determine, in accordance with section 776(a)(2)(D) of the

Act, that the use of facts available is appropriate as the basis of our

adjustment to U.S. price for duty drawback. As facts available, on

those sales for which Saha Thai claimed a cash-or guarantee-based duty

drawback adjustment, we are allowing an adjustment to export price

equal to the simple average of the reported per-ton duty drawback

amounts that Saha Thai had calculated by export invoice. See August 3,

1998 QR at Exhibit 3 (public version on file in the CRU).

With regard to Saha Thai's claimed adjustment for suspended duties,

Saha Thai argues that, under the laws of Thailand, a manufacturer may

establish a bonded warehouse and, if certain conditions are met, be

exempt from paying import duties on materials entered into that

warehouse. See Saha Thai Case Brief at 9. In cases where the import

duty is not collected, the first prong in the test for granting a duty

drawback adjustment then becomes whether ``import duties were actually

not collected by reason of the exportation of the subject merchandise

to the United States.'' See Wire Rope From Mexico, 63 FR at 46756.

In this review, Saha Thai provided no records of any of the import

entries of coil or zinc that it claims were exempted from duties

because they were entered into Saha Thai's bonded warehouse and later

exported as pipe products. Therefore, because there is no record of

these imports on the record of this review, or of any import and export

clearance documents related to the entry of imported raw materials into

a bonded warehouse or export of pipes made from those raw materials, we

cannot establish that ``import duties were actually not collected by

reason of the exportation of the subject merchandise to the United

States.'' Id. Therefore, we are not allowing Saha Thai to now claim

duty drawback for these sales that were purportedly produced from

inputs imported into a bonded warehouse. See Stainless Steel Bar From

Japan: Preliminary Results of Antidumping Administrative Review, 64 FR

64 FR 10445 at 10445-46 (March 4, 1999); Duty Drawback Memorandum at 4-

5.

Petitioners assert that Saha Thai failed to describe the bank

guarantee duty drawback program until verification. However, we

consider the information first submitted in Saha Thai's initial section

C questionnaire response (August 3, 1998) and supplemental sections A,

B, and C questionnaire response (September 23, 1998) to be sufficient

to determine that Saha Thai participated in the guarantee-based duty

drawback program. In particular, Saha Thai's September 23, 1998

supplemental questionnaire response indicates that Saha Thai

participated in two duty drawback programs with Thai customs

authorities: ``the documents in the exhibit [Exhibit 23] show the duty

drawback amounts refunded to Saha Thai as well as the duties exempted.

* * * The export report details the duty drawback calculation for each

export transaction. * * * The preceding column shows whether the duty

was

[[Page 56763]]

refunded by check `C' or as a credit `G.' '' September 23, 1998 QR at

27-28 (public version on file in the CRU). At verification, Saha Thai

explained that these two programs were the cash-based and bank

guarantee-based duty drawback systems discussed above. In addition, we

believe that our choice of facts available appropriately accounts for

any fees associated with the bank guarantee duty drawback process that

may have offset Saha Thai's claimed duty drawback adjustment.

Finally, with regard to petitioners' assertion that the information

Saha Thai provided on its bonded warehouse operation was untimely, as

discussed above, we made our determination to not allow Saha Thai's

claim for a duty drawback adjustment for import entries into a bonded

warehouse because there was insufficient evidence on the record to meet

the first prong of our test to grant such an adjustment when the import

duty is not collected. Therefore, the Department did not consider the

issue of timeliness.

Comment 2: Currency Conversion

Saha Thai argues that the Department should use actual daily

exchange rates for the entire period of the baht's precipitous

decline--which Saha Thai defines as July 2, 1997 to January 31, 1998--

to convert the Thai baht to the U.S. dollars. The respondent argues

that while the Department, in its preliminary results, correctly found

that the rapid and unprecedented decline of the Thai baht on July 2,

1997 justified the suspension of its normal practice of applying a

forty-day rolling average, or ``benchmark'' rate, for converting

foreign currencies to U.S. dollars, it nonetheless failed to apply the

actual daily exchange rates during the entire period of the baht's

decline. Instead, Saha Thai states that the Department converted baht-

denominated prices and costs to their U.S. dollar equivalents using its

normal methodology, but utilized as a benchmark the stationary average

of the baht to dollar exchange rate for the forty day period from July

2, 1997 to August 27, 1997. For the period after August 27, 1997, the

Department reverted to using its normal methodology with the standard,

rolling forty-day average benchmark. However, Saha Thai argues that the

Thai baht continued to fall precipitously even after the August 27,

1997 cut-off date used by the Department to mark the end of the baht's

decline. Because there was a continued decline in the baht even after

August 27, 1997, Saha Thai contends that the Department should extend

the period during which the baht is considered to be in a sustained

decline through January 31, 1998, and that the Department should use

actual daily exchange rates for that period.

Moreover, Saha Thai maintains that the methodology the Department

used in this review is inconsistent with that used in other recent

investigations involving countries which have experienced rapid,

sustained devaluations. Saha Thai cites two investigations completed by

the Department involving Korea, in which the Department found that a

forty percent decline in the value of the Korean won amounted to more

than a temporary fluctuation, and in which the Department used actual

daily exchange rates to convert home market prices to U.S. dollars.

Citing Emulsion Styrene-Butadiene Rubber from the Republic of Korea

(``Rubber from Korea''), 64 FR 14865 (March 29, 1999) (final

determination) and Stainless Steel Plate in Coils from the Republic of

Korea, 64 FR 15444 (March 31, 1999) (final determination).

Petitioners maintain that the respondent's suggestion that the

Department use daily exchange rates, notwithstanding fluctuations in

the daily rates, would violate the statute. See 19 U.S.C. 1677b-1(a)

(section 773A(a) of the Act). See also Statement of Administrative

Action (at 171), House Doc. 316, 103rd Cong. 2d Sess. 841 (1994).

Petitioners argue that the Department's currency conversion methodology

utilized in this review recognizes the rapid devaluation of the Thai

currency by establishing a separate benchmark for the period when such

rapid devaluation was occurring. Petitioners emphasize that from July 2

through August 27, 1997, the Department used a stationary benchmark of

average daily rates, which recognized the precipitous drop in exchange

rates, but ``avoided undue daily fluctuations in exchange rates.''

Certain Welded Carbon Steel Pipes and Tubes from Thailand; Preliminary

Results of Antidumping Duty Review, 64 FR 17998 (April 13, 1999).

Petitioners contend that the Department was correct in using the

standard benchmark (a rolling forty-day average) for the period in

which fluctuation was still occurring.

Department's Position: We do not agree with Saha Thai's request for

the use of actual daily exchange rates to convert Thai Baht to U.S.

dollars for the entire period of the baht's decline from July 2, 1997

to January 31, 1998.

As stated in the preliminary results, we made currency conversions

into U.S. dollars in accordance with section 773A of the Act, based on

exchange rates in effect on the dates of the U.S. sales as certified by

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

Department to use a daily exchange rate in order to convert foreign

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

fluctuation. It is the Department's practice to find that a fluctuation

exists when the daily exchange rate differs from the benchmark rate by

2.25 percent. The benchmark is defined as the moving average of rates

for the past 40 business days. When we determine a fluctuation to have

existed, we substitute the benchmark rate for the daily rate, in

accordance with established practice. See Change in Policy Regarding

Currency Conversions, 61 FR 9434 (March 8, 1996); see also Preliminary

Results of Antidumping Duty Administrative Review; Aramid Fiber Formed

of Poly Para-Phenylene Terephthalamide From the Netherlands, 64 FR

36841, 36843 (July 8, 1999), Notice of Preliminary Results and Partial

Rescission of Antidumping Duty Administrative Review: Canned Pineapple

Fruit From Thailand, 64 FR 30476, 30480 (June 8, 1999).

Effective July 2, 1997, the Thai government ended its restrictions

on the movement of the dollar-baht exchange rate and allowed the rate

to be determined by market supply and demand. Our analysis of Federal

Reserve exchange rate data shows that the value of the Thai baht in

relation to the U.S. dollar fell on July 2, 1997, by more than 18

percent from the previous day, a decline which was many times more

severe than any single-day decline during several years prior to that

date, and did not rebound significantly in a short time. As such, we

determine that the decline in the baht from July 1 to July 2 following

the change in the Thai government's exchange rate policy was of such a

magnitude that the dollar-baht exchange rate cannot reasonably be

viewed as having simply fluctuated at that time, i.e., as having

experienced only a momentary drop in value, relative to the normal

benchmark. While we previously found a large and precipitous decline

where the Korean won declined more than 40 percent, that decline

occurred over a two-month period. Here, the decline was smaller, but

occurred in a single day. Therefore, for these final results, we

continue to find that there was a large, precipitous drop in the value

of the baht in relation to the U.S. dollar on July 2, 1997.

We disagree with Saha Thai's claim that the baht continued to fall

precipitously after August 27, 1997, and that only daily rates should

be used through January 31, 1998. In its 1996 Policy Bulletin (61 FR

9434; March 8, 1996) on exchange rate methodology,

[[Page 56764]]

the Department defined an exchange rate ``fluctuation'' but also stated

that it would use daily rates when ``the decline in the value of a

foreign currency is so precipitous and large as to reasonably preclude

the possibility that it is merely fluctuating.'' The Policy Bulletin

did not define a ``precipitous and large'' decline in the value of a

foreign currency but left this determination to be made in future

cases. In Rubber from Korea and other Korean cases, the Department

found that a decline of more than 40 percent within a two-month period

was sufficiently large and precipitous that use of daily rates was

warranted during this two-month period. In contrast, in Extruded Rubber

Thread from Indonesia, the Department found that a decline of some 50

percent over five months was not precipitous and large and continued to

employ its normal exchange rate methodology. See 64 FR 14693.

While we have concluded that the drop of more than 18 percent in

the dollar-baht exchange rate on July 2, 1997, constitutes a

``precipitous and large'' decline, we do not find that the gradual

decline that occurred over nearly seven months, from July 2, 1997, to

January 31, 1998, qualifies as a ``large and precipitous'' drop for

purposes of our exchange rate methodology.

We have, however, reexamined our methodology for addressing

exchange rates following the large and precipitous decline on July 2,

1997. In the preliminary determination, we determined that, because a

large and precipitous drop occurred on that one day, it was appropriate

simply to begin on that day to use a new benchmark in order to avoid

using pre-precipitous drop daily rates in calculating the benchmark for

daily rates after the precipitous drop. Accordingly, for exchange rates

between July 2 and August 27, 1997, the Department relied on the

standard exchange rate model, but used as the benchmark rate a

(stationary) average of the daily rates over this period.

As noted above, the gradual decline in the value of the baht over

several months after July 2 was not so large and precipitous as to

reasonably preclude the possibility that the exchange rate fluctuated

from time to time during that period. Therefore, it is appropriate for

the Department to use its standard methodology so as to ``ignore''

those fluctuations in accordance with section 773A of the Act. However,

we also recognize that, following a large and precipitous decline in

the value of a currency, a period may exist during which exchange rate

expectations are revised and thus it is unclear whether further

declines are a continuation of the large and precipitous decline or

merely fluctuations. Under the circumstances of this case, such

uncertainty may have existed following the large, precipitous drop on

July 2, 1997. Thus, we devised a simple test for identifying a point

following a precipitous drop at which it is reasonable to think that

exchange rate expectations have been sufficiently revised that it is

appropriate to resume using the normal methodology. Beginning on July

2, 1997, we used only actual daily rates until the daily rates were not

more than 2.25 percent below the average of the 20 previous daily rates

for five consecutive days. At that point, we determined that the

pattern of daily rates no longer reasonably precluded the possibility

that they were merely ``fluctuating.'' (Using a 20-day average for this

purpose provides a reasonable indication that it is no longer necessary

to refrain from using the normal methodology, while avoiding the use of

daily rates exclusively for an excessive period of time.) Accordingly,

from the first of these five days, we resumed classifying daily rates

as ``fluctuating'' or ``normal'' in accordance with our standard

practice, except that we began with a 20-day benchmark and on each

succeeding day added a daily rate to the average until the normal 40-

day average was restored as the benchmark.

Applying this methodology in the instant case, we used daily rates

from July 2, 1997 through August 4, 1997. We then resumed the use of

our normal methodology, starting with a benchmark based on the average

of the 20 reported daily rates from July 8 through August 4.

Comment 3: Exchange Losses

Saha Thai maintains that it incurred unanticipated and

unprecedented exchange losses in 1997 which fit the definition of

``extraordinary'' established by Department precedent and U.S. GAAP.

According to Saha Thai, U.S. GAAP defines: (1) ``Extraordinary'' as

``events and transactions that are distinguished by their unusual

nature and by the infrequency of their occurrence'', (2) ``unusual

nature'' as ``the underlying event or transaction possesses a high

degree of abnormality and is of a type clearly unrelated to the

ordinary and typical activities of the enterprise, taking into account

the environment in which the enterprise operates'', and (3)

``environment in which the enterprise operates'' as including ``such

factors as the characteristics of the industry or industries in which

it operates, the geographical location of its operations, and the

nature and extent of governmental regulation.'' Saha Thai describes the

Government of Thailand's decision to float the baht as ``highly

abnormal (it can only be taken once),'' as an event which ``would not

reasonably be expected to recur in the foreseeable future'' and as a

``one-time irrevocable * * * government * * * decision to change the

fundamental nature of the nation's exchange rate regime,'' and

therefore argues that it is consistent with the definition of

``extraordinary'' under U.S. GAAP. Saha Thai asserts that contrary to

the Department's memorandum to the file (citing Foreign Exchange Loss

Memorandum to The File from Marlene Hewitt, dated March 31, 1999), the

decision to float the baht was not a ``usual'' or ``frequent'' move on

the part of the Thai Government that could easily be reversed, because

prior to the decision to float the baht, the exchange rate was fixed by

the Thai government.

Given their extraordinary nature, Saha Thai requests that the

Department amortize these exchange losses over a five-year period. The

respondent argues that failure to do so distorts the margins for

antidumping purposes. Saha Thai cites the following cases in which the

Department either excluded entirely or has amortized extraordinary

costs over a reasonable period of time: Stainless Steel Wire Rod from

Taiwan, 63 FR 40467 (July 29, 1998); Large Newspaper Printing Presses

and Components Thereof, Whether Assembled or Unassembled from Japan, 61

FR 38153 (July 23, 1996 ); Fresh Cut Roses from Ecuador, 60 FR 7038

(February 6, 1995); and Fresh Cut Roses from Colombia, 60 FR 7001

(February 6, 1995). Saha Thai argues that according to Thai GAAP, Thai

companies are permitted to calculate losses based on the difference in

the baht value of foreign-currency denominated assets and liabilities

between July 2, 1997 and the end of the first accounting period in

which the baht was floated, and to report such costs as extraordinary

in their financial statements.

Saha Thai argues that, if the Department includes all exchange

losses in interest expense or G&A expense, it should allow an offset to

cost of production for exchange gains earned on accounts receivable.

Saha Thai states that the Department's treatment of exchange rate gains

and losses in cost of production calculations should reflect economic

and business reality, and that for companies buying and selling in

foreign currencies the overall currency position should be

determinative of actual costs. Saha Thai asserts that

[[Page 56765]]

currency gains on sales are just as much a part of financing costs as

currency losses on purchases. Saha Thai believes that the Department's

treatment of exchange gains and losses--denying an offset for currency

gains on sales on the basis that these gains are sales-related income

and not a cost of production, and also denying a circumstance of sale

adjustment for foreign currency gains--violates the WTO Antidumping

Agreement, which states that price comparisons should be conducted in a

fair manner. See WTO Antidumping Agreement at Article 2.4.

Saha Thai also argues that it ``self-hedges'' its currency exposure

in that its purchases of raw materials in dollars are offset by its

sales in dollars, and therefore that the Department should not ascribe

to the period of material purchases a ``paper cost''--the exchange rate

losses--which is reversed in the following year. Saha Thai argues that

to do so would be unreasonable and distortive, and that the Department

should exercise its discretion under section 773(f)(1)(A) of the Act in

determining the proper allocation of costs.

Finally, Saha Thai argues that, if the Department decides not to

treat its 1997 exchange losses as extraordinary and therefore does not

amortize these losses over a reasonable period of time, it should

follow its past precedent of treating the portion of the loss incurred

on raw materials purchases in the same manner as other costs associated

with current period raw material purchases. Saha Thai cites several

cases in which the Department has treated foreign exchange transaction

costs associated with raw materials purchases as a cost of

manufacturing. See Stainless Steel Round Wire from Taiwan, 64 FR 17336,

17338 (April 9, 1999) (final determination); Emulsion Styrene-Butadiene

Rubber from the Republic of Korea, 64 FR 14871 (March 29, 1999); Steel

Wire Rod from Trinidad and Tobago, 63 FR 9181 (February 24, 1998); and

Canned Pineapple Fruit from Thailand, 63 FR 7392, 7401 (February 13,

1998). Saha Thai argues that the appropriate method for expensing

exchange losses on raw materials is to transfer all purchase expenses

to current costs.

Petitioners argue that the Department's refusal to amortize Saha

Thai's 1997 foreign exchange losses as 1997 losses, which were

expressed in Saha Thai's financial statements in accordance with Thai

GAAP as a normal business expense, was reasonable and consistent with

Department practice because these losses were not extraordinary. Citing

Fresh Chilled Atlantic Salmon from Norway, 58 FR 37912, 37915 (July 14,

1993); Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-

Rolled Carbon Steel Flat Products and Certain Cut-to-Length Carbon

Steel Plate from the Netherlands, 58 FR 37199, 37204 (July 9, 1993).

Petitioners assert that 19 U.S.C. 1677b(f)(1)(A) (section

773(f)(1)(A) of the Act) requires that the Department calculate costs

on the basis of a respondent's financial records, provided that such

records are maintained in accordance with GAAP and reasonably reflect

costs. Citing Asociacion Colombiana de Exportadores de Flores v. United

States, 6 F. Supp. 2d 865 (CIT 1998). Petitioners note that Saha Thai

characterized its losses on exchange transactions as a normal business

expense during verification, and stated in its case brief that 1997

exchange losses were expensed in the company's financial statements in

accordance with Thai GAAP. Consequently, petitioners assert that the

Department should treat exchange losses in the same manner they were

booked by Saha Thai, because this treatment conforms with the home

market's GAAP and represents consistent treatment of these expenses.

Citing Certain Welded Carbon Steel Pipe and Tube from Turkey, 63 FR

35190, 35199 (June 29, 1998) and Certain Steel Concrete Reinforcing

Bars from Turkey, 62 FR 9737, 9743 (March 4, 1997).

In response to Saha Thai's request that losses associated with raw

material purchases be assessed as a cost of manufacturing, the

petitioners argue that Saha Thai's internal bookkeeping on raw material

inventories cannot override the treatment of the exchange losses in

Saha Thai's audited financial statements. Citing DRAMS of One Megabit

and Above from Korea, 58 FR 15467, 15464 (March 23, 1993).

Petitioners also argue that the Department should not change its

established practice of denying circumstance of sale adjustments for

exchange gains on accounts receivable, as Saha Thai requests.

Petitioners argue that 19 CFR 351.410 (c) and (d) provide that such an

adjustment will be granted for ``direct selling expenses and assumed

expenses,'' such as ``commissions, credit terms, guarantees, and

warranties.'' Petitioners argue that the Department's ``regulations for

such an adjustment require that reason for the circumstance of sale

adjustment have an effect on the prices charged. * * *'' Quoting FAG

U.K., Ltd. v. United States, 945 F. Supp. 260 (CIT 1996). Petitioners

argue that because Saha Thai failed to demonstrate that its export

prices are directly affected by exchange rate gains resulting from the

conversion of U.S. dollars into local currency, its circumstance of

sale claim should be denied. Citing Cold-Rolled Carbon Steel Flat

Products from Argentina, 49 FR 48588 (December 13, 1984); Certain Hot-

Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel

Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products

and Certain Cut-to-Length Carbon Steel Plate from Germany, 58 FR 37136,

37149 (July 9, 1993).

Petitioners further argue that in calculating COP and CV, it is the

Department's normal practice to ``distinguish between exchange gains

and losses realized or incurred in connection with sales transactions

and those associated with purchase transactions.'' Quoting Stainless

Steel Round Wire from Canada, 64 FR 17324, 17334 (April 9, 1999);

citing Steel Wire Rod from Trinidad and Tobago, 63 FR 9177, 9181

(February 24, 1998); Stainless Steel Wire Rod from Japan, 63 FR 40434,

40441 (July 29, 1998); Certain Welded Carbon Steel Pipe and Tube from

Turkey, 63 FR 35190, 35198 (June 19, 1998); Certain Steel Concrete

Reinforcing Bars from Turkey, 62 FR 9737, 9741 (March 4, 1997); and

Certain Pasta from Turkey, 61 FR 30309, 30324 (June 14, 1996).

Petitioners argue that it has been Commerce's long-standing analysis

that exchange gains and losses from sales transactions are not related

to the manufacturing activities of the company. Petitioners cite the

following cases to support their argument: Stainless Steel Round Wire

from Canada, 64 FR 17334 (April 9, 1999); Steel Wire Rod from Trinidad

and Tobago, 63 FR 9181 (February 24, 1998); Fresh Atlantic Salmon from

Chile, 63 FR 31411, 31430 (June 9, 1998); Circular Welded Non-Alloy

Pipe and Tube from Mexico, 62 FR 37014, 37026 (July 10, 1997);

Polyethylene Tenephthalate Film, Sheet, and Strip from the Republic of

Korea, 56 FR 16305, 16313 (April 22, 1991). According to petitioners,

this policy is not inconsistent with the Department's treatment of

exchange gains in the context of a circumstance of sale adjustment, and

petitioners argue that the Department should maintain such a policy in

this review.

Department's Position: We disagree with the respondent that the

Thai Government's monetary policy to alter currency regimes has any

bearing on the case. Changes in exchange rates, even large ones, are

neither unusual in nature nor infrequent events. Additionally, the

company did not treat the effect of this event as an extraordinary item

in its financial statements.

[[Page 56766]]

In addition, we have not amortized certain portions of its POR

exchange rate losses over five years, because these losses were

incurred on current debt as opposed to long-term foreign currency debt.

The Department's practice is to allow the respondent to amortize

foreign exchange losses over the remaining life of the loans to which

they relate. See Final Determination of Sales at less than Fair Value:

Fresh Cut Roses from Ecuador, 60 FR 7019, 7039 (February 6, 1995)

(losses amortized on a straight-line basis over the life of the loan

and included in the net interest expense calculation); and Final

Results and Partial Rescission of Antidumping Duty Administrative

Review: Canned Pineapple from Thailand, 63 FR 43661, 43669 (August 14,

1998).

Furthermore, the Department normally includes in its calculation of

COP and CV foreign exchange gains and losses resulting from

transactions related to a company's manufacturing operations (e.g.,

purchases of inputs). See Final Determination of Sales Less Than Fair

Value: Polyethylene Terephthalate Film, Sheet, and Strip From the

Republic of Korea, 56 FR 16305, 16313 (April 22, 1991) (comment 16),

and Notice of Final Determination of Sales at Less Than Fair Value:

Steel Wire Rod From Trinidad & Tobago, 63 FR 9177, 9181-82 (February

24, 1998). Saha Thai's foreign exchange losses, which are included in

its COP and CV, are for losses resulting from raw materials purchase

transactions or borrowing money to support its production operations.

Since these activities giving rise to the foreign exchange gains and

losses directly relate to the company's production operations, we

included them in the COP and CV.

In accordance with section 773 (f)(1)(A) of the Act, the Department

normally calculates costs based on the records of the company, ``if

such records are kept in accordance with the generally accepted

accounting principles of the exporting country * * * and reasonably

reflect the costs associated with the production and sale of the

merchandise.'' In the instant case, in accordance with Thai GAAP,

respondent wrote off the entire amount of the foreign exchange loss

associated with foreign debt in the current year. Thus, consistent with

Department practice, the Department has not amortized the exchange

losses. Rather, for calculating COP and CV, we treated these losses as

Saha Thai treated them in its financial statement--as losses expensed

in the current financial period--and included all exchange rate losses

in G&A or interest expense. Accordingly, there is no justification to

grant a COP offset.

In addition, petitioners correctly argue that Saha Thai is not

entitled to a circumstance of sale adjustment for foreign currency

gains related to its sales transactions. Moreover, we disagree with

Saha Thai's assertion that the Department's treatment of exchange gains

and losses in the preliminary results violates the requirement of the

WTO Antidumping Agreement that price comparisons be conducted in a fair

manner. We included Saha Thai's exchange gains and losses in our

calculation of COP and CV in a manner consistent with the Act, which is

consistent with the WTO Antidumping Agreement.

Comment 4: Date of Sale

In their case brief, petitioners argue that purchase order date,

rather than invoice date, better reflects the date upon which Saha Thai

established the material terms of sale for export of subject

merchandise to the United States. Petitioners note that the

Department's regulations establish that date of sale will normally be

the invoice date as recorded in the ordinary course of business.

Nonetheless, petitioners argue, the record in the instant case supports

the Department's use of purchase order date as the date of sale.

Petitioners claim that the Department's continued reliance upon invoice

date is not an accurate reflection of the facts of the case and that

the Department's practice has been to determine the date on which price

and quantity for a sale are finalized and establish this as the date of

sale. Citing 19 CFR section 351.401(i); Al Tech Speciality Steel Corp.

v. United States, Consol. Court No. 97-08-01328, Slip Op. 98-136 (Sept.

24, 1998) citing Silicon Metal from Brazil, 61 FR 46763, 46766

(September 5, 1996), and Titanium Sponge from Japan, 54 FR 13403, 13404

(April 3, 1989).

Petitioners assert that the Department's regulations establish that

the date of sale will normally be the invoice date unless ``a different

date better reflects the date on which the exporter or producer

establishes the material terms of sale.'' See 19 CFR Section 351.401(i)

and Standard Line and Pressure Pipe from Germany, 63 FR 13217, 13226

(March 18, 1998). Petitioners argue that the standard of ``better

reflects,'' as laid out in the Department's new regulations, is valid

and applicable if the material terms of a sale are usually established

on a date other than invoice date. See Antidumping Duties;

Countervailing Duties; Final Rule (``Final Rule''), 62 FR 27296, 27348

(May 19, 1997) (Preamble), and Circular Welded Non-alloy Steel Pipe

from Korea, 62 FR 64559, 64560 (December 8, 1997) (preliminary

results). Petitioners cite to a recent final determination in which the

Department emphasized that the regulations allow for flexibility in

identifying the appropriate date of sale if the facts of the case show

that a date other than invoice date is the date upon which the material

terms of a sale are established. See Circular Welded Non-Alloy Steel

Pipe from Korea, 63 FR 32833, 32835 (June 16, 1998). Petitioners state

that the Department can select a date of sale other than the date on

which an agreement on the material terms of a sale has been reached if

changes to the material terms of the sale are common to the extent that

the initial agreement is not binding or definite. See Stainless Steel

Plate in Coils from the Republic of Korea, 64 FR 15444, 15449-15450

(March 31, 1999).

Petitioners assert that evidence of the usual date for establishing

terms of sale must be ``satisfactory.'' See Final Rule 62 FR at 27348;

Certain Corrosion-Resistant Carbon Steel Flat Products from Japan, 64

FR 12951, 12957 (March 16, 1999); Canned Pineapple Fruit from Thailand,

63 FR 43661, 43668 (August 14, 1998). Petitioners argue that evidence

in the instant case establishes that the material terms of Saha Thai's

U.S. sales are usually set at purchase order date and that the specific

evidence to support this is more than satisfactory. Finally,

petitioners argue that the record in the case clearly shows that a date

other than commercial invoice date better reflects the date on which

the material terms of sale for U.S. export transactions are

established.

Petitioners contend that during the 1996-1997 administrative review

Saha Thai did not respond to the Department's request for information

related to date of sale but, instead, argued that the Department's

regulations called for the use of invoice date and, therefore, it would

not be relevant for Saha Thai to respond to questions related to date

of sale. See Certain Welded Carbon Pipes and Tubes from Thailand; Final

Results of Antidumping Duty Administrative Review, (``1996-1997 Final

Results'') 63 FR 55578 (October 16, 1998). Petitioners argue that the

Department, despite the facts on the record in the 1996-1997 review,

incorrectly chose invoice date as the date of sale because of the

Department's analysis that sample contracts and invoices demonstrated

that changes occurred beyond tolerance levels established in an initial

contract, between purchase order and invoice

[[Page 56767]]

date. Citing 1996-1997 Final Results, 63 FR at 55587 and current

litigation contesting the Department's determination in Allied Tube and

Conduit Corp. v. United States, Court No. 98-11-03135. Petitioners

argue that the facts on the record in the instant review are more

definitive than the 1996-1997 administrative review in supporting the

use of purchase order date as the date of sale.

Petitioners argue that after Saha Thai and its U.S. customers enter

a contract agreement, the customer submits purchase orders for specific

products. See Memorandum to File from Steve Bezirganian and Marlene

Hewitt, Verification of Saha Thai Steel Pipe Co., Ltd., 1997-1998,

February 25, 1999 (``Verification Report'') at 20. Petitioners argue

further that Saha Thai sells specific, custom lengths to U.S. customers

and, therefore, it can be assumed that the purchase orders submitted by

U.S. customers initiate a made-to-order transaction. Petitioners argue

that the Department's conclusions reached through conducting sales

traces at verification support the use of purchase order date as the

date of sale.

However, petitioners argue that the Department, for purposes of

administrative convenience, chose to use invoice date as date of sale

despite overwhelming evidence to the contrary. See Verification Report

at 37, and Preliminary Results, 64 FR at 17999. Petitioners argue that

the Department cannot go against its own regulations for the sake of

administrative convenience. See Ferro Union, Inc. v. United States,

Slip Op. 99-27, March 23, 1999 at 9-10, n.9 citing Voge v. United

States, 844 F. 2d 776, 779 (Fed. Cir. 1988); Reuters Ltd. v. FCC, 781

F. 2d 946, 950 (D.C. Cir. 1986).

With regard to matching sales if purchase order date is used as the

date of sale, petitioners assert that Saha Thai was well aware during

the 1997-1998 administrative review that the material terms of its U.S.

sales did not change after the purchase order date and that,

accordingly, the Department should apply adverse facts available where

sales matching data is inadequate.

The respondent rebuts petitioners' argument that purchase order

date is the date upon which the material terms of Saha Thai's sales to

the United States are established and asserts that the Department

should continue to use invoice date, consistent with the Department's

statutory and regulatory framework, for the final determination in the

instant case. Furthermore, the respondent argues that the facts on the

record demonstrate that the material terms of Saha Thai's sales to the

United States are not confirmed until invoice date. Finally, the

respondent argues that if the Department changes its date of sale

methodology in the instant review, the use of supplemental verified

data from the previous review--rather than the application of adverse

facts available--would be the only appropriate course of action.

The respondent argues the presumption for the Department to

consider invoice date as the date of sale is well established. Citing

19 CFR section 351.401(i) (1998) and 62 FR at 27348-49. Given the

presumption for the use of invoice date as date of sale, Saha Thai

further argues that in a recent antidumping proceeding, the Department

also favored the use of a single date of sale for each respondent for

purposes of making more efficient use of the Department's resources and

enhancing the predictability of outcomes. Citing Hot-Rolled Flat-Rolled

Carbon-Quality Steel Products from Japan, 64 FR 24329, 24335 (May 6,

1999) (final determination). In the context of a recent antidumping

proceeding and decision by the Department to use invoice date as date

of sale, the respondent argues that for Saha Thai there is no uniform

event prior to invoice date that can be used as date of sale because

the price and quantity of merchandise may change until the invoice is

issued to the customer. See Stainless Steel Plate in Coils (``SSPC'')

from the Republic of Korea, 64 FR 15444, 15449-15450 (March 31, 1999)

(final results).

The respondent cites to a large number of recent cases in which the

Department used invoice date as the date of sale even where petitioners

argue that another date was more appropriate: See Certain Cold-Rolled

and Corrosion Resistant Carbon Steel Flat Products from Korea, 64 FR

12927, 12933-12935 (March 16, 1999) (final results); Hot-Rolled Flat-

Rolled Carbon-Quality Steel Products from Japan, 64 FR 24329, 24331-

24335 (May 6, 1999) (final determination); Stainless Steel Plate in

Coils from Belgium, 64 FR 15476, 15478-15482 (March 31, 1999) (final

determination); Certain Corrosion-Resistant Carbon Steel Flat Products

and Certain Cut-to-Length Carbon Steel Plate from Canada, 64 FR 2173,

2178 (January 13, 1999) (final results); Stainless Steel Plate in Coils

from South Africa, 64 FR 15459, 15463-15465 (March 31, 1999) (final

determination); and Emulsion Styrene-Butadiene Rubber from the Republic

of Korea, 64 FR 14865, 14869 (March 29, 1999) (final determination).

The respondent argues that petitioners' reliance on Corrosion-Resistant

Flat Products from Japan as an example of the Department's use of order

confirmation date as date of sale is not relevant and is based on facts

not present in the instant case. See Petitioners Case Brief at 5-6 and

Certain Corrosion-Resistant Carbon Steel Flat Products from Japan, 64

FR 12951, 12957-12958 (March 16, 1999) (final results). Finally, the

respondent argues that the Department, in a recent case, rejected a

petitioner's request for use of order confirmation date as date of sale

in order to avoid using different dates of sale in the home and U.S.

markets. See Small Diameter Circular Seamless Carbon and Alloy Steel

Standard, Line and Pressure Pipe from Germany, 63 FR 13217, 13226

(March 18, 1998) (final results).

The respondent rebuts petitioners' argument that purchase order

date should be used rather than invoice date because evidence on the

record shows that the material terms of sales do in fact change between

the purchase order and invoice date. Citing to the Department's

preliminary results, the respondent argues that the Department has

already recognized that while price and quantity for sales to the

United States may be established at the date of the purchase order,

price and quantity may not be set until invoice date. Citing

Preliminary Results, 64 FR at 17999.

Saha Thai also rebuts petitioners' argument that the Department's

analysis in the preliminary results was based on administrative

convenience. The respondent agrees with petitioners' assertion that

Saha Thai ships merchandise to customers in the United States under

umbrella contracts which establish price and general quantity. However,

the respondent argues that a number of the sales traces examined by the

Department at verification demonstrate that changes to price and

quantity after the purchase order do occur. Furthermore, the respondent

argues, the Department noted at verification that Saha Thai utilizes

invoice date as its date of sale in its own accounting system. The

respondent notes that the Department has found that a respondent's use

of invoice date as date of sale in its internal records and financial

statements is one reason for the Department to select invoice date,

rather than purchase order or order confirmation date, as the date of

sale. See Stainless Steel Plate in Coils from South Africa, 64 FR

15459, 15464 (March 31, 1999) (final determination).

Finally, the respondent rebuts petitioners' assertion that the

Department should apply adverse facts available if the Department

chooses to change its date of sale methodology for the final

determination. The respondent

[[Page 56768]]

argues that it fully complied with the Department's instructions and

that it reported all U.S. entries during the POR according to these

instructions. Saha Thai argues that, if the Department chooses purchase

order date as the date of sale, the Department may request to

incorporate a few additional months of home market sales from the

previous period of review in order to match home market sales with

contemporaneous U.S. market sales. The respondent argues that these

sales were verified by the Department in the previous administrative

review and, therefore, application of adverse facts available would be

unwarranted.

Department's Position: To determine the date of sale for this

review, we evaluated, pursuant to section 351.401(i) of the

Department's regulations, whether ``a date other than the date of

invoice * * * better reflects the date on which the exporter or

producer establishes the material terms of sale.''

Saha Thai reported invoice date as the date of sale in its

questionnaire responses. August 3, 1998 QR at C-17. The response also

provided information that supports the use of invoice date as the date

of sale. For example, Saha Thai stated that, ``* * * for sales to Ferro

Union (accounting for two-thirds of the quantity sold to the U.S.) the

contract notes only the total quantity to be ordered. The specific

quantity for each product is set subsequently. The exact quantity for

each sale is not determined until the merchandise is shipped.''

September 23, 1998 QR at 13 (emphasis added).

At verification, Saha Thai stated that the contracts it enters into

with U.S. customers bind the parties to the quantities agreed upon in

the contract, within a tolerance. See Verification Report at 20. Saha

Thai further stated that after a contract is made, it consults with the

customer on a production and shipping schedule, after which the

customer submits purchase orders to Saha Thai that indicate the

specific quantities to be supplied for each product. Id. According to

Saha Thai, the quantity tolerance in its sales contracts applies to the

total quantity on a purchase order (including all products), not to the

quantity for each individual product ordered. Id.

Saha Thai stated at verification that it typically meets the

quantity tolerances (both per purchase order and per the underlying

contract), and that between the purchase order and the invoice, neither

the agreed upon quantity nor the price itself would change. Id.

However, Saha Thai also stated at verification that ``between the

contract and invoice dates, it is still an open question as to what the

quantities will be for a specific product.'' Id. In addition, we noted

at verification that, for accounting purposes, Saha Thai considers the

date of invoice to be the date of sale, and records sales in its

accounting system on this basis.

Despite the apparent contradictions presented by the explanations

Saha Thai offered in its questionnaire responses and at verification,

the facts on the record, namely the actual sales documents, establish

invoice date as the most appropriate date of sale. In situations such

as this, where an agreement on the material terms of sale has been

reached, but is nevertheless subject to change, our practice, as

properly cited by petitioners, is to focus our analysis ``on whether

changes are sufficiently common to allow us to conclude that initial

agreements should not be considered to finally establish the material

terms of sale.'' See Stainless Steel Plate in Coils from the Republic

of Korea, 64 FR 15449-50 (March 31, 1999) We have analyzed five sets of

contracts, purchase orders and invoices contained in the record: Saha

Thai's July 1, 1998 Sales Documents supplement to its June 29, 1998

Section A questionnaire, and Verification Exhibits 21, 22 and 23. These

documents establish a pattern of material changes in quantity occurring

in a significant number of sales when purchase order quantity is

compared to invoice quantity. We noted that the frequency and degree of

the changes in quantity between invoice and purchase order were not

identical to that observed in the previous review. Nonetheless, the

sales documents in this review reflect the same pattern evident in the

previous review: that the quantity in Saha Thai's U.S. sales is not

commonly established until the invoice. Therefore we find that the

facts support our decision to maintain our date of sale methodology for

Saha Thai in this review. A detailed discussion of our analysis is

contained in the Memorandum to the File from John Totaro: Determination

of the Date of Sale for Saha Thai Steel Pipe Co., Ltd. (August 11,

1999) (``Date of Sale Memorandum''), on file in the CRU.

Given that the record evidence indicates that the quantity of

subject merchandise invoiced to Saha Thai's U.S. customers varies from

the quantities requested in the customers' purchase orders, we find

that invoice date is the appropriate date of sale. See Preamble to the

Final Rule, 62 FR at 27348-49. Therefore, our preliminary determination

on date of sale is unchanged for these final results.

Comment 5: Duty Reimbursement

Petitioners assert that, as expressed in the Department's

Verification Report, Saha Thai assumed the obligation of paying

antidumping duties for entries in the U.S. during the POR. Petitioners

argue that Saha Thai's assumption of responsibility for the payment of

antidumping duties constitutes a nullification of the relief these

duties were intended to provide. Citing Verification Report at 21 and

34.

Petitioners argue that Saha Thai's actions should be addressed by

the Department according to the Department's regulations related to

duty reimbursement. Citing to 19 CFR section 351.402(f)(1)(A),

petitioners urge the Department to deduct the amount of antidumping

duties paid directly by Saha Thai on its entries of subject merchandise

into the United States.

The respondent rebuts petitioners' assertion that the Department

should deduct the amount of antidumping duties paid directly by Saha

Thai on its U.S. entries. The respondent asserts that petitioners, in

referring to U.S. entries, are referring only to those U.S.

transactions in which Saha Thai acted as the importer-of-record and for

which Saha Thai posted antidumping duty deposits. See Petitioners Case

Brief at 11. The respondent argues that the Department's regulations do

not support petitioners' argument. The respondent asserts that the

plain language of the Department's regulations pertaining to deduction

of antidumping or countervailing duty payments from export price or

constructed export price clearly establishes that this deduction should

only take place if there are two entities--i.e., if an exporter or

producer pays duties on behalf of a separate importer. Citing 19 CFR

section 351.402(f)(1)(A). The respondent claims that, because Saha Thai

is the producer, the exporter, and the importer of its U.S. entries in

the instant case, the reimbursement section of the Department's

regulations is not applicable.

The respondent also rebuts petitioners' argument on the grounds

that petitioners do not cite any administrative precedent prior to the

completion of the URAA. The respondent points out that the SAA

establishes that the Department has no intention of changing its

methodology related to the finding of reimbursement. Citing SAA at 216.

The respondent further argues that the Department has, in recent

antidumping proceedings, reaffirmed its interpretation of the

regulatory language related to reimbursement. The respondent argues

[[Page 56769]]

that in recent cases the Department has not applied its reimbursement

regulation to a single entity. See Circular Welded Non-Alloy Steel Pipe

and Tube from Mexico, 63 FR 33041 (June 17, 1998) (final results) and

Certain Cold-Rolled Carbon Steel Flat Products from the Netherlands, 64

FR 11825 (March 10, 1999) (final results). The respondent argues, in

summary, that the regulation cited by petitioners to support the

argument that antidumping duties paid by Saha Thai for U.S. entries

should be deducted from export price is not applicable in the instant

case.

Department's Position: Section 351.402(f) of the Department's

regulations addresses reimbursement of antidumping duties. The section

states, in relevant part, that, ``[i]n calculating the export price (or

the constructed export price), the Secretary will deduct the amount of

any antidumping duty or countervailing duty which the exporter or

producer: (A) Paid directly on behalf of the importer; or (B)

Reimbursed to the importer.'' 19 CFR section 351.402(f)(1).

The Department recently addressed an allegation of reimbursement

that involved similar facts in Certain Cold-rolled Carbon Steel Flat

Products from the Netherlands: Final Results of Antidumping Duty

Administrative Review, 64 FR 11825 (March 10, 1999). In that case, the

manufacturer/exporter was also the importer of record during the

remaining part of the period of review. On the issue whether the

Department's reimbursement regulation is applicable whenever the

foreign producer is also the importer of record, we stated that ``we

disagree with petitioners that the reimbursement regulation is

applicable where the importer and exporter are the same corporate

entity. Our decision as to reimbursement is based upon our regulatory

interpretation of 19 CFR 351.401(f) [sic], which is that two separate

corporate entities must exist in order for the Department to invoke the

reimbursement regulation.'' 64 FR at 11833, citing Circular Welded Non-

Alloy Steel Pipe and Tube from Mexico; Final Results of Antidumping

Duty Administrative Review, 63 FR 33041, 33044 (June 17, 1998) (``Pipe

from Mexico'').

In Pipe from Mexico, the Department was applying the reimbursement

provision from its old regulations, 19 CFR section 353.26, which is

substantially the same as the current section 351.402(f). In that case,

the Department also examined a factual situation in which the

respondent was the producer, exporter, and importer of record for U.S.

sales of subject merchandise. The Department found that two separate

corporate entities must exist to invoke the reimbursement regulation,

and that therefore, the reimbursement regulation does not apply where

the producer/exporter and the importer are one and the same entity. See

63 FR at 33044.

Saha Thai explained at verification that at a certain point in the

POR, it became responsible for U.S. Customs clearance, which meant that

Saha Thai would pay the import duties on its U.S. sales after that

point, including antidumping duties. See Verification Report at 34.

This statement, as well as other facts on the record of the instant

review which cannot be discussed in a public notice due to their

proprietary nature, indicate that, like the respondent in Pipe from

Mexico, Saha Thai is the importer as defined in 19 CFR 351.102(b)

because it is ``the person by whom * * * the subject merchandise is

imported.'' See Memorandum to the File from John Totaro: Analysis of

Saha Thai Steel Pipe Company, Ltd for the Final Results of the

Administrative Review of Certain Welded Carbon Steel Pipes and Tubes

from Thailand for the Period March 1, 1997 Through February 28, 1998

(August 11, 1999) (``Final Results Analysis Memorandum'') at 9, on file

in the CRU. Because the facts on the record indicate that Saha Thai has

neither paid antidumping duties directly on behalf of another entity,

nor reimbursed another entity, we find that section 351.402(f) of the

Department's regulations is inapplicable. Therefore, we did not deduct

the amount of antidumping duties Saha Thai paid on certain U.S. sales

from our calculation of Export Price for those sales.

Comment 6: Weighting of Physical Characteristics for Model Match

The respondent argues that the Department incorrectly revised the

values for Saha Thai's product characteristics for the preliminary

determination and that these revisions do not accurately reflect

physical characteristic differences in a number of instances. The

respondent requests that the Department, for the final determination,

abandon its methodology of grouping all sizes of Saha Thai merchandise

into three distinct groups. The respondent argues that the Department's

consolidation of its various product sizes into three groups is highly

arbitrary and distorts product matching criteria. The respondent

proposes that the Department use a methodology for converting actual

pipe diameter to a code to be used in product matching by multiplying

the actual diameter by a thousand, i.e., \3/4\ inch pipe would be coded

as 750, 1 inch pipe would be coded as 1000.

In addition, the respondent argues that the Department also

incorrectly assigned general matching codes to a variety of subject

merchandise's wall thicknesses. The respondent argues that, for

example, the Department in its preliminary determination identified

fence tube as being closer in grade and wall thickness to one grade

but, in its analysis, assigned fence tube a GRADEH/U value which ranks

it for matching purposes to a different grade of pipe. See Verification

Report at 23 and Saha Thai product brochure attached to original

response as exhibit SR1-A19. The respondent argues that the Department

should use the numerical coding for wall thickness/grade that it used

in previous administrative reviews. The respondent proposes in its case

brief that the Department apply the following numeric designations that

it used in previous segments of this proceeding: ``ASTM=10; BS-S=100;

BS-L=110; BS-M=120; BS-L=130; fence tube=20.''

Petitioners argue that Saha Thai's suggestion to match wall

thickness based on numerical assignments should not be adopted.

Petitioners assert that the respondent's suggestion is confusing and

does not result in better product matches. Petitioners note that fence

tube should not be matched to ASTM specifications because fence tube

typically has a light wall appropriately matched to BS light. Hence,

matching should continue to be on a wall thickness basis.

Petitioners also reject Saha Thai's comments on matching by size as

a way to improve the Department's ability to match products.

Department's Position: The respondent is correct in noting that our

product weighting for the size characteristic differed from that in the

previous administrative review. A change was necessary because Saha

Thai sold its products in a wider array of sizes than in the previous

review. However, in reexamining the weights we assigned in the

preliminary results, we determined that some of our changes could

result in anomalous matches. Therefore, for the final results, we

assigned the same weights to the size characteristics as we had

assigned in the previous review where possible, but multiplied the

previously assigned weight by five. For example, in the 1996-1997

review, we assigned one-inch pipe a weight of 20; in the final results

of this review, we assigned one-inch pipe a weight of 100. For the

sizes of pipe sold in this review but not in the

[[Page 56770]]

previous review, we assigned weights proportionate to the weights

derived from the previous review weights. The result is an array of

size characteristic weights which is consistent with those assigned in

the most recently completed administrative review, and which avoids the

possibility of anomalous results presented by the preliminary results

size weights. We have modified our preliminary results model match

program to reflect this weighting method.

We agree with petitioners that fence tube should not be matched to

ASTM specifications because the wall thickness of fence tube is most

similar to that of Saha Thai's BS light pipes. Saha Thai incorrectly

states in its case brief that ``[i]n its preliminary results, the

Department found fence tube to be closer in wall thickness (and

therefore grade) to'' a particular grade of pipe. Saha Thai Case Brief

at 23. Our preliminary results Analysis Memorandum stated that ``Saha

Thai categorized its Galvanized Fence Tube (``GFT'') product as

belonging to a `grade' distinct from ASTM and British Standards * * *

Saha Thai's arguments justify our classifying GFT as a separate ``grade

* * *' '' Preliminary Results Analysis Memorandum from John Totaro to

the File, (March 31, 1999) at 7. In addition to Saha Thai's arguments,

evidence on the record indicates that Saha Thai's fence tube products

are not manufactured to the physical requirements of the grade cited by

respondent in its case brief. See Final Results Analysis Memorandum at

7-8. We did not discuss the wall thickness of fence tube in our

preliminary results. Moreover, contrary to Saha Thai's suggestion, our

weighting in terms of wall thickness (WALLS/WALLM) relates strictly to

the dimensions of the walls of the subject pipes, without

differentiation by grade. Our model match program incorporates a

separate weighting variable which provides different weights for each

grade of pipe (GRADES/GRADEM). See Final Results Analysis Memorandum at

2.

However, Saha Thai's case brief is instructive in that it sets out

the wall thicknesses, in millimeters, of Saha Thai's one-inch diameter

pipe products. In order of wall thickness (thinnest to thickest), these

products are: BS-L (2.6mm), BS-M (3.2mm), ASTM (3.38mm), and BS-H

(4.0mm). Saha Thai Case Brief at 23. We have revised our weighting

hierarchy of these products in terms of wall thickness to follow this

pattern, and we ranked Saha Thai's fence tube in this hierarchy

consistent with the wall thickness information contained in Saha Thai's

product brochure, and BS-S pipe consistent with the wall thickness

description in Saha Thai's questionnaire response. See Saha Thai June

29, 1998 QR at 27 and Exhibit 18. We revised the weighting of these

products to reflect their relative wall thicknesses. This is a change

both from the preliminary results and the 1996-1997 review. In our

view, this change will result in a more logical product matching

process in that the weighting of Saha Thai's products by wall thickness

will relate solely to the physical dimensions of walls of the products,

without regard to grade. This characteristic, in combination with the

characteristic based on grade, ensures that we select the most similar

merchandise for purposes of model matching.

Comment 7: Constructed Value Calculation

The respondent argues that the Department incorrectly omitted the

deduction of imputed credit from constructed value despite the

Department's recognition that credit should be deducted from

constructed value. Saha Thai cites to Dynamic Random Access Memory

Semiconductors from Korea, 63 FR 50874 (September 23, 1998) (final

results) and Carbon Steel Flat Products from Korea, 63 FR 13192 (March

18, 1998) (final results) in support of their positions. The respondent

requests in its case brief that the Department correct this error by

subtracting imputed credit from constructed value.

Department's Position: The Department agrees that imputed credit

should be deducted from constructed value and has done this for the

final results.

Comment 8: Description of Verification

The respondent argues in its case brief that, in the preliminary

results, the Department failed to mention that Saha Thai's cost

responses were also verified, despite the fact that the Department's

verification report suggests that the Department did in fact verify

significant portions of Saha Thai's constructed value and cost of

production information. See Preliminary Results, 64 FR at 17999 and

Verification Report at 16-20, 22-24 and 34-36. The respondent argues

that the Department should state in its final results that it verified

both sales and cost of production information submitted by Saha Thai in

order to ensure the accuracy of the public record and establish a

foundation on which to decide the need for verifying cost issues in

future reviews.

Department's Position: We agree with the respondent that the

Department should have stated in the preliminary results that our

verification addressed both sales and cost of production issues. We did

not intend to imply that cost of production issues were not addressed

at verification.

Final Results of the Review

As a result of this review, we have determined that the following

weighted-average dumping margin exists for the period March 1, 1997

through February 28, 1998:

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

Manufacturer/exporter Period Margin

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

Saha Thai................................. 3/1/97-2/28/98 9.65

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

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

assess, antidumping duties on all appropriate entries. The Department

shall issue appraisement instructions directly to the Customs Service.

For assessment purposes, we have calculated importer-specific duty

assessment rates for the merchandise based on the ratio of the total

amount of antidumping duties calculated for the examined sales to the

total entered value of sales examined.

Furthermore, the following deposit requirements shall be effective

upon publication of this notice of final results of review for all

shipments of certain welded carbon steel pipes and tubes from Thailand,

entered, or withdrawn from warehouse, for consumption on or after the

publication date, as provided for by section 751(a)(1) of the Tariff

Act: (1) The cash deposit rate for the reviewed company will be the

rate stated above; (2) for previously investigated or reviewed

companies not listed above, the cash deposit rate will continue to be

the company-specific rate published for the most recent period; (3) if

the exporter is not a firm covered in this review or a prior review, or

the original LTFV investigation, but the manufacturer is, the cash

deposit rate will be the rate established for the most recent period

for the manufacturer of the merchandise; and (4) if neither the

exporter nor the manufacturer is a firm covered in these reviews, the

cash deposit rate will continue to be 15.67 percent, the ``All Others''

rate made effective by the LTFV investigation. See 51 FR 3384, 3387

(January 27, 1986). These deposit requirements shall remain in effect

until publication of the final results of the next administrative

review.

This notice serves as a final reminder to importers of their

responsibility

[[Page 56771]]

under 19 CFR 351.402(f)(2) 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 notice also serves as the only reminder to parties subject to

administrative protective order (``APO'') of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with sections 351.305 and 351.306 of the Department's

regulations. Timely 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.

This administrative review and notice are in accordance with

sections 751(a)(1) and 777(i)(1) of the Act.

Dated: October 12, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-27569 Filed 10-20-99; 8:45 am]

BILLING CODE 3510-DS-P